There is a belief among some that entrepreneurs get better in new business start-ups their second time around. Recently, three owners of fast-growth Utah County companies I have come in contact with have persuaded me to believe in that theory.
Take Paul Allen, CEO of Ancestry Inc. He had great success as one of the lead entrepreneurs of Infobasees Inc. but, through some poor decisions, found himself in a minority ownership position and control got away from him.He learned. Now he is squarely in control of his new venture that will, in total revenues, soon leave his first venture in the dust.
My new friend, Hal Wing, CEO of Wing Enterprises in Springville and current mayor of the city, lost Wing Enterprises to a group of investors. After buying it back at a sheriff's sale, he has already taken it to greater heights than even he might have imagined.
Then there is Eric Ruff, CEO of Power Quest. He lost an Orem company he founded, Gazelle Inc., along with his wife and family, as he learned the hard lessons of concentrating on building a company rather than giving necessary time to his family.
Now having learned those painful and costly lessons, he has built Power Quest into the fastest growing software company in Utah, and probably the United States, and perhaps the world.
Power Quest had revenues of $25.7 million in its fifth year and will probably double that in 1998. That is faster growth than either WordPerfect or Microsoft.
Ruff best explains this "second time around" philosophy as he speaks of identifying failure points in building a business and then working to remove those causes of failure.
"If we remove the possiblity of failure from our businesses, it just makes sense that the odds of success will rise," Ruff says.
He believes the only true way to identify the failure points is to live through them. "People ask me what they need to be a real entrepreneurial succcess. I just tell them it needs to be their second time."
In a presentation to some 220 BYU students Tuesday, Ruff openly identified the mistakes he made in his first effort at being an entrepreneur and then contrasted them with what he is doing correcly in his second effort.
For example, this "second time around" thinking has motivated him to hire only battle-scarred veterans in key positions. "With Grazelle, I hired inexperienced people thinking I was saving money. Not any more. We learn lessons from the battles we have fought.
"With Gazelle, I hired good friends and then spent time bartering with them as I had in our friendship. That didn't work. Now all my key hires are those who have had significant previous experience.
"At Gazelle, I spent 90 percent of my time with computers. I felt people were a bother and just got in the way. Now I feel that `people networking' is super important. We are a team. I am in charge, but it is no longer me and them, it is we and us," he told the students.
Ruff felt at one time that the more employees the better and was averaging revenues of only $40,000 per full-time employee (FTE) the first time around. Now he is averaging more like $200,000 in revenues per FTE.
He is also a great believer in a fluid business plan, while before he was totally reactive and was without focus.
"We are very pro-active. We are forging our own trail. I like to explain it this way: We are a $1 billion revenue company. All we are currently missing is the revenues, but we will be there," he said with self-confidence that convinced me.
"As a first-time entrepreneur, I thought I knew something about business, but I didn't. Now I understand my strengths and weaknesses, and I have vowed to overcome these weaknesses. Now I spend 90 percent of my time with people - not with computers." He added, "This includes my new family."
An additional person he spends much of his time with is his brother, David, who is vice president of operations at Power Quest.
"I know what they say about blood in a business being a creator of problems; however, hiring David was the best hire I ever made," Ruff said. "He and I won't be done with this company until we reach $1 billion in sales.
"I believe one must have the ability to dream. There is no way I am going to let reality get in the way of my success," Ruff concluded.
To sit at the feet of Eric Ruff is to learn from a changed man; he learned those hard and painful lessons while a first-timer then succeeded the second time around.