The Road to Success panel discussion held at the Fairmont Hotel in Pittsburgh was engaging and full of insights for the entrepreneurs in attendance.
Our panel included Dr. John Altman, Chairman, Finance and Audit Committee, Miami University Board of Trustees, Joseph Ferrara, Founder, Wombat Security, and John Waldron, CEO and Founder of Waldron Private Wealth, and was moderated by Bill Flanagan, broadcast journalist and Chief Corporate Relations Officer for the Allegheny Conference on Community Development. In keeping with the intent of the Road to Success series, we composed our panel with highly successful business leaders from a variety of industries (manufacturing, online security and wealth management) and explored their experiences starting, growing and harvesting their businesses. Our panel also offered a diversity of business goals, with Mr. Altman looking to develop successful companies with the intent of selling them to the team that built them, Mr. Ferrara looking to build a successful company structured so that all team members could cash in their options within a short time horizon, and Mr. Waldron working to sustain growth and expand marketshare and services for his namesake firm, and transfer ownership to high performing team members over time.
The importance of your employees.
For Joe, his company started with himself, two investors and two faculty members from Carnegie Mellon University, and grew to 200 employees in year seven when the company was sold. Every person on his team had shares in the company, and in a way, were all entrepreneurs themselves, as their take home pay wasn’t the goal – cashing in the shares was. And they did – the business sold for $200 million. But their complete alignment and commitment to the vision of the firm was what drove the start-up’s success. For Dr. Altman, his view of employees was that, at each of the eight companies he ran, he preferred to hire entrepreneurs, so, as he put it, “The people who got on the train early, were able to buy the train at the end.” For John, he focused on hiring diversely talented people, and letting the experts take the reins. He realized he was adept at many of the technical aspects of providing service to his clients, and hired people with the skills he didn’t have to provide the missing elements at the same high level of performance firm-wide.
What makes an entrepreneurial venture successful?
Dr. Altman felt that debt ratios and cash flows are important but come in a distant second to one key aspect of a firm’s success: customers. In his experience, all of the complex financing and structuring will get you nothing if you don’t have customers. And when you have customers, you can grow. They will let you know what else they need and provide guidance as to what other products you should develop. He also pointed out that in order to successfully turn an idea into a business, you have to be able to recognize an opportunity and pull the trigger before it vanishes. Joe seconded the notion, explaining that for any idea, there is a limited window of opportunity. If you wait too long, an inferior product is likely to swoop in, and close that window. Conversely, if you can gather financing, fine tune your product and take it to market in a timely manner, you can create an entirely new product segment. Joe was able to do just that with interactive cyber security training at Wombat Security. John had a similar experience in the financial services arena in the early 90s when he was as accountant at Deloitte. As a CPA, he was aware of the many components that comprised a client’s financial life, and understood the complex relationships they had with each other, but was prohibited by the SEC from providing a comprehensive suite of services. At the time, clients were typically getting investment management advice from advisors working for investment banks who were likely selling their own products, risk management services from insurance agents, estate planning from attorneys, tax assistance from CPAs and other services provided by a patchwork of professionals, all handling specific and separate services. No firm or advisor provided his vision of a comprehensive wealth management offering, integrating all of these services. John saw his opportunity and took a leap of faith, leaving his high paying accounting position to strike out on his own. Initially, he struggled to stay afloat, but once he had a few engagements, he was able to establish credibility through referrals. His reputation grew, and as he signed more clients, he reinvested in his team to ensure that he would be able to provide the same concierge, comprehensive service to each new client.
For Joe, he would have started earlier. He felt he was complacent with a high paying job, benefits and paid time off, but that he missed some opportunities by remaining in the corporate world. Dr. Altman wished he had valued team members more, earlier on. He realized over time that it was team members who make a business successful. Later in his career he focused on giving team members ownership, but he wished he had done that sooner. John said he struggled with the idea of not being the sole owner of his company and sharing ownership with senior team members. But over time he realized that by allowing team members to take ownership, he was creating sustainability for the business, and for his clients. And after the administrative and legal process of transferring minority ownership to his executive team, he noticed that these already high performing team members had another gear. And when he came through the tunnel, he realized that he could focus more on what he wanted to, which was exploring new aspects of service to develop and offer to his clients.
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