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3 CEOs share their journey for taking their SaaS startups through exits.

Building and Exiting a High Growth Startup | Panel Discussion

This panel discussion, presented in partnership with PNC, North Coast Ventures Managing Director Todd Federman talks to three founders of successfully scaled Cleveland-based business-to-business (B2B), Software-as-a-Service (SaaS) startups. The journey to a successful exit is always unique and individualized; the panelists highlight the highs and lows of their own journeys, and provide pieces of advice that they learned along the way. Topics of discussion include building a great team, working with industry trends, and finding partnerships and mentors. 

Listeners can gain not only an inside look into the mindset of a founder building up to an exit or major deal, but the experiences of innovators working within the Midwest, a region that North Coast Ventures is committed to supporting. 

Watch the video or read the full transcription of the session below. 


Presenters include:


Highlightable Quotes:

  • “If you see a market with inefficiencies, they will get rooted out over time. It’s just a matter of when and who is going to do it.” - Mark Woodka
  • “We...were more focused on building a great company and with success the opportunities of what path we would choose to go down would present itself to us.” - Tim Sherwin
  • “Don't let your customers run your product roadmap right and don't let the universe of potential acquirers determine your strategic moves.” - Todd Federman
  • “It was the ride, the journey, the fun, the people building, the challenges, the successes, the failures, the ups and downs. They were the experiences of a lifetime, which ultimately resulted in something good.” -Tim Sherwin



Todd: With that, we are going to ask our panelists to unmute, and to be ready here, and we’ll ask each of them to provide a brief overview of themselves and their companies before we dive into the questions. We’re gonna start with Lance Hill!

Lance: Hello everybody! I’m Lance Hill, the CEO of Within3. Pleased to meet everyone on the call. My background is in technology, pretty much my whole career one way or another has been in and around technology and the intersection of technology and business. Within3 is the company that I lead, it’s a collaboration software company that focuses on the life science market so pharmaceutical companies, biotechs, medical devices etc. We have a software platform that helps these companies communicate better with internal stakeholders as well as external constituents like patients payers positions, folks like that, ultimately bring drugs to market faster for less money into more effective and their business.

Todd: Terrific. Mark?

Mark: I’m Mark Woodka, the CEO of OnShift, been in Northeast Ohio since the mid 90s This is my third software startup in the region first one and CEO, actually got involved with on chip as an angel investor. So when people ask me how I ended up becoming a CFO I say what my job Northcoast was an early investor of ours, along with Jumpstart. And we've done five series of raises we did a series about two years ago but a 210, 215 employees right now in downtown Cleveland. 

Tim: Hey everybody, thanks for having me. So yeah, this is Tim Sherwin, I'm the CEO of CardinalCommerce. I'm one of the three founders of the company. We were acquired by Visa four years ago and as you mentioned, not an overnight success. We started in 1999. So we've been in operation for over 20 years, the last few years have been phenomenal. We have over 300 plus employees well by the end of the year, mostly in the Cleveland area, growing well over, 35% year the last few years, highly profitable, and even though we're owned by Visa we're still operated as a separate wholly owned subsidiary within the visa ecosystem. What we do is we're a global leader in authentication for online commerce, and basically what we're addressing the problem we're solving is that this year alone in the digital commerce or online commerce space there will be over $450 billion of falsely declined transactions, meaning a good card holder tried to buy something online, and got declined. And similarly, there will be over $7 billion of online fraud. So the falsifying numbers really that the big opportunity. And the real reason behind this is the lack of insight, the issuer of the payment card has in making a good decision in the transaction. And what we do really is connect hundreds of 1000s of merchants or hundreds of 1000s of issuers across the globe to basically share rich information so that everybody can make a better decision that this really is him making this transaction or somebody fraudulently pretending to beat him to stop fraud. 

Todd: Thank you I think we can all relate to that. Yeah. So first question, Lance, we'll start with you, I think many people know that North Coast invests at the seed stage where there tends to be three to five people, minimum viable product, maybe a customer or two but not a lot of revenue and still a lot of questions to be answered. Looking back to when you were at the seed stage, did you know where you wanted to take within three or were there many pivots along the way.

