Published Work

An Overnight Business Success Takes 20 Years

One of the American dreams has always been to build a business from scratch and sell it for a not-so-small fortune. We had this same dream in the 1990s but we wanted to speed it up so the entire thing from start-up to sale could happen in a year or two.

In a few rare cases, that's exactly what happened for these "designer" businesses. The battle cry from entrepreneurs then was exactly what my father had told me for years: "Patience is a virtue shared by fools and jackasses." As so many advertising campaigns reminded us: "Speed was not the only thing; it was everything."

The Internet bubble boosted that part of the American dream where we all want to get rich quick. This is the part where we look for every shortcut there is to avoid putting in the required time or effort to get there.

As much as an ethic of hard work and building something slowly over time is part of this American tradition, others have different ideas. We want to somehow "leverage" Lady Luck and strike it rich by taking any shortcut we can find.

Sometimes, as we have seen with Enron and Tyco, this leads to some people committing crimes. Mostly, though, it leads to a model of unrealistic expectations about how to get there and over what period of time it takes to build a profitable business that can make you wealthy.

"There is a tendency to think that great businesses are built overnight," said Jonathan Kalman, president and CEO of Katalyst, a Midwest venture capital firm. "The reality is that "overnight" often means 10, 15 or 20 years."

We have many well-known "overnight success stories" in the Midwest. In 1956, Jack Miller started an office supply business in his dad's chicken store. Overnight (42 years later), he and his brothers (Harvey and Arnold) sold their company (Quill) to Staples for what became worth about $1 billion.

In 1974, Mike Blair founded Cyborg Systems, which developed and sold human resources software. The company's first product was a payroll software package named VERS 80 Batch for mainframe computers. It was successfully installed in August 1974 at Reflector Hardware Corporation in Melrose Park, Ill.

Today, Cyborg's integrated workforce management software is used at more than 6,000 locations around the world. Overnight (30 years later), Blair sold the company to Hewitt in June 2003 for $43 million in cash plus other performance payments.

Other local entrepreneurs have been growing their businesses for a long time without a liquidity event. Jay Goltz has been building Artists' Frame Service for 25 years. Dave Ormesher at Closerlook has been building for 16 years. Steve Shadrick at SGS Net has been at it for almost 10 years.

Building a real and sustainable business takes a long time. If you want to get rich quicker, you should get a job. You will make more money over the first five years working for someone else than working for yourself.

This is the basic change we need to make in our thinking while we build our businesses. Think in terms of decades rather than years. This is hard for a society like ours that is built on immediate and short-term gratification through e-mail, cell phones and instant messaging.

So what does it take to build a business over a long time? Kalman characterizes it as resiliency. He added: "It takes time for a business to establish itself and to build the internal systems and processes. [It takes time] to determine the right personnel to make the business perform [and] to really understand the customer."

This resiliency is for you to be able to weather the good and bad times. You need to be able to ride the roller coaster up and down. You need to be able to celebrate and remember the good times. You need to weather the bad times.

You need not wallow in that hopeless feeling for too long but look for changes to make to improve the situation. Mohnish Pabrai reminds us that "when things go very well, you learn nothing." During bad times, you need to remember that you have been there before. You have survived and things will get better.

Finally, during the good times, we need to be humble and remember that every business person meets the same people on the way up as we do on the way down. Guaranteed.