Todd Merrill:

Hi, welcome to Tales from the SkyLounge. It’s a podcast about business, consulting, and venture investing. We get out there in the world, we talk to people who are making it happen, and we get their stories. If you can like and subscribe, it makes our producer, James, very happy. And he wanted me to mention that we have a sister channel, Speed Run, through Claude, where we talk about all things AI and practical aspects of it that can make your life and business go faster.

So, today’s guest in the SkyLounge, legendary Neal Miller. Hi, Neal, how are you?

Neal Miller:

Great. Thanks. Great to be here.

Todd Merrill:

So, everybody knows Neal, at least around TechCXO, but Neal, who are you and what are you working on these days?

Neal Miller:

Well, as you mentioned, I’m a partner at TechCXO, was one of the early partners in the firm. I started in late 2006, I think it was partner Number 5, and had a career of 25, 30 years before that in technology. I started my career in public accounting, but right now, what I’m doing is I am sort of making the move towards relaxation and retirement. I’m now a partner emeritus at TechCXO, which means I’m sort of involved, but I’m not doing client work anymore. I’m still on the board of managers of the firm. And besides that, I am working on trying to improve my golf game, which, you know, I didn’t spend enough time on that for many, many years. I’m getting a little bit better at it and playing a couple of times a week.

My wife and I just recently purchased a property and home in Costa Rica, and we’re starting to spend some time there. Getting it ready to have friends and family who are lining up to come down. That’s it.

Todd Merrill:

Yeah. I’ve heard awesome things about Costa Rica. That’s well-deserved. That’s an awesome place down there. Well, you mentioned a lot and one of the cool things I think about your background story is you know a lot of people, and in particular, we sit down for lunch and we talk, everybody knows Neal, and it’s surprising how many people came through Neal Miller to get to TechCXO or an investor in Atlanta or have had contact through that positive interaction.

I guess you and I had a brief, I don’t know if not brief, but for me, it was four years at Hireiq. So, that was kind of fun. And then Joe Gruca was there for a minute. And then several other partners at TechCXO came through you. Are you surprised at how many people come back around in your career? You probably have a million stories like that, where you planted a little seed and then 5 or 10 or 20 years later, something comes back around where you knew that person, there’s an opportunity, and you can play matchmaker again. How frequently do you think that happens?

Neal Miller:

Well, it happened, I think, quite a few times over the years. And I think it started with the fact that I joined TechCXO early on, and I never wanted to do anything else. And it’s been 19 years, and that’s a long time. And the main reason was I used to get bored a little bit and kind of start looking for something else. But when you’re working with three or four companies at a time and they’re either getting acquired or they’re growing to a point where they hire, you help them hire a full-time executive, and you’re kind of always changing what’s going on.

It’s a little bit like Groundhog Day, but with a different cast. And so it was just such a great fit for me that I always wanted to tell everybody that I knew or like about it. And so a lot of them were relationships that were clients. You know, Hireiq was one of my longest engagements, although it didn’t really kind of get the kind of traction and takeoff that we all wanted, but I was there for a long time. And Joe was there. There were two other CEOs after him during that time. And so Louis Gump at LSN Mobile recently joined us as an executive operations partner. We hired him as the CEO while I was there.

I think one of the first ones was Greg Swayne, who was the president of a company called AirSage that I got introduced to. And Greg and I became friends and worked with him. And actually, one of my first trips to Costa Rica, he and his wife and a few other couples were … there were like five couples. And over time, he kind of left AirSage as well. And we just stayed in touch. And he was kind of like, I’m not sure what I’m going to be doing next. And I’m like, you got to come to TechCXO. So, it’s just been that kind of a thing. Right?

And I’ve been around the Atlanta technology community since 1983. I guess I’m old. I know a lot of people. And I’ve worked with close to 70 companies between TechCXO and prior to TechCXO. Most of them, over 60 of them with TechCXO.

Todd Merrill:

Wow. That’s awesome. Well, so talk about your origin story. So, at some point you got to build up credibility to be the fractional CFO. How did you get your start as in the financial world?

Neal Miller:

Yeah, I graduated from Georgia State University and immediately went to work with what is now KPMG. It was Peat Marwick & Mitchell at the time. The Big Eight accounting firms and their audit arena.

And early on in my career, I got assigned to work on the first-ever audit of a little bitty company called American Software, which was based in Buckhead. And it was basically owned by two entrepreneurs who had been part of the management team at MSA back in the 60s. And during some of MSA’s reorganizations, they left and started this company. In 1981, ‘82, ‘83 was one of the first many IPO booms. I mean, it would probably look like an ant today compared to IPOs, but you had companies like Home Depot and Health Dine and some other early-stage technology companies that were starting to go public. And so I got assigned to work on the American Software audit, but they were really looking to go public. And so they went public in February of 1983.

I mean, you couldn’t really do this today because it was, I think there were $8 million in trailing revenue. And at the time, there was really no accounting department there. They had some clerical people and all of that. And so me and the other auditors were really doing the books and so on. And like I said, it was a little bit of like the Wild West at the time, but those were the rules. And they had a very successful IPO.

