A Tale of Two Exits, Part 5

Build a support system, get lucky and final thoughts from Tom

This is the fifth and final installment in a five part series, A Tale of Two Exits, by Tom Buiocchi. In Part Four, Tom discussed his lessons about acting like an owner, not a manager, and how he was not the hero in the story.

Introduction

Thanks for taking some of your valuable time today to ride down memory lane with me. It’s been a couple of years since my last company was acquired, and after nearly four decades in tech, I’ve stepped into that quasi-retired, old-guy advisor role, which has been very enjoyable. I’ve worked with about 15 early and growth-stage companies — mostly first-time founders with some very compelling businesses.

The frequent and engaging conversations that I’ve had with these next-gen leaders are the catalysts that got me started on this document. Shocker – it turns out that many of them are having to confront and solve the same types of problems and challenges that I (and so many others) have seen dozens or even hundreds of times throughout long careers.

Upon some reflection, I realized that I handled many, if not most, of these challenges very poorly in my first CEO gig, but often better in my second CEO go-round. That revelation, along with the extreme contrast between my two CEO outcomes, pushed me to write this document titled A Tale of Two Exits.

I cover my background more extensively in Part One, but as an introduction to me: I served as CEO twice, and both of my companies were acquired. But the results couldn’t have been more different: the first company (Drobo) was acquired for a single dollar (yes, really), and the second company (ServiceChannel) for $1.2 billion.

In both cases, I followed visionary but turbulent founders, and yet the experiences were night and day. So I wanted to share some of the lessons I learned between those two experiences: what changed in how I operated, and how that evolution impacted the results.

This isn’t meant to be a masterclass or a universal guide; it’s just a first-hand account of the shifts in mindset, behavior, and leadership that helped me grow from a rookie into someone who could guide a company through a meaningful exit.

I’ve organized these thoughts into a “Top 10” list—some obvious, some hard-won. And while I know I’m guilty of a little results bias here, I still think these takeaways are real. Hopefully, there’s a nugget or two in here that helps you avoid some of the painful lessons I had to learn the hard way. We will pickup with Lesson #9.

Lesson #9 - Get an executive coach, or a mentor, or a business therapist

The CEO role is incredibly lonely. There are no professional peers in the company to spar with intellectually, or with whom to share aspirations or concerns – only employees or board members, with whom you have different relationships. Yes, there’s also friends and family on the outside – but often, you can’t (or won’t) be truly transparent with any or all of them.

In a 2012 Harvard Business Review study (yes, a little old, but still relevant), half of CEOs reported feelings of loneliness and 61% believed that it hindered their performance. I certainly felt that way as things started to move south at Drobo – I felt like I needed to keep up the optimism in the office, had to project a strong footing with the board despite my concerns, and had to keep a balanced game face on with family and friends.

Executive coaches and mentors can provide a sounding board in these moments, a place to share thoughts, concerns, and ideas before they are put in front of the board or C-suite team. When a coaching or mentoring relationship is fostered correctly, CEOs can gain trust and confidence and will be able to navigate complex trade-offs to get to the right place – and it won’t be because the coach/mentor told them the answer, it’ll be because the CEO was able to talk it through and explore various angles and scenarios with an independently-minded peer. This is an important point – a great coach will help enable you to make progress in your thinking by holding a mirror up to you with a valuable, unbiased perspective; not by telling you how to do things.

I had met Jeff (my coach at ServiceChannel) earlier in my career but had always looked cynically at executive coaches like him – what did they know about our business, or about the nuances of the executive team, or about our competition, or about me? How could they possibly help? I’m not sure of the events that led me to call Jeff early in my ServiceChannel tenure, but I am glad I did. It turns out that many of the things that I was facing as a CEO were just oft-repeated personal, people and team dynamic issues that a lot of CEOs and leaders face. I didn’t have the benefit of the pattern recognition, or the clarity of thought of an arms-length colleague to understand that, but Jeff did, and other executive coaches do as well.

Jeff helped me think through complex trade-offs that included strategy, people, team building, feedback I needed to share, blind spots that I had, etc. And he was there to listen to, and redirect my rants, center my emotions, and check my ego and intuition – all in a way where I felt like I was walking myself into the solution, and without ever feeling like he was telling me what to do. Jeff had coached top level CEOs, and professional athletes and coaches in his past, so he had seen enough ego, drama, and tension to last ten lifetimes – which made my problems and challenges look like second grade arithmetic (at least to him).

I ended up encouraging everyone on my executive staff to hire a coach for themselves (with anticipation of benefits to the entire team and company). Interestingly, the range of acceptance to resistance could not have been wider - some folks dismissed it as I had for years and others embraced it. In the end, these engagements helped us surface a lot of the tension in both our strategy and our interpersonal communications. It wasn’t always easy, but I learned a lot on how to manage individuals and cohorts better, and how to ultimately get the most out of the machine.

