Decision Dialogues
Decision Dialogues

Episode 30 · 6 months ago

The Risks of Starting Up – and of Letting Go

ABOUT THIS EPISODE

Episode 30 of Decision Dialogues features Michael DeNitto, the founder and CEO of MarketSight, which was acquired by Reimagine in 2018. Michael talks to Mark Willoughby and Victoria Consoles about spinning MarketSight as a company and product off from Monitor, the company he worked for—and the risks and decisions associated with that path, from leading a team as an entrepreneur, to ensuring the finances would work out for him and his employees, and more.

Get the full show notes and more resources at ModeraWealth.com/DecisionDialogues

Are you paving the way for the life you want facing decisions that may affect you personally and financially? The decision dialogs podcast, brought to you by Modera Wealth Management, presents personal stories about navigating through life's pivotal moments, narratives that we hope will inspire you as you create your own story. You'll learn what influence their next steps and gain insights that could help you with your own critical choices. Welcome to decision dialogs. Thanks for joining us on decision dialogs. We're thrilled to have you along. My name is Mark Willoughby and I'm a principal and wealth manager of Madera Wealth Management Llc. Today, my colleague, Victoria Consulus, financial advisor, and I will be chatting with Michael Denito, founder and former CEO of market site and executive at several groundbreaking content and technology companies such as zed net, canters, business information, Revenuo and consumer reports. Today we'll be talking with Michael about his decision to start market site, the software company. He found it in two thousand and six, and the story of launching and growing that company for over twelve years until it was acquired by reimagine which is now owned by Danita. Welcome Michael, and welcome everyone to the show and I'll hand over to Victoria. Thanks so much more, Mark. Michael, thank you for joining us today. I was hoping that we could start off with a little history of market site and how you got started and then talk about what you're doing now and your journey with market site and selling the business as well. Sure it's great to be here with you, Victoria. Just a little bit about market site. Market site was a software company that I found it and ran for about a dozen years, and the software was a data analysis application for market researchers. Was a web based tool and it helped people analyze survey data and it was important in the market place because at the time we started it back in two thousand and six it was really the first Sass software as a service or web based tool to serve that market. There were some traditional players in the market that were big installs and we really brought something new with an easier to use software application that was web based. So before that I worked for a number of different companies that mark mentioned, including zdnet, which was really one of the early pioneers in web based online information products. It was based on the Zd or the Z if Davis magazine, magazines like PC magazine, pc computing and others. It was really the first, one of the first publishers to go online back in the early days. Other companies like that were connors who did that in different markets, but the same approach, taking their their content assets that were typically...

...print and migrating them online. I also worked with consumer reports doing the same thing, as well as in number of other companies developing technologies for people to use online. So have you always worked in the tech field? A half. My first job was at a company called the Open Software Foundation and I was an early player in the open software space. From there I continued to work essentially online businesses, so basically the beginning of the Internet, Pre Weeb, working on platforms like copy serve and prodigy to bring the information and decision tools to people. I'm just curious, actually, would you major in in college to bring you into that field? Well, it turns out that my major, which was psychology, was relevant in a general sense throughout my career but not really applicable until I started market site. As a as a psychology major, you tend to do research in the analyze data and I was very relevant when designing a data analysis platform, but for the rest of my career it's it. You know, provided some interesting analysis of my colleagues and come the particularly relevant. There you go. So what got you started with market site? How did you start your own business or become the business owner there? I'm curious with at what point did you decide to leave one company to start your own? That's pretty interesting story. Actually. In in two thousand and four I joined the Monitor Group, and monitor was a consulting firm, management consulting firm Basing Cambridge, and I was hired by them to take a look at some of the tools they had developed for internal use, so software applications that their consultants would use during client engagements, and I was asked to see if any of those technologies could actually be sold directly to clients so the clients could use them as a way to make money from those assets, that intellectual property that monitor had developed, and also is a way to extend their footprint into the client so there were a number of different tools that they had built, one of which was market site. Wasn't called market site, was called profiler. At the time and it helped their consultants to analyze research that they did on behalf of clients. So fast forward, after a couple of years looking at those products, marketing them to clients and selling them to clients, one market site emerged as the strongest product idea and it was a joint decision by monitor and by me to actually spin out that product as a separate company to give it the focus that it deserved and the investment that it deserved...