Again, the numbers are nothing compared to what things are going today, but I think they raised like $24 million on maybe $100 million valuation or thereabouts. And so a few months they hired, they didn’t have a CFO. They hired a controller and he hired me basically away from KPMG to be the assistant controller. I think I was like 25 years old at the time and because I knew everything about the accounting. And so I got their systems and all set up.

Eventually, as I mentioned, I kind of got bored a little bit. And so they had some software products that were financial in nature. And so I became what they, I think, call now a sales engineer. I would go out with the salespeople and demonstrate the products and help answer questions and RFPs and things like that. And then also help, in those days, you got assigned to the prospect/client and I helped them with the implementations as well. And so I did that for a little while. And then a regional sales manager took me to lunch one day and said, I have a sales opening and I think you’d be really good in software sales. And I’m like, I don’t know anything about sales, you know, selling. You know, just take my word for it, you’ll be good.

So anyway, I went on a six-year diversion and was carrying a bag and selling enterprise software …

Todd Merrill:

… no kidding.

Neal Miller:

In Georgia and South Carolina in the textiles, in the carpet mills, manufacturing environments, utility companies, all of that kind of stuff. So, I had a very good … I was good at it. I mean, I wasn’t a superstar, but I wasn’t on the bottom rungs. But one day in, I guess it was 1990, right after a few months after my son was born, the CEO, Jim Edenfield, he was one of the two founders of the company, called me into his office, which made me nervous because he never did that, never did that. And he told me that the CFO had resigned and that he was looking for a new CFO, and he thought that I might be a good candidate. And that was kind of shocking to me. But yeah. He said, “Well, you know the company. You know the products. I see the CFO, his real main role is being outward-looking with Wall Street.” And in those days, you went around and literally met with people in New York and Chicago and San Francisco and Europe and all of that to kind of pitch the stock. And he’s like, you know, you’ve been selling our products. So, I think you could do it.

Todd Merrill:

Wow!

Neal Miller:

We had an existing accounting department, which I had started to build before I moved into those other things.

He gave me my first opportunity to be chief financial officer. And at the time, I was like, well, I could probably do pretty well on sales. But at the time, American Software was about $75 million in revenue company had grown dramatically and was on Forbes’ fastest growing companies list for five years in a row. And so was like, that is really a big, a big opportunity out there. So, that’s how I made the move into that. And I had was the CFO of a couple of other public companies, one called Syntellect, which was interactive voice response technology. It was actually a reverse merger of two companies. Syntellect was in Phoenix, Arizona, and they merged with a company in Atlanta. But the management team from the from the acquired company was basically taking over from that. And Noro-Moseley Partners had been the venture capital firm behind the Atlanta Company.

Todd Merrill:

Okay

Neal Miller:

And the CFO that was in in Phoenix didn’t want to move to Atlanta, so he took another job. And so through some of my connections, I got introduced into this opportunity. And that’s where I started my relationship with Noro-Moseley Partners, which has been a great relationship for years and years. One of the longest operating venture capital firms based in Atlanta, if not the largest venture capital firm.

Todd Merrill:

Oh, yeah.

Neal Miller:

Then after that, I did a private venture-backed company, and then my third public company was Cypress Communications, which was the in-building local exchange carrier where they leased your phones and your Internet and all that by the person, by the drink type of environment. We sold that in 2005. And I kind of puddled around doing a few little things here and there, doing a little consulting. Basically was trying to figure out what I wanted to do, and so I did like what everybody who’s not clear what they want to do. I went to the mountain and I talked to John Yates.

Todd Merrill:

Yeah, there you go. Yeah.

Neal Miller:

Yeah. His name has to come up in my story. John said, “Well, what do you want to do when you grow up, Neal?” And I was like, “Well, I had done some consulting. I really like doing it, working with multiple clients, but I don’t really want to do it on my own.” Right? Because when you’re working, you’re not selling. When you’re selling, you’re not working. And John said, “Well, do you know Kent Elmer and Mike Casey over at TechCFO?” I knew Mike a little bit. We were both CFOs of public companies and were at various events. I didn’t really know Kent. And so John made the introduction and that was 19 plus years ago. 

Todd Merrill:

That’s so awesome. Well, so when you got to TechCFO at that point in time, and that’s about the time that I got introduced to the company a couple of years after that, I had started a company down at ATDC in Atlanta, did Georgia Tech and got some investors. And then they said, “Hey, you need a CFO.” And I said, “I don’t know anybody like that.” They said, “No problem. We got a guy.” And it turned out to be Eric Froistad. And he was Tech CFO at that point.

Neal Miller:

Yeah

Todd Merrill:

But like one of the companies that was in our kind of cohort of entrepreneurial ventures or entrepreneurial startups at that time was Cloud Sherpas, which I know you kind of drew that straw and you were their CFO. I can remember sitting around when the three of them were just in a nothing card table situation in a rented office with nothing, and going, man, I don’t know how this is going to scale. And then boy, do you want to tell us that story? Or at what point did Michael and those guys find you?

