Worthworm Wisdom

Insights for entrepreneurs & investors

Getting to Know the Team Behind the Green: An Interview with Paul Jackson

Posted by admin on 2014-01-07 03:41:01

Recently Worthworm’s founder, Paul Jackson, was interviewed in order to get to know what makes him tick and hear the story behind his impetus for starting this venture. Learn more about Paul’s background, how he came up with the idea for Worthworm and his plans for the company.

Worthworm’s founder, Paul Jackson, may not seem like an entrepreneur at first glance. Paul has a background in angel investing, aerospace engineering, and most recently in business engineering. Although he comes from a different world, Paul discovered an overlap between his individual passions and realized that he could help solve a powerful problem: helping entrepreneurs determine realistic business valuations and standardizing a portion of the due diligence or screening process for angel investors.

Question: You have a background in engineering, so how did you become interested in startups and business valuations? 

I started my career as a dynamics engineer for Orbital Sciences and a commercial space development consultant in Washington, D.C. Then, I founded Dynamic Labs, which was dedicated to testing and evaluating products in the early stages of development for commercial and military applications. During my time at Dynamic Labs, I became interested in the stock market and the underlying parameters of what makes a business successful, which led me to develop a risk analysis technique for credit-ratable bond offerings and funds.

Then, I sold Dynamic Labs and start a company, Integrus Capital, whose mission is to find languishing intellectual property from Fortune 100 companies that we can repurpose into new business uses. Our first transaction was with Honeywell. We licensed their D-Strut technology, which is a very unique vibration isolation and damping technology that was developed by their Space division and has been used in the Hubble Space Telescope since it was launched.

The second transaction is where I became interested in valuation. Business engineers at Boeing had developed and patented a set of Real Options algorithms, which is a methodology that tracks risk over time. I saw that it could be a great tool for an innovation portfolio, so I invited Alan in to help me apply the technology to a real-world problem. When I told him about it, he thought pre-money valuation was an ideal initial use for Real Options because we could use it to help early stage companies evaluate the risks and opportunities of their venture and manage their company for value. That’s when we partnered up, purchased the technology from Boeing, and founded Worthworm.

Question: So how does Real Options relate to valuation?

I thought that we could pair Real Options with valuation, which correlated with my beliefs that investors should do what they can to understand the parameters that support an investment opportunity.

I like to compare business decisions to dating. You date a lot of people before you get married. At a certain point, you make a choice, and your choice has long-term ramifications. There is risk associated with the people you did and didn’t choose. While I don’t suggest that you try this on your next date, the principal is that the more you can understand risk and the possible paths to success you could take, the better you will be at making decisions.

That’s what Worthworm is ultimately about. It’s about solving a real-world, business problem (valuation) using financial engineering and an analytics approach. Worthworm not only gives entrepreneurs and investors a more credible valuation, but it also helps them identify the things that affect valuation as a whole so they can improve their worth and have better conversations about valuation. It’s not about a number; it’s equally about how you got the number and how it changes thereafter.

Question: Very interesting. Do you have any other companies or ideas in the works?

Yes, I’m an owner or manager of several other ventures, including Integrus Analytic Systems and D-Strut. These entities are managed by my company, Brite Ventures, and I am the CEO and President of Integrus Capital, the holding company for our businesses.

I’m hoping to use what we learn from Worthworm to create new products and companies in the future. I plan to study the data to learn things like: What are the top 100 questions that are correlated to value? What’s the threshold of risk where the probability of success goes up? Where is that level of maturity where the probability of success goes up? This information will be key for our next product, which has been bouncing around in my mind. It will probably be a service that furthers our overarching goal to assist Fortune 100 companies with repurposing their under-commercialized knowledge and helping investors make more informed decisions.

Question: It would be so valuable to have a way to better predict a company’s success and make more informed decisions. What other projects are you involved with outside of Worthworm and your other ventures? 

I am not in the prediction business, but with U.S. failure rates for angel portfolio investments in excess of 50%, I contend we can do better. I want to build products to improve this failure rate. Just a little improvement makes a large difference. However, as an aside, I’m now on the STEM Advisory board at Grand Canyon University and have been involved with ASU’s astronautics and aerospace program for a while, so I’ve been working with educators a lot recently. 

I am interested in ways to educate engineers that will make them useful for society. I think to myself and ask others, “How could we adjust our teaching methods to produce a better outcome for our students and community?” 

What we know from building successful companies is that investment is a cutting process. Like in dating, not all contenders make it to the finish line. Interestingly, it’s the same process that pervades all the sciences, including theology. Is there a way to connect student internship and capstone projects with real work opportunities so they can safely fail sooner and learn faster? And would this create a better engineer? The data suggests so, and I’m really looking forward to seeing if we can make that happen.

Question: Thanks for your time, Paul! Where can people reach you if they have more questions? 

They can get in touch with me at pjackson@integruscap.com.

And if you’re curious about how much your venture could be worth? Or looking for a world-class teaching tool? Or are you trying to do due diligence on potential deals?  Then try a subscription to Worthworm, and let us help you.