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There is no shortage of descriptors for Ron Close, HBA ’81: a seasoned entrepreneur, leader, educator, coach with a small ‘c’, board member, investor etc.
A graduate from one of Ivey's most 'entrepreneurial classes (1981),' Ron was the co-founder and CEO of Netcom Canada, one of Canada's earliest and most successful Internet companies. After selling Netcom, Ron spent a number of years in executive roles across the telecommunications, and technology industries.
A deep thinker who is eminently quotable, Ron shares some of his most important learnings, from starting up, leading teams, and coaching some of Canada’s top young entrepreneurs and executives, on the latest episode of the Ivey Entrepreneur Podcast.
The Ivey Entrepreneur Podcast is sponsored by Connie Clerici, QS ’08, and Closing the Gap Healthcare Group, Inc.
Transcript
You're listening to the Ivey entrepreneurship podcast from the Pierre L. Morrissette Institute for entrepreneurship at the Ivey Business School. My name is Eric Morris, and I will be your host for this episode.
Eric Morse
Delighted to be here with Ron Close, Ron and I have actually done this before, this kind of format and he's just fantastic at it. I mean, one of the reasons Ron's just such a great speaker is that his experience is vast, I guess, in one way, in the sense of he's a serial entrepreneur, you know, it's not just one entrepreneurial venture, it's a number of them and so he brings a real different mix of experience because of that, but he's also worked, you know, and for large companies, he's a board member and advisor, a consultant. So Ron has played a lot of different roles over his career and I think what you're going to find about Ron is that he doesn't just go through these experiences, he's thoughtful about them and that's why he's such a great resource, I think, to so many entrepreneurs out there. The one thing that I forgot to mention is Ron is also a teacher, Ron spent a lot of time with us at Ivey actually teaching the new venture courses. So I've gotten to know Ron really well over the years and I know you're gonna delight in his experience and the lessons that he's learned over the years. Really, the first thing I want to do is I want to turn it to Ron and just say, Ron, would you mind sharing, maybe a little bit more about you and your kind of entrepreneurial journey over the years?
Ron Close
Well, Eric, thank you, and Ash, thank you for thinking of me for this format, it's a complete honor to be able to spend a little bit of time with people who are going to change the world in the future. Eric, it's a double honor to actually be on this camera right now with you and we do go back a long way and I think it might even be a couple of decades and it's all been great memories and high impact stuff. At least on your side, and it's an honor for me to be here with you. I graduated from Ivey back in 1981 and I went originally to consulting it was Andersen consulting, and I did my usual you know, two years at Stanford consulting before I realized it wasn't really what I thought it was, and went on to a number of other small companies, in almost what I would describe as an embarrassingly scrappy, self serving promotion, surfing career. Instead of me walking through my CD, which in a nutshell is big and small companies, leading to sort of in my early 30s, some entrepreneurial, some serious entrepreneurial startup stuff and then, selling my internet service provider called Netcom, I was a co-founder of that, selling at AT&T and then staying on board with AT&T for a couple of years as president of internet and business services, and then kind of getting involved in software companies and going later in my career and in my mid 40s, to Bell Canada, and serving on the senior leadership team at Bell Canada, being part of that, that issue. It's been a wild ride of big company and small company experiences, and all of them very educational. Since those days, you know, my last full time role was the CEO of Palmer Tx, which is the parent company of the weather network, which was another honor and pleasure, great people there, and very fond memories and thoughts about that organization. I semi retired and got involved with some people investing in Fintech, serious investments in Fintech. I've now sort of worked my way into a role as an advisor, a leadership advisor for people that that are working in Fintech, small companies and larger companies, I would say some of them are on the private equity side, some of them on the on the on the Fintech startup. Mike Catch, I know as a student of mine at Ivey, and I coach him now he's the founder of Well Simple and I coach the founders and I use the word coach, sort of, with a little bit of wiggle room and grant me a little bit of space on that because I'm not a trained coach, I'm a bit of a hack a small c coach, if you will. I'm really a fellow practitioner for these leaders. And I sit sort of between the board and the CEO or the senior leadership team, with probably 10 or 20 of these companies right now just trying to help them figure out how to grow, how to scale, how to avoid walking into the blades of a fan, if you will, as a as a leader as a manager and also coaching boards and new directors on boards, rather their venture capital people who are wildly smart at modeling but don't have a lot of experience being on a board of directors and so how do we intervene with management without compromising their ability, their proprietary feeling about their baby and their ability to make things better? And yet be able to add value and eliminate hurdles for them. All of these things are sort of born just from battle scars, most of it me doing things wrong and learning trying to learn from those things. But generally being a student of leadership and teamwork, since I was at Ivey, and Ivey taught me that, and one of my Ivey profs, Richard Hodgson, in organizational behavior is one of the people I think about most in addition to Eric, and the things I've learned from Eric as well. But you know, just about how do you bring people along? What's the difference in a team of people warming chairs around the table, and people who are turned on sort of at a visceral level and really understand the the dream and understand how they reach across the divides, the functional divides, the technical divides, the market divides, to just make sure we don't drop balls and have better than average performance as a team. I've been a student of that and I've been lucky to work with some great people that have given me some good tips and I'll turn it back to you, Eric.