Neal Miller:

Well, I’m going to use the same name another time.

Todd Merrill:

Okay

Neal Miller:

But John Yates called me up and he said, “I just had this meeting with this young guy. The name is Michael Cohn, and he just quit his job. And he’s got a couple of partners and he wants to start this company. Something about bringing companies into cloud solutions and moving them off of Microsoft in-house AS400s and all of that kind of stuff.” And he basically, I’m not a hundred percent sure I understand what they’re trying to do, but they need help and they need a raise of money, stuff like that. So, I gave him your name. And so I called Michael and we had coffee in the Starbucks in Sandy Springs on Roswell Road on the Monday morning after the Friday that was his last day at his prior job.

The two partners were still working at their jobs, and Michael was sort of trying to get things organized. And so we literally met in his basement. And he had his second child during the first couple of months, which I thought was very brave of him to quit his job and all of that while he was expecting a child. And we kind of white hoarded out all of that stuff that was going to need to be done. This was like the spring of 2008. Obviously, we started putting together the materials that you need for going out to try to raise capital and all of that kind of stuff. And through the summer and as many of us know, you know, there’s really no venture deals that are done in the summer or new deals done after like Thanksgiving until the middle of, or like January. So, it was like, okay, we got to get ready to go out by early September and get started with all of this. But the world was crumbling.

Todd Merrill:

Oh, yeah.

Neal Miller:

Yeah, financially. And so it was very difficult. I think Michael was, I think it was something through the ATDC or whatever, but somebody got a golden ticket to present at Venture Atlanta. Michael won that. I guess it was the early stage or startup.

Todd Merrill:

Yeah, I had the other golden ticket. So, that year, so it was Cap Venture, I think was like a feed in thing, and then we all pitched off and then, yeah.

Neal Miller:

Yeah

Todd Merrill:

Yeah, sorry. It was exciting.

Neal Miller:

Years later, Michael was on the stage at Venture Atlanta and said, “Does anybody remember October of 2008 when I presented?” He said, “You could hear a pin drop in the room.” And so anyway, so things were looking dire because nobody wanted to talk to him. Right? Nobody. And I think part of it was the business model was going to be so different and unique. And it was dependent on larger companies. I mean, large meaning hundreds of users, companies taking this leap to cloud. And this is the 2008, right? So a lot of people didn’t know what the cloud was at that time. And so I helped raise a, I think it was about 175 or $200,000, what today would be called the safe, but it was convertible debt at friends and family, mostly mine. And so I just believed in what they were doing. And actually, TechCXO became one of their first clients.

Todd Merrill:

Wow!

Neal Miller:

And you probably don’t know this, but our first intranet was a Google Sites thing. A bunch of us, and again, in 2008, we were probably 10 partners by then, I don’t know, maybe 12. And we all loaded data and shared and stuff like that into this Google site. And then we moved our email over to Gmail, where it is today, right? We were using a hosted Microsoft Outlook solution. And so we became one of their big customers. And then we did some joint marketing with Google and things like that.

So anyway, they started getting a little bit of traction, and basically, in about 2010, we started looking for capital again, and that’s when Jon Hallett invested in the company, and he came on board as the CEO. He had a lot of venture experience and connections from companies that he’d run. He drove the mergers and all of that. I was sort of done after Jon came in, which was, yeah, fine. And really, yeah, the business model, right? You’re there as long as they need you. And usually, we’re the ones who tell them when it’s time for us to go. They don’t tell us. So anyway, but yeah, Michael and I have been good friends and connections. In fact, I’m having lunch with him the week after next. And I introduced him to some other people. I’m an investor in both of the Overline venture funds and things like that, and just really happy with their great success. It took a while, you know? I mean, it took a long time to do that, but I mean great, great outcomes take a while.

Todd Merrill:

And the end of the punch line was that they sold to Accenture.

Neal Miller:

Right

Todd Merrill:

It built it up to like what, a thousand employees or something crazy. Yeah. Great success.

Let’s talk about value creation. Was that one of your better stories or do you have another company that was outstanding in how they went from undervalued or nothing to like insanely great valuation in a relatively quick period of time?

Neal Miller:

Well, if you didn’t add the in a really clear time, would have.

Todd Merrill:

Okay, 10 years.

Neal Miller:

10 years. Okay. 10 years. So, that’s quick.

Todd Merrill:

Yeah

Neal Miller:

Yeah. Yeah. I think, I mean, there’s been a lot and sometimes. I mean, in our role as a fractional executive, oftentimes, the exit happens after we’re gone. And this is what I tell the founders when I’m coming on board. It’s like I’m probably not going to be here when you have your great exit. Sometimes I am, but you know, if you do it kind of to the real big value creation, I’m here to put the foundation in and get the main walls up on the house and all of that kind of stuff. And then the frame, I’m not here to do your interior decorating per se, you know? And so oftentimes we’re not there. I was not there when clearly had their exit and were acquired by IBM. But we had hired a full-time CFO there two years before because we had raised a big amount of money. And we knew that the next kind of two-year goal was to position for an exit. And I still was, again, of counsel. I’m like, you know, if you need me, I’m here, but I you need somebody every day.