LESSON LEARNED - Life is complicated and so is being a CEO. And it’s a lonely gig. Don’t hesitate to get help when and where you can.

Lesson #10 - Be lucky

I know it’s completely disingenuous to blame a bad outcome on bad luck, and certainly I can’t do that with Drobo. We didn’t execute well, and we didn’t anticipate the importance of a very powerful indirect competitive threat (the cloud), so you can say we made our own bad luck.

Conversely, it’s hard to fully credit a good outcome to strong leadership, sound strategy, and precise execution without acknowledging the “luck catalyst”. There are thousands of companies out there who did things right but who never had the killer outcome because of circumstances that were well out of their control – market timing, new competitive entrants, macro or other world events, etc.

We did a lot of things right at ServiceChannel (and many wrong), but we also got tapped by the lucky stick a few times:

• The COVID pandemic – as horrible as it was – served as a positive catalyst for our business. Chain locations had to repeatedly shut down and open up, had to clean and disinfect at unprecedented levels, and had to reconfigure their physical locations to accommodate the new world (think plastic shields, more drive through and pick up, greater spacing between tables and aisles) – all of which led to “more work orders”, higher platform usage rates and ultimately, more dependence on our product. We had nothing to do with this; we just “luckily” benefited from being at the right place during this terrible time.

• When we had invested in ServiceChannel in 2014, we had decided to operate the business until we had line of sight to $100m in ARR and then consider going to market to sell the company. It turned out that our timing worked out well (again, luckily) from a markets and multiple standpoint - if we had hesitated and waited even 6 months, we would have been faced with a market downturn and multiple contraction the likes of which we hadn’t experienced in over a decade – which probably would have resulted in either (a) no exit, or (b) an exit at a significantly lower price. Again, this was completely out of our control; we were fortunate in the timing this time around, but there are many who have been caught in market squeezes that superseded whatever great execution they had been achieving. Luck. Out of your control.

• And there are more “lucky” themes that lined up – our timing allowed us to avoid the post-pandemic inflation which hurt the markets, we were fortunate that the FTC never stuck their nose in our eventual M&A process, which would have added time and possibly pushed us out of the lucky timing window we experienced. Much of our outsourced engineering talent was in Belarus, who became a difficult actor to work with once Russia invaded Ukraine, which happened relatively soon after our deal closed. Lots of things you can look back at and say, “we were lucky”.

LESSON LEARNED - I’ll add the same comment here that I did earlier on another point. You have to be both good and lucky. It’s hard to be successful if you’re bad and lucky. Similarly, good and unlucky don’t often bring you the result you want, either. Be good – and get lucky. Sounds like advice you can’t really make much use of, but sometimes you can manufacture luck and other times it makes sense to act quickly so as not to tempt bad luck, which as we all know comes and goes to its own rhythm.

Conclusion

OK, that’s it. I know, I should have given the TLDR warning earlier and this doc over five parts is already long enough. But here are a few final thoughts:

Being a startup CEO (or Founder and CEO) is hard in any and every circumstance. There’s no rulebook or ten commandments on how to do it. This doc isn’t a masterclass or a universal guide; it’s again just my first-hand account of growing from a rookie CEO into someone that led a company through a meaningful exit.

But, us “old guys” do see folks making a lot of the same mistakes over and over, and you want to avoid making them if possible. Make new mistakes, not old ones.

Don’t be discouraged. Circumstances often change, and sometimes you do things that don’t work out — but which might have worked had things been different. It’s important to be aware of the problems you are facing and decide whether and how you need to evolve your approach….

And yes, getting lucky is super important. Getting lucky isn’t predictable, but you can “be ready” for when you get lucky….

If you have more examples of “things I learned between the first and second time”, or other lessons you may have learned along the way, please do share – you’ll be doing everyone a great service!

Thanks for taking the time to read my story. I hope it helps, and best of luck in your journey.

Thank you,

Tom

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About the Author

Tom Buiocchi has helped lead 5 companies to exits as CEO, founder, and marketing executive over a 30+ year career. Most recently, Tom was CEO of ServiceChannel, a company serving global retailers with a platform and marketplace for facility repair and maintenance. ServiceChannel was acquired for $1.2 billion in 2021.

Prior to ServiceChannel, Tom was the CEO of Drobo and served in marketing leadership roles at Brocade, Apex and HP among others. Tom has served on boards of venture-backed, private-equity, and non-profit enterprises and currently advises a wide range of early-stage start-up companies.

Tom holds an electrical engineering degree from Union College in Schenectady, NY, and an MBA from the Kellogg School at Northwestern University. To get in contact, please reach out to Tom on Linkedin.