...to truly grow as a product company as opposed to a service company, which monitor was. So we spun out and we took a number of the employees in the team to build that company. So you really believed in the product. They're wanting to launch it on its own. Then with some of your colleagues, what did that look like? Did you move offices or did you stay within that same office and kind of just spin off on your own and work with some of the same people? Did you when you left on your own, where you still communications with your former company there? In order to do something that like that, you really have to believe in the product. So yes, you know, with myself and the team, we really believe that we can make a go of it make a successful business from what we had started at as part of Monitor. And part of our agreement with monitor to spend the company out involved continuing to use their office space in Cambridge, continuing to leverage their it resources, so internet phones, and also a short term contract for some software development assistance from the team. But we did in fact take a team of five people initially who were all part of the Monitor team. So it was me to sales people, a customer support representative and marketing, finance hr kind of administrative person to help with all those other pieces. And that was our initial team. And ironically, we started a software company without a single software engineer. So that was after we spun out with that was our first hire was to find someone to lead our our suffware development efforts and get ourselves off of the monitor system to do that. And Victoria, if you don't mind me interrupting here, there's a couple of questions I'd like to post to Michael along the lines of when you chose to start market site. Michael, were you able to keep your personal finances separate from Your Business Finances? That's the first thing I was thinking of, and and were they somewhat entangled. The company was an LLC, so there's a connection there. It's pretty personal when you do that. So they were definitely considerations and you know, as we as we made certain decisions. And what sort of financial runway did you give yourself when you were starting out? You know, we talked to different business owners who either are getting investors to help fund the business or they've been saving for four years to be able to quit their corporate job and start their own company. I'm curious what if you were prepared for this or if it was more of a sudden decision along the way that just had great timing where you were at monitor before. I think it's it's a little of both. I'm not an extravagant person. I don't tend to live and extravagant lifestyle when it comes to spending. I like to have fun adventures...

...and do fun things and you know, as someone with three kids, it's you have to be thinking about paying for college, so you do have to plan. I think it depends for everyone on their situation. If their spouse or partner is working, that makes a big difference. What's your what's your monthly burn rate? How much you spending that you just can't not spend. And how much money have you made so far in your career? So some of that depends on how old you are, how long you've been at it, what how you save. So at the time when we were considering spinning this out, I certainly had enough runway so that I wasn't I didn't need to make the paycheck right away and if I had to skip one or two to make it through a challenging on, I could do that. But I certainly wasn't independently wealthy. I wasn't set and and this and just doing this as a for fun. It was my right. So yeah, it was important for me to continue to pay myself, you know, as regularly as possible, and to pay all the remember of the team, because people won't stay if you don't pay them, unless they own a huge piece of the company. They just won't stay and even then they may not be able to. So advice I would give someone who's thinking about starting a business lower your burn rate personally, because that just gives you the runway that you need so you can keep trying like that gives you a longer amount of time to be successful with the actual business. You know, my philosophy has always been to be a little more conservative in your personal finances so that you can take risk in your business, because your personal finances are a lot of hut spending money. Right the business is where you can make money. So if you cut your burn right down and give yourself the ability to be more aggressive with the business you're trying to build, then you're going to you could have a chance for much bigger success down the line. Instead of some of the luxuries that you might want, maybe defer that until later, after you've you know, after you've been successful with your business. Yeah, it's pulling the different lovers of things you can control, whether that's, you know, we can control spending to a certain extent, and then income, like you said, you know, we can't necessarily control our income, but you can make choices that hopefully grow it, which would probably be along the lines of taking the risks, like you said, to to be able to make more profit within the business. That is connected to to your personal finances in the long run as well. Right, you know, it's seriously, I had a conversation just a couple days ago with a good friend of mine. He called me up and telling me about this great opportunity that someone had called him about. Was a startup and he was going to be a key guy. He's going to get a good percentage of the company, but he wasn't going to make as much money in this new role as he would if you just continued where he was at a larger company. And we talked about it. We talked about like how much he's spending to live his lifestyle, and it was a lot and I don't know to what extent he can reduce that, given the kind...

