In March, Gerry Pond was named the inaugural BDC Entrepreneurship Champion, in recognition of 45 years of business success. After a lengthy career at NBTel, where he rose to the CEO office, Pond left in 2001. That same year, he co-founded Q1 Labs, an Internet security firm, which was purchased by IBM for roughly $600 million in 2011. He also launched Radian6, a social media monitoring company that Salesforce bought for $340 million.
Pond is currently chairman of technology firm Mariner Partners, and the force behind both Propel ICT, a startup accelerator, and East Valley Ventures, an incubator for Atlantic Canadian tech companies. In this exclusive interview, he talks with James Cowan of Canadian Business about about the one skill no university teaches: sales
James Cowan: In 2001, you helped create Q1 Labs, an Internet security firm IBM purchased in 2011 for something like $600 million. You also co-founded Radian6, which made social media monitoring software. It sold to Salesforce in 2011 for $326 million. What is the fundamental question you use to evaluate a potential company?
Gerry Pond: You look at the idea and ask yourself, Is this a big idea? Can it get to be a big idea? If they’re looking to build a better mousetrap—even if there’s plenty of mice around—I look at it and say, Naw, that’s an idea that’s run its course. But if it’s a software process that will allow parents to adequately monitor the activity of their children on the Internet, that’s a big issue. There are already solutions, but an elegant solution that’s reliable—that sounds like a big idea.
So you need a big idea. What else?
Next, you look at the people and whether they’re determined. Is this a game or a business? And that’s probably where my specialty is—picking the determined people. If it’s a group, you want to make sure it’s a team, not a bunch of drinking buddies from college. How much stress can they take together? These are the human questions.
Do you figure that out just by talking to them?
It’s all I’ve got. It’s not rocket science—your mother probably did it. But I have a lot of experience doing this.
You were the CEO of NBTel the New Brunswick Telephone Company, for years. Do you think corporate life prepared you for becoming an entrepreneur?
Well, NBTel was very entrepreneurial. We were a small company in the big world of telecoms. So we had to get a competitive advantage, and I felt that through innovation we would get that advantage and be able to keep our stock price up and keep our shareholders happy, as opposed to becoming a target for acquisition. So we did internal startups; it’s referred to as intrapreneurship. Nothing spectacular, but we did have one that we did, a joint venture with Terry Matthews, the founder of Newbridge Networks.
That was a television venture, right?
It was called iMagicTV. We made software to allow Internet protocol TV to be distributed by telephone companies. That was our big entry into the public world of a startup, and it went to IPO. Public offerings were relatively easy compared to today—and that’s why we had a dot-com crash. We were the third-last company to go public before the crash. So we got a good number, but we got creamed afterwards.
Let’s talk about that. Did you find a moral to that story?
Oh, yeah—there was definitely a moral. One is pay more attention to what your investment bankers are telling you on the IPO. We were getting a lot of comments from investors that our IPO was grossly overweighted. This was at the start of the crazy price-to-earnings ratios that didn’t make any sense. And the entire sector came down like a house of cards very quickly, as you probably can recall. So we also learned to not drink our own Kool-Aid. Sure, we had an IPO on two exchanges in Canada and the U.S., and everything was quite nice. But we couldn’t assume everything was fine.
We didn’t have enough information on customers yet. It was the dot-com era, and the telecom industry literally stopped buying overnight. The software was still cool, but there was no one to buy it. We learned that getting revenue traction, if you will, is extremely important before you go out and commit to shareholders.
With both Q1 and Radian6, you picked companies that were ahead of a trend. What’s your trick?
Well, I grew up in the ICT [Information and Communication Technology] sector working at NBTel, so I do understand the evolution of technology. With Radian6, it was very clear that social media was becoming the new phone system. This is pre-Twitter, pre-LinkedIn and pre-Facebook becoming legitimate. But it was clear that [social media] was going to change the direction of communications, like 1-800 service did.
Toll-free calling wasn’t invented until the ’70s, and it became a way of doing business: You call me, but I will pay. That allowed us to predict where we thought social media would go: The phone never rings, but I’m talking about you. The co-founder of Radian6—who is also a co-founder of Q1 Labs—had an idea for a social media monitoring platform. Our first application was to use it to catch pedophiles and other bad guys by monitoring the blogosphere for traces of conversations. The product morphed and morphed. But it was only when social media was starting to become mainstream that it became very clear: This was the new phone system.
What’s the one thing that most startups need help with?
It’s a Canadian problem—and an acute problem in the technology sector. We’ve got good innovators, good technology people and good financial people. We can build a really strong team, but we have a very small domestic market, and the Americans are the top software producers in the world, so you are not going to sell a lot to them either.
You have to sell to other countries. They all speak English, generally, in the technology sector, but you still have to sell to humans and know their cultural norms. As Canadians, we’re not very good at that. I find Quebecers have a bit of a leg up on that, by the way, because of their environment.
Is it just a matter of learning the culture in overseas markets?
It’s not the salutations and “drinking the local wine.” You have to really engage and prove you are reliable. It’s a problem-solving exercise. What happens if the purchasing department has said it will only buy from software companies that have $50 million worth of business and have been in business 10 years? Does that mean it’s over for a startup? No, you need to find a sponsor in the company to get an exemption to the rule. It’s a long journey, and you have to know how to weave through the layers of management. You have to give them a business case over and over. It’s a skill—a professional skill—and we’re not growing a nation of salespeople.
Why is that?
You can’t get a degree in sales. You might get a course credit, and you might get a certificate from a college. But sales has not been recognized by academia as a skill set and a knowledge set that is worthy of a degree. And most professions are a combination of knowledge and apprenticeship. Lawyers, doctors, engineers—all require a combination of education and on-the-job training. And that is essentially what sales needs.
We have to bring the status or the prestige of this profession up to a standard that’s equivalent to other professions. And until a lawyer or doctor and a salesperson can be viewed as the same professional class, we are going to be sending people out into the field that aren’t prepared for cross-cultural communications and don’t understand how to build that relationship. And building those relationships can be very difficult if you’re trying to do business in parts of Africa, for example, and it’s really difficult in China. But it’s got to be done.
People assume you’re either a born salesperson or you’re not. Can you turn a lousy salesperson into a good one through education?
I believe so. It’s about problem solving. And in the technology sector, there are a lot of engineers who have been taught problem solving in university. Get the facts; know the lay of the land. If we’re going to build a bridge, do we need some stress tests? Do we need some analysis, some core samples? This is all problem solving. So you can learn to apply that to cross-cultural problems. Can you teach people to listen better? I think you can. Can you teach them to remember better? I think you can. So listen better, remember better and solve problems before you open your mouth.
Can you give me an example of how these skills help?
If you go to Brazil, they speak Portuguese, but many of those companies are actually run by Spaniards. Now there is quite a mix. The Portuguese don’t really like it but put up with it. So that creates some subtleties you need to understand. And then there’s also the fact that they force you to legally create a company in Brazil, and you have to have a Brazilian director on the company’s board. It can’t be a shell company, like you can do in most countries. They want to control their destiny, and that’s very powerful. Until you figure that out, your attempts to get in there will just not survive.
You have many projects underway at the same time. How do you launch a new venture while making sure the old one keeps running smoothly?
Well, make sure the old one is run by people that don’t need you. It’s finding the right people—that’s the hardest part. And then letting it go.
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