Lance: Yeah, we, we knew where we wanted to take it. The problem was, where you wanted to take it was the wrong place. And so, within three. It's 2010 I was on a different panel of ones with Michael Carson and he was saying, kind of an open to the right, I was like our company kind of went up to the right and back to the left and then up to the right again and then. So you know we started in 2008, we were focused a little bit differently in the marketplace, we were trying to solve the problem of communication healthcare more general, using kind of social media technology so when we started, you know 2006, 2007 timeframe, you know, talking about some of these issues. At the time the number one search network was Myspace and Facebook was kind of coming on strong and Friendster, had been number one it just crashed and burned LinkedIn was this kind of weird business's social thing that no one quite knew where it fit. and the prevailing wisdom was that, either Facebook or MySpace was going to win the consumer Social Network World. And then there was going to be like a Facebook for lawyers and a Facebook for venture capitalists and Facebook for doctors and each of these vertical, social networks would be a viable market. And so we really were trying, initially, to see if we could create an online kind of social environment, social network back environment, professional network for physicians and healthcare professionals. And that model did not work out for a number of reasons for us there were four or five different companies at the time that that we're all approaching that problem from different angles are all tombstones now. And so we actually had to re pivot we recapped, our business and at the end of 2012, and really went forward then with a different model taking what we had learned but really moving forward as a b2b SaaS company got dealing directly with life sciences so narrowing our focus from all of healthcare just the life sciences, and really honing in on the places where there was discrete and tangible tangible difference, and we built out from there. So, within three phases to it if you will, we're still going, obviously very strong, so there's kind of phase one which, which didn't work. It was the pivot and then kind of starting from maybe 23 2013 to 2017 where we were really doing the stuff that early stage companies do build an initial product, Gaining initial clients finding what worked, finding what didn't finding what's repeatable. And then from 2017 Till current and keep going has been our rapid growth phase.

Todd: Very good. Mark You mentioned five financing rounds if you can remember back to the early ones the seed round. What type of objections, did you have to overcome when it came to investors?

Mark: Yeah so one thing I forgot to mention in my intro is what we do. Sorry about that we're human capital management software platform that focuses on post acute healthcare so that's skilled nursing Senior Living continuing care retirement communities. So there was really two obstacles that we had Todd one was convincing people that this was really a market. You know, when you talk to healthcare IT people, it's all acute or payers right nobody, nobody was focusing on post acute back at that point in time. So there was a lot of hurdles to get over to explain that it was a viable market. It was a large enough market the TAM was good. The opportunity was good. And then another issue would be framing, we were early in Angel, raising and technology companies we were early with you guys, right. And if you remember some early pitches a lot of questions I got were. Well, do you have any patents, and I'd scratch my head as a software guy go. Now of course we don't have any patents, why can't we have patents, but I got the question so frequently I finally found a lawyer that would do a provisional patent for like 400 bucks, and put it together. So now I have a slide in my deck I could say yes we filed a provisional patent, you know, we're good. But those are the two biggest issues that we face is helping people understand the market, and helping some angel investors that didn't have experience with technology understand it's different than manufacturing are some of the things they may have been more familiar with. 

Todd: Then, Tim, I think there's a misnomer of sorts that great companies stand out from the rest of the pack at the beginning, right, whereas in reality, it takes time for great companies to emerge. So when did you know that things were going to work for cardinal and feel like you could really take steps to maximize value?

Tim: Yeah well you know interestingly, as I mentioned we started in late 99, 2000 And anybody remembers March 2000 was not a good time in the technology world. So you know that was a big question Do we even have a market, you know, e commerce, although it was important back then it was such a small fraction of, you know, traditional retailers business and you know some of the internet only startups, you know, were maybe high end valuations before that March of 2000 but not really high in terms of business so you know it was I would say the culmination around 2007 2008 When the introduction of the smartphone, you know, most people having access to broadband internet Visa and MasterCard went public, you know, being kind of almost government institutions to transforming into technology companies, you had AMD chip cards that came into various regions and eventually made its way into North America which basically pushed all fraud into the online channel, you had the burgeoning kind of gig economy companies have, you know the Ubers of the world and even like QSR and Starbucks in the mobile app which has shifted so much commerce from cash to digital, that you could start seeing that the digital space was becoming the critical strategy for any legacy historical retailer and obviously the grounds for all kinds of new business models. And within that, you know, fraud is a problem, and false declines is a problem. And so there was the realization like this is a major thing that is sort of an afterthought to anybody starting one of these businesses, but they soon find out it can become very destructive. So it became very apparent that, you know, the need to address security in the online commerce space was going to be critical. 

Todd: And then Lance, as you know, many early investors say that the most important thing they evaluate is the team. So what was it about the team that you had at Within3 or your ability to grow that team that put the company in a position to be successful?

Lance: Yeah I think that's obviously the most critical thing for an early stage company right if you have really good, really smart, really dedicated people, which can be difficult to do because you're usually doing that when you're woefully under capitalized. But that makes a difference and so the way I thought about it at the time was I could surround myself with really great people. And on the one hand and to make sure that there was enough capital to give those great people enough time to figure out how to build the build value then we would be successful. So those two things were always kind of top of mind. You know, in terms of the people side. One of the things that I found really important. Looking back, is people who really were had the kind of stage appropriate experience I'll call it, so if you don't Cleveland especially there's a lot of large companies, institutions, especially if you're kind of pulling from the it ranks in this area, and being inside of a large organization is, is it night and day different than being an early stage, you know, unknowing unknown market creating sort of organization. And so it was very helpful. Over time, to realize that and surround myself with people who really thrived in that feeling of size of an organization could deal with the uncertainty you could deal with the pace, could deal with the risk. And not only didn't look at that as a negative but look at that as fun. That was a big, big difference. I think loading up an early stage company with a bunch of marquee resumes of folks who haven't existed in that stage of an organization is probably a recipe, if not for disaster at least for a lot of mistakes and probably a lot of waste.