...of lifestyle he's built and the end of the colleagues like you know. Its just sort of makes me wish I'd been a little more prudent over the last five ten years, because now I'm faced with this opportunity and I'm not sure that I can take advantage of it because I got to make money to sustain this, you know, license real estate and the taxes and my kids called education all that. So it's not for everybody. Doing the startup isn't for everybody and I think you have to live and spend money leading up to it in a way that's conservative. So you do have a cushion. Yeah, I'm more conservative than than that way, than a lot of people. A and it doesn't work, we'll just go do something else. It's not always easy when you have three kids. Right there are a variety of different considerations that you want to take into account, one of which is your family and your personal appetite for living in a certain way that maybe well below your means for a period of time until what you're trying to do takes off. So you need to think about that and what's important to you. The flip side of the coin, I think a lot of people think, well, I work for this company, it's a secure job and you know staying there is less risky. That's not always true. In fact it's often the opposite is true, and if you've lived through any kind of start up or any kind of a layoff at even a large company, you know that if you're not the owner, if you're not the one making decisions, your job is not cure. You could be let go at any moment and then you're basically where you'd be if you're if your business that you tried had failed. You're starting over, which is okay, but I think the myth of a job that you have today being secure one thing that prevents people, people from going out and and following their dreams and say, Hey, I'm going to start this company, I'm going to give this a try. But it's not. It's level of comfort for people, I think, to right. Yeah, don't fool yourself into thinking your job is as secure as you think, because it's not. Right. So, why not start something new that you actually can, can control and you can drive to success on your own or failure? Right, you never know, but I think really evaluate the risk of staying as well as the risk of taking taking on something new and exciting. You know, I think that helps people make a decision and hope that they can all do as well as market site did for you. To right. Right. But yeah, that the happy ending is good, but it doesn't always, you know, doesn't always work out that way. How big did that company grow? How many employees did you end with before you sold the company? We were close to thirty people. Be Wow, when I sold it. And and many of those people were actually offshore software engineers. Okay, you know, that was one of our competitive advantages to be able to hire people not in the US who were highly skilled, a highly productive and far...

...less expensive than a US based engineer with them. And what was it like to, you know, run your own company at that point, because you went from working at monitor to all of a sudden being CEO of a five person team, growing a business to nearly six times the size your team they're so what did that look like for you? What challenges did you face along the way? Well, at that growth certainly didn't happen overnight. It took you took many years to get to that size, but it was a big change. I went from being part of a company one five hundred people to being leading a company of five and that had plenty of challenges, you know. Certainly the on ramp provided by monitor to continue to operate out of their space and leverage their technology was very helpful as we got started, and having them as one of our principal investors and on our board that that helped in the early days. But I think you know, when I look back on the various roles that I had at different companies leading up to my experience at market site, I was always a part of an entrepreneurial group within a large company or at another startup. So the startup world and that kind of scrappy mindset you need to start something was really something I had been doing all along, but this was the first time where I had I really took cook on responsibility for five different people and, you know, paying, paying the bills, making that, you know, making pay roll every two weeks. So it was a change, but we, you know, we tackled it. Everybody in the team was committed and we tackled it together and ultimately we were successful. It doesn't mean it was without a lot of hiccups and a few miss pay checks here and there, which we eventually made up, but there were challenges along the way for sure. Well were some of the biggest, most challenging decisions you had to make as a business owner. One of the big decisions that any owner or manager faces is around hiring. People are the most expensive, biggest asset. You have the decision to add a roll to the company and how you're going to pay for that and how you're going to find somebody to do that. Those decisions were always very challenging. So hiring was a big one, and firing, of course, not something that nobody wants to do. is also a decision that's it's not always a good fit and sometimes you have to let somebody go in order to move in a different direction or to achieve your objectives and when it's not a good fit for either person. So those are the tough ones that you have to make, typically involving people. So what gave you the drive to actually take this risk, because you talked about, you know, you've been part of the sort of startup company and things like that, but this seems to be, you know, you're taking the risk of all these people into your own hands. At that point in starting a business said, like you said, the human part...

