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Pulling The Trigger, Making The Call
(Rockville, MD -- May 30, 2003) The toughest decision Deepak Hathiramani ever had to make as CEO of Vistronix? “When I had to terminate our second employee who had been with us for four years. The reason it was tough was that our second employee happened to be my wife.”
He told the story laughing and all remains well in the Hathiramani household, but it points out two very real elements of starting a business. First, that no entrepreneur will ever get by without making some difficult decisions, and, second, that many of those calls will involve people. In his case, according to Hathiramani, “It just made business sense for her to step aside and for us to bring in a professional who could take us from where we were to where we are today.”
Hathiramani spoke as part of a panel at this morning’s Coffee & DoughNets event, joined by fellow entrepreneurs Ching-Ho Fung, Chairman of Parature; Phil Carrai of General Atlantic Partners; Michael Chasen, CEO of Blackboard; and moderator Mark Frantz, Vice President at venture capital firm The Carlyle Group. The topic was “Pulling The Trigger,” and the speakers explained when and how they make important business decisions in their careers, such as whether or not to accept venture capital, building a management team, tackling a market, or using advisors.
For Fung, having a solid and sober process is essential because many of the truly important decisions can (and should) be prepared for over time, especially when it comes to identifying your available options. “When I make major decisions,” he said, “it is actually a decision that had been made a long time ago; you just evaluate the right time to do it.” For example, Parature, a 10-person firm with an average age of 24, recently hired a new Vice President of Sales, a significant change for the team. Fung knew the candidate and had worked with him informally for several years, long before Parature would need a sales executive. Their association had grown through intentional, proactive networking at events like Netpreneur’s Coffee & DoughNets until Fung felt that Parature was ready for a Sales VP.
“I'm a golfer,” explained Fung. “When I get on the course for 18 holes, for every stroke I make I feel like I'm pulling the trigger, but I have evaluated the wind and all the other conditions, and then I pull the trigger.”
One thing about “trigger” decisions, however, is that you may not always recognize them when they are happening. “Often it is only in retrospect that people truly understand the decision that they made and the ramifications of success,” said Carrai. “It's always easier to go back in time and evaluate why a company was successful, but the trick is finding those specific, key events that are defining or life-changing in the history of a company, and making sure that you soberly think through those decisions.”
For example, he told the story of how, as CEO of a company that sold relatively inexpensive, tactical software products, he made the decision to hire two salespeople who came from the enterprise software world. “The context of the company, everything from what we developed to how we developed it, supported it, and sold it, fundamentally changed on that one decision. In retrospect, on your résumé, you say clearly that what you were planning to do was to expand the company, but it really was a minor event in the belief that this was a fresh way we needed to go.”
In fact, a big decision at one stage of a company’s growth may happen very differently at another, and that becomes a factor. Chasen’s company, Blackboard, has grown tremendously in just six years, from two people and no revenue to about 470 employees and $90 million in revenue this year. “The most interesting thing that has happened as we evolved is that the decision-making has fundamentally changed. It hasn't gotten easier, it hasn't gotten harder, but decisions that were easier in the beginning are harder.”
He gave several examples, ranging from M&A, to hiring, to product development decisions. “When we were adding features early on,” he explained, “we had 10 clients. We'd call up all 10, tell them about the feature, work with them to develop it, roll it out, and they’d all love it. If there was a problem, we assigned one of our tech people to each client to work with them to make sure the feature was properly implemented. Now, we have to think about full regression testing, full roll-out plan, full support plan. Just training everyone internally in the company on this one new feature involves 50 support people and 100 sales people. Something that used to be very, very minor has now turned into a major decision.”
All of the panelists had advice for entrepreneurs on how to perform successfully as a leader and decision-maker in this ever changing environment. For Hathiramani it’s particularly a matter of focusing on three things: customer interaction, people, and strategic vision. “In building the company,” he said, “you come across a number of tough decisions you have to make. As entrepreneurs, we would like to bury our heads in the sand and hope the problem goes away, but, as a CEO, my role is to decide as fast as possible when and where the decision has to be made. Procrastinating is not going to make the problem go away.”
“And what happens when you don't make the call?” asked Frantz, who, as a venture capitalist, is often one of those stakeholders looking over an entrepreneur’s shoulder. “Then somebody ends up having to make it for you,” he said, answering his own question with just a slightly ominous tone.
One thing that everybody agreed is that the toughest and most important decisions usually involve people.
“The best decision I made was recognizing the importance of bringing able players onto our team and making that change in the last two and a half years,” declared Hathiramani. “If I look back, the worst decision I made was that I waited too long to make that decision.”
Carrai used similar words. “You’ve heard conversation about markets, and money spent, and products that we've launched, but at the core, for me, the best decisions I've made have been around people, and the worst decisions I have made have all been around people, as well.”
And people decisions involve more than just who to hire as VP of Sales. There are all of the daily decisions, both small and large, that will determine the balance between business and family life, including, as Fung noted, those early supporters of every entrepreneur -- friends and family. “It's not so much a decision of telling them that it is not working out,” he said. “It is more a decision of inviting them into the venture when you are not sure where you are going.”
If Hathiramani’s biggest decision to date involved “firing” his closest family member, that’s still not the ultimate entrepreneurial decision of all. “I constantly ask myself ,” he said, "'If I had a true Board of Directors, would I have this job tomorrow?' That question lets me evaluate my performance, and sometimes the answer is 'no,' unfortunately. I hope it doesn't get to the point that I have to step aside and bring in somebody else to take it to the next level, but it might. Entrepreneurs need to recognize that it is not an ego decision, it is how you build value for your company.”
Copyright 2003, Morino Institute. All rights reserved.