Someone recently asked me how I got my “Big Break.” I had to pause and reflect back as, like most of you, I’ve had a few lucky breaks. I got one of the luckiest breaks of my career when I least expected it, during the dotcom crash of 2001. I had recently moved out from the East Coast to Silicon Valley to get into the software industry, because I could see that it was changing the world. I was only here for a couple of years before the dotcom bubble burst. Through a combination of networking, asking for feedback and simply being passionate about what I was doing, I got the opportunity build a company which we were able to scale and later sell to software giant SAP. Here’s how it happened.
I had joined Accrue Software, which did analytics on website data, a few weeks after it went public. The company’s valuation quickly grew to over a billion dollars. Keep in mind that in our best quarter we had generated $15 million in revenues. Those were some crazy times.
I was hired to build a team of consultants selling value added services to teach people how to use website data.
But, shortly after Accrue’s IPO, they bought their first company. There were a lot of smart people at Accrue, but none who had done any kind of M&A work. I had already worked on 17 M&A transactions at a previous employer, Renaissance Cosmetics. So, I stepped into that role instead, helping Accrue acquire and integrate four more companies and becoming the business leader for the acquired companies.
Then, the bubble burst.
The big sell off
Because Accrue sold to mainly to e-commerce sites, and those sites were downsizing, not only was the number of target companies decreasing, but the value of those targets was decreasing as well. Our average sales price declined, and we had to downsize as well.
We decided to sell off non-core assets and use that cash to keep Accrue running and focused on their mission. Since I ran these businesses, it was my job to sell them off. I sold three of them in short order, but I couldn’t find any takers for the fourth one.
One Friday afternoon, I met up with some venture capitalists at US Trust, who were friends of friends, and asked if I could come in to their office and give them my pitch, just so I could get some feedback on it.
They thought the pitch was interesting because the company had a revenue stream, but they didn’t see much growth potential. However, they started asking me more about what I was doing at Accrue and in the course of that conversation I told them about the business unit I was managing, which was Pilot Software.
A surprise offer
Pilot was what I’d call a legacy EIS—executive information system–that had been around since the ‘80s. Back then, EIS was just a fancy way of saying “dashboards.”
I took them through what Pilot was doing and how many people we had and what the revenues were. They kept asking questions, and I guess they could see I was enthusiastic about the business, because one of them said, “Well, what if we just gave you a bunch of money and you spun Pilot out of Accrue and ran it as a standalone company?”
That caught me totally by surprise. What? Who? Me? I told them I had never considered that, and I didn’t even know how much money I’d need.
They explained that they were an East Coast bank, but had recently set up a fund to make investments on the West Coast, and this looked like a good place to make an early bet since it had revenue and had already made it through the bust. And, they had people who could help me take this on.
My head was spinning. I said I needed to think about it, because I was totally unprepared for that thought process.
Series A for dummies
So I went home and noodled it. I bought a bunch of books, such as “Business Planning for Dummies” because I had never built a plan to raise venture capital. I didn’t know what to expect. Thankfully, between US Trust and my own network and a whole lot of reading, we were able to put together a pretty solid business plan. US Trust invested a series A round, and that was all we ever needed. We were cash flow positive and profitable in the first six months of being a separate legal entity.
We refocused the product offering around the emerging area of operational performance management, establishing a strong growth trajectory that led to an unsolicited series B offer from one of the investors on Sand Hill Road that had passed on the series A.
At that point, the board decided that we needed to hire a banker to determine what a fair market valuation was. The outcome of that process was that we ended up with a dozen different parties interested in either investing or doing a merger or acquisition. We decided that the right thing to do for the business and for our employees was to sell to SAP.
They say luck is when preparation meets opportunity. Meeting the team at US Trust at the exact right time they were looking to invest and I was looking to sell was clearly a lucky break, but it would not have happened if I hadn’t deliberately done a few things to be able to step into the opportunity they presented.
First, I built a strong network that I could tap into for introductions. Second, I didn’t go there looking to sell something. I was looking for feedback, something I’ve made a habit of my entire career. That probably showed them that even though I’d never led a company, I was teachable.
Finally, I was authentic and I was passionate about the story that I was telling because to me Pilot was a very exciting opportunity. I just hadn’t seen it as an opportunity for me, but fortunately they saw something I didn’t.
The moral of the story: You never know where your next big break is going to come from, so keep your eyes and ears open. Always be stretching yourself and learning, so you’re prepared for it when it comes. Drop any prejudices you might have about who you think is important and why, and be your authentic self all the time, with everyone. Your big break could happen at any time, and anyone you meet could hold the key.Google+