HarQen: From $5M In Debt To A Hit Business – with Kelly Fitzsimmons

How does a founder have multiple setbacks and still go on to build a hit business?

Kelly Fitzsimmons once found herself on the hook for $5 million in debt. She did something painful to get out from under it. Today she is the co-founder and CEO of HarQen, whose software makes voice more useful. Among its other applications, HarQen’s technology allows employers to automate phone interviews with prospective employees.

It’s latest product is Symposia, which makes the voice of your conference calls, webinars totally search able.

Watch the FULL program


 

About Kelly Fitzsimmons

Kelly Fitzsimmons is the co-founder and CEO of HarQen, whose software makes voice more useful.

Raw transcript


Mixergy’s audio transcription is done by Speechpad

Andrew: Coming up, have you ever given a personal guarantee as a founder?
Hear the painful thing that happened to today’s guest when she did it and
get some advice on how you should handle it yourself. Also, do you want to
see how to find a hit business? I’m going to ask today’s guest about the
process that she and her co-founder took when they found that the first
version of their company didn’t exactly rock, and how they turned it around
and made it into a business that people are eager to be a part of and eager
to be customers of. All that and so much more, you’re going to want to stay
tuned, coming up.

First, three messages. Who is the lawyer that founders in the Mixergy
audience trust? Scott Edward Walker of Walker Corporate Law. Have you seen
what Chris Pritchard posted on my Facebook page? His new company’s
incorporation pages that Scott Edward Walker helped him get. Scott Edward
Walker is the lawyer that publications like Forbes trust. Go to
walkercorporatelaw.com.

Next, when my friend had to close her company’s office, but still wanted to
give callers the impression that all her employees work well under one roof
together, what service did she use? Grasshopper. With Grasshopper everyone
who works for you could have an extension. They can pick up calls on their
extensions, no matter where they are, or what phones they use, and they can
transfer calls to each other back and forth with ease. Get those features
and tons more at grasshopper.com.

Finally, when Dave Jackson and Dave Petrillo invented a product that keeps
coffee at the perfect temperature, what platform did they use to create
their online store? Shopify.com. Look at how beautiful their store looks.
It’s because it’s built on Shopify. They did hundreds of thousands of
dollars in sales. Shopify stores are designed to help you sell. Patrick
Buckley invented an iPad case and used Shopify as his online store. Within
months, he sold over a million dollars in cases. Get your beautiful online
store at shopify.com. Here’s the program.

Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the
founder of Mixergy.com, home of the ambitious upstart and home of over 700
entrepreneurs who have come here to tell you their stories of how they
built their businesses. How does a founder have multiple setbacks and still
go on to build a hit business? Kelly Fitzsimmons once found herself on the
hook for millions of dollars in debt. She did something painful to get out
from under it and I want to learn from it, and I’ll ask her about it in
this interview. Today, she is the co-founder of HarQen, whose software
makes voice much more useful. Among its applications, HarQen’s technology
allows employers to automate phone interviews with prospective employees.
Their latest product, Symposia, makes the conference calls and the webinars
that you do right now totally searchable by voice. You don’t just search
for the PowerPoint slides, you can search for voice. I don’t know how
that’s possible. We’re going to find out about that and, more importantly,
how she built a business around it here in this interview. Kelly, thank you
for doing this interview.

Kelly: Thank you. Thanks for having me.

Andrew: Let me start off with the painful part and then I’ll quickly ask
about the positive part. The painful part, how deep in debt were you?

Kelly: At the height of it, before we were able to restructure things, I
was personally guaranteed for five million.

Andrew: Five million dollars. You personally on the hook. You can’t escape
from it by saying, “Hey. I’m walking away from the company?”

Kelly: No, no. the company at that point had already been folded, so this
was banked [SP], up. This was contracted but that I personally guaranteed.

Andrew: In the interview, we’re going to talk about how you got into debt,
why it made sense at the time and how you got out of it, but let’s skip
quickly, for a second, to the happy ending. HarQen found its voice. It now
basically makes voice searchable online. How do you know, now, that it’s a
hit? That the business is as well off as I’m telling my audience it is?

Kelly: Customers ultimately tell you. The thing that’s nice about business
is that, at least, the type of startup that I run, is its revenue. You can
start to see whether or not people are buying your things, and is it
accelerating? Are they buying more of it? Are you starting to get a nice
growth curve? What’s the month over month rate? We’re getting some really
nice traction and also we’ve got world class customers, so our customers
are [??].

Andrew: Name drop a little bit. Who are some of the customers?

Kelly: [??], Adecco, Manpower, Randstad. Those three customers alone make
up over 80 percent of all the revenue in staffing and recruiting.

Andrew: What size revenue are you guys doing now?

Kelly: We’re a privately held company. We don’t disclose, but I can tell
you that we’ve doubled our revenue over everything that we did last year in
the first quarter.

Andrew: Can I say this, that you’re doing over $1 million in sales? I read
an article, where you said, “We’re going to do $1 million in sales.” Have
you guys hit that in annual sales?

Kelly: Well, I can’t say. I can’t say. It’s actually from a privacy
standpoint, we’ve got a lot of disclosure issues right now, so I can’t. I
apologize.

Andrew: OK. That’s OK.

Kelly: Actually, our investors signed non-disclosures regarding our
financials. Which is a different story for maybe a different episode, but
I’d be happy to (?).

Andrew: You mean, why your investors signed non-disclosures? Why did they?

Kelly: I’m sorry?

Andrew: Why did they sign a non-disclosure? I thought investors…

Kelly: Yeah. It’s interesting. It’s to be able to get the full financial
information. We just had some issues with disclosure, people sharing
information inappropriately. Because we have such a large investor base,
it’s easy to happen and it can hurt the company. We have to be really
careful.

Andrew: You know what, Kelly? You’re right. This is a whole interview on
its own, but I’ve got to tell you that you bring up a point that we don’t
talk enough about in the startup world, which is, I’ve heard other
entrepreneurs say, “Hey, I send out these weekly emails to my investors.
They’re all angel investors. I wanted to keep them in the loop because
they’re also going to advise me. I told them about some of my setbacks, and
bam. The setbacks that I was having, that I was being open about, they were
sharing it with their friends, they weren’t holding…” This is something
that we should just keep it as a whole other interview.

Kelly: Absolutely. I’ve got lots of ideas.

Andrew: I’m glad that you brought it up. It’s not a topic that I could ever
get deep in depth on, because we can never call anyone out on it. It’s just
not going to work properly in an interview, but I’m glad that we’re
starting to talk about it a little bit. All right. Let’s go back and focus
here. Before you even built this, you were a student who was dyslexic, had
severe ADHD. What is ADHD?

Kelly: Attention Deficit Hyperactivity Disorder.

Andrew: OK.

Kelly: There are a lot of folks who think it’s some sort of just trumped up
diagnosis, but if you’ve ever had or seen a truly hyperactive child, that
was me. I basically ran in circles for the first six years of my life. I
just could not settle down.

Andrew: You mean, literally you would run in circles in the living room at
home?

Kelly: Oh yeah. Anywhere. For most of school, up until high school, I was
in the principal’s office constantly. I just couldn’t settle down. I could
not sit still.

Andrew: Were you also at all entrepreneurial? Did any of the people who you
became, was that in there?

Kelly: Oh yeah.

Andrew: What did you do?

Kelly: I had a lot of businesses. Before the age of 13, I can’t even tell
you how many businesses I started. Some of them were door-to-door, some of
them involved me setting up a shop at the end of the driveway. Let’s see,
one of them, this was when I was living in Florida, was selling coconuts
and coconut driftwood to tourists.

I was seven years old, and everything was $20, because that sounded like a
good number. When they asked me how in the world I could justify selling a
coconut in 1978 for $20, I pointed to the tree. I had to go obviously climb
and get the coconut, and they, ‘Oh, my gosh.’ Well, fooled. Yeah. Coconuts
do fall. I don’t know. Yeah. They’re heavy.

Andrew: You know what?

Kelly: They were questioning me.

Andrew: I remember the founder of StubHub telling me about how when he was
a kid, he was selling, I think it was toys or candy in school, and he got
shut down. Did that happen to you?

