Mr. Frantz: I want to start the Q&A with a question of my own. Phil just told us
his worst decision. We certainly know Deepak’s toughest decision,
having to fire his own wife. Since you guys are all being honest,
why don't we take thirty seconds and each of you tell us the best
decision you’ve made?
[Laughing] I think that probably the best decision Blackboard made
was letting The Carlyle Group invest in us. Honestly, the single
best decision we made was probably to take venture capital money.
That is what allowed us to fuel the growth of the company and take
advantage of what was, at the time, a nonexistent market base,
bring the product to market, and bring it from an operational to a
sales perspective. As far as the worst decision, I probably can't
define just one bad decision because we make bad decisions almost
on a daily basis. We just kind of hope that they even each other
out to the slightly positive, but there is nothing that stands
Personally, the best decision happened when I was in graduate
school. I was being a good student and thinking that I really knew
how to do this, so I was thinking about going after a Ph.D.
program. At the same time, I got a consulting job as a graduate
student and got paid $25 an hour. I quickly found out that making
money was a good thing, so I dropped my Ph.D. plan and went on to
this entrepreneurial route, which was the best decision in my
Later on, a good business
decision was the time that I had the opportunity to sell my
business and did so. That was, I think, a very good decision. As a
person of Chinese descent, we were told to keep it forever—you
build a business and hand it down to your children. It was a
difficult decision for me to give it to somebody else for bigger
money. Investing in Michael and Matthew at Blackboard was another
A bad decision. There were
a lot of bad decisions I made in the past. The most difficult ones
were related to people, especially friends and family. As you are
doing business, if you have involvement from friends and family,
it is very difficult to tell them that it's not working out.
Actually, it's not so much a decision of telling them that it is
not working out, it is more of a decision of inviting them into
the venture when you are not sure where you are going. The lesson
that taught me is to make decision ahead of time. Know what you
want to achieve, then evaluate options, and always be looking at
the results. Think about what the outcomes might be so that you
can make the decision earlier and you don't have to fix it later.
We know we all try to do this, but I am actually trying harder now
because of those lessons. Whatever decision I make, I try to look
further down the road as far as possible, so I don't have to
Mr. Hathiramani: I want to clarify something. The second employee who I terminated, my
wife, I actually still report to her. [Laughing] Jokes aside,
family support and her support have been instrumental in my
success, and I definitely owe that to her.
The best decision I made
was recognizing the importance of bringing able players onto our
team and making the change in the last two and a half years. I
cannot emphasize how important it is to have the right people in
the right place on a management team—somebody you can trust,
somebody who has the drive and desire to succeed, as opposed to
just working a job. That has been an instrumental decision.
If I look back, the worst
decision I made was that I waited too long to make that decision.
I should have done it two years earlier. Hindsight is always
20/20, but I think it is imperative that we are always looking for
star performers on our teams; people who have that drive, who have
the desire to succeed, and who can help you succeed, because it is
a team effort. I am just one spoke, and you need those other
spokes to support that wheel.
Probably the best personal business decision I made was in 1989
when I left a relatively secure technology position and went to
work for Mario Morino, this crazy entrepreneur from Virginia. For
those of you who have heard his stories, they are actually far
worse than how he's reported them, at least as I lived through
I think that all of the
best decisions I have made have been around people. The difference
between a 9 or a 9.5 performer and a 6 or a 7 performer is
dramatic. For me, the most personally gratifying decisions were
recognizing somebody in the organization who was a 9 or a 10 and
moving them into a position where they could fully blossom. To me,
that is the most personally and professionally gratifying.
Conversely, the worst decisions I have made were around people,
too. You’ve heard conversation about markets, and money spent, and
products that we've launched, but at the core, for me, the best
decisions I've made have been around people, and the worst
decisions I’ve made have all been around people, as well.
You talked about bringing in Vice Presidents of Sales. How do you
find these people? Ours is a tech company. We have the techies,
but we don't know how to find the top sales guys.
One of the main things we are always focusing on is recruiting
sales people. I like to say that a lot of times we come to think
of ourselves as a technology company, but, fundamentally, we are a
sales company. We do two things simultaneously. One, we are always
working with professional recruiters. You need to, because the top
sales people are using those recruiters and they are probably not
looking for jobs right now; they are in existing positions.
Usually, for quite obvious reasons, the company recruits from
local job postings or local community, but for salespeople we rely
heavily on recruiters.
