When I started Sageworks back in 1998, our goal was to develop an expert system technology that would convert hard-to-understand financial-statement numbers into plain language. It was a simple idea, but we struggled mightily for the first four years. We had to develop a system that really got it right. This took about two years. We were horrible at raising money from professional funds so we used our own money. Then, once the technology was developed, we had to sell it to someone. That was when the adventures really began.
One meeting during this tumultuous time stands out in particular because of the impact it had on me personally and ultimately on the success of our company. This meeting was with the founder of a very well-known and innovative software company. The names are really irrelevant to my point, so I’ll omit them to avoid being harsh.
As a financial wonk, I had always followed this company and their founder because I loved what they were trying to do -- to make finance easy for the common man. The match between our product and theirs seemed perfect: They produced the numbers, and we made sense of them. At the time, the meeting was a big deal to me. I was meeting an icon of the financial-software industry running a company with several billions of dollars in revenue while I was running a company of about 15 people (approximately 12 of whom were part-time college interns).
I woke up the morning of the meeting, left with plenty of time to navigate California 101, and waited in the lobby of the company’s headquarters. The founder walked into the lobby, delivered an abrupt handshake, and bounded ahead of me up a staircase. I had to nearly sprint up the stairs to keep up with him.
Once in his office, I gave him the standard opening of who I was and what I was trying to do with my company. I mentioned that I was the "tri-founder" of the company (I think I made that term up but it seemed self-explanatory at the time). He cut me off with a smirk and wondered (more to himself than to me), "What is a tri-founder?" After a feeble, mumbled definition by me, he replied that he “guessed” that it made sense.
The fun continued when I began to describe our business. I explained that business owners have access to a lot financial data without fully understanding the data. To me, this was and is still a truism, so I was a bit thrown by his response: "Well, right off the bat, I disagree with your major premise."
You might imagine my internal dialogue: How in the world do I present the product if he does not even buy into the basic idea of what the business is about? However, having already commenced the meeting, I thought it was best to keep going -- kind of like when a gymnast has to finish the whole routine after falling flat on her face right after coming onto the floor. Well…I’ve made it this far.
I decided to demo our product for him. Unsurprisingly, he was not impressed with it. He made his displeasure very apparent in various creative, curt and condescending ways. Wow, I thought. Two years of work down the drain. As I continued, the meeting’s trajectory began to mirror that of the Hindenburg. Small beads of sweat began to appear up and down my neck, and I started thinking about how to best exit the meeting while maintaining a smidgeon of dignity. Even now, I cannot watch Shark Tank because I feel for the entrepreneurs and recall this meeting. After about 15 minutes or so, I basically decided I had enough and politely excused myself.
I vividly remember waking up the next day after the nightmare meeting hoping that it was just that: a bad dream. Alas, it was not. At that moment, I resolved that, no matter what I had to do, I would make Sageworks a success. That one meeting crystallized everything for me. It built a quiet and powerful intensity that has helped me overcome many business obstacles. At the same time, it instilled several important business principles that have stuck with me over the years:
1. When the inevitable shock and anger subside, the real test begins. One’s first reaction to rejection is often confusion. At some point relatively soon, you move to anger. How can he treat people this way? This isn't right. The world is not fair -- that kind of stuff. It’s difficult to imagine a successful entrepreneur on the planet who has not been in a meeting like this or faced some kind of rejection. Of course, being slammed by a billionaire takes the rejection to another level.
This next reaction is what separates successful entrepreneurs from unsuccessful entrepreneurs. It is what you do after you are knocked down that truly defines you. I realize this may come across as a platitude, but some platitudes really are true. Your ideas (and sometimes your personality) will be attacked, and you will experience rejection, just as I did. You are either deflated by the rejection and give up, or you use the embarrassment and pain as fuel to propel your company forward.
2. Sometimes we don’t realize the impact our actions have on others. Maybe I simply caught the guy on a bad day -- too much coffee, problems at home, the cat is sick. I would hate to have someone record everything I’ve said when I’m in a bad mood. You can never truly know the heart of a person, and you certainly can’t make a confident character judgment based on one interaction. Still, I did resolve at the time that, when I became successful, I would never patronize a struggling entrepreneur. I hope some of you reading this will remember this as well. There are nice ways to critique an idea without being a big jerk.
3. All feedback is valuable. The entrepreneur I met made some great points. He provided some valuable insight about the limitations of the product and our model. These were points that I really did need to hear, albeit not necessarily in a nasty manner. It is important for you as an entrepreneur to separate the delivery of content from the value of it. This is incredibly hard to do, but it’s a crucial part of getting better. Feedback is always helpful, despite the method of delivery. Keep in mind, too, that people are not obligated to make time for you; try to be grateful for anything you get from somebody, whether it’s time, advice or anything in between.
4. Even very smart people can be quite wrong, and often. Building a business is not a math equation, and even the most brilliant entrepreneurs are often wrong. There are no gurus in business, myself included. Absorb as much feedback, insight and advice as humanly possible, but do not let anyone dictate to you what can and cannot be done in business. It is all an imperfect science.