...of it was the most challenging. So now, these four people under your wing, we're essentially you are taking a bet against yourself in them, that you would you would come out successful. So what drove you to make this decision, and can you talk about some of the challenges along the way, like did you ever give yourself a time that said, if this doesn't work out and x amount of years and maybe we'll go a different route or all go work for another company? I think there were a lot of factors that went into the decision to spin out and to take this on. I think we had a fair degree of confidence that the product market site that we had developed was valuable and it had potential in the market because we had sold it to a number of clients already. So okay. So we had that. We had the product, which took fair amount of resources to develop initially by monitor. So we had that. That intellectual property, which was owned by market site, was no longer owned by Monitor. So that was something that I insisted on earlier, that we actually own the IP. Wasn't a likefense, it was we owned it. So whatever, whatever value we were driving in the company would be owned by market site and not by monitor. So we had the the product. We had good market understanding of the value of that products. People were paying for it, not a lot and we certainly weren't making enough money to cover our expenses when we spun out. So that was the gap we had to cross us. We had to sell very quickly in and get to the point where we could pay our salaries and pay for whatever we needed to run the company. So you go to just increase your client base from the start immediately, right, which we did. You know, as I say it wasn't without some hurdles and hiccups long the way, but eventually we did it. I think having a team of people that that was willing, each person was willing to take those risks and could say, okay, it may get pretty lean during some of these some of these coming months, but I believe in this and I'm willing to do my part to make it happen. That's critical. But if there were people in the team who who either weren't in a position to do that or didn't have the the appetite for that kind of risk and that kind of hard work, then it would have been difficult. But everybody was on board, every everybody was confident that we had a shot to make it. So I think that gives you what you need to get started. As far as a timeline, you know, when do we call it quits? We just never did. We kept going and we know we would see, okay, we can close this deal, we can make these changes, these improvements of the product, and then we can close more deals and we just kept going. And some of the people that we started with did not all stay until the end for a variety of reasons, but you just keep going. I'm sure that in many cases you can't keep going right you just it doesn't sell, or you can make money and you have to you have to go get her another job up.

So I think you know, we worked really hard and we had some good fortune along the way and we made it. Not Every company does, but we did and I'm very grateful for that and I certainly recognize the hard work by lots of people to make that happen. Can you talk about what it was like when you sold the business? We'd been at it for a while and we had taken the company a long way from where it started and in two thousand and seventeen, two thousand and eighteen, I think we knew that in order to really grow it beyond where it was, it was going to require a significant additional investment and that that investment came in the form of an acquisition. I stayed on for an additional two years to run the company under the new owner then eventually transitioned out. We spun out because we wanted to give this product and business a life and a chance, and we did that and it grew and we had thousands and thousands of users all around the world. We were in twenty five different countries. Well, it was a great run and I think everybody had a lot of fun doing what we did, but we wanted to keep it going and have it grow. So we made the decision to to sell and obviously there were some, you know, financial benefits and reasons for doing that, but it made sense for the business as well. Were you the sole owner of the business at that point? Still No. Every employee, prior to the acquisition, of course, had meaningful equity in the company. It was one of the principles that I had going into it. That was very important to me. I wanted to make sure that everybody who was working on the team had a real reason to continue to work hard and stick with it. Yeah, you talked about how much work everyone put in. So that helps drive the momentum with everyone wanting to be a team player and wanting to be successful for the business. But it benefits them in the long run as well. It really does. You need to pay people market rates. You can't starve people. You need to pay them a fair salary and I also believe give them incentive compensation each year. But the coming into the office every day, you know, day after day, week after week year after year. In many cases has to have some additional benefit to an employee or a teammate down the road, because there are other opportunities out there. So to give someone ownership in the company makes them think differently. They when you think like an owner, you don't waste money, you don't waste time, right, because if it's your money, then why would you know? Why would I waste it? You think twice about you know, whatever, whatever it is that you're going to do, where it's an opportunity to spend money or to spend time on something anything. So that was important to me and it's something we did right up till the end. So did you know when you sold it that you were going to stay there for two years is and then leave, or were you expecting to stay at...

