Professor Kevin Sharer, former CEO of Amgen, shares the story of a HBS graduate who found himself the owner and CEO of a multi-million dollar company just seven months after graduating from his MBA.
[stag_dropcap font_size=”50px” style=”normal”]W[/stag_dropcap]e at HBS are rightly and deservedly known as the institution most focused on the general manager’s view, and we now have over twenty-five of our graduates leading very large companies.
Many students, however, hunger for the top job earlier and more directly than the long climb to the top of a global organization will allow. (More in a later column on why the view could very well be worth the climb on that longer journey- but back to the story at hand for now.)
Over two years ago an RC student who came to HBS from the military sat in a faculty member’s office in his second semester and in a moment of candor reported how the experience and expectations of HBS had been a confidence rattling experience, even though he had excelled in a complex, high stress, mission-focused leadership position in the military. The faculty member had heard stories like this from more equally capable, high potential and accomplished people than you might imagine, spanning the full range of backgrounds.
Fast forward to last month, and this same person sat on the same couch and with justifiable pride, excitement, and confidence tempered with humility described the experience of being the owner and CEO of a technology business in the Midwestern USA with multimillion dollar revenues, strong profits, and twenty team members.
This business was one the alum had purchased with regional bank assistance after a six month search. No family money, connections, or help were involved. The grad did it. How? What was the journey? What reflections does the new CEO have now on the HBS experience? What is the alum’s advice to the HBS students now in school and perhaps contemplating a similar path
The CEO, as a late-in-year RC student, signed up for a course from Professors Yudkoff and Ruback on entrepreneurship using a search fund that was central to the CEO taking this path. In describing this course and experience, it was apparent how much support, direction, and motivation this course and these faculty members provided- HBS at our best.
The CEO next decided the characteristics of the target business and was very, very specific in criteria selection. The criteria were: owner wants to sell, operating and profitable business for at least three years with one to four million dollars EBITDA, steady and recurring revenue, B2B, diversified customer base, and located in either the Midwest, Rocky Mountain region, or San Diego. This highly specific list was very important in organizing a search yet left substantial room for the eventual operating details and business type in terms of industry and competitive dynamics.
[stag_dropcap font_size=”50px” style=”normal”]T[/stag_dropcap]he next step was to find a set of intermediaries to help, and some modest seed capital. The CEO was selected at HBS to receive a modest but important seed grant, but these grants may be found in a variety of places. The majority of the eventual capital came from a regional bank near the business.
Now, to the hard work. Using all available means but largely online, the CEO contacted 250 intermediaries and had a thirty percent response rate. Phone calls resulted, and this intermediary group presented two hundred possible deals. The CEO looked seriously at sixty-five, in which a CDA was signed, went deep on six, signed two LOI’s and closed one. The search process took 188 days, with 65 of those days involved in detailed due diligence before the final close on January 8, 2015.
The business is a sixteen year old founder/owner technology service business. It has local government and lenders to agricultural interests as clients for the geo data the business provides, twenty employees, one primary technology partner, a five percent of sales R+D budget, and is solidly profitable and stable.
What is the CEO dealing with right now? How can the culture be modified to be more trusting, accountable, open, and interdependent from the prior owner’s more controlling and centralized approach? How best to develop a shared sense of reality with the team about where the business is now positioned compared to its potential beyond its relatively narrow and regional client base? What does good look like across a variety of processes and operating results? How best to expand, manage, organize, and empower the sales organization to move beyond the prior owner’s lack of support and tendency to do it himself? What should be the relationship with the technology vendor/partner or should the firm invest more in R+D and become less dependent? Do we have the right team at the top in terms of hunger, curiosity, and responsiveness to a new vision and set of expectations, and can I develop and motivate that team to reach its full potential?
These are similar to the kind of issues all CEO’s face, no matter what the business’ size or industry. So, how did the HBS graduate feel about how well HBS prepared this newly minted CEO for this breadth and depth of challenge and opportunity?
The new CEO became very serious, measured, and authentic in sharing a message intended for the students who are now at HBS and might be interested in a similar path. Believe in yourself, you can do it. You cannot believe how much HBS-imparted knowledge gives a floor to interact with customers, suppliers, and staff. Remember though, it is only a floor and you should not hesitate to admit what you do not know and ask. How much and how rapidly you grow is up to you. This is an incredible challenge but be very, very grateful to have the opportunity.
The final thought might be the most important of all: with full conviction, the new CEO said “I am the author of my own life and I will know I am giving it my absolute best”. Good words to live by no matter what path you choose.