Serial Entrepreneur from Alberta, Canada: Michael Sikorsky, CEO of Robots and Pencils (Part 5)

Sramana Mitra: Give me the chronology of it. You didn’t mention raising money at any of these points.

Michael Sikorsky: I raised right away as I started the company.

Sramana Mitra: In Alberta?

Michael Sikorsky: Yes, in Alberta. I presented to 11 investors when I was 22. Just to tell you a neat story there, the presentation I had given was horrible. I didn’t know that it was horrible. I realized as they asked me the questions that I didn’t have answers to any of the questions, and I didn’t have the thinking that they wanted me to have. Just their questions were enough for me to reflect.

Sramana Mitra: Why did they give you money?

Michael Sikorsky: I asked them that exact same question. We had sold the company to an American firm. Everyone was getting their checks at the end. I actually pulled aside one of the guys that I had the best relationship with and I said, “I just want to ask you. That was the worst presentation. I can’t even believe how bad it was. Why did you guys give me money?” He said, “Everyone is worthy of an act of liberation. We just looked at it. We can’t believe that you’re up here. You’re obviously passionate. We could realize how coachable you were as we were asking the questions. We figured you would be successful. If your presentation was better, you probably would have had more money.” I raised $550,000.

Sramana Mitra: I’m sure your exit turned out to be  very interesting for you and your colleagues because you raised little money, and got yourself a sizeable revenue without raising further money.

Michael Sikorsky: Totally. It was good for everybody. It was a win-win situation.

Sramana Mitra: I can extrapolate in 1999 to 2000, if you have a $5 million to $8 million run rate, the multiples were really high at that time.

Michael Sikorsky: I’ll let you do your own math.

Sramana Mitra: What did you do after this exit?

Michael Sikorsky: I worked for that firm for three years. To give them a lot of credit, I learned a lot. It was bought by a company called Softworks. Softworks is a reknowned software product company. In fact, several great things have been invented there. It was an amazing place to join. Because we were purchased in, no one knew anybody. As part of an acquisition, you didn’t go through any wars together. You’re not in the trenches together. That was the single hardest thing to do. You come in at an interesting level but you didn’t grow up together. We were a small company. You’re coming to a company with 1,400 people. It’s totally different. Everything’s interesting. They’ve got global operating committees. All of these things are in place that we’ve never put in place because we were too small for it. I got to see stuff happening at a larger corporation and extrapolate from where we were, why did they buy us. Those three years was a lot of learning about how you build larger complex software and work on even more interesting software products.

Sramana Mitra: You were still based in Alberta?

Michael Sikorsky: Yes, I was still based in Alberta, but at this time, I was travelling a lot.

Sramana Mitra: When you left this company, what was your next move?

Michael Sikorsky: I started another company. I always had a home in Alberta. I still have a home in Alberta. I now live in California. Over time, I just felt like being where other innovation happens. I now officially live in California. At this point in time, there’s a market dynamic there where there’s a lot of independent consultants that get pulled in and out of projects. Everybody was always going after the clients. The reason why this story is relevant prior to the Robots and Pencils story was I saw this as, “How come no one ever goes after the talent?” I came at it from a different perspective. Imagine a play where the talent was on top. Clients were going to the talent anyway. There’s only so many golf tournaments that they can go to. They’re trying to get an outcome and they need talent to get their outcome.

I came in to the market and said, “Please come work with me. We’re going to take that same amount of money, and we’re going to do things like finding your favorite author.” For example software developers love to talk about the Gang of Four. I got Ralf Johnson to fly in and have dinner with my team. The same amount of money that I would spend to sponsor a golf tournament, I spent it on the talent – not on the clients.

Sramana Mitra: I’m not sure where you’re going with this.

Michael Sikorsky: Then I sold that business to my partner.

Sramana Mitra: I didn’t understand the business.

Michael Sikorsky: The business was basically software services. People would rent out software professionals for staff augmentation. Most of the time, people want to win over the large corporations like, “My client is Boeing.” Then Boeing will come and say, “What I really need are 10 Java programmers.” I came out to the market and said, “Who are the best Java programmers? What would I do for them?” Rather than taking executives from Boeing on a golf trip, I took that money to bring in famous authors of software.

This segment is part 5 in the series : Serial Entrepreneur from Alberta, Canada: Michael Sikorsky, CEO of Robots and Pencils
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