Eric Morse
Okay. Well, thanks, Ron, I think there's, there's a ton to unpack already and I want to leave most of this with you. But just one thing that I heard you say around, you know, your appear as much as you are an advisor, I guess and I think that's so important, right? You've been through this, and I encourage everybody that's listening that has that entrepreneurial desire to find that group of other entrepreneurs that they can bounce ideas off of, and it's just so helpful to know you're not alone, and that there's others in this and when you can find season, you know, men or women, people like Ron, to help you through that. I think it's enormously effective.
Ron Close
I second that Eric. There's this lonely spot for sure as a founder CEO. There are some things that you can openly communicate with your investors and your board, if you have a board and there's some things that you can openly communicate many things with your team and your direct reports, but there's some things that you just can't put down your Dukes and sort of divulge your fears and for that, it's nice to have sort of a confidential comrade who can just say, yeah, no, I know how you're feeling and thoughts and maybe noodle a little bit together on a whiteboard, somebody that you respect, and somebody that respects you.
Eric Morse
Absolutely. Really, really, really important. You know, one of the questions that I'm sure you get a lot, and it's always a hard one to answer, in my opinion, because it's usually not a bolt of lightning. But Ron, when you were evaluating, you know, is this an issue that I want to jump into and start this business? How did you know that was the right opportunity for you, and then go through your decision making to take that leap?
Ron Close
You know, the irony of it was, I think in my life I had either in my early career, I had heavy entrepreneurial inkling inclinations and yet I was doing well in larger companies. I was running new product introduction at a Telco and then running marketing, and then running sales and marketing, and making presentations at the board and at 32 years old, decided, I don't think I actually need to take the risk as of entrepreneurship. I had a home and a mortgage, I had a wife and two children and bills to pay and all the scrambling and it was starting to make some build. The decision for me to start a company was one that I had to de risk completely along with my amigos there were three of us that, we actually started Netcom Canada in those days and it was one of the earliest and largest Internet Service Providers back in those days. We started it in, you know, in our in early 30s and it was it was a process of writing a business plan. Now, I mean, a detailed 85 page business plan with a model that's nested with driver sub charts that feed revenue and feed headcount and labor and the ability to do what if analysis to see where the risks are and because I needed to mortgage my house and cash in my rsps, and put everything on the line for that first startup, I had to de risk it and so that was the process, I went through. What I encountered and what I've encountered, since it's sort of like, there are a couple of small number of really important things that define a really compelling business plan, or a business idea, and one of them is just the most important, perhaps is an effective and differentiated solution to a big problem or opportunity and there's a lot packed in there. It's an effective solution, it really does work, it's differentiated. It's a little bit better than the bad guys. The problem or the opportunity is actually material. I've introduced it over the years including my teaching days at Ivey this concept of a bleeding neck wound. You know, I would rather sell gauze to somebody bleeding from the juggler because they desperately need it and it's an easy sale, if you're standing there at the right time with a solution that they're going to die with, then a vitamin that you know, you can be even better. I know you're well now, but you could be even better, that's a tougher sale. So, and the size of the opportunity is important just because we're going to work our butts off no matter what. We might as well work at large, fruitful spaces. So one, there are a couple of other things I want to mention in terms of at the top of the iceberg, what we look for in really compelling business plans. One of them is that a differentiated solution that works in a large and attractive market. The second one, perhaps not in any order, is just attractive economics and, you know, you've got to be able to acquire customers at a rate that you can get a sufficient payback. So you can pay the bills and change the world, and have an impact on people, and your employees, and your customers, and your shareholders. So there's no avoiding attractive economics. The third thing is a credible team with a credible plan. I spent five years that I'd be trying to teach how to write credible plan and with varying degrees of success and I've spent 10 years since then, really just working with a lot of startups working through that, but there's nothing magical about it. Don't leave wiggle room for me to furrow my brow and say, yeah, but did you consider this? What about the competition and regulatio or the economics aren't attractive? Or you've never done anything like this before? Or no one's ever done anything? And this is so new and unproven in terms of the market poll, and demand. There's some no brainer stuff that you yourself, if you sit back all you entrepreneurs with an honest assessment of your idea and your thoughts, you would say like it is this compelling? What makes it compelling and what makes everybody I talk to my mom and my dad and my friends, and whoever it is a little bit skeptical that are you sure this is the one? It's not rocket science.
