Three entrepreneurs in the high desert of New Mexico are shattering an important myth – that there is not enough talent in the interior of the USA to create world-class companies.
About 80% of venture capital is invested on the coasts, reflecting the conventional view that aside from a few exceptional places – e.g., Austin, Denver, Salt Lake City – the land between the oceans is a wasteland for entrepreneurship. The three myth-busters come from very different places: Andy Lim, from Borneo and later Taiwan; Chris Ziomek, from the San Francisco Bay area; and Terry Dunlay, from Pittsburgh. What better place to prove their point than New Mexico – the state whose problems of drugs, crime, and poverty were made famous in the TV series “Breaking Bad”?
These three entrepreneurs show how to find local talent in unlikely places – and to supplement it selectively with out-of-region people.
Andy Lim created Lavu, maker of a mobile, point-of-sale software platform for restaurants. Lavu is used by more than 20,000 restaurants in 89 countries. Now run by Ohad Jehassi (from NYC), Lavu employes 110+ people in Albuquerque and 50+ outside the State.
Where did the talent come from? Most of Lavu’s hires were students or recent graduates, without experience, recruited via word-of-mouth. Andy Lim found good people by going to a computer science class at UNM, and at the end of the session raising his hand and saying, “I am looking for the best programmers. If you are interested, please see me.” He conducted the first interviews in the hallway right after class.
Lavu’s very best programmer came from Taco Bell. That young man was doing various managerial tasks but had a passion for programming – something he had done since childhood. No one had given him a chance. He worked hard at Lavu, created the front-end for the POS platform, and became the founders’ third partner.
In 2015, Andy and his two partners received a $15 million equity investment from Aldrich Capital Partners. The investors brought in a new President, Ohad Jehassi – who has achieved dramatic results, including a sales increase of nearly 100%. Ohad has also increased employment in Albuquerque, from 40 people to 110. But he has had a hard time finding all of the skilled people needed for this high rate of growth. So, he has looked outside the State, found what he needed, and opened new Lavu offices – in Miami and India – to employ 40 more people.
Andy Lim is now working on his second start-up in Albuquerque: Addmi.com, an online business events platform.
Chris Ziomek created ZTECH Instruments, designer and builder of devices to test components used in wireless electronics, such as cell phones, routers, and GPS products. Most of Chris’s hires were hardware and software engineers. The chosen candidates started out as interns from universities and colleges in New Mexico. ZTEC provided on-the-job training with real projects right away. The company ended up hiring many of the interns. ZTEC employs 20 people in Albuquerque, and 10 outside the State. Most of Chris’s managers today began as interns years ago.
In 2013, Chris sold ZTEC to a subsidiary of Teradyne for just over $20 million, providing a return of 7x to the ZTEC investors.
Now Chris is running his second start-up in Albuquerque: Build with Robots, which is developing applications for collaborative robots (“co-bots”).
Terry Dunlay created a biotech company called IntelliCyt – designer and manufacturer of high-throughput cell-analysis systems, used in “flow cytometry” – to facilitate the study of cells, to reveal the complex biology of diseases at the cellular level. Terry launched the company with technology he licensed from the University of New Mexico Cancer Research Center.
Terry found his first IntelliCyt employee in an unlikely place: Abiquiú, a village of 500 people, 110 miles north of Albuquerque – famous for being the residence of the painter Georgia O’Keeffe. There, living off the grid, was an artist who had formerly been in marketing and sales at Becton Dickinson. Terry persuaded her to lay down her paint palette and return to flow cytometry.
His second hire was a software programmer who had the wrong background and no managerial experience. The fellow had come from being a software engineer at Sandia Labs and earlier from the computer-game industry in Silicon Valley, but he had never worked in the life sciences. He got the job at IntelliCyt because he was smart. That decision paid off: today the former computer-game programmer is IntelliCyt’s VP of Engineering.
Terry found key executives outside of New Mexico. He convinced his CTO and CFO to move to the “Land of Enchantment.” Terry was not able to recruit the right VP of marketing to move from the Bay Area. So, he compromised: he hired some one from Silicon Valley, and he opened an office there. This seemed risky and extravagant at the time, but it proved to be worthwhile.
In 2016, Terry sold IntelliCyt to Sartorius for $90 million, providing a return of nearly 4x to the IntelliCyt shareholders. IntelliCyt employs 50 people in Albuquerque, and 30 outside the State.
Now Terry is advising other local entrepreneurs in New Mexico.
New Mexico is an example of the potential that lies between Boston and San Francisco, between Austin and Chicago. The small-scale eco-system works in favor of entrepreneurs. The support network is easy to access, and simple to navigate. Start-ups in New Mexico get valuable attention and support because they stand out.
Ries Robinson is a native New Mexican who has founded four local companies, including Lumidigm (biometric identity management solutions), which was sold to Assa Abloy in 2014 for more than $60 million. Ries reflects, “You can get a lot of things done very efficiently in New Mexico. There’s no better place to be through Series A or B. The cost is 30% below that of California in general, and 50% below that of the Bay Area.”
Bill Bice, general partner with the Albuquerque-based Verge Fund, adds, “If you hire for attitude and aptitude, you will find amazing people here. You can afford to invest in these people, because you will keep them. On the other hand, if you are looking only for a narrow skill set that you need right now – but may not require six months from now – then you may not find what you want.”
The implications for the rest of the country are significant. For managers, the moral is that you can thrive outside the traditional centers of business, by adjusting your approach to talent. For venture capital investors, the lesson is that you can make excellent returns by backing the right entrepreneur – the likes of Andy Lim, Chris Ziomek, and Terry Dunlay – who will find talent, even in the desert.
Kevin R. McDonald is an investment banker in Albuquerque. He has had no business or financial dealings with the companies mentioned in this article.