Probably the big, the best story for me was a company called Boomtown in Charleston, South Carolina, which is sort of how I got my big Charleston connections now. I met those guys. I’m going to say it again; it was John Yates. He has a place in Myrtle Beach and he would go through Charleston and meet with some of the early-stage tech companies. Those there back in 2010 or 11, there were a bunch of, not by Atlanta standards, but a growing group of early-stage tech companies. There were two guys who had come up with a real estate marketing platform called Boomtown. And they were 20 people. They had 40 customers. They were doing kind of a $2 million run rate overall when John introduced me. And I just started off helping them put their first budget together and a monthly reporting package that we then all went out and reviewed with their leadership team, who were all, I mean, everybody was young, right? There was hardly anybody there who was more than about 32, 33 years old in the company. Right? And so I was just the wise old man, even then, it was like and just asking a lot of questions like, well, why are you doing this? Have you thought about that? So, they went from 2 million to 4 million to 8 million to 18 million in revenue in those first few years. They were growing their customer base, and their customers were real estate agent teams.

Their product was a monthly subscription, and it was a $1,500 a month, for real estate agents or brokers are cheap and they go up and down with oh, business is good. Business is not good. I need this. I don’t need this. But anyway, I helped them look at their product and their market and kind of dissect it and come up with an entry level, instead of a one-size-fits-all or one price fits all, an entry-level, a mid-level, and a big level product and pricing, which helped them kind of accelerate. Because when you get somebody who’s small or two or three people and you can get them on your platform and they start becoming successful, then they’re going to move up over time. And so that was really helpful.

I helped them really design what their internal structure, management structure needed to be, because as was typical early on, you had the CEO, one of the two founders, the other founder was kind of a product guy, and everybody reported to the CEO. I had a hard time getting a meeting with him. Once a month when I was coming down and I would try two or three weeks in advance to get on the calendar. But one day I came in with a piece of paper and I said, “Well, this is what your org structure looks like right now. Here’s you and here’s everybody else. And you’re not helping anybody.”

Todd Merrill:

Yeah

Neal Miller:

And you’re not spending any time on the business. And then I just turned it over and I said, “Here’s what your org structure is going to look like, you’re going to have you, you’re going to have your partner whose product, you’re going to have a CTO, you’re going to have a CFO, and you’re going to have a COO. And then here’s the levels below that.” And he looked at it, and he’s like, “Well, which one do I need to hire first?” And I said, “You should hire the COO. This person needs to take all this stuff off.” And so we went in, he liked it, the idea.

We went through a whole process. I helped him interview a bunch of candidates and we picked somebody, and he was perfect for that role. And I came down like two months in, and I got an appointment to meet with Greer, and I said, “So, how’s it going?” He’s like, “Oh my God, look at my calendar. Look at all this white space on my calendar. Look at the whiteboard here. I’ve got all of these ideas and stuff.” And so anyway, those are some of the non-financial things that you can bring as an executive who’s been through multiple companies, companies have a hundred million, $2 billion or whatever, and seeing how some of that stuff works.

Actually several times along the way between 2011 and 2019, I said, “It’s time for you to hire a full-time CFO.” And they said, “No, we’re not going to do it.”

Todd Merrill:

Okay

Neal Miller:

And I’m like, “I’m starting to spend a lot of time here and it’s very expensive.” And they’re like, “We don’t care.” And this was also after I helped them raise $20 million that they never actually used, but just having it was important. And so, in 2019, I said, I mean it, I mean it.

Todd Merrill:

Yeah

Neal Miller:

You guys have to get ready for an exit here. And by then, they were like 60, 65 million in revenue. I helped them do a couple of small product acquisitions, to expand their product line, all complementary and all that. And I said, you can’t just grow this company organically. And so by the time they sold in 2023, they were somewhere over 90 million in revenue. They did one more acquisition after I left. I helped them find a full-time CFO and had a very, very good exit.

Todd Merrill:

Wow!

Neal Miller:

So, those are two stories of a number. The fastest sale was a company called FSLogix where I got brought in by some of the, I’ll call it seed investors. And then I helped them raise a Series A, in like February of, I don’t remember, it’s been a few years, so in February and then in May, one of the largest software companies on the planet came knocking on the door and said we want this. And then I think it was in September or October that the deal closed.

Todd Merrill:

Wow! Oh man. So, it’s like a couple, three quarters.

Neal Miller:

Yeah. But it wasn’t a 10X or whatever, it was a very good return for everybody.

Todd Merrill:

Heck yeah.

Neal Miller:

Including myself.