You should also take a look
at the competitors in your space or companies that are selling
similar products. Not necessarily their VP of Sales, but they may
have top performers who are looking for a VP of Sales opportunity.
Those are the primary places you can find your salespeople.
In the early stages, you cannot afford to hire recruiters, so you
have to look for what is available to you and pick the best from
it. It's all hard work. It’s coming to an event like this, waking
up at 6:00 in the morning, trying to meet as many people, and
getting to know them as well as you can. You develop a long list
of friends, then somebody is going to be right for you themselves
or they are going to suggest somebody else to you. This is all
free. This is why Netpreneur is here, so we can do networking and
bringing on people who can recommend other people. That is exactly
what we did. I've known Fran Witzel for six years. He introduced
me to Michael Chasen, and now I've known Michael for years. I
picked the right time to ask Fran a question. “Would you like to
be our VP of Sales?” He asked, "Are you serious?" I said, "I'm
serious." Then he said, "Yeah." That was the decision, but it took
six years of investment, of knowing a lot of people, and weighing
a lot of options. That is a success story in my book.
One other comment on that. We think Netpreneur is great; we also
meet a lot of people through connections in the community, but I
don't think that a company can necessarily say that you can't
afford recruiters. It may cost $20,000+ to bring in a great head
of sales, but that person will pay for themselves. You can't
afford not to. We believe that sales people are the most important
people in the organization, and it does take a higher amount of
investment to make sure you bring in the right people.
Mr. Hathiramani: We are always looking for good people. Finding good people is always
critical in the success of the company. If we find somebody good
and we don't have a place for them, we always keep that in mind.
If we have an opportunity to bring a person in, we find a place
for them in the company, because I would like to echo what Michael
just said—once we find the right person, they will create the
success you want them to create. They will make it happen. That is
instrumental. When recruiting for key positions, we tend to take
that view. We always believe that if you don't find the right
person, don't hire. Wait. Hiring the right person is critical. We
tend to use recruiting agencies, even though they are extremely
expensive, because we know that if they find the right person,
they will deliver. Over the long term, you will get a better
I'll answer that a little differently. If you are a founder of a
business and you can't sell, hiring a salesperson is not going to
solve your problem. I hear this a lot from people who say, “We are
technology people. We have what we think is a really good product
but we can't figure out how to go to market, so we'll hire
somebody senior in sales.” I would argue that you really have to
understand what it is that you have and what your value
proposition is, and you need to go to market for some more
customers. If you think that recruiting somebody to fill that void
is going to work, it generally doesn't, at least from the
experience I've had.
After all, what kind of
person are you going to hire? Are you going to market with your
product direct or indirect? Are you going to hire a young person?
Do you want to hire somebody who has experience building US
offices? Do you want somebody with experience bootstrapping a
technology company with a limited amount of marketing material and
a limited amount of dollars spent? I think that people often go
down a formulaic road when it comes to recruiting salespeople, and
I think the formula is often broken. Before you look at how you go
after inside or outside sales, or using recruiters, or friends or
otherwise, you have to fundamentally understand why somebody would
want that product. Whether you are a technology person or not, you
have to know what it is that you are representing to the customer
in that product. You have to know what's going on. Founders
are sellers. If you are not, then that is an issue.
If you read the books about time management, they say that you
should tackle the thing that gives you the most anxiety first. I
find myself pulled in so many different directions, and, when I do
tackle that project first, I get so involved in it that other
things just get left aside. How often do you reorganize your list
of priorities, and how do you shift back and forth and multitask?
I'm very good at doing that because I'm a golfer. I schedule my
golf first. Actually that is true. I'm not lying. I usually commit
myself to playing one round of golf per week. I put that on the
calendar with options that I can change to another date depending
upon the weather. Then I shift to my other job. Because of that, I
usually work either early in the morning or very late in the
evening, trying to make up for that hobby and priority. I commit
to playing golf and I commit to being able to shift things around
to make up for the hobby I have. I'm actually proud to announce in
the office that I'm going golfing, not sneaking around. Actually,
I did that before. I went out to play golf, didn't tell anybody,
and came back to the office after I was done playing, but I forgot
that I had left my golf glove in my back pocket. I walked around
like that in the office for the rest of the afternoon. After that,
I decided that I was going to be honest with my schedule and just
work harder to manage my time.
