Andrew: Hey everyone. My name is Andrew Warner. I’m the founder of Mixergy, where I do interviews with entrepreneurs about how they built their businesses. Some of you might think I’m tough on guests in the interviews, and I’m not so sure that’s true. But, you know, I do want to make sure that we have an interview here that’s actually useful and I stay focused.
What is actually tougher for me are the things that I have to say to guests before the interview starts, like today’s guest. He’s a guy I’ve gotten to know. We got on a call, we started talking, and I really liked him, which is why I invited him to do an interview here. And then our team did a pre-interview with him and I looked at the notes and “Oh, no. I really like this guy. How do I tell him I don’t want to talk about the company that was in the pre-interview, that he just spent about an hour talking to our producer about, the company that he’s here to promote, the one that’s he’s working on now? How do I tell him I don’t want to talk about that?” But I want to. I think I need to talk about a previous company, and so I said, “You know what? Just speak your mind. Just say what you feel.”
And so I sent him a note and I said, “William Moore, nobody cares about your current company because it hasn’t launched yet, but you created a company and you sold it to Ross Perot, fricking Ross Perot. This is a billionaire. This is a guy who ran for president and shook up the country by getting 19% of the vote. This is a guy who, when his guys were held hostage in Iran, he found a way to go and get them out of fricking Iran, and you sold a company to them, an incredibly successful company. Will you talk about that?” And it was so painful for me to hit the Send button. After I hit it, I wanted to like undo it, but the undo disappeared, so I let it go and thankfully, William understood and he said, “Okay, let’s do it.”
So we’re going to talk about that company that he created and he sold to Ross Perot. It’s called Rothwell International. It’s a contract programming company focused on object technology and, of course, we’re going to talk a little bit about the company that he’s got now. It’s called AlphaDog Fast Trading. I’m going to give you the one-sentence description and then tell you why it’s so significant.
AlphaDog Trading is an online educational game that teaches you to be a better trader by enabling you to practice by using real historical data. I mean, think about it. If you were to learn how to play the piano, nobody would give you a book and tell you how to do it. No one would show you videos. They’d say, “Sit down at a piano. I’m going to tell you what to do and you can actually practice and do it badly until you figure out how to do it right and we’ll work together to get you there.” He says, “Why are we teaching people how to trade without giving them a similar experience, putting them down at the keyboard, and letting them actually make real trading decisions so that they can develop their instincts?” That’s what AlphaDog Fast Trading is.
We’re going to talk a little bit about that, and we’re going to talk about that company that he sold, all thanks to two great sponsors. The first will help you hire your next great developer and I’m hiring a fricking CFO from them. It’s called Toptal. I’ll tell you more about them in a little bit. I use the word fricking a lot, huh? And the second one will help you send out smart email marketing, the kind that addresses people properly based on what they really want. It’s called ActiveCampaign. I’ll tell you more about them later too. William, good to have you on here.
William: Thank you, sir.
Andrew: Now that we’re being open with each other, when I sent that email to you, did it come across as like a jerky thing? What did you feel? I won’t make that a multiple choice.
William: Well, you know, I’m pretty thick-skinned. I don’t get offended easily, and obviously, you’re the expert at what your audience is going to be more interested in. The only part was, your opening sentence was something like “Nobody cares about you,” or something like that. It was like, “Wait a minute.” And I think you remember my P.S. I sent. “My wife and my dog, they care about me.”
Andrew: Yeah, that’s the part where I actually felt like maybe that’s a little harsh, especially from someone who I’m courting to be a guest here. But you did. I’m looking at the notes from the pre-interviewer. I’m looking at my notes that the team put together. This was amazing what you were able to do. Again, not that I’m going to spend too much time on Ross Perot, but he was, when I was growing up, one of my heroes. This is a guy who used to sell for IBM, was incredibly sharp, built his own company, sold it. He bought your business. I asked you before we started about what he was like working with him and you said, “Look, I had the situation. I believed that good engineers love to be trained and need to be trained, and so I had this idea,” and you took it to . . . What did you do?
