Milwaukee Investor Mosher on WI Startups, Twitter’s Business Model
George Mosher has never really enjoyed golfing, and for that Wisconsin entrepreneurs should be thankful.
Rather than fading into the sunset after he and his wife sold their $125 million business, National Business Furniture, in 2006, Mosher has become one of Wisconsin’s most prolific angel investors.
The 74-year-old Boston native has made 162 angel investments, mainly in companies based in Milwaukee and Madison, WI. Mosher still holds a stake in 100 of those startups, representing $13 million in investments, he said. Of the remaining 62 investments, which totaled $9.5 million, 17 led to exits in which he received $15 million, and 45 were losers, for a net gain of $5.5 million, he said.
The successful exits include Prodesse, a Waukesha, WI, biotech firm that sold for $72 million in 2009.
His investment activity earned him a spot this year in the Wisconsin Investor Hall of Fame, an honor bestowed by the Madison-based Wisconsin Technology Council and its Wisconsin Angel Network.
This week Xconomy sat down with Mosher, an Xconomist. The conversation in his 18th floor corner office overlooking downtown Milwaukee turned to improving Wisconsin’s entrepreneurial environment—and why Twitter’s business model perplexes him.
The following is an edited transcript.
Xconomy: What’s different about today’s startup environment than when you started National Business Furniture in 1975?
George Mosher: What’s happened in the last five years is the sense of malaise on the United States has just made it much harder for new enterprises to get over the hump and be successful.
It’s hard to say fully why, but a lot of it is that in this economy…people are buying more from companies that they feel comfortable with and are less inclined to do new things just because it’s new and different.
Now…there are some exceptions to that. The people that are truly successful are where software is making it possible to do some things. But even with software, the younger [entrepreneur] somehow has the mentality that stuff should be free. It’s not the sense that we’re in business to make money.
The best example for me is Twitter. …It’s incomprehensible to me that people who use it regularly wouldn’t pay $2, $5, or $10 a month to be able to use it, and nobody’s asked them to.
Nobody’s willing to take the chance that they might turn off their Twitter accounts. In my mind, if they had a $2 student rate, [and] $5 for the first three months [for everyone else], I can’t see the people who are using it all the time not being willing to pay for it. But that seems to symbolize the mindset of younger people. I would recommend younger people read the book about Steve Jobs because Steve Jobs believed heavily in charging for what he was doing when he had a better product.
The other problem that people have today that makes it harder is competition can come from anywhere. Anyone can look up the Internet on anything, and as soon as [a company] seems to be successful, then you get a whole swarm of competitors coming around.
X: What are some of the challenges for Wisconsin entrepreneurs?
GM: The number of successful exits [in Wisconsin] is pretty small. [Editor’s note: Click here for an Xconomy analysis of Wisconsin exits since 2008.] Most people, if they’ve wound up making [a successful] angel investment, they’re going to be prepared to make additional angel investments. If they get unsuccessful or it takes a long period of time [to exit], the second one is going to be a smaller investment. Or they may get an initial portfolio but then they’re going to wait to see what happens. Whereas if you go to California, a lot of people have made money on their investments, so there’s a pool of money [for] new investments.
If there were more of a track record of success [in Wisconsin], then there would be more people making investments. My particular reason for doing this is I’ve made some money, and I thought I can help more people by helping businesses get started, rather than philanthropically [giving] some money away. That’s not going to grow things.
X: What’s one piece of advice for Wisconsin entrepreneurs?
GM: What I’m now starting to preach is…they really need to put their efforts into selling the initial alpha and beta customers. …What they need to do is approach and work with the people that are going to use the product—people who are willing to pay for it—work with them to iron out the bugs.