Kelly: Oh, sure.

Andrew: What were you selling?

Kelly: My mom shut down one of my schemes. One of them was Kids Club
International, where I went door-to-door. It was $20, because 20 was my
magic number, to join Kids Club International. It was connecting children
from around the world. Now, again, this is 1978. We didn’t have the
Internet, at least we weren’t aware of the Internet back then. We certainly
didn’t have access to it in rural Florida. Yeah. My mom caught onto that
scheme, and I had to go back and return all the money.

Andrew: How about school? Did they shut you down too?

Kelly: That’s interesting. I actually got away with it at school. By then,
I had moved on to more socially responsible enterprises, and ones that had
genuine business models behind it that were not so seedy. In middle school,
high school, I started starting clubs. Then, of course, I wasn’t going to
have just one club, I had to start the club that ruled them all.

I started a club that essentially was in charge of all the clubs to ensure
that we had a voice with the student council, so that they would have
adequate time. We lobbied to make sure that we had time alongside the
sports. You could do it either/or, you didn’t have to be a jock. I was able
to get the chess club off of the athletic requirement, because they were
doing chess after school, and that was competitive.

Andrew: You don’t seem hyper. You’re not, obviously, circling around.
You’re sitting down and doing this interview. What did you do to eventually
calm down?

Kelly: It’s funny, I still have an incredible amount of energy, but it’s
called having two small children. I have a child at the age of six and a
child at the age of four. Having two small children really does take a lot
of energy. For me, what ends up happening is that I look like a normal
human, not somebody running in circles, still. So, it’s age!

Andrew: Alright. Sun Tzu, that was the first big business that you were a
part of. Were you the founder of it? You are, you founded it.

Kelly: I started the company in 1996, at the tender age of 25.

Andrew: At 25? What was Sun Tzu? I see it here on my screen and in my
notes, but for people who don’t know what Sun Tzu Security was, what was
it?

Kelly: We were, as far as we could tell, the first pure-play information
security consultancy in the world, dedicated to helping businesses protect
their mission critical information. You have to remember, in 1996, I
started this company before most people knew what e-mail was, or a web
browser. And so, what a firewall was, what (?) was, being hacked, none of
that was really part of the common vocabulary. It was really ahead of its
time and in some ways, I really paid for that, with three years of trying
to get some sort of market created around the concept that information was
important and needed to be secure.

It was very hard to do, because that was the go-go 90′s. Everything was
about access, and everything was about scalability. I was saying “Shut it
down!” You can imagine how well that was received. I was pretty much a
Pollyanna, which is kind of funny, because I had such a negative message,
and my personality is quite positive. I can’t imagine what I sounded like,
particularly back then. When the dot-com bust happened, you started to see
a little bit of interest in security, but it really didn’t happen until
9/11, unfortunately. Post-9/11 is when information security really, in my
opinion, became an industry. At that point, client service security and
Internet security really came into vogue.

Andrew: You were still around, and you sold the business, I think it was
January 2003?

Kelly: Yes, I sold Sun Tzu in 2003 to Neohapsis [SP]. Prior to them, in the
go-go 90′s, I had started the business that would be my undoing.

Andrew: Before we get into that, I want to understand something. You tell
me that you’re selling security in a world that just doesn’t understand the
value of it, but did you get any clients pre-9/11? I’ll ask you about what
you did after 9/11, but how did you get clients before 9/11?

Kelly: Oh, blood, sweat and tears.

Andrew: Can you give me an example? I want to learn. I love these kinds of
stories.

Kelly: At first I was going for small business, because I figured small
businesses needed my services. I assumed that Enterprise or Fortune 500 or
Global 2000 clients had the lawyer thing, they had Accenture [SP], they had
(?) Martha Anderson, so I figured they were covered. My market niche was
going to be small business, and they had absolutely no interest in
security. That was not in the budget. It wasn’t on their radar. They didn’t
get it. In the beginning, interestingly enough, I started working with a
series of non-profits, particularly at technical museums, where they had
the issue of kids coming in and surfing porn on some of the core computers.
The good news was that I got in front of the board of directors so they
could say, “Wow, I’m so impressed you can do this. I’m worried about people
doing this at work,” and that was how I actually got my early client list
together, was actually working with non-profits at very, very low rates
that they could afford.

It was a marketing expense to really try and make sure I got in front of
their board of directors, who (?) concerned. It was from that, I actually
started a relationship with a gentleman who was on my board of directors
for many years and was a great personal mentor to me. Unfortunately, he
just died this year. He just passed away, so I’m very sad. A gentleman by
the name of Rich Dalton, who was the founder and CEO at the time of Pfizer.
Pfizer, still today, is one of the world’s largest back-end transaction
processors of financial data. They have well over 10,000 banks that they
run the back-office systems for. George was one of my first and earliest
fans that found my lack of revenue, and I wasn’t that bad. It was over a
million , but it was, like I said, blood, sweat and tears, just befuddling
because he had started this company. It was worth billions and he’d like to
say, “I don’t mean to insult you but your business is really small
potatoes, Kelly.” “I know.” “‘I’m only doing this because you’re a good
person.” I said, “I realize that. I realize I’m a charity case.”

Andrew: You’re doing over a million in sales and you must be proud of the
fact that you hit a big milestone. He’s still making you feel like it’s
small potatoes and you’re going along with that?

Kelly: I actually, back then, there wasn’t like it is today with all the
data being so easily had and I didn’t know that a million dollars was big
shakes. I didn’t. I didn’t know that the vast majority of businesses never
get to that and it was incredibly hard to get there. It was painful. I’ll
tell you a quick George story because this is really helpful, just to get a
sense of how bad the market was, because people now, today, can’t imagine a
time where people didn’t care about their information. It seems like it
would just have always been, but in 1998, or ’99, really in the height of
the upturn, everybody’s so excited about this Internet thing and George
takes me aside and he says, “Kelly, I just can’t stand it. You’re just
beating your brains out. You’re so smart. You’re so talented. Just stop.
Nobody wants what you’re selling. Just stop now. I can’t stand it. I can’t
stand to watch this.” I didn’t cry then, but I cried later and I said,
“George, you’re wrong.” Remember, he’s the CEO of the organization, at the
time, that was doing the vast majority of the bank transaction back end
processing for financial institutions. “Nobody cares about security, Kelly.
Stop. Give it up. It’s not a market.”

Andrew: Then the way that you got it at first was by saying, “I’m going to
go in and give these clients what they want. I’ll sell them what they want
and give them what they need. They want anti-porn software. I’ll go in the
door and give them some of that, but then I’ll introduce them to security,
and that’s how I’ll get my security customers.” That works so-so for you.

Kelly: That’s a really good way of putting it. It’s like a lot of what we
did was, ‘What do you need? What problem are you trying to solve?’ With
professional services, you can do that. You can’t do that, particularly, as
well or easily with product, but it’s solution based selling and what we
ultimately did was make a lot of companies far more secure than they would
have been otherwise, but one of the reasons I’m not in security today was
that by the time everybody got excited about security and started seeing it
and suddenly there’s chief security officers and chief information security
officers, chief privacy officers, by the time those positions were carved
out, by the Global 2000, it was too late. The horse was out of the barn for
three years. The systems to the state, I can’t say that any system has not
been penetrated and it’s still, probably, vulnerable, if not open in some
major way. It’s almost impossible. It became very sad. [??] time I should
have been celebrating my success and saying, “Yes. See, look, I was right.”
I was so sad because I didn’t fix the problem. I didn’t save the day.

Andrew: But did you get to capitalize on it afterwards?

Kelly: Sure, but for me, capitalization, I had a good return, but it was,
as you know, I had some lingering debt.

Andrew: Business was starting to get better after 9/11.

Kelly: Business was steady and good for [??]. Where our business was not
good was on the startup side, [??] the side.

Andrew: One more thing on this. You told our producer, Jeremy Weisz, that,
“I spent eight years being CEO and doing it badly.” So far, it seems like
everything at SunSu [SP], life wasn’t great, because you couldn’t persuade
enough customers to change their world view, but lots of people can’t
persuade strong headed entrepreneurs and other business people to change
their world view. What do you mean by,”I was a bad CEO’?”

