Spinning a Product out of a Company. An Interesting Journey

Yesterday, Dave Gion joined us as the speaker for our monthly BIZ networking event. Dave told a great story about his trials and tribulations in spinning a product out of the Weitz Construction company and forming his own company, Canvis, LLC. Gion provided the audience with a series of lessons learned dealing specifically with spinout issues.

A Different Kind of Startup

What made Gion's presentation especially interesting is his background. This is not the first company Gion has started. Gion is a serial entrepreneur who has been through traditional startups in the past and because of this, Gion brings the perspective of someone who knows how startups work. Much of what Gion related were hard learned lessons he did not expect going into this spinout.

For me, the most important lesson to be taken from this is the difference in pace and perspective the various parties have in a spinout. Depending on the company you are spinning the product out from, the motivations are widely divergent. The entrepreneur is looking to get the product spun out and the company up and moving. The management of the company, which the product is being spun from, is another story. The people in this role have a duty to make sure they get the most from the divestiture. They must determine the value and the terms of sale. They must deal with the contracts and issues that arise. For many, this is new territory and their tendency is to move slow.

Tips for Entrepreneurs

• S/he must set the agenda
• S/he must drive the schedule
• S/he must manage all of the action items to completion
• S/he is not the center of the universe for the rest of the parties

Finally, remember that the entrepreneur must continually assess the value of the deal. As these transactions take far more time than desired, the value of the product being spun out may change substantially during the process.