William: It became an issue because several of the other executives thought, well, this was going to be taking too much time away from their work and all these things. I was trying to solve an attrition problem because they were losing an excessive number of people. You’ve got to remember, that’s a time when technology was in high demand and so good technology people could work anywhere they wanted. But nevertheless, about a 10% turnover is expected, and if you’re having a 20% turnover, you’re losing too many people. So I was trying to help solve that problem, and in my experience, a good education program internally is one way to keep technology people engaged. Good technology people like to increase their knowledge and their brain power more than they like money, but I was getting pushback from some of the vertical industry executives, so I went to Ross Perot.
I called him in the morning, and I got a call back 10 minutes later. He says, “Well, Bill, come up to my office at 1:00. At 1:00 I was there. We sat down, we discussed it for 45 minutes, and he goes, “Well, that’s going to affect this guy, this guy, this guy, and this guy.” And I said, “Yep.” He picks up the phone and calls those guys and, of course, they’re in his office in about 10 minutes. And half an hour later, we have all the decisions made. He was an absolute joy, as far as I was concerned, to work with because he was going to make decisions. Decisions happened when he was there, so he was great.
Andrew: I get being able to make decisions, but to be available on 10 minutes notice or to be available for later in the day to meet with . . . How did he do that? What did you learn from him about how to be a better CEO, how to be a better manager, how to be a better entrepreneur?
William: Well, the thing is he didn’t micromanage. You had to go to him. He wasn’t going to go get involved in those issues unless somebody came to him, and you’d better never come to him with a problem without a solution. You know, he made that very, very clear, that you did not come to him with a problem. I said, “The problem is attrition. We’re trying to fix that and here’s my solution. I’m getting pushback from some of the guys.” So that was the issue. It sounds a little crazy, but I think a lot of his people were afraid to call him. I don’t know, maybe it’s because I was new. My company had just been acquired, and I had a three-year contract that couldn’t be broken, so I had no fear at all. I just picked up the phone and called him. Anytime I had an issue that wasn’t moving forward, I called Ross Perot and it went forward within hours.
Andrew: I see.
William: I don’t think he was that busy. I think he was in his office waiting for somebody to call and ask for help. You know, not so many people did, but I did.
Andrew: You know what? That’s one of the takeaways I’m already getting from this conversation, that I do tend to make myself so busy that when a crisis or an issue that can only be handled by me, that only I can make the decision on comes up, I can’t because I’m so busy doing the little things that anyone else should be doing and that’s a real problem. To be available like that is not to not work. Like, to be even on notice and just be available like that is the work and I’ve got to keep remembering that. That’s been a challenge for me, to be honest with you.
William: Yeah. I think that the real message there is that if you can, it’s better delegated. That way, you can be there for the things that just can’t be delegated, right? So always delegate if possible, basically.
Andrew: What did you sell the business to him for?
William: Are we talking about dollars and cents here?
Andrew: How much money? I’m sorry. I should be clear.
William: It was sold for a bunch of stock, basically. There was a million-dollar cash payment in the front and then a bunch of stock. The target at the time was for it to be an $11 million sale, but the Perot stock later shot up pretty high, so it ended up being more like $20-something million.
Andrew: Wow. Life changing. How did your life change after that?
William: Well, I had to take my three years there. That was part of the terms of the sale. I had a three-year contract that I had to stay, and then I bought an island off the coast of Belize and I developed that. I spent four and a half years about 18 miles out to sea in the Caribbean.
Andrew: By yourself?
William: My wife and I. Yeah, my wife and I. We had two employees on the island. We were out to sea for four and a half years. I mean, four and a half years. That was our house at the time. We traveled a lot. We went to Europe and we went to South America and we traveled a lot in Central America, so we did a lot of traveling. But when we went home, it was to a private island for four years. It was nice.