Kelly: I was a terrible CEO.

Andrew: What did you do?

Kelly: What did I do? I started two other businesses while I had SunSu
going.

Andrew: Why is that a bad thing? I hear a few entrepreneurs do that.

Kelly: Well, it was an ego thing, first off.

Andrew: Oh, OK.

Kelly: I mean, it was the Go-Go ’90s, I had not come out of an MBA program
and became an entrepreneur. I had my Masters in Comparative Religion, I
mean, so I had studied something that was fairly esoteric and very limited
business experience before I started my own company. So it was a lot of
ego. I’m reading these articles about, you know, grow this and scale that,
you know, why start one when you can start two or three. There was a lot of
very credible people at the time that were saying a lot of things that I
believed to be true that if I had any sort of business acumen, I think I
would have been far more doubting but it was a time of, it was a boom time
and people get crazy in boom times and I didn’t have the wisdom to know
that this was just crazy talk. So I believed it and, you know, I let me ego
get out in front of me, look how successful I am and if I can do this once
I can do this three times. So one of the business I was able to sell to my
partner at the time for $1, so it wasn’t, you know, it was a failure in the
grand scheme but I didn’t get hurt by it.

Andrew: This is one of the businesses that you were doing while you were
running Sun, too?

Kelly: Yeah, yeah. We started a side bar, Bar Value Item Reseller that had
a very focused market. And then the other one [laughs], the other one,
Prism, yeah that blew up spectacularly.

Andrew: That’s the one where you took on the five million dollars in debt.

Kelly: Yeah, at one point. We were able to talk it down significantly but
it took time to get it worked down. But it was still, like for about
eighteen months, like an elephant was just standing there.

Andrew: And it wasn’t reduced down to nearly nothing, we’ll get to that in
a moment.

Kelly: Well, no, it was well north of all of my worldly possessions.

Andrew: This is a big number but we’ll hold onto it, I want people to pay
attention until we get to that. What was Prism?

Kelly: You can work it down if they see that this is not a solvable
solution, you can work them down, which we did. Significantly.

Andrew: I would’ve thought that you could work that down to practically
nothing but I guess. So, what was Prism?

Kelly: so Prism was a wonderful acronym. It meant Proactive Remote
Information Security Monitoring, aah, great name. And it was started two
months prior to Bruce Schneider [SP] starting Counter Pain and it was the
same basic business model which was working with Fortune 500 companies and
taking in the data that was being, you know, thrown off my their firewall
and intrusion detection system, monitoring it and essentially ensuring
that, you know, kind of have PDP or Honeywell for you perimeter security.
It was a great concept.

Andrew: So, securing your office, if you want to make sure that if anyone
tries to break into your office.

Kelly: Not your office, but your data center.

Andrew: Oh, you’re data center. I see, OK.

Kelly: So, it’s like that for your network, computer network.

Andrew: So, I went back and I looked at articles from the time you were
running it and you said that one of the problems was that you had a
customer who didn’t pay you for nine months. It’s really terrible to rely
on a single, large client that will not pay until they feel like it. Tell
me about that. Who was the client? What kind of damage?

Kelly: Well, they’re so famous for putting small business out of business
and it’s been so many years, you know, it was GE [laughs].

Andrew: GE put small businesses out business how? What did they do?

Kelly: They don’t mean to, it’s funny but they have, you know, like a lot
of large businesses they spend a lot of energy trying to negotiate really,
you know, good terms and then they leverage their vendors and particularly
the market goes sideways or south, you know, they extend terms and so, you
know, it’s a 120 days is not unusual to see from large companies when, you
know, times get bad they’ll just stretch it out in terms of paying their
vendors and that’s what happened to us and we didn’t have the cash flow to
be able to sustain ourselves.

Andrew: To pay for what? What were the expenses you had?

Kelly: Employees mostly. It wasn’t like we were running crazy. It was
people.

Andrew: And you also said, same article, Prism was getting nowhere with a
strategic partner which was negotiating a one million dollar investment in
a marketing deal. So this was GE also or someone else?

Kelly: No, no. That was Bull Honeywell.

Andrew: I’m sorry, what?

Kelly: Bull Honeywell. They did invest, they ended up, they ended up, they
ended up putting the money in so that was a misquote but that was part of
the debt, so.

Andrew: OK. I see, so they lent you money.

Kelly: They lent me money.

Andrew: I see. OK. And then you also had, I don’t see it here in my notes
but you also had a partner, I think, who was supposed to build this out and
it was taking too long to get it built.

Kelly: Mm-hmm. So, it wasn’t up on the building side of the technology.
What is was the…

Andrew: Oh, client’s, selling.

Kelly: The technology side, they were supposed to sell it, which seemed
really smart, you know. They had all of these Enterprise salespeople that
wore fancy suits and they were well trained and they spoke Enterprise and,
you know, we’re just this little tech company from Wisconsin that’s really
good on the technology side. We’ll build it, and then they will go sell it.
That was the idea, and it’s supposed to be a sales channel for us into the
Fortune 500 which made a ton of sense on paper. The problem was, and this
is important for entrepreneurs to know, is that these particular sales
folks were making money hand over fist on a cash cow that was dying, which
was, at the time, it was data that was basically, it’s hard to believe
these things ever existed.

But it was managing large data centers. Not just data centers, but
mainframes. It was outsourced mainframes. And so they had these huge data
centers full of mainframes of their clients and they would maintain them
for them. And obviously that was dying. And so they were looking on how to
leverage their reputation at security, reputation plan for the Enterprise,
it made total sense on paper. And it still makes sense on paper. I don’t
think I would have necessarily, even with today, obviously if I had the
knowledge I wouldn’t do the deal today. But if I just saw it on paper, it
would still make sense.

Andrew: All right. We build it, you have the partnerships. You sell it. You
need a new product to sell because your cash cow is going to die, but they
didn’t make a single sale.

Kelly: Nothing!

Andrew: Nothing.

Kelly: And the funny thing was the way the contract was worded. I was
responsible if they didn’t sell. This is where the dyslexia comes in. I did
not understand that contract. And this is where being a poor CEO came in. I
didn’t ensure that I had enough resources reviewing it. I was so excited
that they wanted to put money in it. I was so excited that they wanted to
partner with us that I overlooked a lot of things because I also thought
there was no way we weren’t going to be successful. There was no way this
was going to fail.

Andrew: I get that. I’ve made that mistake. Because I’ve had success early
in life and I thought, then, of course my whole life I was waiting to be in
business. I started all of these little businesses for fun so I can learn
and be prepared for when I am finally in business. I am in business. I’m
hitting and hitting and hitting. Of course I’m invincible. All of those
other people were the kids who just didn’t care business. No wonder I’m
beating them. And then, of course, you start to make mistakes when you
think that way.

Kelly: It’s amazing how fast those mistakes come, too, isn’t it? And then
how embarrassing and usually how public.

Andrew: And at the same time how amazingly fast . . . You wait a long time
to have a hit, and then . . . Napoleon Hill says something like this that
when it comes, you’re going to be showered with success, and it does
happen, and of course on the other side, too, when it hits the fan, it hits
the fan and spreads all over the room.

Kelly: There’s no way to explain it for anybody who hasn’t been through it.
But it is the best and the worst thing that has ever happened to me. And
it’s the best thing that’s happened to me because it totally and utterly
shattered my persona. There was nothing left at the end of it. I thought I
was doing pretty good in my time. I mean I felt like I was smart, I thought
I looked cool, I thought I was pretty hot stuff. And when the apocalypse
happened, it shattered that false persona so completely. It was just
annihilated. The rest of my career has been about trying to lead with
authenticity, because I don’t have the luxury of going back and trying to
put that monkey suit back together. It’s just, it was incinerated. So I
don’t think that a lot of people think it’s so great to talk about failures
and stuff. But I think it’s important because there’s so many different
ways to success. You can be successful for a myriad of reasons. And there’s
just a few surefire ways to fail, and I seem to, with my trip up, hit a lot
of them which is lack of diligence to details. Pride goeth before the fall.
But trusting others, and particularly over-trusting legal and expert
advice. I just got a whole bunch of advice that wasn’t worth a hill of
beans.

