Originally printed on Noozhawk:
Catalyst for Thought is a local nonprofit organization with a goal to advance the community by educating and motivating individuals to create, develop and act on their entrepreneurial ideas. Through its MINDS series, Catalyst for Thought seeks to create a unique synergy between featured speakers and a small group of local entrepreneurs to empower each individual to help create solutions that affect society and inspire others.
Mike Pfau recently engaged an intimate crowd in a discussion about his experiences, ranging from business activity and formation to mergers and acquisitions. Pfau offered a wealth of stories about his experiences in business and legal ventures that illustrated the strategic steps he believes every entrepreneur and business owner should be aware of in order to maximize control and success.
Pfau prefaced his talk by humbly admitting: “I don’t have a lot of wisdom, only experiences to share with you.”
His professional experience began after earning a law degree from Boston College Law School and a Master’s of Laws in Income Taxation from Georgetown University Law Center. Afterward, he was admitted to practice in Connecticut in 1979 and in California in 1986. Pfau worked tirelessly to prove himself in the early years of his career, and after receiving a disappointing review and bonus for his efforts, he made a significant realization.
“At that moment I realized the importance of acknowledging and listening to people and paying attention to the reactions of everyone around you,” Pfau said. “I was able to step back and mature quite a bit.”
It’s easy to understand then, why one of his favorite quotes is, “In order to be heard, you must first learn to listen” by Steven Covey
Pfau went on to found Schramm & Raddue as well as Reicker, Pfau, Pyle & McRoy, where he currently focuses on the representation of businesses and individuals in their corporate, securities, tax, real estate and other general legal matters. He also provides general counsel services to technology, manufacturing, e-commerce, real estate and service businesses.
Pfau is very active in advising technology startup companies, and is a founding board member of Venture Investment Partners, a group of angel investors that invests in startup companies based in the Central Coast. He also represents the leading real estate firms in the Central Coast in their acquisition, financing and leasing transactions, and is an adviser to the Technology Management Program at UCSB’s College of Engineering and a member of the Board of Directors of the UCSB Economic Forecast Project Project.
“I love the creation of value that bright and energetic business people bring, and the effect that has on personal interactions,” said Pfau, adding that he is constantly inspired by the excellence and achievement around him. Pfau emphasized the importance of having quality partners, in business as well as otherwise, throughout life.
“I’ll take grade-A people with a grade-B idea, over grade-B people with a grade-A idea, simply because grade-A people will pick grade-A people to work with them and grade-B people always pick grade-B people,” he said. “They’ll never pick grade-A people because they’ll make them look bad.”
When asked about his rules for investing, Pfau answered immediately: People, people, people. Simple.
Once you have the people in place, Pfau outlined the next questions you should be asking yourself when starting a new company: What problem are you solving? Does your solution create a sustainable advantage in the market? Should I be putting time into this idea?
“It’s all about marketing,” Pfau said. “You can have a good idea — and there are a lot of them out there — but you need to understand the value that people put on your idea. Don’t be a technology searching for a problem to solve. Have a problem, then go out and find the technology to solve it.”
Pfau talked about how the most important lesson in business is The Founder Who Won’t Let Go. This is a lesson he learned through working with many different people and companies over the years, and unfortunately even if the company has a great idea or technology, this issue can destroy value and pervade every other issue in the company.
“The No. 1 rule in business is that everyone’s interests should be parallel,” Pfau said. “When interests don’t align, that’s when problems occur.”
He said many mistakes can be traced back to problems with company founders, as it’s easy to get encompassed by an idea or technology.
At the end of the luncheon, Pfau left the audience with a few final thoughts:
“When it comes to founders, remember that it’s OK to rearrange the deck chairs from time to time,” he said. “It’s inevitable that dynamics and roles are going to change along the way. Always remember that failure is acceptable. Just make sure to learn from your mistakes.”