Mark: So anytime you ask me, I'm not a plan, it's pretty uncontroversial I agree with what you say but some of the interesting things we found that is a little bit different than that was, you know, when you think about human intelligence as probably like a lot of things on a bell curve, we're all sort of within two standard deviations and we're not that smart and not that not smart either. And you know, We found that when you get people, particularly we we brought a lot of people right in from college that are still with us today 15 1718 years later, and they get immersed in the culture and care about what you're doing, and become insanely passionate about the mission. You know the chip on the shoulder and domain expertise because action makes them super smart, what you're doing, are the leaders of our company today these are people that you know wouldn't have been treated you know someone to community college in two years at Kent State, couple people literally, are some of our early salespeople are now like technology implementation people were were worked at used car sales places, you know, because we were scrapping back then trying to find anybody, so of course I get what you're saying let's not necessarily lead the strategy and vision of the company but it's amazing how you can bring people into the organization and immerse them into the culture, and they build up this domain expertise and, you know, pleasantly really surprise you with, you know what kind of great people they are. We had kind of a completely different experience. We always look at the stages of teams is forming, storming, norming and performing right and when you're forming and storming it's where you wear three hats you come in and it's exciting to your point, Lance it's you know it's risky it's fun, it's great. And when you get to norming and performing goes forming and storming people hate it, they hate each other hate the job description and rules and being pigeon holed. So we actually had to, You know, we had to change out the team a couple of times over the course of our life, to get the people that we felt would take us forward. We also found that some of the people we needed as we grew we found there was a real inflection point between five and 20 million, where we needed very strong leadership to make that transition, and the people that we got it during that phase, we couldn't have afforded would have been interested in us earlier. So we had to may wait until we grew into some of the people that we need to get onto the team. 

Todd: Good. Then mark will will stay with us so as a startup CEO you live in a world where you understand and manage risks and it's not fun to think about but in our world of seed stage investing at least 50% of the companies are going to fail and failure typically means that we all walk away with nothing. So it's all about maximizing and optimizing really the trade offs of upside right with maximizing the amount of the opportunity but minimizing the risk so as you approach that how did you balance the two right of wanting to raise more money, build more product make more investment versus slow and steady. Let's keep this company alive so that we can eventually achieve an exit. 

Mark: Well, I'm not a slow and steady guy by nature. And I think like a lot of CEOs, we, we want to manage the risks, but we don't really see failure as an option, and don't sweat failure. I more sweat lack of success than I do failure, so I'd be more concerned about missing an opportunity than protecting myself and I'll tell you, there, there was a funny shift that I had a hard time getting some of my team across is, to your point in the early days, you want to stretch capital, a little bit longer than normal, or you want to stretch it as much as you can until you achieve your objectives, because you don't want to go back to the market to raise money until you get to an inflection point from a valuation perspective right by the time you get to a Series C or A Series D where you're getting bigger checks, you want to spend that money as fast as you can, right, because you're you're buying growth is what you're doing so for us, we always manage our fundraisers in the business along inflection points we would identify what the next inflection point was. And so from the very early days and Series A, the inflection point is really more customers part with money for my product, will they use it and see value out of it, will they keep it right. So we enter that question so that was a different segment of customers by will, Can we so in our, in our world we sold individuals skilled nursing buildings. Then we said well, will the multi facility chains buy from us. We were successful there that it was well the enterprises buy from us, because in any market an enterprise player is either a buyer or a builder, they may not be a buyer, and they may not buy from a small company, that's not very well known right so we target those inflection points. And then as we prove success in those best when we go raise additional money and feel comfortable that we could continue to grow the business. There's other things too, besides just sales and revenue production, you know, can we take care of the customers can we manage our churn etc, but it was always one of the inflection points we need to get to to get a good bump in valuation and prove to ourselves this is a sustainable global business.

Todd: Then, Tim. Mark mentioned inflection points and one of the magic inflection points on the way to a successful exit as product market fit, when the market is ready to pay for what you have and ready to use it and sing from the mountains, write your praises so that you can bend the curve of growth, and ultimately ramp revenue. At Cardinal, when did you know you have product market fit, what did it look and feel like?