Todd Merrill:

Nice. Well, so those companies, they obviously took your advice. Was there ever a time you think that you gave good advice and they just didn’t take it. I know that happens a lot in consulting and you just kind of go, oh, okay. Do you get any stories like that?

Neal Miller:

Yeah

Todd Merrill:

Client missed it?

Neal Miller:

Yeah. Well, yeah, there’s a lot of them. I mean, I tell many of my clients early on, you know, you don’t have to take my advice. You just have to pay for it.

Todd Merrill:

I’ll still be your friend. I just want to hear how it works out.

Neal Miller:

Yeah. But also, there’s a lot of people who didn’t take my advice that are wishing that they had. Well, I mean, I think there is a lot of times you’re working for entrepreneurs on the second or third time around. And so they have some experience, which emboldens them to feel like they know everything, and it’s not always the case. I won’t name names. It’s been a long time ago, but there was a company that I got called in by their venture capital firm, because they were doing some work in contact technology. And like I said, I had worked in the IVR business arena. I had some experience in telecom telecommunication. But they had this really, I mean, it was really interesting technology and approach, to help, to basically make IVR is more I’ll say, self-serve really self-service.

They actually had some people behind the curtain that it was like a game theory solution. And they, instead of like press 1 and then you get to the next menu and presses it 6 and you get to, you know. It takes you seven menus to get where you’re going. These people basically would try to get you through the menus to the place where they expect that you’re wanting to go really quick.

Todd Merrill:

Okay. Okay.

Neal Miller:

The advice that then… so the founder was like, and when people see this, they’re going to throw their IVRs out the window, and we’re going to conquer the world. Okay. So, they were having some issues, and I ended up coming in, I heard all of this story and I said, “Well, I really like your solution, but your strategy is flawed.” 

Todd Merrill:

Okay

Neal Miller:

And he didn’t like hearing that, but I told him why it was flawed because the big companies that are buying IVRs are like banks and utility companies and all that. They had tens of millions of dollars invested and I said, they’re not going to stand up at a board meeting and say, we have to get rid of all of this stuff and we’re going to have to ride, take these write-offs and all that, because there’s something new out there. I said, it’s just not going to work, but you know, but you can make your solution sit on top of the IVRs and make them better. And over time as these things go out to pasture, then you can start taking and doing that. And he didn’t really want to hear that. But a year later, he was explaining at a board meeting why they had not met their sales goals and things like that, and it was just almost verbatim what I had told him. So.

Todd Merrill:

Oh!

Neal Miller:

But that company grew over time. It took a while. He no longer there as part of it. But they did sell the company a couple of years ago.

Todd Merrill:

Okay. All right. Yeah. And I think I might know who this company is, but I won’t name names. So, one of the things that I’ve come to realize there’s kind of like the pinnacle of an individual contributor in the skill, like an accountant can rise up to a CFO level. And then there’s this kind of another gear where TechCXO type people are operating, right? So, it’s very common for people to get, yes, you’ve gone all the way in that individual like swim lane, but you’ve also got some kind of other discipline in your background. Like you had sales, right? Auditor to sales to CFO is not a traditional progression.

Neal Miller:

Yeah

Todd Merrill:

But you know, I think that’s very common, and then that’s kind of an interesting like take where maybe we all found each other or maybe I don’t know what it is, but there’s like a whole different set of advice you get where you have like a CTO can sell, a CFO who’s sold or run the company or run the division. There’s a whole, done the financial roadshow internationally, like it’s a whole different skill set that’s not common that you get as a complementary for free, you know? And then do you think that’s a part of why fractional leadership kind of makes sense where, like your skill set is so deadly early on at exactly the time when they can’t afford you full-time, you know? So, like, it’s this really interesting juxtaposition of perfect skill set at the right time. Fractional is the way you get it and onboard it. I mean, how do you think about that? You don’t need just another really good person with finances. You need really broad strategic leadership.

Neal Miller:

Yeah. Well, and I mean, that was my very simple pitch. It’s not complicated, and personally, I very rarely sent out flyers and booklets and all of this other stuff or PowerPoint decks, and said, “Look, here’s what we do is that the skill sets that you need, you can’t afford.” Right? You need somebody like me with my experience, but you can’t afford me as a full-time hire. You’re a $2 million company. You just can’t afford me. Right? And the person that you can’t afford by definition does not have the skill sets.

Todd Merrill:

Yeah. Right.

Neal Miller:

So, that’s what the fractional model is all about. You get exactly what you need at the time and the very small increments, of this. I mean somebody needed to help the CEO of Boomtown understand why he was not being helpful to all of his direct reports because he had so many of them and literally draw it out on a piece of paper with a pen. And I mean, honestly, everybody who’s ever asked me the question, like, what was the best thing that you … the high value delivered to Boomtown? It was like this piece of paper with two sides on it. That was it.

Todd Merrill:

The napkin.