Andrew: What a great experience considering all the work and all the changes happening in your life. You’re a guy who, you told our producer, “Look, when I was in grad school, I thought I’d be a scientist who was going to save the world.” What kind of impact did you mean when you said, “save the world”?
William: Well, I guess I have to tell you how much of a nerd I really am, you know, because I was pushed along in school rapidly, okay? I finished my Master’s Degree when I was 20.
Andrew: When you were how old?
William: Twenty. I was 20 when I finished my Master’s in Physics.
Andrew: Wow. I was just in the second year of college at that point.
William: Yeah, but I had been shoved along. They made me skip a couple years as an elementary kid, you know, so I was in college at 16. I went through in summers as well but, you know, I finished an undergraduate degree and a Master’s Degree in four-and-a-half years. And I’m talking about being a real nerd. I played chess and I did all the nerd stuff. Hey, I do sleight-of-hand magic, just like on “Big Bang Theory,” right? I’m exactly like one of those nerds. You know, it’s cool to be a nerd nowadays. It wasn’t cool back in those days.
Andrew: Did you feel bad about being a nerd?
William: You know, feeling bad is probably not the right word. It was like because I was so much younger than everybody else, I mean, because all the kids I was going to school with were at least two years older than me, I wasn’t going to be able to compete in sports or do anything like that. Do you know what I’m saying? Because two years is a huge thing to give up at that age. So if I was going to compete in things, it was going to be music or drama or, like I said, sleight-of-hand, or chess. I was the captain of the chess team. You know, I’m still a very serious international chess player today, so yeah, I did all the nerd things.
If you’ve put your head in that since you were in the sixth grade, by the time you’re in college and in graduate school and everybody’s telling you what laboratories you’re going to work in and all this stuff, you know, that’s where your head is. Well, that’s where my head was. My head was, “I am going to go solve the Unified Field Theory. That’s what I’m going to do.”
Andrew: I see.
William: Somewhere along the line, all of that got disturbed by an entrepreneurial streak that appeared in that whole thing. When I was actually doing my interviews with the . . . When I was finishing graduate school with these various laboratories and I was being flown all over the U.S. to meet with these people, you know, I saw myself as the owner of the laboratory, not as one of the guys sitting in the laboratory, and it was just one of those deals. It turned out that at the same time . . . This was the end of 1978, so I started work in ’79, but computers were just now taking off. I mean, big computers were already there, but I’m talking about computers like exploding where everybody was going to get into them. And so I ended up taking a job with Hewlett-Packard. Rather than going to be a research scientist somewhere, I took a role that was with Hewlett-Packard, which actually was going to be technical sales support and then moving into a sales role, so completely different than my whole research scientist role.
Andrew: But you still weren’t going to own Hewlett-Packard. Was it the idea that if you learned from them . . . these guys have a storied entrepreneurial background with the whole HP garage and so on. Was it that you were going to learn from them and then go start your own?
William: Well, let’s take one step back into graduate school. When I found this entrepreneurial streak in myself, I was so far down the road with getting a Master’s Degree in Physics, I wasn’t going to go back and get an MBA at that point, and I was working my way through school, so it wasn’t like I had a ton of money. I wasn’t being supported by family or something. So I decided . . . Again, being the nerd I am, I studied it. And what I came up with was to make money you either had to be the owner or you had to be the sales guy. I mean, those were the two roles that made money, and it was too late to go study the MBA, but I didn’t think it was too late to learn how to be a sales guy. So I started sitting in on all the sales courses I could take. I started selling insurance at night, you know, and being the nerd I am, I carried a notebook and after every sales call I would write down everything I did right, everything I did wrong.
Andrew: Whoa. Where did you learn about sales from doing it like that? It’s a tough thing to sell.