Tim: Yeah, so this could be a super long answer, so I'll try to keep it, not super long. You know, obviously as ecommerce grew, the importance from a merchants perspective to manage fraud was very important, but a lot of this solutions and merchants us and we're not necessarily replacing them we're layering on top of them is very siloed, to try to stop fraud from happening. But what it doesn't do is stop fraud from happening. But what it doesn't do is work directly with the card issuers who are on the other end of that transaction to help give them insight into data so a card issuer and a normal payment doesn't know an IP address device information, they don't see the bill to the ship to email address. They have no information to make a good decision and a Card Not Present online transaction. So when the narrative started shifting from just managing fraud to driving higher approvals because what happens is, as you try to stop fraud, you're killing a lot of good orders, and it becomes a vicious cycle, and that creates really bad user experiences. So, when we knew the industry was starting to talk about, we need to not only solve the fraud mitigation problem, but be able to work more collaboratively across the ecosystem to share data to make better outcomes for everybody, which is drive higher approvals that obviously we were a little unique in that way we weren't just doing fraud screening for a merchant, we were actually building a pipe and infrastructure connect issuers and merchants together to make better decisions so that that was big. And then secondly, there were certain governments around the world that regulated and mandated two factor authentication for E commerce. So January 1 of this coming year starting in Europe, two factor authentication is required for all e commerce transactions and it's rolling through various countries in Europe, and really the only scalable practical way is to use a solution like ours. So you know those little things that we're creating a market for us and then sort of the narrative of what was trying to be solved was evolving to something that we actually uniquely solved. So it became pretty obvious to us that we're on the right track.

Todd: Very good. So let's talk about the investors for a moment and environment like the Midwest, we can have big capitals, many smaller investors. And it's nice because across these three companies, there's probably a good 100 Plus individual investors and in these cases, eventually they were very happy, investors, but looking back, what was the role of investors, and those that served on the board, especially early on with the company?

Lance: It was, it was very very critical. I mean we were, we were really fortunate. I was really fortunate to connect with an early days I posted Jim Bennett and Marc Morgenstern in town who were active, angel investors, had a good network of angel investors between them and had really a passion for this stage of organization really had a passion for what we did and that led us to really gather a lot of talent is is good and bad right so you know what we weren't able to do is oh, we're gonna go raise, you know $30 million in a big check and just swing for the fences right out of the gate, but what it did allow us to do is make sure that we could as things were working and we needed additional lots of capital we could begin to find it in the early days when we weren't cash positive, that was a huge, huge component, without having experienced investors around the table who were trying to be kingmakers not kings, if that makes sense, was also really critical for us in the early days, and so there was a lot, a lot of places I could go for advice. A lot of issues if they popped up or there was, there's a lot of thought and that was really really helpful as we got going. So I was very very blessed to have the investor base I had again. 75, different kind of investing entities and most of them in Cleveland. Most of them the same folks are probably in teams cap table back in the day, etc. Probably a lot of shared shared relationships there is really really really helpful and of course I was thrilled to be able to provide a great return for all of them.

Tim: Yeah. Shout out to Marc Morgenstern, he was a common person we had and you know I think the advantage to it is that doing a massive fundraise, you know, to some institutional client is debilitating to the organization because you're on a roadshow and it's what all the leaders of the entire company are doing. Whereas when you have somebody like Marc Morgenstern, that can, you know, bring in all kinds of people and it's one hour meetings, a couple times a week you know and people get excited and the ambassador allows you to continue to focus on building your business and not just become a fundraising company. So, Mark was amazing for us to write.

Todd: So from individual angels to billion dollar private equity funds, work with. How has private equity factored into your decision making and how has it evolved with the company in your approach?

Mark: For some reason Todd is we went out to that round I thought a monthly proctor logical exam would be a great idea. So we decided to go that route. Now I can't say bad things about our private equity investment they've been great, but it's a different world, right, angels are one class of investors, venture is different in private equity is very different. We decided to go the private equity route because it organic growth and acquisitions was going to be part of our strategy going forward and to Tim's point I didn't want to be permanently raising money. Every time I wanted to do something and if you look at most venture investors, they don't have the capital to deploy. They can't continue to write checks. You've got to go raise money, so we went with venture investors, you know, some had 15 to $30 million under management in the early days, or later venture investors had maybe funds of 70 to 120 million. When we got to Clearlake they had $7 billion under management. And today they have $25 billion under management. So we felt that would be an easier way for us to execute our strategy of inorganic growth, and it did bring some nice discipline to the company, you know, it's always we always tried to benchmark ourselves against the best in the business. We've used the Keybanc Capital Market SAS survey for years as kind of a guiding tool and how we're comparing to like companies of the same size and and scope. And so these guys bring just a tremendous amount of knowledge and information. So they really get you sharp on what matters in your business and how to look at the business and so we found that to be very helpful. Yes it's painful at times, but it's at the end of the day it's very helpful.

Todd: Tim skipping to the end. How did you know it was the right time to sell?

Tim: Well, we were hitting sort of that inflection point as well as I mentioned earlier there was regulatory things going on around the world that were almost mandating adoption of a technology like ours that we didn't have a lot of competitors, you know, all the dynamics of the market that I was talking about, so we weren't necessarily trying to sell we were making the decision to sort of Mark's point was, we have to go big now. And we need a major raise like we have to do at one time, it's got to be 100 million or you know what have you. And certainly we were hopeful when we went through that process that a strategic would come along and it so happened that that's the way it turned out so we weren't saying hey let's go try to sell to visa. We were maybe secretly hoping that was what was going to happen but we were, we were ready to go to you know take in a big capital raise and and scale up the business significantly. And then, when a visa came along, it's really was a no brainer. I mean when you look at the scale, they have I mean there's a bank in every corner of the world already issuing a Visa card that's one of our key customer targets. We can walk into any bank anywhere in the world. It makes scaling a lot easier.