...the new company for a while, or were you just wanted to set them up for success and then kind of be done with it and find out what's next for you? I knew at the outset that I would be there for two years. You know, there was nothing saying I'm quitting after two years or there was no commitment on either part to continue there. I think running a company for for twelve years a long time and at some point you want to do something different, you want to do something new. So it was it was a natural choice to go go our separate ways, but I did, I really did want to be there immediately after the acquisition in order to continue the the direction that we had taken and continue to drive the company in the beginning stages of that next phase and Victoria. If you don't mind me interrupting again, there's there's a few questions that are recurring to me here. Firstly, what were those two years like working at market site after you sold at Michael? was a transitional and and and more you grooming another CEO to take the range over from you during that period? It I wouldn't say it was transitional in that way. I was not grooming another CEO. In fact, the company after I left really became more of a department or a division of the larger company it was. It was run pretty differently. So it was. It was a transition and that, you know. We were this small start up controlling our destiny and going whichever direction we made thought made sense. But once you're part of a larger company that owns you, you lose that ability to do that. So I think we all were getting used to that new model over time and by the time, you know, my commitment had ended to the company, it was it was a different feeling and it was a different place to work. So it was a it was natural for me to move on, but it wasn't the company as a company didn't persist. The product still exists, for sure, and it's still an important part of their overall offering, but it's not the way it was before. So what was the next chapter for you after selling the business? or You still figuring that out? Well, I'm still figuring that out. I've got a couple things that I'm thinking about, but you know, I've spent a lot of time in the last few years decompressing a little bit from the experience, as well as focusing on my family and other things. But I'll be I'll be getting back into the back end. Two things soon. Watch this space. Do you have any interest in running a business again or or creating a startup or anything like that? I do, and it's certainly something that resonates more with me personally than going to work for another company again, but I wouldn't rule that out at this point. You know I'm not. I'm not certain you know which direction I'll go, but I think once you've run your...

...own company and had that that freedom to do that, it's hard to go back to working for a larger organization. But you know, I certainly wouldn't rule that out. So we met through toastmasters. Did that help you at all running a business? Because I know a lot of people who are part of this public speaking group, you know, use it for things, whether it's talking to a big group and being able to communicate well with other people. So I was just curious if that's where your interest in the group came from. I think public speaking is a skill that is relevant and important no matter what your job, no matter where you work. If you broaden it from public speaking to communication and think the things that you know we've done in toastmasters that every toastmasters club offers, it's the ability not just to get up on a stage and give a speech but also to listen and to give feedback and also to have conversations. So I would absolutely say that toast masters has been important for the last half a dozen years or more and you know, in my career and just in life, I think being able to communicate well as an important skill. So it's been a great organization to out develop those skills. I agree with everything you just said. I found it to be such a wonderful tool in tern terms of communication, whether it be a presentation in front of a large group or just with two clients reviewing a financial plan. Is also been a fun way to meet people and connect with others in the community as well. So, Michael, I want to pivot now and ask you to share some advice you would pass on to someone looking to make a decision on the next step in their career, whether it was one of your kids or, you know, just anyone out there. Well, that's a big question. I could I could probably share a lot of my thoughts there. I think when I look back at the progression of my career, that one of the things I always tried to do was to always be learning new things and trying to help move whatever organization I was working with forward, whether it was their product offering or service offering, and the ability to go out and sell that. There's an old adage if you're not making something or selling something, then you're not really a vital part of your organization. So whether whether it's a product or service company, I think being as close to the creation of that product or service and as close to the selling that to a client or bringing bringing on new customers or clients, those are the most important places to be and they give you a security and a confidence that you might not have if you're on a more peripher a part of the business.

Not to say that there are other careers that are just as important, but for me I've always tried to be very close to the product and the customer. And I say product, I I mean product or service, whatever it is, whatever solution you're providing to your clients that they are willing to pay for, that is the most essential thing. You can understand and know and be able to bring to the client say hey, help me understand your problem and I can try to see if our solution can help you solve that problem. That is the essence of business and my view, so being as close that as possible as important. And this this is something I've telled them, told my own kids, who are grown now, and something that I've shared with people I've worked with. If you if you can do that it, it gives you the confidence to know whether an idea is good or not. So when you think about starting your own company, you want to do that knowing that you have a good idea and that people want it and people are going to be willing to pay for it. You have to believe in what you're what you're selling or what you're doing right. So the closer you are to that problem solving part, that role a company plays, the more likely you are to understand that well and to be confident. Because if you're not, if you don't believe in it, then you shouldn't be you shouldn't be doing that. And I think to the extent you can bring yourself into a business with your ideas, your creativity, your direction, that for me, is more sad, is fine than being one of many people who are each contributing a little piece. And I think teamwork is is essential and any big undertaking. So I don't, I don't minimize the importance of the team and and the rule that group, small or large, can play and bringing about success. You none of us does this alone, but when you think about your day and what you do and how you contribute to an organization, for me, bringing myself to it and my thoughts in my views and having that shape in some way what an organization does. That was important to me. So, as I said, I've always been part of entrepreneur of groups within larger companies or at smaller startups in their own right, and I think I prefer that. The excitement that comes from being able to move quickly, being able to solve customer problems and a dynamic way and being able to kind of bring a small group of people together to solve those problems. It's just it's it's more exciting, it's more fun for me. Yet you talk about being a part of that and making the changes that lead to successes, but what about, you know, any downfalls along the way? Have you ever, you know, been part of a group where it wasn't working out and you put all your effort in and then realize that, especially as entrepreneur, maybe this isn't the best route? Have you ever had to kind of start over? Absolutely, I've been part of teams whose product was a good idea but...

