Shades of Silicon Valley: Q&A With Michael Pfau

Michael Pfau, photo by Daniel Dreifuss for Santa Barbara Independent.

Michael Pfau, photo by Daniel Dreifuss for Santa Barbara Independent.

Representing tech-sector businesses for more than 30 years, attorney Michael Pfau, who is a founding partner of Reicker, Pfau, Pyle & McRoy LLP, provides a unique vantage point of the Santa Barbara scene.

HOW HAS OUR TECH SECTOR EVOLVED? The same way it did in Silicon Valley. What happened was that the university attracted some real national quality talent to its faculty. Many of those people were entrepreneurially inclined, and they exported technology from the university and formed companies. Some of those were sold off and were successful; they put money into people’s hands.

Over time, you have a collection of technology, engineering, and management talent that has some money in its pocket and wants to do it again. One success begets two successes and four successes, which beget eight successes, and it just evolves naturally that way.

In parallel with that, we had the build-up of infrastructure to support these companies: angel investing, like the Santa Barbara Angel Alliance; venture firms like Kevin O’Connor’s ScOp Venture Capital and Entrada Ventures; and law firms and CPAs that are used to dealing with these things. It becomes a self-perpetuating cycle.

ARE TECH ENTREPRENEURS DIFFERENT FROM PEOPLE WHO START OTHER KINDS OF BUSINESSES? Maybe, but the answer is probably no. The analysis for any opportunity is (a) what is the problem you are trying to solve? (b) how do you solve it? and (c) what is your sustainable competitive advantage? In other words, why are you different from everybody else?

You have to be solving a real-world problem. What they all have in common is they believe they can go through brick walls, and they will do it to get to their outcome.

SO ENTREPRENEURS ARE ENTREPRENEURS THEN? It’s just grit and gristle, and in the end, a disciplined approach to business always pays off. The technology guys are more successful because they’re building companies with what we call fatter revenues — lower expenses to higher net revenue — so they are more profitable, and that’s why people think that maybe there is something better about it. But no, I’m just selling something or creating something that can be sold as more valuable.

reickerpfau.com

Tech Talk Special Issue for Santa Barbara Independent, published October 1, 2020.

Tech Talk Special Issue for Santa Barbara Independent, published October 1, 2020.

 

Tech Talk Special Issue for the Santa Barbara Independent, originally published on October 1, 2020.

To read the issue as it appeared in print, please click here, Tech Talk 768_10_01_20