Andrew: Why didn’t your law firm tell you that this contract is putting you
on the hook for something dangerous? That’s a fairly easy for an
experienced lawyer to tell you.

Kelly: Well it wasn’t because, at the time, necessarily working with the
senior attorney. I was working with the more junior attorney at the time,
which wasn’t, and quite frankly, I didn’t have enough money to pay him
enough to really sit there and review it, so I was like, eh, don’t worry
about it, it wasn’t really his fault. It was mine. And also, I just have to
say that you can, you can pay a lawyer a lot of money and get information
back and if you can’t hear it or know how to process it or you’re nodding,
you know like you understand something but you’re too cool to ask stupid
questions, quote/unquote, which is who I was at that time, you’re not
really listening. You don’t have the capacity or ability to actually hear
what they’re saying and I think that was part of it too.

Andrew: Sun II though was sold, right?

Kelly: Mm-hmm.

Andrew: This is before the frustration, before you had to pay the 5 million
dollars in debt or?

Kelly: No, no, no, so that was all part of the fallout. So, I actually,
gosh, so we ended up selling Sun II in 2003 and I had to unwind Prism in
2002. So, you know, Sun II was still a going concern and but you have to
remember we had 9/11 hit too, so it was hurt with the down turn and the
.com bust. It was definitely a good company and it still had a lot of
assets to it so what we did is, essentially it was more like a merger, we
merged it into, you know, Halfsis [SP] and I came on as CEO of the combined
companies.

Andrew: I see. But when you sold it you still had all this debt. Did the
sale help you?

Kelly: No, it was not a cash transaction at that point. So it was just me
still having this burden.

Andrew: And when you negotiated, you took 5 million down to how much?

Kelly: Gosh, at the end of the day I think it was 2.25, yeah, it actually
was.

Andrew: So you still were on the hook for that. You didn’t have that in the
bank, how were you going to pay that, or how did you end up paying it?

Kelly: Well, you know, it was a series of fortuitous things but, you know,
we got very lucky in 2006 and had a, you know, good exit with Neil Halfsis
and, you know, I was able to continue to work things down so it was, it
was, it was a process but today I’m debt free. So that’s the big thing.

Andrew: You know what? I was just talking to an entrepreneur earlier today
who is still trying to get his business going and we were talking about
what happens to your self esteem when revenue isn’t coming in, when the
business isn’t doing well. It just shatters everything else and you have to
really work to stop thinking about the failure. You have to really work to
remind yourself of what you want to do and to work on your confidence. How
did you do it considering that setback? How did you run a business
successfully?

Kelly: I think I was finally ready to run a business successfully. It took
me three years at Neil Hapsis to really learn, earn my credibility there.
But for the first eighteen months it was pretty sketchy. I mean, my ego was
so dead and I was so low and also remember I’m a female in a, you know, a
female CEO in a tech firm. That’s a kind of weird thing. Particularly in
security at that time, there was not a lot of women in information security
at that time. Not as a CEO. So it was a weird dynamic and then eighteen
months in I had enough success with my company to run significantly and,
you know, quarter over quarter we were very successful and we were
profitable and eventually I earned the trust of, you know, the team.

Andrew: How do you do it? How do you get yourself to a place where when you
feel like a failure or not, you feel like a failure, I see you made that
face.

Kelly: Yeah.

Andrew: Yeah, you do. How do you then lead people with confidence,
especially when you’re trying to send people in a direction, they always
want to question it because they want to understand it or question it
because their used to a different approach and you have to have the
confidence to say, no, follow me. How do you do that?

Kelly: You, it’s a very interesting dance and for the first eighteen months
I would say I didn’t do it well at all. I was, I would fight with my
partner in crime, my CTO Craig, and we would just lock horns and it was
very difficult and after eighteen months he learned to start really
trusting me and after that things got a lot easier. But it was all based on
results, you can’t fake legitimacy and Craig was there for the whole unwind
of Prism. He saw the whole brutal reality unfold and that was, you know, so
he got to see me at my lowest low and in some ways that was really good but
in some ways it was really bad because he was, he didn’t, even in the
beginning he was very nervous about me being CEO. By the end of it I think
he was very proud and very and I think it was a really good partnership. We
did exceptionally well together. But that was an earned trust over time in
the performance.

Andrew: Will you give me a piece of advice that someone in my audience, or
I, when we’re doubting ourselves but still have to lead others, that we can
count on? That we can touch back in with?

Kelly: Here’s my trick, and it is a trick. I’m not going to claim that this
actually will work for anybody other than me. I compartmentalize. What I do
is, if I’m feeling very doubtful of myself, I’ll say, ‘I got it. I hear
you. We’ll put you aside for now because I can’t listen to you right this
minute, but I will get back to you.’ I literally box it up and I put it in
a little shelf, and I will do, you mentioned [??]. I do do affirmations.
I’ve had to talk myself up because you have to come from a place of
authenticity, but at the same time people sense when you’re self conscious,
or self unassured and it’s killer in the CEO position, so you have to have
a level of confidence.

The good news is, if I really feel strongly about something, about a
direction, or an idea, I can’t fake it. I can’t fake that it’s, I’m just
very passionate and that passion was able to come through even though
inside I was questioning whether or not I had the competency. Does that
make any sense? I was just able to put it aside and it doesn’t mean that I
slept well at night. I didn’t. I was constantly in this loop of, ‘Are they
right? Am I really no good?’ There was a lot of very hard things, but the
“ah-ha” I reached, and this was not at [??], it was after, it’s really been
at HarQen, is that, actually, there’s a lot of things I’m exceptional at.
Sometimes people can see it and sometimes they can’t, but that doesn’t
matter. I can see it.

Andrew: You just keep making sure that you reminded yourself, ‘I am good at
leadership,’ or ‘I am good at.’

Kelly: No. I would never say I’m good [??]. Seriously. I’m not a manager.

Andrew: So what did you say that you’re especially good at?

Kelly: I’m especially good at relationships and sales.

Andrew: So when you were doubting, you’d keep touching back with that?

Kelly: I’m sorry?

Andrew: When you were doubting yourself, you’d just keep saying, “No. I’m
really good at sales. I’m really good at relationships.”

Kelly: Mm-hmm.

Andrew: By the way, I’ve got to take a pause here and ask you why. I notice
that too. You and I, before we started, I felt so comfortable around you
and you were saying things that a lot of people would have felt
uncomfortable to say. You wanted to get ready. Most people would have said,
they would have hidden the fact that they needed to get ready and pretended
they just need to come on camera. Even with that, what was it? What do you
do? You’re introspective enough to tell me what you do, to tell the
audience how they can do it too.

Kelly: Here’s the real trick, learned in the process of failing and also in
the process of just growing up. Growing up, I mean, really in my 30s and
early 40s, that all the fears, doubts, worries that I have are shared by
everybody and my hidden conclusion, prior to the big break and disaster was
that I was stupid, I was crazy and I was a failure and it was just a matter
of time until the world found out and ran screaming. When Prism [SP],
failed, I honestly came to the conclusion of, “Oh my gosh. It’s happened.
My hidden conclusion is now out there for the world to see because what I
did was damn stupid, crazy and I was a failure.” There was just no way I
could get around that.

Once that broke, and I didn’t explode, or nobody ran screaming and I still
had friends and people still cared about me, I went, “Wow. It’s so much
better to be over here and not be worrying about how people perceive me.
I’ll just be me,” and people seemed to like just me and, “OK, I can do
this. This is so much easier.” Then I really had 10, 11 years of practice
of just being me and saying what’s on my mind and most of the time it
works. Sometimes I offend people, sometimes it lands badly, but I keep
practicing and you feel the fear and you do it anyway. You just be you.

Andrew: Practicing is a good point. Even when you try to be you, it comes
across badly or people misinterpret it and you just need to understand hey,
I’m practicing it. It’s going to be bad now. I’m sorry this person’s
conversation had to be sacrificed to my practice and need to get better but
later on it will be worth it.