...it wasn't a business and you couldn't make money by selling that product. No matter what we tried, it just wasn't going to happen. That's bound to happen right. If you do a number of startups, you know they're not all going to succeed. And there have been a few, a few times in my life where the the idea was great and either the execution wasn't done well enough or it was just too early and the world hadn't quite come around to that way of thinking. And I think to be successful you have to have a lot of things go right. You have to have a great product, you have to have a market need that you're meeting clearly and it has to be the right time. There have to be the technology in place to deliver that or to provide that, if it's a you know, as as is most often in the case, a product, to make it happen. So you have to get pretty lucky for all those things to line up. But the more attempts you make, the more at bats you have, the more likely you are to have, you know, to have some success. So clearly not everything is going to work and sometimes it's a matter of knowing when to walk away and say, you know what, yeah, we gave it our best, but this isn't can happen. So you stop and you regroup and you try something new, and I'm sure they'll be more and more of those in my future, hopefully more successive to there you go. You know that that's great. When you look back from the start of the twelve years of owning the company, is there anything you really regret or are you happy with how it ended and you know where it brought you now? Now I'm just curious if you wish to ruin a little bit longer or if you look back and think that was the right time and the right decision. For me, I don't have any any big regrets about what we did and how we did it. We had a great team and many of them are still there as part of new owners. I think the timing was good when we sold the company and enabled it to go on to continue to grow and enabled me to to benefit from a lot of the hard work and a lot of people, frankly, to benefit from the artwork we had done. So I don't look back with any regrets. Do I miss the team? Absolutely. I miss the the collaboration we had and the the process that we went through to continually improve our product. I missed talking to customers and hearing about how what we've created and what we delivered to them actually helps them in their jobs. I miss what we were doing at market side for sure, but you know, you have to keep going and come up with the next thing. You can't keep doing the same thing over and over again, and it was I think it was good for the company and it was good for the team to start to do things a little differently and it's part of the natural evolution of a company, of a product, of a business. So I think the timing was right and it went well and I'm certainly don't have regrets for selling it. Thanks for sharing all of that. It sounds like you had had a great run in and exciting chapter of your life there with market site,...

...and I know I'm looking forward to hearing what's next for you once you've taken the time to figure that out. Me Too, well, so we ask every guest. What's the last non financial decision you had to make? I don't know, let's see. Well, when I want to go for a cup of coffee, I always have to decide whether I'm going to go to starbucks or cafe euro or Tat A. You've got, you know, tough decisions at each day and very tough decisions. It's pretty hard to resist the all the wonderful pastries that tat a. So I find myself there more often than not. But there you go. Michael, thank you so much for joining us on the show and sharing your journey and all the different chapters of your life getting you to where you are now. We appreciate it and appreciate you sharing all the details with us well. It's been a pleasure. Victoria and I've really enjoyed our conversation. So thanks very much to Victorian Michael for letting US listen in on their conversation. We appreciate their time and perspectives and thank you for tuning in. We hope you'll join US next time on decision dialogs for more stories from successful business owners. So long for now. Thank you for listening to decision dialogs. We hope you found today's stories helpful for your own decisionmaking. If you like to listen to more episode, you can subscribe on your preferred podcasting APP or visit our website, where you'll also find show notes and important disclosures. WWW DOT wealth coom forward slash decision dialogs. This has been a production of twin flames studios,.

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