I’ve worked with entrepreneurs for most of my life. Some companies will make it, while other companies won’t. So, what leads to success?
Especially during this trying time with COVID-19 controlling what happens next in our world, entrepreneurs must be agile and resilient. Furthermore, there’s certain DNA that makes a phenomenal entrepreneur, and it can be boiled down to three characteristics: passion, perseverance, and personality. Throughout my journey with failed startups and second chances, I’ve learned firsthand how important these traits are to succeed.
When my lifelong dream of becoming CEO of a technology company in Silicon Valley came true, I jumped at the opportunity and knew there was no chance of failure—or so I thought. After one year that company failed, and it was all on me. So, what next? Through a combination of circumstances, opportunity number two came along. That company lasted two more years than the first, but it also failed. When a third opportunity came knocking, guess what happened? It did okay, but not great.
What do three failed startups have to do with passion? After coming to terms that I couldn’t get a job as the CEO of another tech company, one of the investors from my failed startups asked me if I would be interested in being a venture capitalist. As an expert in failure and having much worldly experience in my pocket, I started from the bottom, sought out opportunities to invest in, went to conferences, and met a very interesting entrepreneur.
This man was so passionate about his idea, the people who were working for him, and he had such a strong vision of building this huge company, which was simply a coffee shop. I brought this idea back to our technology partnership, and they thought I was crazy. I ended up personally investing in this firm because I believed in this entrepreneur and his passion; this man was Howard Schultz—the founder of Starbucks.
I wasn’t completely sold on Howard’s initial idea, but as we talked, I believed in his vision and passion. I was willing to invest in something that I didn’t think was perfect because I had complete confidence that he would figure it out. I thought he would be successful no matter what he did—and he was.
Any rational person would give up once they hit the lowest low, but you have to be so passionate about what you’re doing to be able to push past those nosedives. The pandemic hasn’t been easy on anyone, but those with passion have ideas that can’t be stopped. You can’t succeed at the levels you want to unless you find that ‘thing’ that you’re passionate, excited, and in love with; if you don’t love it, you’re going to fail. Entrepreneurs that are successful love what they do, and they can persevere when things get tough—like the situation we’re facing now.
Out of all of the hundreds of companies that we’ve invested in at Bay Partners, none have ever gone right to the top. They always have ups and downs, almost go out of business, almost get sold, almost merge—a lot of different things happen. If you look back at some of the biggest companies in history, like Google or Apple, they all had a mighty struggle early on.
A few years ago, we invested in a company called Guidewire (NYSE: GWRE). They provide enterprise software for large property and casualty insurance companies worldwide. The entrepreneur running this business practiced a lot of patience, as it took us three years to get the first order. Three or four months after that booked order, the customer cancelled. The CEO, Marcus Ryu, persevered and focused on fixing the problem with the team and the customer despite the demoralizing downfall. It all worked out, and Guidewire did an IPO which turned out to be one of the most successful IPOs of that year. Although Marcus has now passed the baton on to another CEO, Guidewire now has a $9 billion market cap and it is still going strong.
As investors, we were nervous to continue to fund this company, but the team’s perseverance made all the difference. There’s a very fine line between winning and losing that’s walked by people who either choose to continue to move forward or step back. Successful entrepreneurs have to act and be willing to fail, crash, and burn, but rise by innovating. Now more than ever, perseverance is making all the difference between the companies that are thriving in the face of COVID-19 versus the ones that are forced to shut everything down.
Passion and perseverance go a long way, but personality drives the whole company forward. Who is leading the team during challenging times?
One of the best CEOs that I ever worked with was Chris Cabrera, the CEO of Xactly Corporation. Chris was a consummate sales guy that people followed and really listened to. He traveled the world and everywhere he went, customers, prospects, and staff members of the company all adored him. Whatever he said, they did. This company took a long time to be successful, but he built that company on his back with his fabulous personality. Chris is still the CEO, and he’s still one of the best ones out there. He took Xactly public, and then two years later he sold it to Vista, and now it’s private again. Xactly is absolutely killing it as a private company, and that’s a testament to Chris’ skill.
When you have ‘rah-rah’ personalities like Chris Cabrera’s and contrast it with Marcus Ryu’s cautious entrepreneur approach, you would think that one might be better than the other, but the bottom line is both are great. You can’t have preacher-type people in charge of insurance; in that industry, they want a person with a mild-mannered personality who is in control of things running smoothly. Chris is an excellent sales guy with a lot of enthusiasm, but in the insurance business, they want serious and low-risk personalities, which is why Marcus is the right guy for that particular job. Although strikingly different, both entrepreneurs are very successful at what they do and their customers trust them completely. Founders who have strong personalities are what truly drives companies to be best in class.
COVID-19 has really tested the limits for how entrepreneurs are reacting and responding to the uncertainty of the situation. Particularly during this time, many of you will discover that you hit the mark for having some or even all of the DNA that makes up a phenomenal entrepreneur, so if you’re one of them, go out there and do it—build a wildly successful business. We’ll be looking for you in the marketplace.