I often write about business and values from the point of view of the CEO of a privately held company. And as a business owner, I take great pride in using a business model that I believe delivers the most value for our clients. That being said, I am the first to warn of the “evils” of Private Equity or Venture Capital backed business models.
My software company, Synthesis Technology, is frequently pursued by a range of PE firms. Our latest recognition by Inc. Magazine as “one of the fastest-growing private companies in America,” brought dozens of these firms out of the woodwork. Naturally they are all interested in a company with a successful business model, a recurring revenue structure, and actual profits. They all try to get the door opened by offering “growth equity” and being willing to give the founders the opportunity “to take some of their money off the table.” I entertain a very select few of these advances to make sure I know what the options are and the mood of the industry. We’ve actually walked away from real offers.
The reason we don’t take the money is two-fold.
One, we don’t exactly represent the type of enormously scalable business most of these outside investors crave.
Two, as soon as there are professional money managers in the mix, our firm’s priorities would have to shift.
And that’s what this blog post is really about; how money and outside investors change a company, and usually not toward the best interest of its clients, employees, or owners.
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A couple weeks ago, it was announced that my company, Synthesis Technology, made this year’s Inc. 5000 list of fastest growing private companies in America. It is a great feeling to be listed among the many successful companies across the U.S.
Synthesis experienced tremendous growth (98%) from 2011-2014, which qualified us for this elite award. It is very humbling to receive an honor like this and it is a testament to the hard work and dedication of not only our employees, but our clients as well. Day in and day out, we work together to make investment management firms more efficient and productive with their marketing efforts, while minimizing their business risks.
Over the past few days, I took some time to reflect on how we got here. What key factors lead to high-growth? How does being a privately-held organization impact growth? How can we sustain our growth as we look to the future? I wanted to share some of my thoughts and lessons learned as well as thank those that have helped us along the way. Continue reading →
by John Toepfer
For most software development projects, both internal and externally sourced, success is not a binary equation. There are often compromises or partial satisfaction in either scenario. At the end of the day, the question becomes, how large were the compromises and, taken as a whole, do they equate to a failure of the project?
Over my 25 year career in delivering software solutions to major corporations, I’ve seen both commercial solutions and internal development efforts that have struggled. My observation, however, is that commercial solutions are much more likely to succeed in the end and to represent the smart and sustainable path. It’s amazing how often I watch internal development initiatives that either never get off the ground or fail in some crucial way. In either case, the remedy is to write off that investment and start over shopping for a commercial solution.
As you’re reading, you might argue that my evaluation is biased based on the fact that I own and operate a technology firm. However, if success or failure of an internal technology development effort is measured against the same criteria as a vendor solution, then bias is not a factor. Continue reading →