I don't know if this is useful for anyone else, but, primarily,
one set of activities takes half my time, which is the general
running of the business—examining sales trends, dealing with
clients, analyzing the management team—and, usually the other half
is taken up by one special project at a time. I usually just focus
on one item of work and get that to about 85% completion before
picking up the next major product and working on it. Usually,
those projects end up coming back to back, so, I just divide
myself 50/50 between the daily running of the operation and one
major item going on at a time.
Mr. Hathiramani: My toughest challenge today is balancing my personal and work life.
That is the most difficult challenge that I have.
The question I constantly
ask myself is: Is what I'm doing going to make a difference three
years from now? Is it going to create value for the company? Those
are some of the questions I ask myself when I prioritize what I
I try and spend a good
portion of my time in either a sales role or a strategic level,
and trying to spend some portion of my time, at least 10%-15%, in
a learning mode where I'm learning from other people, from other
things, or from an educational institution. I try to spend at
least 30% of my time with clients. I think it's absolutely
important that I'm in front of clients talking with them.
Balancing personal and work
life is a major challenge for everybody involved. This is my
personal opinion: As a society, if we do not focus on quality of
life, we have lost everything. It's very difficult when my five
and a half year old son asks me, "Are you coming home in the
evening, or are you coming home at night?" That is when you
recognize that you are spending too much time away from home.
I usually wake up in the morning at a quarter to six and go
through the five most important things that are going to add
revenue or add margin to the business. At midnight, I beat myself
up about what I didn’t get done, then go to bed.
I think a certain amount of
chaos is just natural. It is just a given. I think that the more
time you spend in front of customers, the more time you divorce
yourself from the “non-value-added” activity of business, the
better. It's hard to say what non-value-added activity is, except
to say that I'm convinced that it often happens around stupid
things. The reality is that there is a lot of chaos. It is hard to
prioritize. It is often difficult to sort through those five most
important things, but, if you are spending the majority of your
activities around how you interact with the customer base, with
your prospects, with the core pieces of your business, your
development team, your services team, or the strategic decisions
around contracts that are going to lead to other things, then I
think that is a good thing. The amount of time that you spend,
say, finding new conference facility space, is important, but it's
I'd like to follow-up on the VP of Sales topic. I am a CEO. I
think I'm good at selling. We know what our value proposition is,
but our firm is largely technical and we have just five and a half
of us. Four and a half are doing technical development, including
me. The rest of my time is with the sales and the administrative
things. I know what makes people buy things, but I don't really
understand channels and I don't have time to explore the whole
channel thing, or to get the best marketing materials together. Is
that a place that makes us ready for the VP of Sales?
I don't know if you are specifically at that size that you need a
VP of Sales, but it does sound like you need a dedicated
salesperson. We did the selling early on, and the interesting
thing we found is that hiring a salesperson only increased us
doing the selling. Having the salesperson actually forced us to
sell more, and now we had someone else who pulled us along. While
we are doing other things, there is a lot of prospecting going on
and pipeline building, and those are the things that a lot of
founders don't necessarily get to. They are not as diligent about
making 20 cold calls this week and setting up 10 random
appointments hoping to get in someone's door. That is why it is
good to have dedicated salespeople. You need to be careful. When
you are a small size, you don't need a VP of Sales because a lot
of times that person may think they are too high level. It sounds
like you should have one or two dedicated salespeople to build a
sales line, using yourself as a primary resource for working with
sales, closing them, and building the pipeline in advance.
The other thing we found is
that sales and channel sales are two fundamentally different
things. If you believe your strategy is going with channel sales,
you may want to find somebody who is more of a business
partnership development person. In direct sales, I am a big
believer that if you can't sell it yourself as a company, then you
fundamentally won't get someone else to sell it for you. We found
from our experience that channel sales are good, but only after
you've already been successful at selling yourself directly. Then
you get so good that you can easily train other companies to also
sell your product.
I agree with Michael, and I want to add that many of you may have
the same experience if you have full-time salespeople working in
your organization. My suggestion is to bring in the first
full-time salesperson early, not necessarily a VP of Sales, but
somebody full-time doing just sales. A VP of Sales is a different
topic. Then you have to bring in somebody who can work with the
management team, helping you look out for the strategy. But the
moment you have a full-time salesperson, you know that your
company is different, and it is going to be successful much
I'd just echo that you need a salesperson, not necessarily a VP of
Sales. Until you get a repeatable sales process, until you can
really figure out what works—is it channel, is it direct,
etc.—having somebody dedicated to work that problem with you is a
good thing, and that isn't necessarily a vice president’s title.
