Dorrance Lamb has been an advisor with Circle Optics since our Luminate Accelerator participation in 2019. Having taken three companies public and a deep commitment for startups to have a solid financial foundation, we are fortunate to have his expertise as we design our scale strategy.
Dorrance Lamb provides business consulting services including business strategy, management support and financial management to early-stage manufacturing and technology companies. He previously served as CFO of Performance Technologies and has taken three companies public. Dorrance has worked with Circle Optics since our Luminate Accelerator participation in 2019.
What can we learn from your experience taking three companies public in three different industries (banking, software, hardware/software) and how do you apply this experience to early-stage companies such as Circle Optics?
While the business dynamics of these companies were very different, there are universal principles upon which businesses are built. Management needs to establish business goals and the ability to measure their performance relative to those goals. They need to be able to communicate their unique story and the potential of their business to their staff, potential customers and investors. They need to establish a foundation for generating accurate financial information and reporting. Creating the ability to measure and forecast cash flow is also critical. These are just some of the basic principles a business needs to focus on that are absolutely essential regardless of the industry.
What are the key metrics early-stage companies use to measure their performance?
In the world of startups, one of the most critical aspects of the business to monitor is cash flow. Cash flow is a paramount metric that demands constant attention. At Circle, we project revenues and expenses at a detail level for eighteen months in advance. We look at each engineering project and forecast the revenue and associated salaries and expenses by month. Weekly meetings focus on timelines and deliverables to ensure we stay on top of each project and related expenses. We constantly update the cash flow forecast based on changes in the business. We use the cash flow forecast to manage the business on a daily, weekly and monthly basis.
Of course, “sales” is the number one objective of a business but if I were to suggest a key metric for early-stage companies, it would undoubtedly be cash flow—it’s the lifeblood of their financial stability and growth.
During our six years in business, Circle Optics made an important pivot from focusing on the entertainment industry to military applications with our 360 camera systems. Tell us about a critical pivot at Performance Technologies and what we can learn.
In the mid-2000s, 3G was the prominent telecom technology for cellular networks. At that time, more than 70% of Performance Technologies’ business was focused on providing telecom infrastructure platform products to this market. At that time also, in the telecom labs around the world, 4G LTE was in development. It was clear to our management team that the 4G LTE market would not yield the same returns and gross margins as the 3G market.
After significant research and analysis, we made the decision not to compete in the 4G LTE infrastructure platform market and to venture into a niche market segment of the 4G market. We eventually navigated this challenge by transitioning our Canadian subsidiary to developing Diameter products for this 4G LTE market. This revitalized our business and allowed us to continue growing. Our Canadian subsidiary ultimately became an attractive aspect of our business when we decided to sell it. In essence, being open to change and seizing opportunities for transformation can lead to long-term success, even in the face of significant challenges.
What Gives You The Most Fulfillment As An Advisor?
I’ve been very fortunate in my career and I genuinely enjoy giving back by working with the management teams of early-stage businesses to help them solve problems and grow their businesses. Sharing my own experiences and ideas with these entrepreneurs is something I’m truly passionate about. The process of establishing a solid financial foundation, watching the team meet the challenges and successfully growing their businesses is very meaningful and rewarding to me.