Neal Miller:

Right. The napkin. I did help them raise some capital, but they had a really good business. I mean, people were actually lining up to raise capital that they were … we had done a good job of making their name well-known in the venture community. People were calling us and we were going like, “No, we’re not ready. We’re not ready. We’re not ready.” And they would just keep calling back. And it was like what you can’t have is what you really want. Right? And so we had a lot of people that were like when you’re ready, I want to be part of it. And so there were little bits of things here and there, and then it got to the point where they needed somebody full time and they were able to pay up for the experience. And they hired somebody who’d been through M&A transactions and raising capital. And it was a pretty good operational CFO at that point of time.

Todd Merrill:

I want to ask, I kind of want to veer off this a little bit, but something that a lot of people, I deal with a lot of very early-stage folks, and the idea of fundraising comes up and then it’s like this constantly changing game, seed precede angel, a, whatever you’re calling it this year, I don’t know. And then people are saying VCs aren’t investing as much as they used to. I don’t know if that’s true or not. Private equities kind of come down, but there’s not any exits anymore so that’s kind of gummed up. You know, there’s no mulligans right now so there’s no do overs so you got to really hit it down the middle of the fairway to be investable. All these are thoughts and things that people talk about. In Atlanta, you can’t raise money. Yes, you can. You know, what are your thoughts on the current, like, where are we with all this state of investments or how do companies get off the ground? Do you just have to know a guy and then get done more, do more with less with a little bit of friends and family money until you can really get going or like, what’s the kind of current thought for a good solid company with a good team with great idea and a little bit execution. Is that fundable, or where would you go, or what advice would you give to those kinds of companies?

Neal Miller:

Well, it’s a lot easier to start a company today than it was 10 years ago.

Todd Merrill:

For sure.

Neal Miller:

You don’t have to have infrastructure or any of that stuff. We can sit here, on Zoom and have a company. And then you have a fraction of an AWS server, and you have a whole bunch of fractions. You’ve tried to put them together. So, by nature, there’s a lot more companies out there. The unfortunate thing is there’s not enough money out there to fund every company and everybody that’s got a good idea is not going to get funded, even though there’s good ideas. I have failed to help some companies that I thought had really good ideas. And I mean, I’ve seen enough to, I think, be not an expert, but I have a pretty good feel for what’s a good idea. What’s not a good idea. I mean, you can start from the top side on PEs. I mean, the IPO window has been relatively shut except for some of the biggest deals. And so the PEs can’t get liquidity.

So therefore, they are the ones who are buying the ones that the companies that say growth equity venture and growth equity have been funding. So, there’s no money going circulating back to the limited partners who invest in Fund 17 or whatever the next fund is. And it’s hard to raise money in that kind of environment. There are so many small companies that are looking, I mean, that’s what created, I’ll call it seed stage. That wasn’t even a word 10 years ago. Right?

Todd Merrill:

Yeah, right.

Neal Miller:

It was like, oh yeah, we’re going to go raise a Series A. It’s going to be $2 million. And today $2 million is like a little seed stage. So, I think things have got to loosen up a little bit. I think there’s a lot of uncertainty in the financial markets, in the world markets and all of that kind of stuff that’s just making it difficult. Coming out of the 2007, ‘8, ‘9 kind of period, a lot of companies were forced to bootstrap. Right?

I mean, I’ll go back to the Cloud Sherpas example. I think each of the founders put in like 50 grand of their own money to start this thing up. I helped them add another couple of hundred thousand dollars, and that got us two years. Yeah. I don’t know if it was at the ATDC, where you were meeting with them in this building, but it was in, I got them a little space in Buckhead.

Todd Merrill:

Yeah. That’s where I saw him.

Neal Miller:

In Buckhead.

Todd Merrill:

Yeah

Neal Miller:

Maple Drive, because my friend owned the building and I said do you have any vacant space? They don’t need very much. He’s like, “Well, I got this space, but I may have somebody that wants to move into it. If they’re flexible, I can charge them by the head.”

Right? And so that’s like predates like the Tech Village model, where you pay by the head and they were paying like $150 a month per employee for this space. It was four of them at the beginning and, and so on and so forth. So, you have to learn how to bootstrap in order to survive. And I think that’s really good. We got to come back to that because we had a lot of money that was being invested in the last several years. There was a halt at early part of COVID and then there was a waterfall and now there is a pause, it’s slow. It just has to be, you know, you can’t go out and start spending money, and to grow. It’s got to be really, really tight.

Todd Merrill:

Yeah. Well, let me bounce something off of you. So, when like the cloud came, AWS came and was a thing that was right around when Cloud Sherpas was getting going. Yeah, AWS was S3 and EC2 and not much else. But that was a huge game-changer. You didn’t need to raise 5 million. You need to raise 1 million to get going. And then that was a huge quantum shift and you could do way more, still had to have a pizza box rack somewhere, maybe in a colo. You probably had to have an office. You probably had to have phones where you actually pick them up and to call and then you had to drive places and you know, I think.

Neal Miller:

You had to go meet with people.

