When it comes to raising capital, Howard Getson is aggressive, manipulative, and obnoxious. And it works
In August 1996, Howard M. Getson, frustrated with a slow-going attempt to raise $2 million from investors who were "right on the edge but couldn't decide," turned his thoughts to a different kind of investor: 14-year-old boys with minimum-wage jobs.
Not that Getson, president and cofounder of IntellAgent Control Corp., a maker of sales-automation software, began exhorting every fryolator-tending adolescent around to put money into his fast-growing company. But after receiving and reading--and then, strangely enough, rereading--a junk-mail solicitation for a martial-arts video, Getson was struck by the similarities between "trying to convince a multimillionaire to make a $100,000 investment and getting a kid to save up for a video."
Inspired, he quickly began dictating a letter to 40 current and prospective investors, modeling his effort on the cheesy missive, which he'd found particularly potent. "I was tempted to dial the toll-free number, and I was really disgusted with myself because I knew I would never have another street fight in my life and that I would feel silly watching the video," says Getson, whose curiosity may partly have been a genetic by-product of the fact that his paternal grandfather was a masked professional wrestler known as the Green Hornet. "I kept picking up the letter because it was so well written."
As was his own letter--or so he insisted. Daniel G. Jobe, IntellAgent's chief financial officer, laughed when Getson showed him the final result. Briefly. "Then I said, 'No, I'm planning to send this out,' " recalls Getson, "and he literally burst into a sweat." Seeking to dampen Getson's enthusiasm, Jobe told him flat-out that the letter was "too aggressive" to mail. "It was such a hard sell, saying, 'Pick up your subscription form and mail in your check today,' " says Jobe, a former audit partner at Arthur Andersen LLP. "I was worried that it would turn off some of our investors."
He was sure it would, in fact, which is why Jobe quickly faxed a copy to Marvin N. Demchick, a board member who was also one of IntellAgent's early investors. "Dan probably did hope I could talk Howard out of it," says the 73-year-old Demchick, a former CEO of two publicly traded companies. "But I laughed when I saw the letter. The people he was going to send it to understand him. They know his attitude." Not that they all cherish his brash style. "Howard can't seem to help himself," says board member George F. Raymond, who founded Automatic Business Centers, a payroll-processing company that had grown to $26 million in revenues when he sold it, in 1989. "But you don't raise money by bullying."
That's true enough for most entrepreneurs. But then relatively few of them have ever raised anywhere near Getson's $6.8-million haul from 70 investors in just over two years. Each step of the way, he's gone out, armed with hat--no, hatchet--in hand, finding cutting-edge methods to remind prospective investors how lucky they are to make the cut. "I am extraordinarily aggressive," admits the 34-year-old, a master of blustery self-analysis. "If that's offensive to somebody, they shouldn't invest in my company, because I'll make them uncomfortable." But his ability to skillfully induce squeamishness may be what's enabled him to raise money, most of it from individuals. At a time when venture capitalists have moved to a higher plateau, leaving so-called angel investors with more options for their investment dollars, Getson's experience suggests that it pays (literally) to stand out. Granted, there are other ways to do so, such as having an irresistible business idea or an irrefutable track record. And would-be investors always seem to respond well to honesty about risks and candor about shortcomings.
But Getson opts to push an investment in IntellAgent Control as if it were something that could be sold via infomercial; he's a close cousin of the slyboots real estate broker, always invoking that nice young couple who just looked at this house and plan to come back in an hour. A former corporate and securities lawyer, he knows how to stay out of the boiler room. "In many ways I am the reason securities laws exist," he says. "But I'm honest and ethical. I just communicate differently. It's refreshing."
And unforgettable. No matter what prospective investors decide to do, chances are, they will long remember something about Getson, whether it's his artfully worded memos (sample heading: "We Stink Less"), his multimedia slide shows ("I added a 'boom' blast 15 or 20 minutes in, when the initial coffee is wearing off and people are thinking about going to the bathroom," he explains) or the "wild-ass claims" he likes to lob ("We closed the biggest sales-force-automation project in history").