Kelly: It’s authenticity is that the inside voice matches the outside
voice. For the first five years the inside voice would come out and it was
very unartful and everybody would be like ugh, you know. What, you think
that? I was constantly trying to assure people I didn’t mean it the way
they took it. That still happens to this day. I do tend to be
misunderstood. It still happens and it makes me laugh because, I mean when
I’m misunderstood it’s never like a little misunderstanding. It’s like
polar opposite of what I meant.

I’ll sit there and I’m like boy, the universe is really trying to serve it
up in such a way that I can’t continue to get triggered by the idea of
being misunderstood. Because it used to be one of things I feared so badly.
Oh, my god people are going to misunderstand me. They’re not going to like
me. They’re going to run away. Now they misunderstand me all of the time
and sometimes I get upset but mostly I’m just grateful that I don’t have to
sit there and practice what the perfect CEO thing to say is, right?

I don’t have, you know, I prepped for this interview. I’m prepping in terms
of making sure I maximize the usefulness and utility of what I say so that
somebody out there, hopefully, if it’s only one that’s fabulous, here’s
what I say and they spend more time reading a contract. Or they take that
advice from a lawyer with a grain of salt. Or they walk away from a given
deal because something just doesn’t feel right. If I accomplish that this
was really time well spent. Instead of trying to make sure that people
listen and like me, which is a terrible intention, I try to make sure that
when I prep for things like this that what I have to say is actually
genuinely helpful.

Andrew: And one of the things that you want to say to the audience is be
careful before signing personal guarantees. You didn’t even have to, maybe
you could have gotten away without signing a personal guarantee back then?

Kelly: No, not at that time. Now in my career I have HarQen. I mean,
granted, I’ve got a ton of my own cash and I’m the (inaudible) HarQen so
it’s kind of irrelevant. But I haven’t signed any personal guarantees with
this company. Which is a first time. But I have an incredible amount of
cash.

Andrew: All right. Let’s talk about HarQen then. Where did the original
idea come from?

Kelly: My husband. He is incredibly, just an intuitive, creative genius.
Well over a decade ago he noticed that there was this missing. You know?
You could share pictures online. You could share text online. You could
share a video online. But you couldn’t share your voice online. He came up
with this idea of being able to share, what he thought was sort of the
piercing edge, which was joke content. You know, joke of the day. Everybody
likes the joke of the day. Dial a joke meets the Internet. Sounds like a
great idea. He created a company called Yuk Line and then in 2006 we took
it and took some of our proceeds from Yoasis [SP] and that was able to
create the platform technology for HarQen. At first we went out with jokes.

Andrew: It was a joke site. We’re going to talk in a moment about how you
found the pain that companies that do interviews have and how your solution
helped alleviate their pain. But when it came to the joke site, the
American Idol for jokes, was there any pain you were trying to eliminate or
were you just trying to fill what you thought was a hole in the market
because there were video sharing sites and text sharing sites?

Kelly: No, it was really about, from the beginning it was all about voice
and voice as a media in the Internet.

Andrew: But it wasn’t from a pain. It was just we have this technology?

Kelly: The interesting thing was I knew that I was OK as an executive where
I was from an ego perspective because I was willing to be a CEO of a joke
site. Up to that point in my career I had always been a CEO of very
technically sophisticated, you know, things that people didn’t understand.
My mother never understood, really, what I did for a living. And I took
great pride in that. I knew that I had kind of arrived as an executive when
I was thrilled to be handing out a card that said I was CEO of a joke site.
I just felt so good about that. It was a personal development thing. At
first it was just going to be us. We didn’t intend to bring in investors.
We didn’t intend to grow it. But the thing started to really grow and get
some legs and we went OK, this is bigger than us. And so…

Andrew: Because people wanted to come on and tell their jokes and listen to
other jokes? It was just, how did people find out about this? How did it
grow?

Kelly: I mean, so, you know, it was pretty viral. There was also we did
some early advertising. Especially after we brought on capital. It was
good. I mean, it was growing at a pretty fast clip. Yet the problem was we
couldn’t really monetize the content. Advertisers saw this particular type
of user generated content as too risky and the one deal that we were able
to get with free 411, where it became joke of the day and we started
getting some money for it, we had one guy call in, he called Walmart and
said that one of the jokes was offensive and that was the end of the
revenue model. It was gone overnight and no one even called us. They just
stopped sending us checks.

Andrew: Then you had this technology and you were looking for a new
solution. How did you figure out the new solution and accept it for
business?

Kelly: There is a Lassie story that I could make up that would sound much
better than this, but this is the real deal. We were at lunch and we
realized that we couldn’t monetize Comic Wonder and that we needed to
figure out a different business model because advertising was not working.
We also had to figure out a different content that we could serve up that
people cared about, voice related. We’re out for sushi and it was Pehr [SP]
Anderson and Jeff and I.

Andrew: Jeff, your husband. Pehr was the VP.

Kelly: Jeff, is my husband. Pehr is our VPO of Platform. We’re trying to
figure out, ‘What assets do we have?’ We’re really scrounging at this
point. When you have the technology, you don’t really have any customers,
do we [??] that relationships and then pair off, [??] that he had this
friendship with a gal who, at the time, was blogging and she had about
300,000 subscribers to her blog. “That’s great. We’ll call her and she
could use our technology to interview people and that they could laugh at
it and talk about how ridiculous that interview was and make fun of it.” My
husband Jeff said, “Why does it have to be funny?” Pehr looked at him like
he’s an idiot. We kept talking about how we’re going to make this
entertaining thing because our whole brain, on the dominant logic, was
around comedy, even though the company was really about [??], but we’d
gotten so into the comedy mindset we couldn’t really get out of it. Jeff,
that night, went and did a ton of research.

The next day he came back and he said, “Do you know that, depending on the
year, even if it’s a heavy year or a good year financially for GDP, doesn’t
seem to matter, 52 million Americans are hired every year.” “No. I didn’t
know that.” It’s a half a billion interviews are conducted in the U.S.
alone. I said, “Well, that’s interesting.” He said, “Today, it’s a person
and a phone and trying to schedule and connect two people at a time. What
if we use this [??] in this interviewing? What if people could interview at
their convenience, anytime, anywhere and then the recruiter could listen
to it anytime, anywhere?” That was the start of Voice Advantage and then
2010 we won product of the year and today we’ve got the largest apping
companies in the world using our product, as well as many of the largest
banks.

Andrew: How did you get in the door of a recruiting company? I know it was
tough and I know what they told you, but I think the audience needs to hear
this, too.

Kelly: This is a good story. The CIO of one of the world’s largest staffing
companies decided that he was willing to take a meeting with us and we
walked in. We still had Comic Wonder business cards and we’re here to show
him the new technology around Voice Advantage. We walk in the door, we hand
him, the Global CIO of this company, our Comic Wonder business cards. He
looks at my card, he looks at me and he says, “The only reason you’re here
is because your attorney is a friend of mine.” He puts it down. He says,
“You’ve got five minutes.” I go, “OK.” We’re off to a rocking good start
here. We do the demo for Voice Advantage and we show him how you can just
simply send out an email, someone clicks on the email link and they can now
type in their phone number.

The system calls them, so it’s not like an IVR, it’s friendly, it’s
initiated by the candidate and then the candidate can interview you
anytime, anywhere and the recruiter can listen to it anytime, anywhere. We
said, ‘We think it’ll speed up the total time to hire by five, maybe seven
X, and the truth is, now that we’ve got millions of interviews, it’s closer
to ten, but at the time, we thought we were saying crazy numbers. He sat
back and he crossed his arms and he thought. He said, “You know, you don’t
solve the whole problem, but you solve about 30 percent of it and if you do
this and this, you’d solve about 70 of it.” He starts doing back of the
envelope math and he goes, “Hmm. You could save us about $70 million, U.S.
only.” We went [laughs] and with this we left that meeting, and at the time
my Chief Technology Officer ended up writing me a check for $100,000 in the
parking lot. It was that good of a meeting. [laughs].

Andrew: Wow. Wait, so how do you save him 70 million dollars?

