The Lecture Series That Can Help CEOs Even More Than Business Students
What is your background?
I grew up working on a dairy ranch and a freight dock. I went from being a remarkably poor student to earning a PhD in computer science. After teaching at universities in Canada, New Zealand and California, I left teaching to start a software company in the early 80’s. At the time of its acquisition in 1995, the company had over 200 employees, over 300 clients and $30 million/year in revenue.
Interests include wood working, archery, reading, chess, long-range shooting, inventing (hold one Utility Patent), cowboy poetry, hunting and fishing. Married 47 years to Judy; deceased son, Mark; living 42 year-old daughter, Holly. Two grandsons, Max (16) and Josh (13). I’m a pretty fit 69 year-old who no longer runs.
Why did you write this book?
America has historically enjoyed world preeminence in entrepreneurial achievements. In recent years, that world standing has declined. According to the US Small Business Administration, 60% of all startups fail by their fourth year; 30% are doomed to fail within two years; and most distressing, only 18% of first-time startups succeed. I believe these percentages can be improved if these first-timers have a solid introduction to the critical aspects of a successful commercial endeavor. This book provides that solid introduction to first-timers and sage advice to existing firms on how to keep the company moving forward.
What topics are covered in the book?
This book grew out of twelve Guest Lecturer presentations in my spring, 2014, graduate class titled, “Technical Startups”. Each of these business and entrepreneur experts shared their vast experience with the students. They also shared their notes and Power Point slides so that I could write the chapters. The direction given to each presenter was quite simple: “Make sure you include information you wish you had when you started out”. Each chapter is dedicated to a vital part of a successful business. Chapters include the birth, growth and acquisition of a technical startup; Marketing and Sales; Human Resources; Customer Service; Employee Recognition and Retention; Research and Development; the CFO duties; Business Realities; Outsourcing and Startup Funding; Finding Opportunity; International Commerce; Project Management; Social Media and the Virtual Company and 22 Business Axioms. A special Appendix is devoted to giving great product demonstrations. This book would make an excellent primary or supplementary textbook in an entrepreneurism class. I believe a future edition of the book would be well served by chapters on Business Plan development, cash flow projections, P and L projections and worst-case, mid-case and best-case scenarios.
Who should read this book?
Anyone wanting to start a business. An existing business that wants to be more successful. Students in entrepreneurship classes. Resource book for Entrepreneur Centers. Really any business or tech student will ultimately wind up working for, leading or starting a company and they need to know the keys to success described in this book. Both for profit and not-for-profit entities will gain insights into success from reading this book.
In what style is the book written?
This book is not written in a classic academic style; but rather, in a conversational, storytelling style.
Is this a good Reference book?
Yes. The book contains over 150 business and life lessons, each assembled in appendix 2. There are also 22 Business Axioms disclosed in Chapter 13. In addition, a “Chapter Roadmap” lets the reader quickly find information on a timely topic.
What real-world topics are included in the book?
- Finding the offer to buy my company written in pencil on the back of an envelope.
- The relationship between distance and frequency of communication.
- The secrets of doing great product demonstrations.
- The challenges and benefits of running a Virtual company.
- The critical cost of misclassifying employees.
- The acquisition process from start to finish.
- The essential relationship between the Sales Funnel and Revenue Projections.
- The right way to pirate your client’s employees.
- Exploiting Social Media to promote your company.
- Hidden costs of outsourcing development and support.
- How to survive economic downturns.
- Attracting, retaining and recognizing good employees.
- What to look for in a resume.
- Recovering from Customer Support failure.
- Finding great sales people.
- Creating employee loyalty.
- Elements to include in a contract.
- Remote customer support.
- Developing an exit strategy.
- Forming a User Group.
- Managing cultural differences.
- Managing Technical Debt.
- The amazing dry wit of a VP for Research and Development.
- The HR VP who took Calculus for fun.
- The International Commerce expert who grew up in a circus.
- The Marketing expert who doesn’t play golf.
- The CFO who uses no Power Point slides or hand-outs.
- The Project Management Guru who gave the students a scary project.
Can you give us some examples of Lessons in the book?