Then there's the letter. "It really was the perfect blend," muses Getson, "of direct-mail schlock and true business sense."
It was only three years ago that Getson left his first meeting with a trio of prospective investors "very wet under the armpits," recalls Demchick, who had arranged the three-and-a-half-hour grilling. "My guys gave him an unbelievable workout." Raymond, who also attended, concedes, "I beat him up badly." Rattled, Getson asked if he could have another shot in a couple of months.
Given his reemergence as a fund-raising he-man, it's tempting to see Getson's transformation as analogous to that of one of his boyhood role models, bodybuilder Joe Weider. Weider, the muscle-magazine magnate, originally took up weight lifting because he was tired of taking beatings from neighborhood hooligans. But while it's true that Getson has studied the art of inducement--he cites texts like Geoffrey Moore's Crossing the Chasm and Robert Cialdini's Influence: The Psychology of Persuasion--it's clear that his personal style requires that he beam his energies toward one locale: in your face. "When I've tried to be any other way," he says, "I get into trouble."
There's no compelling evidence that a more subdued self is struggling to wriggle out, however. "Howard's personality has been the same since the day he was born," says Jacob R. Getson, describing his eldest son. "Have there been a few cringes? Uh-huh. Have I turned my head a few times? Uh-huh. Howard has no guile. People who don't know him are put off by it. People who know him love it." Then there are the folks who manage both impulses. "Howard has a giant ego, which is why I love him," says Raymond. "Look behind the companies that have really been successful and you'll find a brash, egotistical, and very passionate entrepreneur."
Raymond belongs to a group called LORE (Loosely Organized Retired Executives) Associates, whose 35 or so active members are mostly former CEOs. They evaluate ventures as a group and then invest as individuals. Demchick, LORE's cofounder, originally met Howard through his father, Jacob, who was formerly a senior vice-president at U.S. Healthcare, one of the country's largest HMOs. Two months after the younger Getson got "blown away"--to borrow his father's words--by the LORE members Demchick had hooked him up with, he traveled from IntellAgent's Dallas headquarters to LORE's Philadelphia base to claim $500,000 from 16 investors. "I liked what I saw," says Raymond. "He had fine-tuned the plan."
But no sooner had Getson raised that sum, in mid-1995, than each LORE investor received a one-page fax from him saying, "We're willing to extend the same exact offer for just seven days, but we're only going to accept a total of $500,000." Scarcity, Getson contends, prods people to act. "People don't want to feel they're missing out on something," he says. "And if you ask somebody enough times, they'll say yes." That they did.
But by that October, Getson came at his investors again. At the end of an informal meeting with six of them, he asked for another $500,000 on an unsecured basis, meaning that the company would not pledge any assets. Neither, for that matter, would the loan bear interest. He let it be known, however, that he'd be willing to reward them with a 10% discount on converting the loan to stock. "When he said it, my heart was in my mouth," recalls Demchick. "He had not forewarned me, and my guys don't tend to give in to somebody saying, in effect, 'Put up or shut up.' They'll just walk." Want to guess what they actually did? "The six literally fought among themselves to see who could give us the most money," reports Getson. The gambit worked, figures Demchick, because "Howard wasn't arrogant. He gave every impression of being confident, and we don't fault somebody for having that attitude."
Creating that impression gives Getson tremendous satisfaction. "I'm like David Copperfield," he says, "making emotions and ideas pop into your head and disappear, controlling every aspect of the delivery so that I can make sure you receive the message you need to receive to make an informed investment decision." One of his primary props is a slide show, for which "I do so much preparation that it looks effortless," he says. "There's an element of showmanship there." The big shtick Getson carries is backed by his belief that "people remember things with a lot more depth and clarity if you combine visuals and text." Anyone with a slide show, he also contends, will be perceived as better prepared. In addition, the slides enable him to control the order and timing of the presentation--and step around questions that could trip him. "Hey, you know, I've got something about that a couple of slides ahead," he'll respond to an unwelcome inquiry. "But I want to make a couple of other points first," says Getson. "It's a crutch."