William: You know what? Okay, the one-on-one sales, face-to-face, human sales is much like the AlphaDog Fast Trading where I tell you you should practice. The fact is if you actually go make a conscientious effort when you’re selling, then you’re going to get better. When I got to Hewlett-Packard, I had already begun my thinking about sales. So I decided to be the top sales guy, which is when I went to Hewlett-Packard. One thing I saw, though, was the poor guys . . . Because I was in the scientific computing side. In those days they separated them. They had scientific computers and business computers, and with my education, they put me in the scientific computing, obviously.
But what I did see, which was very interesting to me, was that the poor guys that came right out of college that hadn’t done what I did, which was to go take 18 months the last part of my college career and study sales . . . work at it. They weren’t going to get there at Hewlett-Packard, and the reason is the sales cycle at Hewlett-Packard is a year long. I mean, when you’re talking about a big sale to General Dynamics of some huge amount of computers, that’s a one-year sales cycle. How many sales cycles are you going to get to see? With insurance, I could see five sales cycles a night. I could see from beginning to end the whole thing, right? So I was able to compress a lot more understanding and knowledge about sales by doing insurance sales at night than those poor guys at Hewlett-Packard doing computer sales.
Andrew: I see. That’s another huge takeaway. You’re right, that if you really want to do sales or frankly anything, you look for those quick cycles so you can keep learning, failing, and improving, adjusting, and I also like to not have to wait another week to like fix what I’ve done wrong.
William: That’s right.
Andrew: For example, when I taught Dale Carnegie, “How to Win Friends and Influence People” classes, they say, “Look, you’re helping to teach this class. You give a presentation today to show everyone else how to give their presentation.” I’d give it and I’d go, “Oh, I wish I’d done this other thing.” I couldn’t correct it until the next cycle of the class or even until the next week. The same with Toastmasters. I wanted to become a better speaker. Toastmasters will have you speak today and maybe again next month, but not every day, so I joined five Toastmaster classes, so if I screwed up a talk, I could go back in the next day to another class and then give it again and adjust it. So that’s one of the things that you learned from Hewlett-Packard, that you had that fast sales cycle, which gave you an advantage over people whose sales cycle experience was over a year, even though they had more formal education in it.
But you told our producer that you were sitting there at one of the cubicles and you looked around and you said, first of all, you don’t have anything in common with these people, which I get. I imagine not a lot of them had degrees like you did, didn’t graduate by the time they were 20, and weren’t chess masters, but there was something else. You looked at your quota and you said, “If I actually beat the work that they’re asking for, what happens?”
William: Hewlett-Packard, they’re a brilliant company, don’t get me wrong, okay because it was a great experience and they’re an awesome company, but they viewed themselves as a manufacturing company. If you put that hat on as the president of Hewlett-Packard, “We’re a manufacturing company,” what you want to be able to do is predict all the things that you need to roll out of your factory and get them out to your customers on time, when they need them, and all that, so what you want is a funnel. Not a sales funnel, a manufacturing funnel that is already listed out and predictable so that they can manage manufacturing. So guess what they didn’t want you to do? They didn’t want you to go sell 10 times more than they wanted you to sell because if you did, that screwed up all their factory orders and “How can we possibly keep our customers happy if we’re going to deliver things late?”
What they did is you got your bonus for selling the amount that you did, and I think 10% over they’d even give you an extra little bonus. But if you did more than that, they actually cut things and it was like, okay. so my first year there you’re completely in training. The second year there you’re sales support, so I was literally a programmer, programming things to show off the equipment. But the third year I was finally in sales, and when I found out what the sales structure was like . . . You know, okay, those guys at Hewlett-Packard . . . and I’m talking about the employees there are superb people, well-adjusted humans, probably way more well-adjusted than I am, right? These guys have a quality of life. It’s a great place to work and they have a quality of life and it just wasn’t suited for me because I just wanted to go kill something. Do you know what I’m saying? I wasn’t happy doing $1 million a year. I wanted to do $10 million a year.