From the first chapter on birth, growth and acquisition of a tech company: Diversity of vertical markets can help you withstand downturns.
From the Marketing and Sales chapter: Become a student of the Sales Funnel and Sales Forecast.
From the Human Resources chapter: Make sure your employee postings are complete; it is the law.
From the Customer Service and Employee Recognition chapter: It’s important that your employees act as client advocates.
From the Research and Development chapter: Cloud development wins; however, understand the SLA (Service Level Agreement) and get advice on data privacy.
From the CFO Duties chapter: The Balance Sheet, over time, can show the health of the company.
From the Business Realities chapter: Most startups don’t put enough thought and resources into support: Some recover and some don’t.
From the Global Sourcing and Startup Funding chapter: Don’t overlook the government as an initial funding source.
From the Finding Opportunity chapter: People can exhibit the entrepreneurial spirit in any endeavor they adopt, revenue seeking or not.
From the International Commerce chapter: Research is the key to international entrepreneurial efforts.
From the Project Management chapter: Certified Project Managers make more money than those uncertified.
From the Social Media and Virtual Company chapter: Master Social Media; it’s nearly free.
Can you explain the 22 Business Axioms disclosed in the book?
While I was a professor of computer science, I was asked to write a basic accounting and payroll package for two not-for-profit entities on campus. It began to establish some traction in the late 70s, culminating in the creation of my company.
Bi-Tech Software, Inc. was incorporated April 3rd, 1981. In 1995 the company was acquired by SunGard Data Systems. At that time we had over 200 employees, 300 clients and $30 million per year in revenue. My wife, Judy, and I stayed on to the run the company until our retirement in 2000. Over the course of my career, I developed twenty-two business axioms which served us well as we morphed from a mom-and-pop shop in our home to a successful enterprise. These are enumerated in below.
Axiom #1: Make more coffee when you leave less than a cup. The basic message here is try not to hire lazy or thoughtless people. Both of these characteristics are a huge negative in a company in terms of morale and dollars.
Axiom #2: The first six people you hire will set the work, social, ethical, and intellectual character of your company; be extremely careful with these hires. We were so fortunate with the first hires. I had the advantage of knowing them as students, and I could sense a strong character and work-ethic with each of them. It is interesting that in all the years I ran Bi-Tech, I only fired four people. However, many left. In order to become productive, new employees had to learn the software. In order to do this, you need help. If a new hire showed work habits or ethical or intellectual character values that did not mesh with the other employees, he or she simply would get no help and would leave, rather quickly. The record was four hours. I hired a programmer; he came to work at 8:00 a.m., left for lunch, and never returned. I called him at home and asked what was wrong. He said, “You work too hard.” Another major reason for our early success is that I wouldn’t interview you if you had less than a 3.5 GPA, and I always asked to see the transcripts. We relaxed this requirement as we grew and learned that GPA is not always an accurate predictor of quality.
Axiom #3: Understand, respect, trust, and celebrate what your employees do for you. Employees truly enjoy working where they are appreciated. Bi-Tech had the lowest employee turnover rate in our industry. In our business, we sold large systems to highly visible clients. As they got to know our employees, they wanted to hire them. In our industry, if you don’t like your job, you can go across the street and get another one.
Axiom #4: Be honest with your employees, even when it hurts. There were a few times where we had to call everyone together to tell them we were having cash-flow issues. Luckily, we got through those times. Another thing we did that helped our retention was making our books available 24/7, online, to every employee. At any time, they could look at our balance sheet and income statement, using IFAS, of course (Interactive Fund Account System – our package). Obviously, we did not give access to detailed payroll information. The one time I was not forthright with our employees was during the acquisition. I waited until the acquisition was 99 percent complete. I feared their reaction; in hindsight, I probably could have been open about it.
Axiom #5: Never borrow money. This only applied to us. My view was if we can’t make more than we spend, we shouldn’t be in business; and borrowing money burdens your company with debt. Fact is there are many very successful companies that fund their growth with debt.
Axiom #6: Don’t confuse being smart with having a knack for something. I found this to be a most interesting axiom. There are simply some people who are really good at certain things. Your job as a leader is to discover who is good at what.