Of course, it can support him only if those in the audience agree to watch the slide show, which they do because Getson gives them a choice--or seems to. If he senses resistance, he'll simply wait until the right moment to mention that he's got a few slides he prepared for another presentation that might help clarify whatever topic is nominally at hand. "My aggressiveness is not seen as aggressive because I practice it so much, it's polished," he insists. Once the curtain rises, the graphics flow naturally with his explanations. When Getson talks about what most salespeople want from sales-automation software, a proposal slides into a computer, later followed by a price list. He employs a four-box chart because, he says, "it makes me seem smart, practical, and grounded." He cites the company's achievements (such as ranking #221 on the 1997 Inc. 500 list), interspersing what could be an "egocentric and monomaniacal" recap with humor and provocative headlines like "Does Technology Matter?" In essence, "the show models the buying process," Getson says, building a compelling argument for why viewers should embrace him by becoming investors. "Most people raising money make a mistake," he explains. "They believe the person investing is interested in the product or service. But they don't care what you sell; they just want to know you can sell it."
It's for precisely that reason that Getson often invites would-be investors to the seminars he gives, which--on the surface, anyway--cover how to use sales-automation software to make the most of company assets. Not that he cares if the potential investors learn anything about that. "They see me in a position of authority; they hear people laugh and clap," says Getson. "There aren't many people who can do that on stage. I know they're thinking, 'If he can do this on stage, what must he be able to do with the business?' "
He's after the same effect, in other words, that he felt on the fateful day in 1996 when he tore open the letter commanding him to buy a martial-arts video. "I basically was impressed with how well the letter was written," he says. "I figured if a company can write this good a letter, the video is probably decent. Given what happened, I feel sorry I never bought one."
What happened was this: the very day he composed his own version of the letter, Getson asked his secretary and a couple of customer-service reps to work late, assembling investment packages that would accompany the communiquÉ, which also included a self-addressed prepaid Federal Express envelope. The packages went out just before the FedEx office closed that Tuesday night. It gave recipients a deadline of week's end. He knew it wasn't a wildly popular move. Jobe and Raymond "made arguments against it that made me think, but I knew this was the right thing to do," says Getson.
Priding himself on his understanding of "how persuasion works and how investment decisions are made," Getson used in his composition what he regarded as some of the most effective direct-mail techniques, including scarcity ("Opportunity expires Friday"), exclusivity ("Here is your copy of the letter I sent to key investors"), and reciprocity ("Your support and trust helped us get here. You should be rewarded"). The ultimate effect, says Jobe, "wasn't distasteful, really. It was just more direct than the way I'd seen it done before." (For more excerpts, see "You May Have Already Invested $10 Million!" below.) Before mailing the letter (prospective investors had earlier received the required private-placement documents) Getson asked his lawyer to review it, though he was certain that he "didn't violate any laws," he says. "We just said, 'It's first come, first served. We'll simply send the money back when the offering is oversubscribed.' "
Which it was--by Friday. "No legal fees, no broker commissions, no complaints," says Getson. "Why would anyone have anything bad to say about it?" Indeed, Edward Rosen, who chairs LORE, notes that while "investors may get impatient with the fact that the company keeps needing more capital, I don't hear from them about his fund-raising technique. The guy is good." Not everyone, however, agrees that Getson's behavior has much to do with investors' willingness to show him the moola. "The arrogant attitude didn't accomplish a thing," grumbles Raymond. "They accepted that Marvin and I were impressed with Howard and the product, and that's why they threw their oars in the water with us."
That water, as the venture-capital community was soon to learn, is patrolled by what Jacob Getson describes as "a self-propelled atomic shark" named Howard. By the end of 1996, with his company's revenues at $5 million, Howard Getson began approaching institutional investors. His act, amazingly enough, didn't change. "Don't think I didn't use the same technique with them," he says. "I just did it more subtly." In some cases, apparently, not subtly enough. "He's gone through several institutions, and I know that he ticked one of them off so much that they won't talk to him," notes Raymond.