Andrew: You know, I’m like you too. Sometimes I just have this internal energy. I just want to kill something. I don’t mean like put it to death, but I want to kill it and crush it. I see that in like my three-year-old kid, but the world beats that out of you. It says, “Calm down. Just do this and put that extra energy away somewhere.” Why did you have that? Do you feel it’s just innate the way it is with like my . . . I think a three-year-old is too early to say . . . but like you see in some three-year-olds, do you think it was an innate need, or do you feel it was because you were doing so well in school that you had to also do well at work? What was it?
William: No, I think it’s who you are. I think it’s absolutely who you are. I’ve tried. Even the three years at Perot Systems when I was [inaudible 00:18:47] there after my company was acquired, you know, I could have calmed there. I had a three-year contract that couldn’t be taken away and I could have done just like those other executives, quite frankly, and just gone with the flow and joined the good-old-boys club of the executives at Perot Systems. No. Even there I was in a people space. I can tell you several stories of things.
Andrew: Give me one.
William: Are you sure you want to hear this?
Andrew: Yeah.
William: I might scare you. So we’re in a meeting, and it’s the top 13 guys. As a matter of fact, these are all the 13 people that report directly to Ross Perot, okay? Perot was not in the room at the time, but these are the 13 guys and we’re doing our planning session for the coming year, so this was in December. So one guy was up front and he was talking about how he wants to manage projects, and I’m telling you it was very archaic and very dinosaur-like in my opinion about how he wanted to manage technology projects and all the technology people report to me. I want them to be doing well and happy.
So he finishes his talk up in front. He’s got his slides and everything and again, these are the top executives for the company and he goes, “And this is how I want to do it. Does everybody agree with me?” I have to raise my hand and he looks at me and says, “Mr. Moore, are you ever going to agree with me on anything?” And I said, “Yes, if you’re ever right about something.”
Andrew: Aw, right there in front of everyone. Do you feel that served you, that attitude?
William: Well, it got me known. I do think I would handle it differently today. I don’t think I would have been that harsh on him, but, you know, I’ve never been one to back off from a little bit of a challenge and you’ve got to admit he left himself wide open by saying, “Are you ever going to agree with me about anything?” “Yeah, certainly, whenever you’re right, not a problem.”
Andrew: This was one of my challenges with teaching Dale Carnegie’s program. They are very much, the whole company is how to win friends and influence people, how to take a tough situation like that and not be as abrasive as you are. But I feel like in business sometimes that openness is actually helpful, to say, “I clearly disagree and here’s why ” instead of coming up with some niceties around it to soften the blow. And the fact that they don’t acknowledge it is what makes the program a little bit tough for me. I don’t think that that’s the way we always have to be. We don’t always have to pretend we’re Steve Jobs and be as jerky as we read that he was, but I do think that there are times when that forthright openness is helpful and I wish that they did a better job of incorporating that.
William: I’m going to suggest, Andrew, that your observation there is because, like me, you’ve been running your own companies, small businesses, because that attitude serves you very well in a small company, right? In a small company, if you have an issue with your business, you need to fix it now. You’re a small company, you’ve got to fix it. You see it and you fix it.
Andrew: I want someone to tell me it’s wrong.
William: Yeah, exactly and you want it fixed, whereas, in a large company, I call it socializing the problem. When you see a problem in a big company, you have to go sit with the guys that it’s going to affect if you change this and talk to these people, etc. It takes three months before you can even begin to fix a problem at a company like Perot Systems unless you go to Ross Perot directly, but that’s not the style of an entrepreneur or of a small businessman, and I don’t really believe that that socializing a problem works in a small business. You and I both have been entrepreneurs and running small companies, and I do believe in being straightforward as well.
Andrew: I want to know both because we also have seen people that are so straightforward that you can see that they close people off to their point of view because they’re intentionally aggressive. I want to know a little bit about both and I feel like that’s where they didn’t do such a good job but otherwise, I fricking loved going through that program. I loved teaching it. Teaching it is a good way to reinforce it.
