Behind every successful CEO probably lurks at least one major regret. The best, or the luckiest, CEOs learn from their mistakes and get an opportunity to rectify them. But as we learned from the stories that company founders shared with us, even the ones who get a second chance can still feel the repercussions from their moves for years afterward. And the lessons they gleaned stay with them and influence their business decisions in sometimes surprising ways.
Regret 2: Not seeking financing sooner
Company: Granite Systems (#77 on the 2000 Inc. 500), in Manchester, N.H. Business: Designing software products for the telecommunications industry CEO: John Borden
"I regret not having stepped on the accelerator a little earlier," says CEO John Borden. He started Granite Systems in 1993 as a consulting group, after having served as a consultant with the Boston-based Yankee Group during AT& T's divestiture. But about two years later, when the opportunity came along to develop and sell a new software product, his customers offered to give him funding for it. Borden then got so absorbed in running the business that he just never got around to looking for any further financing.
Borden and his chief technology officer were managing everything. "We were very caught up with solving the problems of our customers, and the business was doing well. There's only so much that two people can do," he says. "But then we stepped back and realized that we had to make the choice between having a lifestyle company or really growing the company."
At that point Borden was financing the company solely with operating cash. And although he is sorry he didn't seek investment funds sooner, he says the emphasis on cash flow "gave us healthy habits" and a workable business model. "By year three or four, we probably could've been ready to go out and do a first round," he says. But he waited until October 1998, when the company raised $2 million. "If we had gotten money sooner, we would've been able to set up a sales and marketing operation and develop a diversified product line," Borden says. And indeed, as soon as he got the first round of financing, he brought in a solid management team, focusing on sales and marketing. "It's made all the difference," he says.
This year (2000) Granite Systems has attracted nearly $23 million in a second round of financing and has 96 employees, up from 25 in 1998. And despite the pride Borden feels about his company's self-sufficient early years, he is more confident now. "I don't lose as much sleep at night over meeting payroll," he says.