Eric Morse
No, you know, but I love how deliberate you are about it on and some people one, we still use the bleeding neck analogy. Neck one analogy, I love that versus the vitamin, it's still something we we use around it. The other thing is make sure it's big enough, again, is this really going to deliver on kind of the lifestyle and the interests that you have? You're going to spend a lot of time with it, so you're going to enjoy it.
Ron Close
Like everything there. Eric, there's so there's tension and you know, I work with a lot of companies now that are wrestling with Is it a Canada only play? Is it a global play? Can we afford not to go to the US What about the UK, Germany has all kinds of opportunity and stuff going on and there's there's a tension between sort of the simplicity of a single market with single regulatory rules, and you can know who the competitors are and understand a little bit more of demographics and consumer behaviors, and the wild complexification if that's a word that happens when you move into a new space, perhaps with new investors definitely with new consumer behaviors and regulators. But is the Canadian market big enough for some of these FinTech startups? And you know, it's a tease, and I think over the battle scars of my life, I've really developed an appreciation for I think it was Geoffrey Moore that wanted to hit the head pin first and you know, if you can win in Canada, and dominate in Canada first and perfect your model, if you're Canadian, if you're American, I mean, in your space, the space, you know, that's perfect your model, debug your assumptions in terms of cost of acquisition and cost of service and churn rates or whatever the economics are the lifetime value, whatever your economics are, debug them, understand the sensitivities, figure it out, and then propagate like hell.
Eric Morse
Yeah and it gets back to your thinking about and talking about de risk. You know, for those of you that may be at Ivey or Ivey grad, so the nine step process we teach is came from Ron, I think he built on stuff that we had done in the past, but it's a process, and a lot of that process is about de risking and I think there's this kind of misconception about entrepreneurs, that they're these huge risk takers. There is some risk in anything that we do, but the idea that I think the successful entrepreneurs take is, there's a body of risk, now how do I bring it down? How do I de risk it and into something that I can manage, and I'm willing to go forward with? That de risking piece is I think, so important.
Ron Close
There is a corollary to that and I couldn't agree more, and I spend quite a bit of time if you're going to lose sleep as a founder. What could go wrong? You know what significantly could go wrong? I don't necessarily just mean a black swan event, that's an unexpected gotcha but just all the little things that can go wrong that could hurt you, what meetings do you have tomorrow? We as founders, and leaders, we spend all of our days and nights thinking about what could go wrong? And what am I going to do? And how can I insure myself against it? But one of the things I wanted to add as a corollary, there is the encouragement to think as a leader about what could go right? What could go wildly, right? You're a year into a startup, you've gone from six people to 23 people at 41 people and your team is busy with the block and tackle building channels, and building products, and hiring people, and getting your board decks together, and your dashboards together, but somebody's got to think about what could go wildly right here. I often encourage these founders, you know, tomorrow morning, the phone rings, and it's a blow your hair back, good news proposal from somebody right out of left field, and it changes the whole trajectory of your startup phone, what was the offer? Why is it so attractive? Why did it blow your hair back? Figure that out and go make that phone call happen.
Eric Morse
Yeah, you know, the worst thing and you've seen it, I've seen it, I'm sure Ash has seen it as well, is when an entrepreneur doesn't make it, because they couldn't deal with the success and you know, so again, that planning that de risking so important. One of the things that I've always admired Ron, about you in terms of the the ventures you've been involved with, and even when you've come in as president and is really team, how you've put team around, and I think it's probably part of this de risking to some extent, can you kind of take us through your thoughts around team and why it's so important.