Let me take a moment to talk about ActiveCampaign, my sponsor. That actually ties in with what we’re doing with sales and then I want to come back in and see this thing that changed your life, this one new piece of technology, one new way of looking at the world that changed everything. But first, have you heard of ActiveCampaign, or am I about to blow your mind?
William: Blow my mind.
Andrew: Blow your mind, yes. I’m setting myself up for something here. Here’s the deal. You know what I used to do with email is send the same thing to everybody over and over again. Here’s what I’m doing today. You and I connected in our last call because of Chatbot. I’m teaching Chatbot. I’m selling a program for Chatbot. I’m selling a done-for-you service for Chatbot. I’m still figuring it out and so what I’ve done is when someone joins my mailing list, I bucket them. So we have a bucket of people who started joining the mailing list two weeks ago who today at 2:00 p.m. Pacific will no longer . . . like, that will be the last time that someone can join this bucket.
Those people go through a sequence of emails that will come out and go only to them, not to anyone else, and that will actually be affected by what they do, so if they buy I’m not going to say, “Hey, you should be buying. I’ll give you a 10% discount.” Or if they buy a service that teaches them how to build a chatbot, I’m not going to come back and say, “Hey, do you also want to hire us to build a chatbot for you?” Instead, I’m going to shift to giving them what they paid for and the emails will reflect that.
That’s the way that smart email marketing needs to work. It needs to allow us to bucket people, to experiment with the way we say things, to figure out what works best, to customize the messages we send to people based on what they’ve done in our emails, and what they’ve done on our website. As I said, if someone says, “Hey, heads up. I don’t want to hear any more about Chatbot,” we should have a way to have them signal that to us so they don’t mark us off as spam. We should have a way for them to say “No more Chatbot, but I do care about this other stuff that Andrew has to tell me about.”
Anyway, all that stuff took me a long time to learn and so much longer to implement because the software around it is really tough. I mean, we’ve had to pay tens of thousands of dollars to experts to help set this stuff up because it’s been so frustrating but ActiveCampaign, a company that’s done email marketing for years said, “You know what? Why don’t we become the simple version of that?” And they created software that does all the things that I just talked about but makes it so simple that the CEO could do it himself. It makes it so simple that if she, the CEO was ready to pass it onto someone else, she could easily say, “Here’s how I have structured it. Now, you take it over” and not have one of these situations where the CEO now has to do it forever and not have one of these situations where the CEO can only pass it on to a professional person who can handle it.
I’m describing email marketing the way it should be. If you’re not doing it yet, it is so much more accessible than you guys ever imagined. William, if you’re not doing it in your new business, it’s so much more accessible than you might have thought if you were thinking about some of the old software. I was going to start to put down some competitors but that’s not really being nice. So instead, I’m going tell you guys, go check out this one URL. You’ll see it’s not as expensive as you thought. It’s not as complicated as you thought. You can set up email that’s intelligent and that allows you to grow your business. The URL is activecampaign.com/mixergy.
When you go to the middle section of that, actually toward the bottom, you’re going to see a simple flowchart that explains to you how you should be managing your email. You can look around the features and see what you can do and if you decide to sign up, they’re going to let you try it for free. They’re going to give you your second month for free after you start paying. They’re going to give you two free coaching calls with their platform consultants, which means they’re going to help you think through how to use it on one phone call. Then you go and implement. Then you come back on the second call and you can follow up and say, “You know, I tried implementing this and it didn’t work. I thought about this other angle on how to sell. Can you help me implement?” And they’ll do that. Finally, if you’re already on an email platform you don’t like, they will migrate you for free. So, if you’re starting out or if you hate your email marketing, I want you to go check out activecampaign.com/mixergy. I’m grateful to them for sponsoring.
As a salesperson, I went a little bit long. Other than the length, what do you think of the way that I just explained and sold ActiveCampaign?
William: It makes me want to go take a look at it, absolutely. And this is an area that I’m still learning because I studied very hard at direct sales, but the marketing at the time when I was doing my company was still primarily with letters, advertisements, and magazines and things of that nature, so I’m a little bit late to the table on some of the things that are happening these days, but I’m very excited about learning them myself. So, it’s cool.
