Being an entrepreneur is one thing. You learn what it takes as you go, you make mistakes, you stumble, but you keep going. If you go on long enough, you earn the title of Experienced Entrepreneur. If you keep on going, sell a business venture or two, you earn the right to be called a Serial Entrepreneur. But not every entrepreneur can be considered great.
Every other year, the MIT Enterprise Forum of Atlanta hosts a coat-and-tie gala to honor entrepreneurs who have gained the wisdom and experience to be considered not just great, but spectacular. This year the Distinguished Entrepreneur Award Gala will honor veteran entrepreneur, executive and venture capitalist Wain Kellum.
Kellum’s career is one that envies some of the country’s most famous entrepreneurs. He has presided over companies that have gone on to be acquired by names like Vonage, Microsoft, and Hewlett Packard. He has served as a board member for Venture Atlanta and currently serves on the board of Atlanta tech residents CallRail and Avoxi.
Kellum took some time out of his busy schedule to give Hype some insight on the importance of culture fit when hiring in a startup, the rapid growth of the software industry in the southeast, and why Atlanta isn’t the city to underestimate.
You’ve had an exciting and varied career. Give us the highlights.
When I got out of undergraduate school, at the time, the best gig was to move to Atlanta and work for a company called Management Science of America (MSA). MSA was led by a guy named John Imlay (who passed away recently). John was unique in that he really helped create the software industry — I think they were the second software company to ever go public. So many of our software leaders have passed through MSA, including a lot of local guys like Tom Noonan and Dave Gould. I remember having coffee with John a few years before he passed away. He kept a list of all the people that had worked for him that went on to be CEOs of software companies, and that number was close to 100. It was a great training ground to learn the software business.
After that I started my first company, Extreme Logic. Extreme Logic was a lot of fun for me. Microsoft ended up buying 20 percent of the company and then we sold the entire company to Hewlett-Packard a few years later.
One of the things I love about building companies is that we created close to a thousand jobs just for one of these companies. A big part of entrepreneurship for me is that I love growth. Entrepreneurism, by definition, means that everybody is in a job that they’re really not qualified to do, because it’s not the job they were hired for, because the company changes. Looking at human beings and how they grow and evolve is so much fun. You grow your role with customers which means every year you can serve them better and better — the joy of delighting and exceeding your customers’ expectations is a wonderful experience.
There’s a lot of ways to look at growth. But at the core, it’s always the people that drive the success in a startup. It is always about the people. I always say that an A-team of people can have a really good outcome even with a B-concept. If you have an A-concept but you don’t have A-players, they’ll find a way to let it fall along the way. For me, the growth aspect is really why I probably enjoy my work life more than anything. I like the fact that an early-stage startup gives you more growth than anything else you could do.
So as someone that has been on every side of the entrepreneurship equation, what’s your number-one tip for a brand new founder?
It’s always about the people. You really can’t take enough time to think through the number of people you hire. As an early stage company, you’re not going to hire 100 people. So really spend time and invest to make sure you make the best hire. That’s something that’s hard for people to do, because when you’re in an early stage you have so much work to do, you’re so overwhelmed. It’s really easy just to reach for somebody that’s the easy hire instead of the right hire.
The companies that I’ve been involved in that do the best are the ones that are very attentive to this. With a partner, I led a funding round at a company called CallRail in 2015. CallRail is one of the very best companies in Atlanta and they’re very picky about who they hire.
Once you get your team together, helping people grow is one of the most important things. Early stage companies often aren’t willing to or aren’t able to take the time to give people very clear and actionable feedback that helps them get along the path of growing faster. One of the worst things you could do with somebody that you work with is not give them very specific feedback about what they could be doing differently or what they need to go work on. As your very small company grows, people change roles and some people end up scaling along and some people end up seeing their boss fired. What is a shame is when you can’t see specific and formal processes in place to give people feedback along the way.