Todd Merrill:

Yeah. And then, so I’m seeing something right now that’s kind of an echo of that where everybody’s talking about AI, but you know, with these AI coding tools and AI marketing tools and AI blah, blah, blah tools, it’s kind of the same thing over again. If people can leverage those, it’s an operational lever that really good people can become really great people in a hurry for a lot less money. And I feel like you can get people through those initial proof points to become investable where you can build a product in two weeks maybe as an MVP, you could start selling, can that founder sell to 10 people? It’s kind of one of my metrics. I’d be interested to hear yours. And then will the dogs eat the dog food? You know, do you have product market fit in terms of do you get the … some of those 10 people you sold to get angry if you take away the product? I guess there are a couple of things there, the cycles are going to compress if you can’t get to a million, what’s wrong with you in revenue in a year or half a year or something ridiculous. But there’s a lot more pressure. Yes, you can start, but yes, you’re going to get required to go faster. And I guess the second, maybe kind of bounce off that. And then the second part is kind of what metrics do you see? Like, what heuristics do you kind of look for when you’re looking at these companies going, that one’s going to make it. And like, that one’s not. Maybe start with the first, like, are we seeing compressions of these cycles? And is that good or bad with AI leverage?

Neal Miller:

Well, I mean, I think the improvements in productivities are very positive. I mean, I’m on the board of a tech enabled healthcare solution service company. Part of what they do is they reach out to patients of doctor practices and to check on them. Are you taking your medicine? Have you done your blood pressure, blah, blah, blah, all that. And it used to be people picking up the phone and calling. Now they have AI agent that does all of that, gets all the information and then updates the doctors, the doctors’ records, and all of this stuff. So, they’ve been able to, I’ll call it reduced costs or do more with the same. It’s been done in six months, six, eight-month period of time, big impact on margins. And you know, I think the ability to bring things to market, I’m not going to go into whether or not AI is good or bad or whatever, but I mean the challenge that the companies are going to have I still think is, okay, you’re doing it. You’re using AI or you’re coming to market in a short period of time. Why can’t you get to a million dollars in revenue? Well, because there’s 20 other people that are doing that had the same idea, right?

Like, when Alexander Graham Bell went to the patent office that for a patent on the telephone, somebody else came in an hour later with the same thing. So, there’s competition. And if you’ve got a whole, a thousand itty bitty companies that are doing something similar, they’re all going to struggle, right? And so there’s going to have to be some kind of consolidation.

Now, whether or not, maybe that’s the opportunity for private equity or whatever, but that’s a lot of work, trying to do that. And so I think the reality is that not all companies with good ideas are going to get funded now, because it’s so easy or quick to take your good idea and turn it into a pilot or something like that. But big companies which drive big revenue numbers are very nervous about taking mission critical, tasks and handing them off to AI, an AI solution, right? So, I think it’s going to have to come from the ground up, and there’s going to end up being a bunch of fallout. The ones that are nimble and strong will survive. And the real, the metric thing is what is your business model? Can you scale, you know, really, it’s about sales and marketing.

If you’ve got a good product, then it becomes sales and marketing. How much does it cost? What’s your customer acquisition costs and what’s your lifetime value of a customer because there’s a lot of companies that are out there that don’t have great margins. I mean, now in an AI world, I mean, gross margins need to be 90%, right?

 Whereas the old software industry if you were in the software industry, you were 50%, you were doing pretty good. And then in SAS, it needed to be depending on what kind of solution it was and how much effort was involved it’s 60 to 75% or higher. And you got to be able to be profitable when you start not dialing back sales and marketing, but expense, but customer retention, layering on the next set, and getting to profitability quickly. You can’t be losing money for five years anymore.

Todd Merrill:

So, I’ve got this kind of theory that AI, some of these AI tools make people more efficient so I haven’t wanted to code for a while. And I tell people you should not pay me to code. This year that changed.

Neal Miller:

I tell people they should not pay me to go into QuickBooks.

Todd Merrill:

Yeah. But you need, if I can direct some people, like I have these coding agents or you have some of this AI that can go do some of those things for you, that’s all of a sudden flipped where you can have a very experienced person doing some of these individual contributor-type things in a background automated if that’s true, if you buy that, which I think we’re going to get there, I think it’s the early days. It used to be started everybody liked to fund a couple of real genius, like Larry Page and Sergey Brin, because they were poor, hungry grad students and they’re cheap.

Neal Miller:

Right

Todd Merrill:

And they could like grind it out and then make a bunch of software. What if the cost of software goes to almost nothing? And then when you rather have some very experienced entrepreneurs running the business and then not pay for the software development anymore, you know, the product development, but pay for the distribution and the connections and the experience of, well, we know how to quickly get to the message and the distribution and how to sell it and position it and price it, and all the kind of things you can’t just kind of luck into, it requires experience.

Neal Miller:

Yeah. I think the ones who are going to be the winners is the ones who can quickly gobble up market share through their sales and marketing experience.

Todd Merrill:

Well, so you got any wisdom for the next generation or maybe some thoughts on the future of venture and consulting in general that you want to share?