Todd: Lance, earlier you mentioned you knew where you wanted to go, you're just wrong. And I don't think that's unusual story by any stretch for startups but what was the key inflection point where you felt like you were on the right track and this could be a big one?

Lance: We started to see so the way that we sell. So for us, like one large pharmaceutical company might be 200 different business unit buyers. And so it's not like we just sell to Pfizer it's we sell to Pfizer diabetes North America Pfizer diabetes Saudi Arabia, and then different different divisions within within that the compartment to the lifecycle, what we start to notice is that we were, what makes it within three a bit different than a lot of software companies, and then a collaboration spaces that every single time. Any business person touches within three it has to work it had they have to get their business results. It's not like a Microsoft tool was like, here's Excel that works for you great you know, figure it out, and we started to see so we implemented a different business model that has a very different kind of client success component to it and a different emphasis on how the software works, and what we started to see is that business unit one would use within three, and in business units, two and three would kind of be coming to us saying oh we want to take your product and use it for this which we hadn't envisioned and then take your product and use it for that which we hadn't envisioned. And we started really good at viral growth inside of our existing clients where our sales cycles were shrinking the volume of implementations within three was was beating target every single quarter. And ultimately, revenue began to follow that when that started happening, and we knew on the back end that we had built an organization that was operationally sound meaning that we could handle that scale, deliver what we do. We're a global business that we could deliver it in countries all around the world in different languages we could do it very solidly and we understood what the costs implications of that were then then we were ready to go, that that's when it all kind of came together, growth, really started to skyrocket for us. And then most recently, you know, the growth trajectory was switches such that we wanted to have a private equity backer, who could really take us to to that next inflection point and would bring with them capabilities to help us scale beyond what we have within the team already.

Todd: And Mark, I didn't realize when we put the panel together that on shift within three and carton commerce, I'll use tap as company counsel for the basic blocking and tackling, and also to help shepherd the exit across the finish line. So can you speak to the value of trusted legal counsel and the role that they play in an exit.

Mark: Yeah, sure. Let me give a shout out to tam because I think they're great, we've worked primarily with Howard Bob row and his team and they've been fantastic to work with. And I think what drew us to Taff was Howard was trying to establish himself as kind of the venture investor lawyer, back when we first started working with them and as it turned out, it saved us a ton of money and time on our first two transactions both early stage partners and Draper Frankel who were series A investors use Taff as their counsel and use tap documents as their, as their base so it was, you know, easy to do those transactions so it's really important to have a great attorney on your side, I'll tell you what a lot of mistakes I see young entrepreneurs make is, Oh, Uncle Fred He's an attorney, I'll go talk to uncle Frey, and I'll go for it does, you know, nothing to do with venture investing or angel investing. If you don't know the ins and outs.

*Mark’s mic cuts out*

Todd: Tim, Cardinal’s a complex business, right in a highly competitive space, many smart people and companies you know not, there's no place like Cleveland but in big financial centers like New York, Atlanta and Charlotte are starting and trying to launch companies like this so why was Cardinal successful Why did Cardinal win?

Tim: Yeah, I mean, I alluded to some of it earlier I think really it was the perseverance and persistence, and the culture that we created with the people that we brought into the company and immersed into our mission and really made them feel like that their founders and we talked about a lot of people as founders in our company and that they felt ownership over it and they had the chip on their shoulder, and it took a long time for the industry were in to evolve, to the point where it was worth being an industry and you can make money and ultimately somebody like Visa would want to acquire you so there were a lot of people that dabbled bigger players in our space on and off, but it wasn't important enough to them to deal with the frustrations, as you said, there's a lot of complexity, you're dealing with a crazy ecosystem of merchants card issuers and all the people in between merchant service providers payment processors, and just the, the ability to stick with it, and then you build up this domain expertise that then you reach a point that even if somebody wanted to spend a crapload of money and put a whole bunch of people. It's not about that. It's about the, the knowledge you have of the ecosystem, and all the problems you're gonna run so every time you run a transaction and goes out to some bank in Singapore. We know what's going to happen and we've already created a solve for what that that experience could could take place because of that. So for somebody new to come in, they would have to cut their teeth and go through a lot of pain that their customers wouldn't be really happy about that we've already solved for, so it was really just the ability to believe in what we were doing and stick to it while we were in a market, market that was evolving.

Todd: Very good and Mark I think we lost your signal for a moment you're right in the middle of telling us about Uncle Freddie's Law Firm.