Ron Close
I always have felt like I'm the weakest link in the chain and so, I really have relied heavily on very talented people. One of the things I tried to add value to is, the process of creating a true team. A team where everybody, as I was mentioning earlier, everybody does understand the objective and the goal, what we're worried about going wrong, what we want to see to declare it a success, how will we know if we're winning? I think teams are vehicles for getting almost everything done. I think if you're an artist or an individual contributor, at the most finite level, perhaps that's not true. Even artists have teams, even tennis player and single sports credit their team. I think the skill set that is quite valuable is the ability to contribute to a highly functioning team, make it a highly functioning team. It means watching body language even as appear around the table, watching body language of the people around the table, are they leaning in or are they leaning out? Too cool for school? Do you have their heart? Do you have their head? Do they have a voice? Do they have an opportunity to contribute even if they're introverted instead of extroverted? What can you do to make sure that people buy in and feel like they're an important part of this team effort? And I think communication and context is key there and that the courage to actually share what what you're doing and why and what you're afraid of, and why, and what you're hoping for, and why, and then listening, and adapting, and changing the direction maybe even changing the goal, but that magical ability to actually create a kick ass team is something that's valuable at all levels. And in fact, I would say, you know, I've been the chairman of YPO here in Toronto, in my earlier life, young presidents organization. I've worked with a lot of presidents and I think one common feeling they have had is the surprise when they sit down at the president's chair and none of the leavers that they thought would have, if I ever ran this place, none of them are connected to anything, you still have to win through persuasion, you still have to be credible, you have to be respectful, you have to invest in buy in, and look not just at the what, but the why of explanation, and all those skills, you start practicing with your first job and your first team. If you can't carry a team along within a group of peers, you're not going to get the job that is the formal authority, hierarchical leader. It's even more important when you're in that role to put down your dukes, leave your ego at the door and say, I might be the president, CEO of this company, but teach me what's going on, tell me what you can bring, you know, stuff that we desperately need. I'll provide as much context as I can, even stuff that I'm not sure you might need but I'll trust them, that you're an adult, a smart adult with great training, and you're going to bring all your gusto to the challenges at hand.
Eric Morse
I think there's a lot of leadership lessons in that, Ron. I think, you know, being a good leader is very much working through your team and getting them engaged heart and mind. I love that idea. Can you speak maybe just a little bit about this idea of the right people on the bus, the right people on the team? And I think you've said a little bit about that from an attitudinal standpoint, but what else are some of the things that you think that and I know, you had a team that you work very closely with, and the first maybe first couple of ventures that you went through. What was it, you know, that they brought to the table, maybe that made everything kind of gel for you guys?
Ron Close
Well, I think it's a combination. Obviously, there's, there's sort of complimentary technical skills and that's just that it's too big, there are too many things for one brain or one person, one woman, one man to handle it all, you might be able to get away with it for the first year or so but when you start scaling, and you really start getting into more complicated opportunities or threats, you really get some specialization experience required there. I think, first, there's technical compliment and most importantly, though, I would say is a cultural fit. I know those are overused words, let me try to find better words that might be more meaningful. like, I want to work with people who are comfortable with me sharing ambiguity, if I'm the president, like, I don't want to have to pretend to be smart, and pretend to have answers, and pretend to always be cool and calm, I want to be authentic. I want to trust that you can handle the truth and I want to tell you the truth, I want to be able to say that openly and have you add value, add your magic. I think it starts as much as teams are important, it does start with a culture of the leadership of that team, and the willingness or the propensity to be open, honest, share things, contextually so that you have a fighting chance of coming up with the right answers, to listen and adapt to always, you know, are the people around the team, always considering themselves students? Are they always willing to learn and listen? How we talk to each other matters, how we share our diverging opinions matters, the culture of disagreeing, and improving on each other's ideas matters. The words we choose to use with each other are chosen with a little bit of care, knowing how precious these relationships really are and if you can just get that balance, right, of leaning in and showing emotion, but also being credible in terms of what you're adding substantively with your thoughts. I think I've always been surprised at how strong those teams can be.
Eric Morse
Yeah, I think there's a lot of leadership lessons in that, that I wish were shared more broadly, right now. Let's go into some other things. Ron, I think you've been sharing, you know, lessons learned already. But I also know that that's something you've given some thought to, I think, your role is advisor sitting back, and thinking your role as a teacher sitting back, and thinking through, and you've recently published some things on lessons learned. Do you want to share two or three of those with us? Or maybe just start with one and we'll, we'll play it from there.