An interesting thing happens. Sitting on the venture side, when a
senior management team gets hired, they tend to propagate
themselves. It's almost like a virus. A VP of Sales hires regional
directors of sales, who hire regional managers, and eventually
they go out and get somebody who carries a bag. It's a little
unfair, but a lot of companies go through that exact process. Then
they realize that this is a direct sale, or it is complex and
strategic, not direct or tactical, and the price points are
different, and this sales channel that I have isn’t right. People
tend to propagate people who are like them. I'm a direct sales
guy. I like direct selling. I wouldn't know how to channel sell if
my life depended on it. If the business was a channel sale
business, then everybody that I would hire to build it would
probably not be very good at it. You see this happen a lot. You
bring in the sales organization and they fire everybody else
because they're going down a different direction. A great amount
of time, energy, and money gets wasted when companies haven't
really thought through what their selling process is and haven't
been more pragmatic about how they're going to go about bringing
in a team.
This question is to the investors. With the new tax law changes,
do you see investors more interested now in dividend returns
versus growth in companies, especially if they could get decent
returns in the same number of years and still maintain ownership
of their investments?
Different types of investors invest in different things.
Fundamentally, venture capital investors want economic return, but
have an element of growth associated with it. At least we at
General Atlantic are growth investors. The idea that a company,
through some other mechanism, is going to be able to unlock
financial transactions from the top is usually foreign to most
venture firms. I would argue that most of the venture business is
still about growth. It's about realistic growth. While it's been
reset with many firms, for those with a longer term focus, the
return horizon is extending and the risk profile is changing
because there is not this bubbling public market that didn't have
anything in its business plan. I think that what has changed in
the investor community isn't really oriented around tax laws, at
least from our perspective. What has changed is that the returns
are over a longer period of time, so you're looking for companies
that can survive and prosper over a longer period of time.
Ching‑Ho, do you want to answer that from an angel investor
Actually, I haven’t thought about this. It's a good question, now
that you make me think about it, but the answer is no, it doesn't
change in the early stage. The early stage investors usually
invest with passion in an idea that they'd like to get involved in
the business models. That is what makes the early stage investor
want to invest. I don't think the tax law changed that.
Can you talk about advisors, such as how you pick them and how it
changes from a very early stage as you start to grow?
I hate to keep talking about sales as the focus, but I think that
the best early advisors to get are ones who can help you with
sales, such as some of your first clients and people you want to
be your first clients. They are very helpful. Then, as you get
better known, you can look for other people to add areas of
expertise that you don't think are necessary full-time on your
management team. You want to have someone who understands how a
transaction process works and how the business works, as well as
other areas that may be relevant to your specific business which
you want to discuss with someone from a strategy perspective. I
think it's a great way to help with early sales.
Mr. Hathiramani: What we look for in advisors is individuals who truly understand our
business and our market and who will bring value to the company
through that experience. We have been fortunate, after searching a
lot, to have found the right people on our team. They have been
instrumental in steering us, and, trust me, they do not hesitate
to tell me that I'm doing a terrible job at times and setting the
course straight. We leverage them extensively. We have a great
relationship with them, and we rely very heavily on their
experience to help us and to guide us through this maze at
different stages of the company.
I see a lot of entrepreneurs and CEOs who put off decision-making.
They believe that over the course of time the ability to make a
correct decision will increase, and, I think, to some extent it
does. Can you talk about the trade-offs between the time it takes
to make that good decision versus speed to grow and scale your
I am very interested in this topic, and I used one word in running
my business ventures: balance. Balance means that you
develop what you have, what is available to you, and, at any given
time, you evaluate both sides to see what is the best decision for
each day. You are actually making decisions, or trying to make
decisions, every day to keep both sides balanced, so that you can
move yourself up and grow your business. That is how I do it, not
sooner or later. Try to get the balance, but you must know what
you have, what is available to you.
I don't think I ever made a bad decision too quickly. Most of my
bad decisions are because I waited too long to make a decision.
Can you talk a little about decisions that you recognized were
significant only in hindsight, that may not have seemed that
important at the time, but turned out to be quite significant for
Recently we had one. We made a very small decision in changing our
marketing strategy, paying a small fee to run an advertisement.
All of a sudden, we are getting leads that are turning into sales.
Now the company is going in a much faster and more positive
direction. Back then, when we made the marketing decision, we
thought we were just trying something small that turned out to be
a very good decision. It just happened.