Kelly: Yeah, I mean, so you got to think about it. So recruiting costs are
exceptionally, I mean, what does a large staffing company do? If you, OK,
let’s say they bring on a client. Let’s say they land Bank of America and
Bank of America needs them to hire 4,000 call center representatives in
Austin, Texas in the next 30 days.

Andrew: Mm-hmm.

Kelly: Well, what they have to do is they have to hire close to 20 or 40
people just to do that. So the first round of hiring is they have to hire
the recruiters to do it because they don’t have that kind of fence, you can
never have that kind of fence, right? And so it’s incredible the costs to
consults actually really high and the margin for the largest staffing
companies is very, very low. It’s like 12% and so it’s a razor thin margin
because people are their number one expense. But with our system, it allows
one recruiter essentially to do the work of about ten.

Andrew: Because one recruiter gets to zip through a bunch of interviews
answers without having to wait for a person to come in, and another
prospective candidate to come in after that. I see.

Kelly: Now, so there are three things it does. One, there’s no scheduling
anymore, you know, you come in Monday morning you’ve got a stack of
interviews that have been completed and you just listen to them, total
listening time is about a minute and a half per interview. So, you know,
they’re able to make a very quick decision on these people that they might
have spent two weeks chasing just to interview. The second thing is about
20% of the time candidates don’t show up for the interview, they might get
another offer or decide they’re not interested. So they fill that schedule
and then they show up and, boom, you know, the plane takes off, you can’t
fill that half an hour or hour. And then the final piece of it, you know,
has to do with the multiple interviews. You know, so you might have the
interview goes well and now you got to ship them off to the hiring manager.
Well, the hiring manager now has to re-interview that person. So.

Andrew: And now they get all the questions there and the questions are
consistent. So then why doesn’t the text based interview work just as well
or video?

Kelly: You know, so when we started Voice Advantage there really wasn’t
video. I mean, so we pioneered this field and video came out later and it
solves a different problem, it’s usually much further upstream because you
don’t want to use video as the first experience when you’re doing large
volume hiring. You know, it’s good to get some data like a resume or a
quick phone based interview before you see the candidate. But for text,
your missing all the nuance. It’s a very low resolution version. It’s like
saying you can hire somebody off their resume. You just can’t, you need to
talk to them. And video will give you more information but audio will get
you about 80% there and it’s just more efficient. You can multi-task a lot
more easily with voice. It’s why we don’t do everything in video today, you
know, the reason is well quite frankly I don’t want you to see that I’m
taking notes or fixing my hair or drinking soda, you know, we could Skype
with video on everything but we tend not to because we can get more done
sometimes when we just listen.

Andrew: It might also avoid potential issues around not hiring someone
because of their race or because of the way they look. So basically, it
sounds like, and I don’t, this doesn’t feel right to me, I don’t want to
leave my audience with this idea that you had a joke site, you happen to
come up with an idea and boom, this guy loved it and so you lucked into
success. It doesn’t…

Kelly: Right, yeah, so that’s…

Andrew: What am I missing?

Kelly: OK. So that meeting was with one of our current clients, one of our
top three, largest staffing companies but it took us 137 meetings. I kid
you not, we had a poster on the wall where we put tick marks every time we
met with them. We went through committee after committee after meeting
after meeting, 137 of them over the course of four years to finally land
them as a client.

Andrew: The first client?

Kelly: Yep.

Andrew: Wow. So the person who said you can save me 70 million dollars, the
guy who ended up as a result you got a $100,000 check in the parking lot
from your partner afterwards, 137 meetings even after that.

Kelly: Yeah. Yeah.

Andrew: I see.

Kelly: Yeah. Yeah.

Andrew: And in those meetings is where the real work happens, where you
persuade them, where you understand and you adjust your business to them.
What’s the biggest piece of feedback that you got at the meetings that you
had to adjust?

Kelly: In that particular case, not anything useful. The culture is just a
very meeting consensus driven organization and they did not end up
purchasing until they screwed up.

Andrew: What do you mean?

Kelly: The reason they purchased our product, in the end, was because they
had bid on a very large scale project and they screwed up the map. It was
not possible for them to actually meet the requirements of their own
proposal, without using technology. They scrambled and they called us. But
they knew us because we’ve been there 137 times. It wasn’t until they
couldn’t actually make one of their biggest deals work because they screwed
up the map.

Andrew: How are you not doubting yourself at that point? 130 meetings in or
97 meetings in. I might go, “This is not working out. They’re just wasting
my time. This isn’t going to be a good business model.”

Kelly: Here is the problem. I didn’t realize it wasn’t working. Here’s
another piece of advice. I spoke information security and sales. The folks
that I had been selling to my entire career were more engineering types. If
they took a meeting, they were definitely interested. If they said, “Yes,
let’s do that,” you could expect a contract. It wouldn’t happen 100% of the
time, but I’d say probably 75% of the time. I felt I had a really good lead
for sales? Right? I knew what the buying indicators were. I knew what the
buying language was. I knew this. Wrong audience. When I went into HR and
started selling to recruiters, these are highly agreeable people. They’re
not engineers. They say yes all of the time. They say no to people every
single day, day in, out. Those people think they’re saying yes to them.
That’s what happened to me.

Andrew: You were too naive to recognize that they weren’t interested and
that’s why you kept acting like they were interested. I see.

Kelly: Because they were saying, “Yes, we need this. Yes, this makes a ton
of sense. Yes. Yes.” If you say that to somebody in security, you’ve got a
contract.

Andrew: Wow.

Kelly: You say that to somebody in recruiting, and it’s like, but I di-, I
was tone-deaf to it. I only figured it out after Ann Om [SP] came on board.
She went to one of those 137 meetings and she said, “Kelly, they’re not
buying.” They said they would explain it. They’re not buying people. They
can’t. They’re just agreeable people. They will take your meeting every
time. It was a horrifying revelation for me. We learn! We move on. I
eventually solved that.

Andrew: It says a lot about being naively optimistic.

Kelly: Yes it does. Because it keeps you tenacious. It keeps you going.
There is a level of naivete because if you really knew how hard it’s going
to be, nobody would do this. Since this is my fifth start-up, you can say,
“Well, you know how hard it’s going to be.” And it’s not true. I don’t,
because I have amnesia. Every time I do well and I have a really good
success, I forget all the pain it took me to get here. I only remember the
good times. It’s kind of like my children. They’re really super cute. Wow,
wasn’t it wonderful having an emergency C-section. I don’t remember it.

Andrew: I’ve heard that. I’ve heard that really, biologically you do not
remember it.

Kelly: No. Women are completely programmed to have amnesia around
childbirth. It’s true. It’s also like that for something as traumatic as
business creation, too. I think there is something to say that the trauma
of creation, regeneration, creates this false memory. It was always
wonderful.

Andrew: You told Jeremy, our producer, that the biggest challenge in the
business is the delay of revenue.

Kelly: Yes.

Andrew: Here online at Mixergy, if I sell something, I get paid before I
even deliver it. For you, it’s how long after you deliver it, do you get
paid?

Kelly: No, it’s all-

Andrew: Revenue, not-

Kelly: Yeah, now, today, finally. We get paid upfront.

Andrew: Actually, delay of revenue is different from delay of payment. What
do you mean by delay of revenue?

Kelly: Delay of revenue means that you think you’ve got the deal. You think
that it’s all going to, [??] right? Even for me, who puts a long tail, or
when we will actually get paid. Most people assume 60 days. I always
assumed 120, because I experience that. You put those things in there and
it still doesn’t map out. It still doesn’t work. When you’re pioneering a
market, you’re not dealing, and I want to do a blog post on this, there’s a
different type of physics. For instance, Newtonian physics, we use that
language for business all the time. You want to lever. They want to
leverage something, right?

Andrew: Mm-hmm.

Kelly: When you’re in the pioneering phase of the start-up, you’re really
in a quantum reality. It’s all about possibilities. You can’t use a lever.
I can’t use it to create leverage if there’s nothing there, if nothing’s
manifested yet. So, the delay of revenue really has to do with pioneering
start-up that is genuinely innovative. There’s no market for it yet.
There’s no pull for it yet. The whole purpose of the entity is to figure
out how to create something out of nothing. It is really the world quantum,
right? You are trying to create these possibilities that you could
ultimately someday lever and create, what? Inertia! You know, you can grow
it and it can be a real business. But in the early days, you know,
projections are so meaningless because against what? I mean, so how do you,
you know you’re going to grow this x amount per year. Really? Well, is it
real? Is it a real plan or is this just somebody picking the tires. You
don’t know until it becomes more of a business and it goes from, you know,
quantum possibility into physical, classical reality where Newtonian
physics actually kind of work.