Ron Close
I have done a lot of thinking about this and you know what, some of them are quite embarrassing lessons learned and there's some that are more lessons learned from a business perspective. Like I would say a lot of startups have a difficult time really crafting and perfecting a compelling story. They have a difficult time, knowing actually how to organize people, what titles to give, the compensation and remuneration, they have a difficult time with the cadence of management. Every monday morning, we're going to have a team meeting who gets invited? What's on the agenda? What about the thursday afternoon, all hands sessions? What about the monthly meetings? Is there a different team for the product development approvals and processes, the cadence and the frequency of meetings, who attends them, what we talk about is always something that young entrepreneurs are trying to wing it and they're starting from scratch and so there's some do's and don'ts on that front. But what I'd really like to share more than just sort of the, the toe stubbing of a startup getting the cap table wrong or you know, giving equity away for $15,000 to a lawyer and regretting it six months later. I think one of the things for young people starting up whether they're entrepreneurial or heading into a career in a company is to pick the right river. I think I've concluded in my in my life, that it's just a lot more fun to be in a rising industry. In an industry that's exciting, full of innovation, and growth with opportunity, than it is to be in an industry that's sort of declining and shrinking and investment challenged, if you will. Rather you're doing a startup or you're joining a company, I think there's just more opportunity for promotion and learning and growth. If the challenges are positive, not negative consolidation, contraction, cost reduction preservation. The second thought I would like to share there if I could, is to have an attitude. This has been embarrassing, but shine on every rung, shine on every rung of the ladder. So there is no tomorrow. There is no tomorrow, you just have today you have the people you're talking to today, treat every single interaction as that one chance, that thank god, I did my best to be on my game. You never know what might happen and if you if you stop aiming for three rungs above you, and start trying to shine today on these rungs and what do I what meetings do I have tomorrow on? How could I pleasantly surprise people, by just doing a little bit of extra, a little bit more research, a little bit more on the personal front, knowing about them, or their family, or their kids, or their sick father? Just how can I shine on everyone? A little bit extra? I've written down a couple of notes here, I've got a half a dozen of these and I think we want to go through them all but one I want to make sure I don't I don't miss here is to practice the art of persuasion. I think it is related to my comments earlier about being on a team and influencing from within a jury of your peers, you don't have hierarchical authority, but you can still matter to the direction of the team and if you become a lifelong student about persuasion, about being crisp, about avoiding opportunities for red herring discussions, or distractive words that made you miss my fundamental point. It is that opportunity, I think that is quite special to just practice and perfect and continually seek feedback in the art of persuading other people.
Ron Close
Yeah, I think that's great, Ron. I see there's some questions starting to come in. I'm going to ask maybe one more question and if you have questions in the audience, please use the Q&A banner, and we'll get those to run in a minute. So run last one and this is something that I know you've thought about and spoken to but I think given where a lot of the businesses that are maybe listening today are very early stage coming out of that masterclass with Ash. I think that idea of getting your story, right, is so important at that stage. Could you talk a little bit about that, and some of your thoughts there?
Ron Close
You know, I think it starts with people want to be of apart of an important part of something good. And your job, if you're attracting money, or talent, or partners, distribution partners, your job is to make them believe that this company is something good, and that their participation is really important. I don't care if they're the receptionist, or if they're the key investor. So I think the whole idea about being able to convince people that they're an important part of something good has to do with coming to terms with those two sides and providing context. I don't know if that addressed that question adequately or not?
Eric Morse
Yeah, I think so. I think it actually is very related to the persuasion stuff that you were talking about before and I think it's usually is based on a real firm belief in yourself and the idea that you're going forward with right we often talk in class of, you know, if you're ashamed to kind of sell your friends and family on this idea, maybe it's not the right idea for you, you want something that you really feel passionate about. As people we're storytellers, and we respond better to story. So that idea of the elevator pitch always ends up so generic to me that I like the idea and the way you've talked about it in the past around storytelling. What's the story you want to tell about this adventure, and why are you so excited about it, and how are you going to share that excitement, and build that excitement in your team and those people that you want on board?