Axiom #7: Encourage employees with a negative attitude to work for your competitors. Nothing is more damaging to a company than having an employee with a negative attitude. They give rise to strife, mistrust, and reduced productivity.
Axiom #8: Let employees make important decisions and mistakes (you got to do both). When employees get to make critical decisions, they feel engaged and valuable. The value of engagement far outweighs the risk of mistakes; and over the years, the employees got it right about as much as I did.
Axiom #9: Hire a few people who tease and cut up (they keep things light). Your employees will spend 30-plus percent of their life at your company. Having a light atmosphere helps make them feel good about being at work. Sometimes our practical jokes got a little out of hand. When we were working out of the A-frame, we had a Springer spaniel that was nuts for a flashlight beam. Ray Kaminski (someone who clearly matched this axiom) took a tea towel and tied a flashlight to the dog’s head. We had beautiful herringbone redwood siding inside one of the rooms. The dog would see the light beam on the siding and attack. Judy came into the room and saw all the scratches; she was not amused.
Axiom #10: Listen carefully to your clients; they will tell you how to stay in business. The close trusting relationship we established with our clients was invaluable to getting feedback on how we were doing. Having our clients draw up a list of enhancements to our software kept us very competitive.
Axiom #11: Leave your office door unlocked and open. With the exception of employees who were having personal problems, my office door was never shut, never locked. I kept all my private documents, like payroll information, in a locked file cabinet in my office. I thought it was important for an employee to walk by my office and just step in to chat. The only thing that went missing from my office was a stuffed Kangaroo; it was held for ransom by an employee conforming to Axiom #9.
Axiom #12: Minimize company policy and procedures. There is no policy or procedure statement that will keep jerks from being jerks. Treat people like adults, and they will generally act like adults.
Axiom #13: Honor all contracts. This axiom is a major reason we were never involved in litigation of any form.
Axiom #14: Under commit and over deliver. Okay, this is the one with which we had the most trouble. In the early years, while striving for a contract, we sometimes relaxed this axiom. Without exception, violating this axiom brought regret.
Axiom #15: Family comes first; work comes second. This was a big part of the company character. It really started when seventeen employees were working out of the A-frame with our two kids running around. If a family had a crisis, we did everything we could to help. This philosophy was also part of SunGard. When my son died, they told me to take as much time as I needed.
Axiom #16: The best committee size is one. For some projects, such as a complete rewrite of the package, this doesn’t work. I have found great success over the years by assigning one person to a development task and then leaving him or her alone to complete it. Because one person invests his or her ego into the task, the outcome is typically better than expected. People enjoy doing important work on their own.
Axiom #17: Get paid for your work. This was pounded into me by SunGard. When we were acquired, Phil Dowd, my bosses’ boss, put a plaque on my desk that said, “Get Paid for Your Work.” Fact is, if you charge for your work, the client values it more.
Axiom #18: Take time to chat with employees. This follows the “management by walking around” theory. It works. You don’t always have to talk about work.
Axiom #19: Anyone can be replaced. Judy and I were, and the company is doing fine today, fourteen years after we retired.
Axiom #20: Don’t let attorneys tell you how to run your business. When I was with the Statewide Academic Senate, I got to meet John O’Connell. John was a Chico State engineering graduate and went on to be president of Bechtel Corporation, a huge international enterprise. While I was contemplating starting Bi-Tech, I got a chance to sit down with John and ask him some questions. One of my questions was, “What is your view of attorneys?” John said, “You can use them to keep you out of trouble or get you out of trouble; I prefer the latter.”
Axiom #21: Employee turnover is much more expensive than paying well. We paid our employees very well. That’s a very big reason they stayed with us.
Axiom #22: Never, ever, think you have figured out how to run a successful business. Being a lifelong learner helps you stay in business.
Why did you sell your company?
When my son expressed no interest in running the company, I began to toy with the idea of being acquired. We drew up a list of requirements for the acquiring company and SunGard met all of those requirements. Requirements included an improved benefits package, no merging of user groups, Judy and I could stay on to run the company, fair price and we could keep our existing development methodologies.