To sum up all this: the human capital aspect of growing a company is probably the one that people spend less time on. They spend more time on the financial capital, they spend more time on sales and marketing, and all that’s critical to build up success, but human capital is probably one of the areas that I spend the most time on. I like to personally read performance reviews for everybody in a company I’m involved in. I want to help managers learn how to write better performance reviews that are actionable, and to put people in a position where the next time they have a performance review they have a chance to perform differently. I think that’s the most caring thing you could do.
We hear a lot about the benefits of raising a fund versus the slow and steady pace of a bootstrapping approach. What do you think works for which companies?
Some companies are just big idea companies to where they need tens of millions of dollars even to get off the block. There is a small category of companies that just need a lot of money. But in the field that I’m an expert in, which is software, the amount of money you need to build a company is dramatically less.
My view, which is very pointed and specific, is that most companies don’t need nearly as much money as you needed in the past to get off the ground. Typically a guy like me will not only give you a little bit of money, but will tell you the twenty dumb things that I did that you don’t have to do, because I’ve already learned the hard way. Hopefully you’ll make better choices, so you also take that small amount of money and invest it more efficiently.
My experience is that too much money up front ends up making the entrepreneur work for the investors instead of having the investors work for them; they end up disappointed at the end of the day because they didn’t own as much of the business as they could have. I always advise people to figure out how little money you can get to get your company off the ground, because the farther along you are when you raise money the better the value. I also tell people that you should go to the LinkedIn profile to look at the specific track records of people that are going to help you every day and make sure that they’ve already done what you’re going to do, so their advice is well thought out and serious.
Startups might be looking at a number of different ways to fund their company. What factors do you consider?
A lot of it depends on what you have. Accelerators are really good for people that have ideas but are missing material components. “I’m an engineer but I really don’t have any marketing background.” Or, “I’m a marketing guy with a good idea but I’ve never built software.” An accelerator would be helpful.
On the other hand, if you can cobble together enough of a team then you can maybe raise an angel round and move forward and get things far enough along, you might not need to go through the accelerator process. But either actually works. The whole idea is: what’s the fastest way for you to get a product in the market that customers are paying for?
What do you think is the next emerging industry in tech for Atlanta?
I think we’ll see a lot more emerging technologies start to impact our technology community. I think machine learning is going to be one of those areas. I think we’ll see a lot of innovation locally around machine learning because we’ll be able to leverage what Georgia Tech brings to that from a research standpoint. It also seems like there’s a lot of stuff going on around medical technologies, between Georgia Tech and Emory.
A lot of people talk about the lack of funding in Atlanta and the Southeast and the fact that we have less local capital than Silicon Valley or New York. Do you think this affects the companies that grow here?
I think that money follows good ideas and good teams. If you really have a good idea and a good team, I think that money will find you. So, I do think that there are a lot of deals that get done in Atlanta. And I think it’s true a lot of deals get done with money outside of Atlanta, but I don’t think that’s the obstacle.
I’m not sure that, today, I would feel like I needed to move because I had a company that needed to be funded. I think the bias, historically, of Atlanta, is can you hire the talent? I love hiring engineers in Atlanta because you know a decent percentage of the engineers came out of Georgia Tech, which is a fantastic school. So I don’t feel like you can make an argument that we don’t have the talent to build any kind of company you want to. I certainly have never been talent constrained when I needed to pull together a management team, that’s for sure.
Next week you’ll be honored at the MIT Enterprise Forum Gala, a distinction that goes to only one entrepreneur every two years. How do you feel about this honor?
When you look at the previous winners, and you look at all that they’ve accomplished, it really is quite humbling, because the list of people that had won before are so accomplished. But also, I know all of them and they’re extraordinary human beings. So it’s definitely humbling for me because of what the MIT Executive Forum does, all the events they have, and how important they are to establish an ongoing entrepreneurial touch point. I’m appreciative and I’m humbled, but I’m also excited that MIT continues to push entrepreneurs in our community.