Clay Collins of LeadPages looks to be that rare co-founder of a technology company who can stay in the top job all the way through an initial public offering or sale that will make pretty much everybody involved rich.
This is a risky call, I suppose, a little like Gophers coach Jerry Kill seeing an All-America linebacker after watching a sixth-grader play flag football. It’s true that LeadPages is still mostly a start-up.
But if anybody makes this difficult transition, it’s somebody who thinks as clearly as Collins does.
Managing a company like LeadPages would seem to be a challenge for any one; it’s one of the fastest-growing companies in the Twin Cities. From its launch in early 2013, it’s now up to about 150 employees and has two dozen open jobs listed on its website.
It’s raised $38 million in venture capital, but revenue has been growing so fast it can’t hire people fast enough to keep from being cash-flow-positive. It hasn’t touched a penny of the venture capitalists’ money.
Succeeding as CEO as the company grows “is something I think about all the time,” Collins said. It’s interesting that the first thing he volunteered is that it’s his “agenda” for the company to be successful, not to remain its CEO. If that means a different role is the best job, he’d be fine with that.
He also isn’t pining away for the exciting early days at LeadPages, remembering all they had to do to get the business established and product launched, with not much help. He’s still working long hours, he said, “but the quality of problems we have now are just much better.”
In thinking through what he should be doing this year, he’s decided that Fred Wilson, a New York venture capitalist, had a key insight. Wilson famously once wrote that all a CEO should be doing is sharing an exciting vision and strategy for the company, recruiting top talent and making sure there’s enough money in the bank. “That’s it,” Collins said. “That’s now how I spend my time.”
He’s also learned that the pendulum has swung back to a preference on the part of venture capitalists to keep co-founders in leadership roles, rather than push them aside in favor of “adult supervision.” He can agree that it’s challenging to remain an effective CEO as the company grows, but he thinks he’s identified the critical issue. He calls it “culture” but what he’s really talking about is communication.
As companies grow it gets far more difficult for accurate information to get from front-line employees up to the bosses. There may not be enough of a process to keep it from getting distorted or filtered as it passes through the middle managers, or keep any information flowing at all. And when that happens often enough, trust breaks down in the top leaders.
“That’s the reason why a lot of co-founders end up stepping down,” he said. “It’s not because they don’t know what to do or they’ve lost their vision, it’s because they can’t steer the ship anymore.”
This problem has been tops in Collins’ mind since the beginning, and more recently LeadPages has started using communications tools such as 15Five. This little application every day asks an employee a serious question, maybe something like identifying a roadblock in his or her work. These thoughts quickly get to the manager who then takes five minutes to respond.
Co-founder Tracy Simmons just put a few thoughts on good leadership on the company website, including the use of this kind of tool, along with the need to apologize a lot.
That’s another point Collins wanted to make, that he’s just the public face of a co-founder team. Simmons, called the chief strategy officer, contributes just as much.
Collins hired her at his little consulting company back when her salary was equal to his entire net worth. He plunged ahead after realizing that the worst that could happen is that he would have to move back in with his parents. The consulting business promptly took off.
LeadPages the software firm was born when Collins produced templates for what a good sales-oriented webpage could look like, and clients wanted to buy them to customize their own businesses.
Most job candidates he meets get LeadPages’ market opportunity, Collins said, and want instead to hear his vision for the company. He starts by telling them what he told his venture capitalists upon meeting them in 2013.
The first investors were the Colorado venture firm Foundry Group and Fargo-based Arthur Ventures, though they’ve since been joined by Drive Capital of Ohio. The message Collins initially delivered was that he and Simmons were building a $1 billion software company in Minnesota and needed at least eight to 10 years to do it.
“The thing to know is we’re not racing toward something. We are not trying to flip this in one or two years, or burn everyone out to make a quick buck,” he said. “We are playing long ball here.”
Buyers have already come knocking, but the “numbers aren’t interesting yet,” Collins said. Two years ago, a similar company called ExactTarget sold for about $2.5 billion. To him, that means LeadPages would have to fetch at least $3 billion in a sale. He likes the idea of an IPO even more.
That kind of success would put LeadPages in the 1 percent. Last year there were just under 2,900 tech companies across the globe that went public or were bought, according to CB Insights, and only 32 of them got their so-called “exit” at a valuation of $1 billion or more.
Collins seemed surprised to hear that shooting for $3 billion seemed awfully ambitious.
“That’s doable,” he said. “That’s totally doable.”