Not the Benton Cos., though. The venture-capital outfit, based near IntellAgent's headquarters, communicated plenty with Getson, who fired off seven memos to partner David Radman. "At each stage, I tried to think of the critical hurdles and how I could use words to get them past those," says Getson. He also used different methods to send each letter: fax, E-mail, courier. "I didn't notice any carrier pigeons, but I'm sure that would have been number eight," says Radman. In a memo titled "Why Death No Longer Scares Me," Getson toured IntellAgent's history, stressing its proven ability to adapt. (In 1992, when his company had revenues of $100,000, he wrote, "The focus of the business began to change because my family needed to eat.") In "Dancing with Piranhas," Getson explained why good industry analysts sometimes say bad things about IntellAgent. ("They are not trying to find an up-and-coming technology; they are trying to find a safe technology," he says.) Throughout the memos, he sprinkled strategically placed terms such as "sensitive information" and "insider's guide" to convey the aura of exclusivity. "Nothing he did was over the top," says Radman. "I am an information junkie, so every additional piece was an incremental benefit."
Radman's sense of Getson as "very, very intelligent and well versed" mirrored his view of the company's software. Radman notes that beyond standard sales-force-automation applications--keeping a large direct-sales operation well-connected, for example--IntellAgent's software can be adapted in a variety of ways: franchisors can use it to communicate with franchisees; headquarters can keep information flowing to and from distributors. That kind of flexibility should sharpen IntellAgent's competitive edge, predicts industry analyst Chris Pavlic, in a field where, over the past 18 months, competitors like Siebel Systems, Aurum Software, and Clarify Inc. have all gained access to big money, either through a well-heeled acquirer or via a public offering. "Management has taken a nice grassroots approach, and Howard's very up-front in telling you what the actual story is," adds Pavlic, director of industry applications at Aberdeen Group, a market-research firm. "With the market starting to mature, there is going to be some consolidation." Clearly, IntellAgent has become better positioned since Benton opted to invest $2 million last fall, bringing the percentage of the company owned by outsiders to 44%. Raymond, who introduced Getson to the venture capitalists, describes Benton as "a little looser than the rest."
Not loose enough, by Getson's relentless standards. He'd like to see Benton use its option to increase its investment to $5 million--and soon. After that, he knows exactly where his next milestone awaits. "I'm going to raise $10 million, and then I'm going public," he announces. "I'm young, and this is only my first deal. It's not even the best deal I'm going to offer them."
Joshua Hyatt is a senior editor at Inc.
You may have already invested $10 million!
When it comes to prodding his investors, Howard M. Getson isn't above using what he knows about martial arts. Not that he resorts to chopping, shouting, and sweating. For him that would be much too subtle.
On August 13, 1996, Getson--in the midst of a $2-million private placement that was progressing "very slowly"--dashed off a letter to past and potential investors using the same principles as a direct-mail piece he had received, which touted a martial-arts video. Three days later software-maker IntellAgent Control Corp., of which Getson is president and cofounder, hit its $2-million target. "I crafted it so carefully it looks like a business letter," he says with abundant pride. "But it's really a well-thought-out marketing piece." Here, Getson uses excerpts to dissect his performance of that not-so-delicate magic:
1. "Your support and trust helped us get here. You should be rewarded."
2. "As we close out what probably is our last round of private fund-raising, Dan Jobe (our CFO) and I agreed that this is the most undervalued financing the company ever agreed to accept....Since the valuation is so favorable, we felt obligated to offer you the opportunity to participate."
3. "Here is your copy of the letter I sent to key investors this round....Enclosed is a reprint of a chapter in a new book... I think it will give you a good understanding of what we do and how we do it."
4. "Our product is one of the best-selling enterprise relationship management systems for corporate workgroups. Our current platform of choice is Lotus Notes. However, early next year, we will be releasing a version that will work with Microsoft Exchange....Even today, the Internet is an important part of our strategy."
5. "Now is a great time to invest. I encourage you to invest at the level you feel most comfortable. Please complete your subscription agreement and send it in to us....Please decide to invest more with IntellAgent Control. Look over the Private Placement Memorandum and fill out your subscription agreement today."