Andrew: All right, here is something that did work out really well. You
launched Symposia, which I mentioned earlier. DVR for meetings. Allows
people to listen to audio of the meeting and search it in a way that we
usually don’t think of with audio. You put it out there. You and Ann, who
you mentioned earlier, were in an art museum and something happened.

Kelly: Yeah. Yeah, so we had had a really tough year. We had, projections
had not manifested as fast as they were supposed to and it was just
painful. It was just painful. I think we had both sort of come to this
conclusion, nobody wants our pretty baby. Why is this? You know, we’ve got
this amazing product and company and nobody thinks we’re pretty. We were at
the Milwaukee Art Museum and we were sitting there in the coffee and we’re
trying to do this as a little quasi mini strategic retreat. Just to sort of
gather our thoughts outside of the office. Going what’s going wrong? All of
a sudden the emails started coming in. In the course of like just a couple
of hours we had done $100,000 in sales.

For more mature businesses they’re like so what? This is coming out of that
quantum reality to all of a sudden it’s manifesting, right? It’s right
there manifesting. We went from possibilities into business. We didn’t
believe it. Neither of us believed it was real. That was the funny thing.
It’s like oh, my gosh. We just closed this, we just closed that. We closed
like three accounts in the span of an hour. Neither of us could process it.

Andrew: These are accounts you had put work into before? You close accounts
by having real conversations with clients, this isn’t about putting up a
website. You put in all the work before and then while you were in the
museum boom, an email comes in saying yes, the deal came through.

Kelly: Well, they sent us copies of the contracts. It was like what? No,
no, no, we just propose. It’s like that IBM commercial. I don’t know if you
remember it from a few years ago. No, no, we don’t sell things. We just
propose. It was shocking. It was really shocking. That was when we were
like OK, we actually have a business. They want our pretty things. You
know? It was a magic moment.

Andrew: Who uses it? Who needs to be able to search within their meetings?

Kelly: You know, it’s interesting. We’re still finding the different use
cases for it. The fact of the matter is it’s anybody who has ideas that are
worth something. You know, it’s negligent at the end of a meeting to walk
away with just notes. If the conversation, in my opinion, was worth having
it’s worth keeping. Because our memories are so flawed and in this age of
distraction not being able to go back to a conversation and find that
moment that was relevant, it’s so wasteful.

What do we do? We keep having more and more meetings to try to remember
what we said or to get things back in alignment because we’re disagreeing
now. Or, the worst kind of meeting, bring me up to speed. I missed that
meeting. I just want to send them a link and go here’s a meeting. OK, go
(inaudible). I italicized things I thought were important. Feel free to
search it for what you think is important, don’t talk to me.

Andrew: I see.

Kelly: I think it’s for anybody (inaudible) feel that meetings are
(inaudible) value they want out of them.

Andrew: By the way Kelly, do you happen to have anything running in the
background that might be using up bandwidth? It looks like something’s
chewing up bandwidth and keeping us from having the same connection we had
at the beginning of the conversation. Like maybe Dropbox downloading
something in the background. Or even if you have a browser sometimes that
can. No?

Kelly: No, let me just double check and see. I’ll close the browser but no,
there’s nothing being downloaded. The only thing I can think of is, you
know, funny enough our data center is not in our offices. Our offices are
awesome, they’re beautiful. But they’re on top of a residential building.
We actually, you know, for an Internet company should have much better
bandwidth than the corporate HQ but nah.

Andrew: You know what? I’m in a corporate HQ, I pay $300 a month for the
Internet. It’s still not as strong as it should be. For some reason
bandwidth is still an issue for us. You know what does work for me?

Kelly: What?

Andrew: Connecting my new iPad from Verizon to my computer. It was my
backup Internet connection. It’s stronger than my landline. These guys are,
it’s unbelievable.

Kelly: Love that. Go Verizon, go!

Andrew: Go Verizon, go figure. All right, one last thing that I want to
talk about and, it’s late on a Friday I appreciate you staying this late to
do this interview, the last thing I want to talk about is: everything’s
going well. You then get hospitalized for two weeks.

Kelly: Yeah.

Andrew: And then what?

Kelly: Oh gosh…so, you know I don’t mean to [fully] be political about
it, I’ve got to be very careful but it’s…you know, what happened was I
got very sick and I couldn’t figure out what was happening and it was one
of the kind of maddening sicks where I would be totally well and then boom,
I would be down for a day. Or I may be down two days with a migraine. And,
you know migraines are maddening and then you can’t figure out where
they’re coming from and I had never had a history of migraines, this all
had manifested in a very short period of time…and, as you know from the
beginning of the interview, I have TONS of energy. High energy, I always
run around. And all of the sudden, you know, not only do I have no energy,
I was, you know, in a dark room where I happened to go in the hospital to
get shots.

So it all manifested in December where I was in the middle of a fund raise
and I was prescribed a series of drugs that it turned out I was allergic
to. And I had a terrible drug interaction and boom, I was out. And I’d
never experienced anything like that in my life and it was really out of
left field. I had no context for it, I had no idea what was going wrong.
But, I was finally able to get a diagnosis and find out what was causing
the headaches in the first place which was, I have celiac. So, I have a
high gluten sensitivity. And anyway, so by simply changing my diet I was
back to being Kelly. And it took a while because I had to unwind all of the
medications I was allergic to too, get those out of my systems but come
January I was back. But, you know, my board was very nervous and rightly so
because it was just…you know, you don’t disappear like that. I mean, in
the middle of a fundraise you’re in the hospital for two weeks, what’s
wrong? [??] and so I had to go fly around the country and meet with all my
[ambassadors] and meet with the board because really…[???] People were
not willing to invest in the company if I wasn’t there and that was very
scary. So, I actually had to go and [???] rumors of my death had been
apparently exaggerated…

Andrew: [laughs]

Kelly: [laugh] [???] it’s a food allergy it was [???] medication and…

Andrew: Did you re-do your business as a result of that? I mean I
understand you have to go back and win their confidence and you do get it
back but you always are a little doubtful but you still have to build your
business differently, don’t you? Once you discover that an illness or some
time away can hurt it so badly?

Kelly: You know, I was very fortunate. I mean, the fact of the matter was
that Ann[sp?] (my CLO) really runs the day-to-day operations of the company
and so she continued to do all the right things. Now, the problem was that
all the right things didn’t manifest until the next quarter, right? So,
when I came back I actually got to look like a hero because all the revenue
hit, all of the clients closed, all of the things that we had promised, all
of the investors came back and so it was kind of like the Rocky theme song,
it was like “I TOLD you this would happen, I wasn’t making it up! Here it
really is, we’re doing the right things.” I’m senior enough, I guess, or
mature enough as a manager to know that I’m not a great manager, I’m not an
ops person. Ann is exceptional at that and so HarQen has really been, the
team that’s currently on is built around my self-awareness of my
weaknesses. Even though, I think, most entrepreneurs will walk back into
[a] mess of an organization if they were gone for two weeks…the
organization was absolutely fine [laugh] and thanks to Ann, Ann really kept
the lights on and kept everything running incredibly well and so me, as a
personal investor, I ended up writing a very large check this round, I
wrote a check for $125,000 and a lot of that had to do with my confidence
in “you know what? This company is bigger than me.”

Andrew: Wow. That is a good feeling to have. That somebody’s got your back
as an entrepreneur, you feel, for most of your career that no one does,
it’s all on you and so a lot of pressure.