Mark: I went on for 10 minutes after that but the other point was, it's funny because I've been having a problem with my network I got a new router today I'm like I'm not installing it today, is use a professional lawyer that does deals, and those the venture an angel ecosystem and tap is very very good at that, it's very helpful to have those people by your side, not having a good attorney is not the right place to save money when you're finding a company and trying to raise capital.

Todd: And then, Lance, what message would you have for entrepreneurs and angels that are looking to create the next within three in Cleveland?

Lance: You know I think I want to sound cliche but I think it's a lot of some of the things that we've already talked about, I absolutely think, especially earliest stage, it really is about about the people you're, you know, you're going to, you're going to, I guess have companies. That's not my company but you're gonna have companies I guess that are right right out of the gate and they just start and things just go the way they wanted them to and four years later on Wired Magazine drinking champagne, that that's just not my experience of how companies work and it's not the experience of CEOs that I talked to who are founders. And so really what you're looking for are people who are founders that you think, obviously are very, very smart. Have enough humility to them, where when something when the markets telling them something isn't the way you think it is they will actually listen and adapt versus just try to ignore and power through because they're kind of tunnel blind in their vision. So, so I think mental, a good kind of mental flexibility a good realization of when to go left and right makes sense. I think Tim talked about culture, you absolutely should be asking yourself when you're looking at a founder can this person, recruit and will people want to love to work around this person. If the answer is I'm not sure that's kind of tough because when you don't have much capital. The only power you have to recruit great talent is the charisma and the vision of the person who's doing the recruiting, because any other reasonable measure wouldn't say this is where you should probably go in so that's the big factor as well. And I think the, the market opportunity has to be one that is wide enough that there, it allows for for pivoting if it doesn't make sense, like if, if the solution that you're talking to someone about is very, very narrow and that narrow doesn't work out, there's not a lot of places to go, so it's almost like you kind of asking yourself okay what if their vision is slightly off. Do I still see places where this company, potentially has has led to this idea has legs, it's all of those things kind of go through my head but ultimately it's, it's this person, a really smart, a great critical thinker. Do they, do they motivate people, the people you can basically going to work for this person can this person recruit talent. When the company maybe doesn't is in a position of weakness of all those things are there. And on the flip side of that the other axis you have a great business idea, and a market that seems to have a growing tam to sell it into, I think we've got something if you're missing some of those components. Now, I don't know, that's, that's risky, risky or it's all risky but it's risky.

Todd: Then you have to look at these early stages that become stages that Lance is talking about what resources are severely limited. There are competing priorities and that the path is unclear. I just think about prioritizing and directing those resources in a way that you thought made the most sense at the time.

Tim: Well, I wouldn't say I was necessarily in we you know that the whole team of us that started the company like Lance mentioned earlier and Chandra who's still our CTO, that we actually always did the right thing, when you ask that question. You know what happened to us a lot, and I'm not necessarily saying this is the wrong thing to do, but you get a few marquee customers if you will or important customers that can help you bring credibility, and they start demanding a lot of you, and you may be playing a space so we're sort of in the checkout on the payment page, And that whole space was evolving with new payment brands and authentication and fraud, and they start to ask you if you can do things, and you agree to them and you actually start not focusing and working on other things because there's like a short term opportunity to make a little bit of money. And you know when I look back, we actually made probably a lot of mistakes about not staying focused on where we were going, where we wanted to go, but at the same time I can't necessarily say it was wrong, because it made those customers more sticky. It generated some revenue which validated some of the things that we were doing like marquee customers actually willing to pay us to do things, but it definitely distracted from some of the focus. So I think there's a balance in there, we definitely went too far off on some of these things and in fact, I'm still trying to unwind. Some of these things that we're doing, where we have no product teams no agile teams, nobody like things that have been running for years and they break and we got to stop and put people that aren't familiar with what we built. And it's still variability, you know, it's the technical debt that we have. So, I don't really didn't answer your question, like we didn't always stay focused. Looking back to some things I would have done differently, but it's hard to say you shouldn't do some of that, because it also builds credible market.

Mark: That's a really excellent point I learned the hard way. Don't turn your roadmap over to your customers not an engineer and an article for this, but I vowed if we're doing something for one customer, we're not going to do it. And so we've really stuck to that very much and it's tempting. There's no revenue here and you know you can call in that favor later. But my counsel to young people in new startups would be, you control your roadmap and let your customers control the roadmap.