Ron Close
So well said, it really is about eliminating the skepticism, or avoiding opportunities to create skepticism. It is about very quickly getting to what matters about this venture, and being able to explain it in a very simple and credible way. It's about what's the hard part of succeeding here. You know what the hard part is actually just going to be raising the money, if we can have the money we could operate, we've done this before. Or maybe the hard part is going to be getting distribution. But you know what, we've got a special in with Walmart, or we have this or we have that. It's actually draining the swamp of furrowed brows and questions and skepticism in a very compelling way that doesn't leave wiggle room for people to say, yeah, well keep working on it and you know, come back to me when you've debugged all your, your dusty corners there. It is tough to be complete and compelling about that and it takes, I think, a lot of deliberate practice, and feedback over and over again and I do spend quite a bit of time saying, Okay, tell me what you're doing and why you're doing it. Why does it matter? What's the hard part? What could go wrong? What's the next step? How will you measure? What steps have you already taken to give me confidence that you're you've got momentum already, that you've already demonstrated, demonstrated progress and what's the next few steps through which we'll see progress? So there are some tricks and there's some practice, but it's wildly important to all your constituents to really be able to communicate a compelling story.
Eric Morse
Yeah. Thanks, Ron. Let's go ahead and answer some questions. So I have a question here from Nicole, and it was back to kind of when we were talking about advisors. So Ron, how do you find an advisor with experience to help you? You know, if they're so successful, you know, kind of the ideas? Why do they want to help you?
Ron Close
It's a great question. I think if you generally mingle. There's entrepreneurial communities in London, and in Toronto, and in New York, and Boston, and LA, and San Fran, of course, all around the world. If those are your aspirations, mingle, get out there and meet people, and talk to people at varying stages of their careers and they will know who the influencers are, they will be quick to point you to go and talk to Professor Eric Morse, if you could get time with Eric Morse, get time with Eric, his time is incredibly valuable and that word of mouth, that sort of informal channel, if you will, comes from mingling and being involved in the ecosystems that you hope to participate in. There are venture capital groups, I consult quite a bit now with portaledge here in Toronto, and Montreal, and in North America and in fact, more broadly than that, and there's a number of advisors that that ecosystem have attracted, and they get a bit of a buzz, and a bit of a momentum themselves. But it really is all about circulating and talking and meeting people.
Eric Morse
Yeah, you know, the only thing I'd add to that, Nicole is that, you know, guys like Ash and Ron. I would say the entrepreneurial community is a community that wants to give back, there was somebody there and their career when they needed them. Every successful entrepreneur I've ever known has a story about that and because of that, they're willing to give back. So it's up to you to kind of get in their circle, as Ron was saying, and, make that compelling pitch with your story and if they can see how they can help, I think they very often do so don't be afraid to reach out and make those asks. Okay, another question here asked by Shokreth. Ron, could you share your experience, the first time you lead a team, what were the big surprises to if there were any?
Ron Close
Takes 130 year memory? I guess my surprises were sort of my ineffectiveness, I might be making some of this up to sort of craft a story a lot of years, I can't remember. But I would say I've been surprised that how non intuitive team leadership really is and you know, often as a child, I was on basketball teams and football teams and things like that and they were different. When you start getting into a business team, you start getting into one where there's hard and fast objectives and consequences that aren't just losing the game or losing the trophy, but maybe losing your job or helping others lose their jobs. So it gets to be pretty serious pretty quickly and just a little bit of coaching about making sure there's clarity about the objectives of the team, making sure that people have a chance to opt in or opt out of the team. It's very difficult to form a team dynamic, if there's some people that just frankly, don't want to be part of this project and so you need some process and some authority to set the team off in the right direction, right at the start. Then I think it is about watching human behavior, body language and offline saying geez, Ash, I've noticed that you haven't said a word in the last three team meetings, I want to make sure you're okay, ss there anything that's not working for you? What are you seeing what's turning you on? What's turning you off here and being able to sort of cajole people around behind the scenes to get that passion all marshalled in one direction.
Eric Morse
Yeah. Thanks, Ron. It's great. Let's see, we have an anonymous question here. Could you please tell your story when, this is a great question. When you were at your lowest point in your entrepreneurial career, nothing's working, all those headaches, how did you come out of that?