Mr. Hathiramani: I cannot answer that question directly, but I'll answer it indirectly.
From my perspective, a good decision executed today is much better
than a great decision executed next week or next year. Time is
critical, and we, as entrepreneurs, tend to defer decisions,
hoping the problem gets better. That is probably a big mistake.
You should not hesitate to make the decision. It may not be the
right decision; every decision you make is not going to be the
right one. You have to deal with the consequences when they come,
but making the decision is critical, as is making it as soon as
possible, as soon as you recognize the problem. Change descends
equally on everybody; it's just that some people recognize it much
faster than others and make the decision much faster. I think that
is what is critical to success, making that decision as soon as
possible with what you know at that point in time.
As a small company, how did you make the decision to add people?
Did you do it after you had the revenue and you knew you could
support those people, or did you hire them before with the
expectation that you would drive it and make it happen?
It changes when your company is at different stages. I remember
our conversations very early on. There were five of us and we had
gotten a consulting contract that was just enough to pay for five
of us. We didn't have any venture capital or angel financing at
this point, and I said to my partner, Matthew, “We really need to
start working on the product. We are doing the consulting work,
but it's hard to raise money without showing that we have a
product. However, we only have enough money for about five more
months, so we can continue paying the five of us for five months,
or hire a developer, which would mean that we actually have enough
money for three months. In those three months, though, hopefully
he can build something that's good enough.”
It wasn't a winning
scenario either way. We hired a person in the hopes of helping us
get at least a demo done, and we did. That enabled us to attract
more interest, and we were able to raise our first round of
financing. It was a decision where we said that we wanted to
invest now, even though it may be detrimental later in order to
ramp up and capture the opportunity.
Venture capital financing
allowed us to continue. Prior to having a large client base, we
hired a salesperson and staffed up to build the product and sell
and support it. Now the decision is just the opposite. We do not
grow unless we not only have the revenue in place, but we have
already hit our earnings. We look at how much extra we have and
look to reinvest it back in our critical areas. I actually think
that is backwards. I think that it was just an effect of the
times. Now, quite frankly, it is more important to be cash flow
positive in the early stage, so I would only invest to the level
at which the extra amount can make sure your company stays afloat.
The economy is fundamentally different, but, if you already have a
large amount of venture capital, that is what the money is for, to
invest in the infrastructure prior to having the client base.
Before we thank our panel, Steve Goldenberg, one of the
entrepreneurs from the team that is transitioning Netpreneur, has
some comments about the program.
Hi, I'll keep this short since I know we're running a bit late. My
name is Steve Goldenberg, and I'm the CEO of
Interfolio. Since we're talking about pulling the trigger, I
pulled the trigger four years ago to start my company. It was a
direct result of participating in programs like this with the
Netpreneur organization. Now that my company is profitable and
we're on the road to success, I've taken a step with a number of
other entrepreneurs to help
continue Netpreneur as the funding from the
Morino Institute goes away. We are going to dedicate time and
money and some of our products and services to the community and
to the organization to help keep Netpreneur alive and going as a
strong entity that can provide events and other resources to
entrepreneurs and would-be entrepreneurs.
I'd like to thank the panel
for coming. It's wonderful that you could share this time with us
from your busy schedules. I ask all of you entrepreneurs in the
audience to consider contributing some of your time to Netpreneur
to help keep it alive and well so that we can keep this real jewel
that helps fund the local economy. You can send an email to
email@example.com to indicate your interest.
Like I said, I started my
company with the help of Netpreneur resources. Even today, four
years later, I'm still getting valuable insights and help from
events and resources like this. For example, there are a couple
things I heard today, and I want to wrap up with those.
I heard that luck is when
preparation meets opportunity. You have to have the preparation,
the plans, and the resources in place so that when you see that
opportunity, you can jump on it and capture it.
I heard that decisions
scale with scale. Something you do today might be done three years
in the future, but it's going to be a lot bigger and a lot
different. You have to learn how to leverage the lessons learned
with the decisions so that you don't make the same mistakes twice.
I heard that when you are
ready and aimed, you must fire. When the time comes, you have to
pull that trigger if you are going to be a successful CEO and
Finally, I heard that you
need to trust your instincts. Making big decisions is not easy,
but you have to make the big decisions.
Thank you to Mark Frantz,
our moderator, and to our panel. Let’s give them a round of
applause. And thank you all for coming out today and supporting