Joan herbigpresentation07.01.10

Lessons Learned in Start-up Land
Presentation for the TAG/ATDC Entrepreneurs
July 1, 2010
Joan Herbig
CEO, ControlScan
www.controlscan.com

Agenda
Overview of Experiences
What I’ve Learned
Any Questions?
2

Personal Background
Serial entrepreneur with > 23 years of experience in technology
B.A. in French and Masters in Computer Science
Serves on the Board of the Technology Association of Georgia (TAG)
Married for a long time (to a very patient man) with 2 children
Interests include traveling with family, cooking, hiking, and (someday I hope) wine collecting
3

Professional History
Digital Communications Associates (1987-1994)
Leader in PC to mainframe connectivity solutions (IRMA)
Began career in customer support, moved into marketing, product management, international marketing and product line management
DCA was acquired by Attachmate in 1994
“CULTURE”
XcelleNet (1995-2004)
Leader in mobile systems management
International Product Manager, then Vice President of Marketing, then President, then CEO
Company was sold to Sybase in 2004
“CHANGE”
Cambia Security (2005-2007)
Security change management solutions
Sold to nCircle in 2007
“MARKET”
ControlScan (2007-present)
PCI Compliance Solutions for small merchants
“BUSINESS MODEL”
4

Current Startup - ControlScan
ControlScan provides Payment Card Industry (“PCI”) security compliance solutions focused exclusively on the small- and medium-sized merchant market (“Level 4”)
Founded in 2005
Headquartered in Atlanta, GA; 44 employees
Sell solutions to merchant banks and ISOs (“Acquirers”) to service their Level 4 merchant portfolios
Level 4 merchants are those doing fewer than 1MM card brand transactions
Customer base of nearly 80 Acquirers representing >350,000 merchants (>80,000 currently enrolled)
Subscription-based model generates recurring revenue
PCI Council Approved Scanning Vendor (“ASV”)
Funded by Total Technology Ventures (“TTV”) in 2007; Harbert Venture Partners and Croft & Bender in 2010
5

ControlScan Transition
Arrival - 2007
Direct customer acquisition; 1,500 merchant customers
Solution for e-commerce merchants only (15% of small merchant market)
No PCI story
No strategic partnerships
Fuzzy business model
Vision - 2008
Ride momentum/mandates in PCI market
Recruit experienced team to complement enthusiastic young talent
Recruit payment experts to the board to build credibility
Focus on small merchants, both e-commerce and brick and mortar
Sell to merchant banks to simplify distribution model
Now – 2010
> 80,000 merchants enrolled
Close to 80 partnerships
Break-even in sight
Recent funding event
6

Agenda
What I’ve Learned
Any Questions?
7

“The single biggest constraint on the success of any organization is the ability to get and hang on to enough of the right people.” - Jim Collins
# 10 - Get the right people on the bus
Surround yourself with people who are better than you
Check your insecurities (and your ego) at the door
Get the wrong people off the bus
Make tough people calls quickly
Your gut is usually right
Treat people well
8

#9 - Listen more than you talk
Hone your listening skills (with customers, investors, colleagues, competitors, peers)
Get comfortable with silence
Use “we” more than “I”
Practice the listening “Game”
“Watch, listen, and learn. You can't know it all yourself... anyone who thinks they do is destined for mediocrity.” - Donald Trump
9

#8 - Stay outside your comfort zone
Being uncomfortable is part of startup life – get comfortable with it
Be decisive – it’s far better to make the wrong call than to make no call at all
Expect many sleepless (and uncomfortable) nights
“Takes risks: If you win you will be happy; if you lose you will be wise.” - Author Unknown
10

#7 - Live below your means
Raising money is hard
Raise as little as possible to capitalize on the opportunity
Best to raise it when you don’t need it
Not a rational process
Get to breakeven as quickly as possible
Understand the evolving business model
Which dials to watch, which levers to pull
Also true in your personal life – allows you to take more risks
“Contrary to popular belief, frugality is the foundation of wealth.” - Thomas Stanley and William Danko
11

#6 - It’s the market, stupid
The most important key to success in a startup is the market opportunity
You can execute brilliantly in a bad market and not succeed
You can execute less brilliantly in a great market and succeed wildly
Get in the game; if the market is ripe (the market will tell you how to improve your products/services; how to price; etc.)
“Opportunities multiply as they are seized.”
- Sun Tzu
12

#5 – Make new friends, but keep the old
Form strategic partnerships early
Build a company for greatness, but have the exit in mind
Most early stage companies will fail, and those that don’t will most likely be acquired
"Our success has really been based on partnerships from the very beginning.” - Bill Gates
13

#4 – Start, Stop, Keep
Great organizations aren’t all things to all people
Learn how to say “no”
Focus can be a differentiator
Doesn’t mean you shouldn’t have a hedge strategy
“Those who built the good-to-great companies, however, made as much use of "stop doing" lists as "to do" lists. They displayed a remarkable discipline to unplug all sorts of extraneous junk.” - Jim Collins
14

#3 - Ask for help
Seek counsel from trusted advisors (especially those outside the organization)
Ask stupid questions, and then listen
Be a Curious George (“Hmmm, really? How did you do it?”)
Write someone every day and ask them for help
“The important thing is not to stop questioning. Curiosity has its own reason for existing.” -Albert Einstein
15

#2 – Obsess on the customer
If you listen, the market will tell you where to go
Form a customer council
Make “the customer” part of the culture
Empower your people…to the customer they are the company
“There is only one boss. The customer. And he can fire anyone from the chairman on down, simply by spending his money somewhere else.” - Sam Walton
16

“Ladies and gentlemen: Wear sunscreen. If I could offer you only one tip for the future, sunscreen would be it. The long-term benefits of sunscreen have been proved by scientists whereas the rest of my advice has no basis more reliable than my own meandering experience.” - Mary Schmich , Chicago Tribune
#1 - Wear sunscreen
Work Hard…Have fun!
Don’t take yourself too seriously
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In Summary
Cash is king
Strive for 80%, not perfection
Avoid “wet logs” at all cost
This is not for the faint of heart
There are NO “Rock Stars”
18

Agenda
What I’ve Learned
Any Questions?
19

Joan herbigpresentation07.01.10

by Melanie Brandt on Jul 01, 2010

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