Kelly: Well, it’s very different I mean again, I recruited Ann for three
years before she came on, I said, “you know, together we’re the perfect
CEO. You’ve got this financial background, you’re an ops, you’re
extraordinary at scaling and you just think differently than I do.” And she
is great at HR, she can see through…and really get a sense of people. I
tend to fall in love with people and so I’m not allowed in the HR process
until we’re really far along and we want to sell the person on coming to
HarQen. I am never used as a screener since I, which is an ironic thing.
But, yeah. That’s a maturity thing and I highly recommend, it’s almost
impossible to do a really good startup by yourself, you need somebody on
your team whose very different and grounds you.

Andrew: I want to tell the audience about something that we’ve got coming
up at Mixergy and then I want to ask you about, here I’m going to put it in
the Skype chat so that you know what I’m talking about, the best advice
that you suggested that when Jeremy, our producer, talked to you about the
best advice that you can give the audience, what you said. I think it’s
important for the audience to hear it. And the thing that I want to tell
you guys if you’re watching that’s coming up, if you’re Mixergy premium
members I record a course with Sarah Hatter about customer service. I
haven’t even edited it, Joe hasn’t even edited it yet and I want you still
to know about it and be on the look out for it because it’s so good. Sarah
Hatter runs a company called Co-Support. If you ever get flooded with email
from customers and you don’t know how to handle it and you find that you’re
losing customers as a result of your inability to keep up with it all, if
you’re having trouble keeping up with all the emails that’s coming in from
potential customers or from just users of your site.

I want you to watch this upcoming course because she took my tools and she
showed me how to use them better, how to make sure that your it, you solve
people’s problems before they ask you those problems, before they ask you
about them. The tools that you already have are going to be supercharged
after you listen to Sarah Hatter show you how to do customer service
better. It’s a course that we put on because I was desperate for it, Sarah
is obsessed with it, so I asked her to come on here and teach it. I mean,
she runs a whole business where she sets up other company’s customer
support and I asked her to do it.

If you’re a premium member, you already have access to it. If you’re not a
premium member, well, why would you not be a premium member? Go to
Mixergypremium.com and sign up now. I guarantee you’ll love it and it’ll be
useful for you. The hundred bucks plus a month that we spend on Desk.com to
answer customer support, just listening to her suddenly became valuable. Up
until then, we might as well have been throwing that money out the window,
just using free Gmail. That is how good it is. All right,
Mixergypremium.com. All right, so, Kelly the advice that you had for the
audience.

Kelly: Yeah. So my best advice is pretty simple. It’s you can’t lead others
until you know what’s driving you. All of us have something that we’re
scared of, our shadow, something that we believe to be true that really in
the grand scheme of things isn’t.

Andrew: What’s driving you?

Kelly: Yeah, so early on what was driving me was that fear of being a
failure, of being, you know, of being crazy, of being stupid, being found
out that that was who I was. So I spent my first half of my career
pretending I wasn’t those things. Then I realized I really was those
things, so that’s part of me and it became a more integrated part of myself
as opposed to just a shadow. And I was able to really recognize and own
stuff that I do have, there’s a lot of assets but it took me a long time to
be able to identify those and say it. I can tell you my weaknesses in a
heartbeat but telling you my strengths, you know, I would start, my palms
would sweat, I can even feel my neck still getting a little warm thinking
about talking about my strengths.

I don’t know what that’s about but, you know, when I found that the
ultimate key of success is just, you know, be you and if you’re you and
you’re genuine and you learn over time and you stay with it, how to be
artful about saying, you know, keeping the inside voice and the outside
voice matching but in an authentic way that doesn’t hurt people’s feelings
and make you unlikable. The key to success is likeability. If people like
you, they want to buy from you, they want to be with you, they want to help
you and likable people tend to get ahead and I just think that, you know,
there’s a lot of reasons to be nice, there’s a lot of reasons to be kind
but, you know, for some people maybe you need an extra push in that
direction just out of fear.

Andrew: And self interest is a good push because people will buy from you
if they like you.

Kelly: Of course, they will. I mean think about the people we buy from, you
know, I can’t think of one person that I buy from that I don’t like in some
way and/or have gotten attached to one of their team members. You know,
commerce is driven by trust and trust is driven by likeability. So, that’s
what it ultimately comes down to. So I guess that’s my best advice, learn
how to be likable. Which means learn how to be you and stop pretending to
be a CEO or something else, because just be you, if you show up
continuously over time and learn how to do that artfully, you’ll be
likable?

Andrew: That’s a good place to leave it. Very helpful. This whole interview
has been helpful because you’re willing to be open. I always say…

Kelly: It’s scary too. I mean, still to this day I always get nervous but
I’d rather do it than not. So thank you for saying that.

Andrew: At the end of interviews I often say to the audience, look if you
got anything valuable out of this, if you felt that this was meaningful to
you, don’t act like someone whose watching a movie where you’re
disconnected from the action. You’re in business just like we are. Find a
way to connect with Kelly and say thank you and I just got an email
recently from Eric Soo [SP] in the audience and he said, Andrew, thanks, I
got an online marketing consulting gig with Grub With Us. Grub With Us is
founded here on Mixergy. He goes, my friend was offered a full-time job
plus equity with them as a result. Just because they shot an email and
said, hey, thank you for doing this interview, thank you for teaching me
something valuable, thank you for being open. So I’m not saying to the
audience do it because of self interest, I’m saying just do it because
somewhere good things are going to come to you. Find a way to do what I’m
about to do right now which is to say, thank you Kelly for doing this
interview. And Kelly if they do want to say thank you, how do they connect
with you?

Kelly: Sure. I’m always reachable by emails, so it’s just Kelly@harqen.com.
That’s K-E-L-L-Y@harqen.com. Feel free to shoot me an email and I’d be more
than happy to connect with you.

Andrew: And for the transcriber let’s get the spelling right on this, it’s
H-A-R-Q-E-N.com. Thank you, Kelly. Thank you all for watching.

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Share

  • Aaron Tull

    Very cool to hear about Fiserv! I’m actually an employee working in my office while listening to this. ;-) 

    Really loving your interviews, Andrew. Great work!  –Aaron Tull

  • http://mixergy.com Andrew Warner

    Thanks!

  • Calvfoo

    Andrew, I listen to your podcast while driving to work! Found it inspiring and uplifting to hear from people who have made the jumps and found it worthwhile. Thanks and keep the interviews coming!

  • Anonymous

    Great advice! Thank you Kelly and Andrew.

  • http://mixergy.com Andrew Warner

    Thank you, Lenny.

  • http://mixergy.com Andrew Warner

    Thanks!

  • Bob

    Why even do the interview if you cant talk about anything?

  • http://mixergy.com Andrew Warner

    What didn’t you get that was so critical?

    I thought she opened up a lot.

  • Anonymous

    Holy shit this was a good interview. It had every component: actionable advice, emotional backstory, business theory/strategy. It was macro, it was micro … man just absolutely killer material, thanks Kelly.

    I especially love the story about the 4 year sales cycle. I’ve had some real doozies myself and have settled on the idea that for some clients, “selling” is really just about “being there”. All the “assumed close” and high pressure sales tactics fall by the wayside and it’s just about being around and in the front of their mind when they’re finally ready to make a decision.

    It also made me think about how many businesses *would* have become successful if they hadn’t have sought VC funding too early. It seems as though if a business founds itself on the basis of enthusiastic vision for growth and gets a tonne of money early on, they’re almost certainly destined for a firesale/acquihire because a lot of the time, it’s going to take 4 years to get your first real customer.

    I know that the only time I’ve been involved with a “funded” business that was certainly the case – incredibly long sales cycles, brilliant product and a burn rate that was so unnecessarily high because everyone just assumed that the thing would explode. In the end it only lasted 2 years before the funding got cut off because it was just “never going to work”. I think if we’d had the kind of patience you displayed we could really have made it work out in the end.

  • Anonymous

    The only thing she didn’t disclose was revenue – did you listen to the whole thing?

  • Scott G

    Thank you both for the interview. Very helpful advice for anyone but especially someone with adhd starting a business: focus on your strengths and delegate or find a partner with complementary strengths to compensate for your weaknesses. That’s been my recipe in all successful ventures. Kelly, I have ADHD and have learned many of the lessons you talk about. Thank you for being so open.

  • http://mixergy.com Andrew Warner

    Iain you’re the best. I love your reactions.