Todd: And Mark will keep going with you as angels in early stage investors, it's easier to get into a deal, than it is to get out of the deal. So, what should investors know about creating an investment that has real opportunity for exit

Mark: It's interesting time, I've done some angel investing of my own and I obviously come at it from the perspective of a tech person, And I think the one thing that I always the impression I get from a lot of angels is they want an exit much sooner than the company wants an exit, right, and they're always concerned about dilution which I totally understand. But if you're going to be an angel investor you have to recognize you're going to get diluted. If the company is going to scale and get to a place where it's good for you, right. So I think it's, it's make your investments wisely, understand the nature of the investment, you know the last article I read this is probably three or four years ago was to get an enterprise software company from startup to exit was $70 billion in nine years. So if you're looking at enterprise software company and thinking you're gonna flip it two or three years, it's probably not a realistic expectation right yeah it happens to Lance's point, we all would rewired and see those companies on the cover, but that's one out of 250,000 companies, right, and God bless you if you're smart enough or lucky enough to get in on those deals, you know, call me, because that's not been my experience either. So, just make sure your expectations are aligned, and you really understand the opportunity, I think, I think, understanding the opportunity and how long it will take to get there very important

Todd: And sticking with the notion of exit Tim, we’ll shift to you if on one extreme, there's a notion of a detailed exit plan and strategy where you're identifying your potential suitors, prioritizing them thinking about the value that you're creating in the context of what they're buying and building those relationships over time. On the other extreme, there's a school of thought that says just build a great company, and you'll have a lot of options, kind of where do you and where do you sit and where did the Cardinal approach, Tim, you're on mute. 

Tim: Thank you. We were definitely having the time of our lives, and we were ready to keep going for a long long time. Obviously we did have investors. So you did ultimately want to find some way to be able to create that exit opportunity so that they could, you know, the commitment and time and stuff they provided us that we could have a reward for them at the end but we definitely were more focused on building a great company and with success the opportunities of what path we would choose to go down would present itself to us, which you know ultimately happened, you know, this was the only one I've done so you know some of you guys have done more, but you know I always felt in my heart. If we were focused on that exit strategy, we'd be sort of building a house of cards to create a, an aura of something that somebody wants to buy, and that would ultimately failed so that you should really be loving what you're doing, and wanting to keep doing it for a long time. And like I said those opportunities would present themselves which ultimately, it did in a great way,

Mark: One of my early mentors said, starting with your exit strategy, he's like going on a first date with a ring in your pocket.

Lance: I agree, I agree wholeheartedly go build a great company, and then being able to then translate the value of that company to a number of potential partners is so much easier than I'd really love Oracle to buy me someday and trying to build what you think Oracle might want to buy some number of years from now, is is a horrible way to run a company.

Todd: Well, it sounds like just another version of the don't let your customers run your product roadmap right and don't let the universe of potential acquirers determine your strategic moves 

Tim: I would just say you know from a mindset, if you are starting a company, because you want to figure out a way to make a lot of money, you're probably not going to be successful. Now, we all want to make some money and be comfortable in our lives and it's awesome that you know many of us have had these successes but it was the ride, the journey, the fun, the people the building, the challenge the successes the failures, the ups and downs was the experience of a lifetime, that ultimately resulted in something good but honest to God, if we made it this far, other than if there's any of you investors out there, if it all crashed and burned at the end I would have felt really proud and happy about how far we made it and the journey that I went through to get there, and it would have been a success, you know in my own mind, I might have something that people around town. But I gave it my all.

Todd: Pretty cool. So work in the private equity world now you have resources available to you that you've never had before and that enables you to think about things like acquisitions. So, at this stage, what's the role of acquisitions?

Mark: So we look at it this way Todd and we went into this series he looking for private equity partner with a strategy in mind of, you know, we started as a niche product we were doing employee scheduling for skilled nursing facilities, right, and what happens to the product over time it gets acquired into a platform or becomes a platform. And so we decided to become a platform and so we really have three strategies to support that. One is we want to invest our engineering talent in building things that really move the needle and are unique in tremendous value creators to is we want to partner with people where we don't feel we need to own the technology or the componentry or the services, whatever it happens to be we're partnering. And the third is we want to buy things to get into either pieces of the platform more quickly, or other market segments more quickly. So we got very, very lucky this year we've done two acquisitions. We had one lined up and closed in February before COVID hit, and we had a second one where we acquired some technology from a company we didn't buy the company, but we were still able to get that closed in June of this year, and it's really been tremendous for us because if you think about it. Our customers are skilled nursing facilities, 60% of all COVID deaths have happened in skilled nursing facilities, right, so our clients are on the front lines and guess what it's really hard to call somebody you don't know and say, “I know people are dying in your building, but have you thought about human capital management software this week”. But our customers are always looking at us for more solutions, so our bookings model flipped from last year with 75 new logo 25 customers this year it’s 75 customers 25 new logo. So we were very fortunate that we were able to get those acquisitions done because it really helped us to continue to grow this year in a time where it would have been really difficult without it. So we’ll continue to look for opportunities to fill out the platform as well as we’re beginning to look into some additional market segments that are intriguing to us that we’d like to get into and don’t want to take the time to build to get there. 

Todd: All right so we’ll transition to a little lightning round. Same question for everybody, feel free to jump in. I’d say as investors we’re always making bets on secular trends, right. Various types of digitization, disintermediation, changes that are happening in the larger world that we really know are are coming or we have a high degree of confidence. We don’t necessarily know how fast they’re gonna come but they drive the larger needs and wants in a market. What were the secular trends for each of you that you feel helped enable your company to be successful? Lance we’ll start with you. 