Ron Close
That's an easy one for me to remembe,r I was a CEO of a publicly traded software company. It was a reverse takeover, which was a public shell that we moved an operating company that really had no business being public at all, really no revenue as wireless software with a lot of intellectual property and I in my amigos, it was in our third or fourth venture together, sort of moved to Windsor, and during monday to friday, and commuted from Toronto to Windsor, and rented a house with five bedrooms and, and all lived together and worked our butts off for a couple of years on successfully in a public environment. It was quite a humbling experience to go through that. At the end, what we were trying to do there is actually find product market match, we had great technology, but there are always reasons for the customers to say I'm not quite ready to invest in this new innovative technology, it seems a bit risky, for one reason or another and where we found a dozen customers, we needed 120 users, it was big software for selling to British Telecom, and Bell Canada, things like that. We just couldn't find that kind of volume of success and in the end, we ended up selling it to Research In Motion. They bought it really for the technical expertise. We had some great engineers, wireless software engineers, we had some intellectual property that they wanted to get ad, you know, it was a way to get out of the skin of your teeth situation here. Nobody made any money, nobody really lost much money there. At one point, I was funding payroll on thursday nights through my my own bank account to make sure that people got paid tomorrow and it was just so damn stressful. So untruthful in the end and so trying, the the team helped. Having a team of competent people that could just look after different chunks of this challenge was really helpful. In the latter stages, even the team went away because I couldn't afford to pay everyone at that stage of the game. I think that still is with me, I don't think there's a happy ending. I think I got out of it and we landed the plane and we walked away with all kinds of difficult, future crafting scars, to be honest with you, it hurt, and it still hurts when I think about it.
Eric Morse
I remember that time, Ron, I think there were also some problems with your driving between Toronto and Windsor. If I remember,
Ron Close
I got the odd speeding ticket here, you're right. I knew you'd remember that.
Eric Morse
Sorry about that. You know, there's a follow up question that I think is kind of interesting to to go with that one and it's it's from Sarah, actually, she says, should an entrepreneur always be thinking about an exit strategy?
Eric Morse
Sarah, firstly, it's nice to hear from you again. Hi. Yes, and no. I mean, I know that's a waffling answer, but no, to the extent that the thing that will make your accent most attractive is that you're a good operator, and you spend all your time thinking about business success, and delighting customers and building teams and to the extent that you're always looking at the door to compromises your focus on growth and success. In fact, I've competed with companies in the past that really were begun with the end in mind, but the end was really a financially driven and of a consolidation play a sellout, Nike or something like that and they failed to do the operational hard work to create a sustainable company that you could operate if you had to. I've always valued the ability to operate these companies and knew that that was creating value in and of itself. The other thing, though, is what what might happen here, like where could this end? What if we have wild growth opportunity, but we have to fund the working capital, you know, if it's a $500 cost of acquisition per customer, but it's an 18 month payback on that I got to fund a whole bunch of growth there while they wait 18 months to get the cash back. So some successful companies really do require a lot of strategic thinking about the financing steps that we're going to have as we go forward here. To that extent, beginning with the end in mind is always helpful, and knowing to whom might we speak what might we talk to a strategic partner, a private equity group, an angel group that might increase their investment, where could we go? That too is getting back to this losing sleep at night thinking what could go wrong here and making sure you're out in front of that wave of risk to say, even if these guys lose faith in us, I have a couple in my back pocket that can sub in really nicely and you're always working those angles to make sure that you can never be victimized, and that your teammates, therefore can never be victimized and as the leader, that's the least you have to do.
Eric Morse
And I think that's a great answer. Ron, thanks. This one's from Ash, different ash. Any learnings from starting out with either the right or the wrong partners having to remove partners do you have any experience you could share?
Ron Close
I do, and my experience, there really is more as an advisor than my personal direct experience just to protect my friends. There's a lot of common errors being made in very early days and those are errors and choosing your partners, those are errors in structuring the management team, and the equity sharing early, those are errors in that cap table, and who you allow onto the cap table as an investor and it's so difficult a year, or two later, to unwind some of these things. Sort of a pad example here is you know, you get a an MBA from Ivey, and you get a Waterloo developer and they have great complementary skills and they're both needed in, in a tech startup, a digital startup, for example, but quite often one or the other and maybe the clearest would be the developer is a great minimum viable product sort of wireframe designer and getting the product originally to Market. But two years later, you might have 25 engineers working for her or him and now she has to be good at allocating work and organizing an engineering team, and setting up a QA team, and attracting engineers by doing public speaking out in the community and yet you gave her the CTO title, and 30 and 5% of the equity and it's hard now to actually say you know what, we need a CTO, that's really got capabilities of a full CTO, or a fuller CTO. And so under title in the early days, you know, save the chief of something word for for later, treat equity as something wildly precious. I know that cash is precious, but so too is equity and that's that's attention another tension you'll experience. Just think about what might I have to do to undo this commitment right now, before you get into them?
Eric Morse
It's such a tough thing. Great answer, Ron. It's something that people should be thinking about as they're starting up and it's it's a particular dilemma when people start with friends, I always tell them, you know, put those agreements in place while you're still friends, because it gets a lot harder as we go down the road and different aspiration levels between partners, and all of those things that are tough to unwind later.