Neal Miller:

Well, I mean, in the early days, back in 2007 and 2008 when the world was like catering financially, all of our partners, all but eight or nine of us, we had these conversations about should we dial back growing our business, right? Cause we had gone from three to five to eight or nine or 10 at that time. And I think the conversation ended up with companies are going to need us more than ever in these bad times, these difficult times, because they’re not going to have the money. They’re not going to have venture capital, that the VCs are going to have a small amount of money to spread around to take care of their existing portfolios.

So, basically, we decided to keep going forward and growing our business, bringing more partners on. And we had more work than we could handle at the time. And then when COVID came, it was very similar. I mean, there was just a shock, I think for the first couple of months, but then everybody was like, we have to reforecast. We have to relook at all of our business metrics. We have to do all of this stuff. Right? And so you can’t wait and go like, oh, I got to go out and hire a CFO, which will take you six months or whatever to do. I mean, they needed answers in hours today.

So, I think the consulting model, whether it’s big consulting, but certainly on a fractional basis has a lot of legs and actually that fits in very well in times of uncertainty, because you’re not making a big financial commitment. I come in with my backpack and I tell them, yeah, you may give me a desk, but it’s not an office. I’m not putting any photos of my kids or any of that kind of stuff. And you can give me 15 minutes notice and tell me that you don’t need me anymore and I’ll pick up my backpack and go. Right? So that model still works as well, or maybe even better … for us, it’s better because now, we have TechCXO, has such a broad, diverse group of skill sets that we can bring in. I mean, you can bring in somebody for two hours to address a very specific need or topic. Nobody’s having to fake it because the client has a problem and we don’t have, you know, I don’t know the answer. I just go out and say, who knows the answer to this and can help my client.

Todd Merrill:

Yeah. I have one other kind of weird question that one of our partners asked, what did you learn from owning a micro-brewery?

Neal Miller:

Well, I’m still involved in it, so I don’t think all my learnings are over, but certainly, I learned the look deeper before you leap. It was one of the things and you know, craft brewing is a very capital-intensive business, not way more intensive than anything that I’ve ever been involved in before even on a small scale. And the other thing is that in the last few years, you got to look at the market, really look in the market because in the last few years, just universally, consumption of alcohol and beer as part of that category has been flat to down, as the young people are looking at alternative beverages and things like that, that are non-alcoholic. Whereas our generation is … I mean, we grew up drinking beer and whatever, but the younger kids, the younger people, yeah, the 20s and 30s are not doing it as much. So…

Todd Merrill:

Yeah

Neal Miller:

Yeah. It’s a challenge, but there are different business models where you can be successful. So, that’s another learning that I’m still learning.

Todd Merrill:

Yeah. Well, it’s about travel and getting out there in the world. And we’d love to hear some of your travel stories if you’d like to share a couple.

Neal Miller:

Well, like I said, I just came back a couple of weeks ago from two weeks in Costa Rica. We’re really getting to enjoy the culture there and the beauty of sunsets over the Pacific Ocean and all of that. But I guess I’ve been doing a lot of traveling the last two years. Two years ago, this month, I took my family on a 20-day trip to Vietnam, Thailand, and Korea. And I’d never been to Asia before, and it was just really fantastic. I’ve known a lot of people who’ve been there. So, I was able to kind of get some tips, and we spent three days in Hanoi, Vietnam, and it was just the most spectacular experience. Not everybody our age, I guess, grew up watching the Vietnam War, and all of that, but it’s just a totally different place, even though it’s communist, you know, politically or whatever, the people are so happy. They’re very nice. We were only in Hanoi because we spent most of our time in Thailand. But I mean, food was good. The place is clean. Everybody is helpful. It was just really fantastic, beautiful country.

And then we went to Bangkok, Chiang Mai, and Phuket, Thailand. Big part of the trip was, I’m a scuba diver and Phuket scuba diving was on my bucket list. One of my last two bucket list scuba places. And so I got to go scuba diving. My younger son got certified just before the trip. Thailand was just great. I don’t have to go back to Bangkok. It’s got 10 million people, and it’s loud and noisy and whatever, but the food was really good. Chiang Mai is a much nicer kind of town and city in the north. And yeah, it was just fantastic.

 And then we spent the last two days in Seoul, Korea. It was the end of November, so it was much colder up there in the north, but the people were really fantastic. And we just had a great time. So, yeah, so that was our big, big trip two years ago. We’ve gone on a few others, but right now, it’s kind of back and forth to Costa Rica, getting our house there in order.

Todd Merrill:

Nice. Well, Neal, it’s been great having you here in the SkyLounge. And if people want to follow up with you after this, what’s a great way to get in touch with you on the internet?

Neal Miller:

Well, certainly I’m on LinkedIn. So, I have LinkedIn, and then I’m still on the TechCXO website, on the Meet Our Executives. I have a partner page there that has a contact information as well.

Todd Merrill:

Well, great. Thanks, Neal.

Neal Miller:

Thank you, Todd. I appreciate it.

Todd Merrill:

Bye for now.