Lance: Yeah Ill start, so for us it was really the move towards digital work. What Within3 is is a virtual work company and before covid, every conversation now is just and then covid happened, and the needs of my business changed suddenly. For us, before covid was an accelerating move to “I’m not gonna fly to a hotel in Dallas to have a meeting I'm gonna interact with them online. It’s more efficient and effective and has all those benefits.” We were seeing that slowly accelerate across life sciences, which is pretty conservative, highly regulated, over the last few years. That was the big trend that we were riding and what happened around 2015 2016 time frame is the trend really started accelerating and that made our sales cycle shorter and made things easier. The core premise was still the same, which was work is gonna move to digital, and if we can be the company that can help that work in this market we can be really important. We were growing triple digits coming into this year, and then covid happened and we saw the same spike of a zoom trip. Leads on our website spiked 400% and just flatlined there and what we think covid has done is just accelerated even further this realization that even if travel came back tomorrow, there’s some work that’s still done better virtually and i think we’ve all experienced that indifferent ways and we can do things we just couldn’t have done from a logistics standpoint. So that was the big trend for us and we think it’s a trend that’s clearly going to continue and Bill gates was just talking about it this week - this is the way of the future. We’re pretty pleased with where we are. 

Todd: Tim can you take the same question?

Tim: Mine’s pretty obvious because we service online commerce payment. Merchants and the card issuers used to make those transactions, so that’s been growing dramatically for a long period of time, and like i mentioned before it’s not only the market share of a traditional retailer that migrates to ecommerce but it’s the creation of these new business models that never existed before so people used to use cabs and pay cash and now they order cars on Uber. You have the food delivery services, the DoorDashes, the GrubHubs, the Instagrams. Obviously the ticketing, airlines, TicketMaster, those guys have all gone 100% online. So not only are the traditional guys moving down that channel , the TAM is dramatically increasing. With that comes fraud and challenges in the payment experience. It’s a pretty obvious thing, it just grows the opportunity for us. Like Lance said, around March 25th, we have some of the biggest online brick and mortar online retailers on our platform, and we don’t touch their face-to-face stuff, and the day they shut down stores and want to curbside pickup and order online pick up in-store, it 5xed a lot of our biggest customers. Our business grew dramatically because of it. 

Todd: Mark?

Mark: For us it’s a handful of things. One is first and foremost the population. We’re selling into a market that serves seniors, we’re all living longer, we’re getting sicker, so the prognostication on the market - we’re gonna have over 70 million people over the age of 65 by 2030. Our customers tend to hit their customers when they turn 80 or 82. That population was flat from 2010-2015 due to the depression but now it does nothing but grow. Trend number two - healthcare is very labor intensive and inefficient and the payment models don’t support that continuing, so I’m a big fan of if you see a market with inefficiencies, they will get rooted out over time it’s just a matter of when and who is gonna do it. So that’s what drives our business primarily. We’ve got great macroeconomic tailwinds behind us. 

Todd: So three more lightning round questions we’re gonna ask for one minute each. Lance, if you were to start another software company, what might you do differently?

Lance: I would be a lot more diligent and a lot more thoughtful in both the people i surround myself with, investors on down, as well as to Mark’s point, a lot more thoughtful making sure i really had a good understanding of what i was trying to do and what i wasn’t. We made the mistake in our early days, we were lurching from one side of the market to another, and we saw the golden pots behind this rainbow or that rainbow a little bit. As Tim was talking about, I would resist that going forward, and be a lot tighter with my focus and a lot more disciplined than I was when I started. 

Todd: Tim, one minute on investors. Were you prioritized around money, industry, connections or something else?

Tim: Not exactly sure what you mean by that?

Todd: Were you focused on getting as much capital as you could, or we need angels who know our space, or angels who can make connections? What were the primary values?

Tim: Well I mentioned that Mark before did definitely and Clay Rankin, I saw him on the chat here, definitely having people in the community that were willing to take the chance on us and believe in us so that they would be interested and passionate about finding their connections and that worked to bring in to the fold to continue to invest. So definitely finding those kinds of people. Originally to be early participants in the Cardinal investment pool made it so much easier going forward. There’s a bit of FOMO you get out there, and as long as you’re progressing and doing great things, I think these guys were amazing and their willingness to stick their neck out, because ultimately they’re the ones that are on the hook and bring in their friends. 

Todd: So we’ve been talking about great exits… Mark, just a sentence to finish. Cleveland would have more great exits if…..

Mark: They had bigger thinkers

Todd: Bigger thinkers, ok. Well I think we will all take that as a challenge, not just to be the bigger thinkers but to be open to hearing the stories of bigger thinkers and supporting them with the resources, both financial and otherwise, to help them grow. So with that I’ll say that this has been a fantastic discussion and I hope everyone at home will join me in a muted but heartfelt applause with our panelists!