Richard Katzman, Fmr Chairman and CEO, KAZ Inc, Investor in and Advisor to Early Stage Cos
Experienced CEO and Board Member with a demonstrated history of success. Skilled in Consumer Products, Business Development, Management, Mergers & Acquisitions (M&A), startups, and Leadership.
Podcast
Overview
Mr. Richard Katzman is an US based advisor to early stage companies, a board member of a forum merger and on the advisory board of Brown University Nelson Entrepreneurial Centre. He is also an angel investor and was the former CEO and Chairman of Kaz Inc.
Discussion :
What is Mr. Katzman’s investment philosophy and portfolio preference?
Initially Mr. Katzman’s primary interests lied with consumer end products and he vividly remembers his initial angel investment in a security webcam company. But of late he has been associated with a large angel group in the US which has expanded his range of targeted investment portfolio. However early and small investment companies still constitute a substantial portion.
What are the metrics for measurement?
For him there is no hard and fast rule for comparing companies instead he relies on gauging the market traction of companies like sales of previous months, checking revenue statements but since the small investment sector hardly possesses all these well audited documentations thus he also has to rely on his prudence and take leaps of faith based on the vision and skillset of the entrepreneurs. He however refrains from going into unchartered territories that are way beyond his expertise and experience.
On Theme vs Team?
Although as an individual Mr. Katzman is more influenced by ideas but when it comes to investment, he prefers his team as they provide alternate perspectives.
On Sole Founder and Co-founder?
Mr. Katzman weighs in on this one seriously. For him a lot depends on the partnership percentages shared by the founders in determining the relationship. The leadership part constitutes the steering wheel of any firm so it is important to have clarity at the top to avoid unnecessary impedances. He quotes his brother who is an entrepreneur who believes that it is better to build a strong team with the necessary skin and equity to thrive in the market than to have a visionary entrepreneur with no team to back up the ideas. And a lot depends on timing as well.
What are the most common mistakes that you see most startups committing?
Arrogance. Most promising startups tend to get oversubscribed at the early phase of their career especially if their ideas and work align to the market demands. This brings in investors and all kinds of deal makers which brings on the added hazard of whether to pay heed to the advisors or stack up the revenue. The latter bullish approach often leads to an atmosphere of self generated hype which leads to stuck investments and numerous other pitfalls.
When to scale up companies?
Mr. Katzman goes typically old school on this. For him when the cost of acquisition is less than the gross margin then scaling up becomes a good idea. However the current trend of relying on unproven marketing and advertising structures without the existence of a strong supply chain or unconfirmed response rate is a very risky affair and numerous companies have gone into pitfalls because of this. He sticks to his old school philosophy but combines it with contemporary market prudence.
How to build a consumer durable brand?
He talks here about his initial days at Kaz and the subsequent journey of the brand from surviving to thriving in the pharma sector. From building it from the ground up to one of the biggest fishes in the pond by touching a substantial market share. To create a consumer durable brand he suggests that one can either go the licensing and regulation en route to acquiring consumer product line and subsequently leveraging that into creating your personal brand; Or leveraging off a brand that already has established equity with the customer base. Further brand extensions and product additions are always available.
On unicorn and present valuations
Mr. Katzman is also a bit awestruck seeing the present amazing levels of valuations. He credits it to market variables like increasing interest rates, strategic acquiring, multipliers apart from the indispensable and time tested constants like skilled human resource additions and sustained growth and profitability.
Profile
Experienced CEO and Board Member with a demonstrated history of success. Skilled in Consumer Products, Business Development, Management, Mergers & Acquisitions (M&A), Start-ups, and Leadership.