Ron Close
If you haven't been brave enough to have those conversations, while things were good, like the shotgun clauses, and what happens if we fall out? How will we unwind without ruining our friendship here? Talk about that, before it goes astray. I hear you got half the battle one.
Eric Morse
Way better position for sure. One thing maybe I'd ask you, again, is that, and again, I've read you've written on this, I know, kind of where that is but I think it's something that hasn't come up and it you talk a lot about a balance, you've got to find a balance. I think it's between yourself, investors, employees and customers and, as an entrepreneur, and you're thinking about these different stakeholders, how do you find that right balance?
Ron Close
You know, I think balance is a big word, it certainly has been in my career. As I've been talking to a lot of teams in two different ways. One of them is sort of the work life balance issue and one of them really is the difficult role of balancing the various and sometimes differing needs of shareholders, customers and employees, specifically, that three legged stool, if you will. The trick of running a company is being able to find a successful sustainable position that makes the shareholders happy, the customers happy, and your employees happy all at the same time and to be able to grow and continue to innovate and succeed that way. You can at any given time, sacrifice your employees for your customers and just rule out vacations and weekends, or you can hire more employees, but you might have to raise more money, you know, if the quality of life isn't good enough, so that difficult balancing act is a sensitivity that I would love to see entrepreneurs have because it's what the job of leadership is balancing the various interests of your investors, your customers and your employees, on the life work balance, I think I've come in my older age to prefer different words like I really like you choosing the places you want to have impact and being deliberate about thinking about the impact, you want to have, I want to have impact on my kids. I want to be there to have impact on my kids, I want to have impact on my company, I want to have impact on my on my friends. So the wagon wheel of your time allocation, to me isn't really about, you know, balance between work and play. It's really about you being deliberate about choosing where you want to have your impact, and then saying, am I am I walking the talk? Am I actually living up to my desired way to spend enough time to have impact with my kids or to have impact with the company and just make it happen.
Eric Morse
Yeah, I think that's great run and I think one of the things that is talked a lot about in business today is purpose. The idea of purpose with impact, I think is is really important, that we all think about, frankly. We reallocate our time differently if we all thought about that a little bit more carefully. We're almost near the end, Ron, I'm going to just give you the chance to maybe say, or talk to something that we haven't had a chance to speak to today, or just, you know, kind of the last thing on your mind. And
Ron Close
Thank you, that's very kind of you. I really want to end with one concept and I think it's the concept of character and that probably won't surprise any of you and I'm sure you all live up to this every day or try to as as we all do but it's something to think about in advance because in your life, your character has already been tested. It's going to be tested again. To the extent that you can think about what you might do, and what they might do differently, and how you might react when you're cornered when these things are sprung upon you and you have to think on your feet, it's helpful to sort of draw your own lines in the sand with a little bit of private time in that in that sort of the confidential circle of your own thinking there. Who are you? What do you stand for? What do you want to be known for? What kind of person do you choose to be and that character, if you've thought about a deliberately and you've given yourself a chance to actually write down some things and pick some words and pick some priorities, it will start to shine through and it'll shine through and work and it'll shine through and play with friends and at the end of the day, when I think when you look back on your career, or your family, it'll be one of the things that brings you sort of the most joy is the impact that you've had on people, those people who may have kindly said you are a role model. All of that can go away in a heartbeat, if your character becomes questioned, or suspect. It's something that takes a lifetime to build of constant attention and thought that's deliberate and it can be lost in a heartbeat and a heartbreak. Just think about character as sort of a fundamental ingredient of how you want to be and who you want to be and it improves your odds, I think about looking back when you're as old as I am anyway, and feeling good about your career.
Eric Morse
Awesome. Ron, I'm going to wrap up, Ash then I'm going to throw it to you. Ron, Thanks so much. I you're just one of the best speakers on entrepreneurship that I know and I know, it's because you reflect on your experiences and how you would want to convey messages and I really appreciate it and I know you've made a huge impact on me and on the business school and the things that we still teach, you know, years after you've been with us in the classroom. It's really appreciated.
Ron Close
Eric, it's my honorand pleasure and I'm a little out of practice. Thanks for bearing with me, it's always an honor to be with you.
Eric Morse
Well, the three things that struck me, you know, deliberate impact and do that with character. And I think those are just great life lessons for all of us. So thanks very much.
Introduction/Outro
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