Charlie Crystle audio story: deciding when to step down from your company

This story is from Charlie Crystle, who founded Chilisoft, a web infrastructure provider which in 1999 was sold to Cobalt Networks for $70 million. He and two partners later started Mission Research, which offers low-cost business software to support nonprofits.

Among other activities related to the startup ecosystem in Central PA, Charlie has founded a group of tech CEOs, Startup Lancaster, that meets monthly to socialize and discuss interests and experiences in the startup world.

In this brief story, Charlie shares the difficult process to decide to step down from a company you've founded. It's a situation ripe for mistakes, because there are so many ways to get it wrong - doing it too late, or too early, or when the core issue is really something else entirely.

Charlie Crystle on when to step down (3:14) [Right-click to download]

Charlie Crystle: when it comes to a cash, verify the numbers

Here's a great story from Charlie Crystle, one of the greatest tech entrepreneurs in Central PA (yes, there are some here in Silicon Pasture!). It's from his Digging In blog, essential reading if you're interested in starting a tech business here or anywhere.

Managing cash flow is an important practice to get to know early. It's pretty simple: you have your known ongoing expenses, known revenue (or not), and known investment (or not). You have to manage your cash--the combination of investment and revenue--to cover the expenses on an ongoing basis.

That's why hiring someone early on is such a big commitment. You're asking them to change their lives on your behalf, so you damn well better be able to make payroll.

I blew that in a big way once; I thought I had a certain amount of cash, and knew I had to contract the company to make the cash last, but then I got an email from my right-hand man informing me he had made a mistake--by $200,000. Oops is right. We laid 10 people off the following Tuesday.

Which raises another point: you're the leader, the CEO--you need to verify the numbers. I failed to do that, though my practice prior to that year was to know everything about finances. It was a mistake I still regret today.

[Remember, regret is not necessarily a bad thing.]

Charlie Crystle audio story - on evaluating and dealing with hiring mistakes

This story is from Charlie Crystle, who founded Chilisoft, a web infrastructure provider which in 1999 was sold to Cobalt Networks for $70 million. He and two partners later started Mission Research, which offers low-cost business software to support nonprofits.

His new venture is Jawaya.com, a social search site. You can sign up for the private beta of Jawaya here. He has founded a group of tech CEOs, Startup Lancaster, that meets occasionally to socialize and discuss interests and experiences in the startup world.

Charlie describes the effects on a startup of hiring "mediocre performers," and how it can take time, and teach fortitude, for CEOs to realize and deal with the issues. There's a sort of companion post to this one, Flip Video's Jonathan Kaplan on his unique approach of dealing with hiring mistakes at startups.

Charlie Crystle - making and dealing with hiring mistakes (MP3 - 3:43)

Transcript:

This isn't new news, but if you have a mediocre performer, you can give him a second chance, but if you keep giving second chances, it starts to drag on the company, drag on the excellent performers. When you remove that person, if you fire them or move them into some better career for themselves, the excellent people fill in the gap. They start performing better because they're not dragged down by the mediocre performer. They have fewer communications to manage, deal with. They see a problem, they take initiative and solve it. The mediocre performer won't do that - it would end up taking other people's time. And not executing very well.

It was a lesson learned but it wasn't a lesson applied, consistently, at Mission Research. I built that with my cofounders and we had a good initial core team. And I was 50/50 on hiring. It was really hit or miss. We weren't very methodical about it. We hired people that we liked. And we didn't take our time with it. We wanted to hire people who were generalists and were good people and liked the mission. There was a gap between that and the performance. The performance was tolerated. I tolerated it for a long time. And that really slowed us down, dragged us down. Because we were spending resources on people that ended up slowing down the excellent people.

It was hit or miss. At some point I developed the fortitude, and figured it out, and pushed by my own mediocrity at times to step up and be excellent. It's hard, when you're building a company, to make those decisions. Sometimes, you gotta recognize you yourself are performing poorly, and hurting the company.

Charlie Crystle audio story - not knowing he didn't need outside experts to be successful

This story is from Charlie Crystle, who founded Chilisoft, a web infrastructure provider which in 1999 was sold to Cobalt Networks for $70 million. He and two partners later started Mission Research, which offers low-cost business software to support nonprofits.

His new venture is Jawaya.com, a social search site. You can sign up for the private beta of Jawaya here.

Charlie describes moving his business to Seattle and hiring a team of experts on the advice of a consultant... and later realizing the business did better with the old team of non-experts.

Charlie Crystle - not realizing he didn't need to hire outsiders to succeed (2:10)

Transcript:

There was a series of mistakes around personnel that I definitely made. It started out that I didn't know what a great professional was. I didn't know what I didn't know. So when I moved everything out to Seattle, I hired a consultant to help me out. He was telling me we needed to hire a CEO and get a management team, and who the good players were in town. We ended up hiring this management team, they really weren't great performers. You know, they had resumes, but... We didn't know what we didn't know.

It turned out that, for instance, we got more press and more interesting press and more momentum before we took venture capital than after. Before we hired a management team and a VP of Marketing than after.

For me the lesson there was: we knew how to do it. We just didn't know we were doing the right thing. We ended up deferring to people that we thought knew better than we did, and sort of ignored the fact that we had really good results. Then again, we didn't have anything to compare it to. It's one of those things where, you want to trust other people, but you don't have anything to measure it against.

Charlie Crystle audio story - how not to break up with a business partner

This story is from Charlie Crystle, who founded Chilisoft, a web infrastructure provider which in 1999 was sold to Cobalt Networks for $70 million. He and two partners later started Mission Research, which offers low-cost business software to support nonprofits.

His new venture is Jawaya.com, a social search site. You can sign up for the private beta of Jawaya here.

In this story, Charlie describes the birth of the company that eventually became Chilisoft, and talks about the wrong way to end a business partnership.

Charlie Crystle - how not to end a business partnership (3:31)

Charlie Crystle audio story - investing time in someone else's dream

This story is from Charlie Crystle, who founded Chilisoft, a web infrastructure provider which in 1999 was sold to Cobalt Networks for $70 million. He and two partners later started Mission Research, which offers low-cost business software to support nonprofits.

His new venture is Jawaya.com, a social search site. You can sign up for the private beta of Jawaya here.

Charlie discusses working crazy hours for someone else, and how that experience prompted him to first go into business for himself.

Charlie Crystle - investing in someone else's dream (1:56)

Transcript:

It started out as Intuitive Computer Solutions. I started it right after I left the music industry. I was so frustrated with my record company and decided I wasn't going to record for them any more. And I got hired by a little computer company, a little computer store, and ended up not getting paid by them, and learning a lot about building computers, sort of on the fly. I was trained, half-trained, in a day or so. And then I had to deal with... The guy left! He left the store, for months.

I was trying to serve customers, didn't know what I was doing. So I studied. All the time. Like all night. Bought "Upgrading and Repairing PCs," a bunch of other books. Really learned how computers work from the ground up. And, you know, I made this mistake of putting a huge investment into someone else's dream. You learn a lot through that, in some ways, but within a couple of months I said, this blows, and I'm not getting paid. So I'm going to start my own thing.