Andrew: And you actually did even use a phone to sell and I think a lot of what you’ve done back then is still applicable today. Let’s get into how you got into it and then we’ll talk about how you sold it because you personally sold it for a while.
The thing that changed everything for you was . . . Is it called object programming or object-oriented programming?
William: Yeah, you’re going to hear people say object-oriented programming a lot. We just started calling it object technology because there was more to it than just the programming side, so we call it object technology, but I think probably more people say object . . .
Andrew: I have all of these pages in front of me explaining what it is. You did a way better job than all of these tabs, so can you explain what that is and how it differs from what came before it?
William: Yeah, so prior to what they call object technology was something called procedural programming, right? Procedural programming or language is like Fortran and COBOL and C. These languages were all procedural. They were actually very easy to learn because it was only 12 or 20 statements that you had to learn, and you just put them together in different orders and things like that to make things happen. If you took a Fortran class in school, which was the only two courses I took on computers other than at Hewlett-Packard were [inaudible 00:28:44] like that, but the problem with the coding is that it’s like spaghetti code. As a matter of fact, for my thesis, my thesis was actually a piece of code to take data from this laboratory that I was working at while I was in graduate school and do all the number crunching, that code ended up at Los Alamos, the nuclear research lab in the U.S. because my professor worked there in the summers.
I defy anybody to maintain that code. That was what you call spaghetti code, dumped out of my brain, and all that shows is where programming was in the ’70s, right? The programming in those days was the spaghetti code.
Structured programming came along and different things, but the ultimate in structured programming is object technology. Object technology takes any problem that you’re trying to solve and breaks it down into its component and creates a piece of code for each of those components. Each component is created and put into an object, hence the name object technology. So what that allows you to do is let’s say your business can be broken into five or six different things. If you changed part of your business or added a new component to your business, then all you had to do was change that one part of the code and everything else still worked, so what it allowed you to do was not start over because for years and years, every two years you threw away all your code and wrote it again. That’s how programming worked.
Nowadays, with object technology, your code is actually equity for you. In those days, your programming was a cost. I mean, it was a pure, overhead cost. Nowadays, you actually build code that’s equity for your business. It lives with you forever.
Andrew: What was that joke you told us about the ax?
William: Yeah. I used to tell this when I was trying to explain object technology to people. Some guy sees in the paper that some farmer is advertising that he’s selling an ax owned by George Washington. And so this guy is very excited. He’s a George Washington buff, so he goes to check out this ax. He goes there and the farmer presents the ax to him and he looks at it and goes, “Wow, it looks like it’s in really great shape to have been owned by George Washington.” He goes, “Yeah, it ought to. The handle’s been replaced three times and the head twice.” The fact is, the ax never stopped being a functional part of life. Do you know what I’m saying? Even though the parts got replaced.
And that’s the same thing with object technology is that you’re breaking your business problems into components called objects, and you fix or replace each component as is required, but the body of code continues to function, continues to work all the time. All of this stuff came out of the Palo Alto Research Center, the same place where Bill Gates and Steve Jobs walked through and got the ideas to start their businesses. Unfortunately, I didn’t take as big of an idea from them. I took the coding part of it.
Andrew: It was big enough for you to say, “I’m putting my stake in the ground. I’m going to start my company.” You start your business. It’s just you and a telephone, right?
William: Let’s hold on a second. After three years at Hewlett-Packard, I left Hewlett-Packard and started doing programming on my own, that’s right, me and an office and a telephone. But I wasn’t doing object technology yet. I was following that project because it wasn’t until 1986 that the computing power on your desktop became strong enough to run object code, because it takes a bigger computer to run object, so everybody who was following these things, let’s say nerds like myself, knew that this was the way programming would be done in the future. Everybody knew that, but they didn’t know when the computing power was going to be big enough to do that, so all we were doing was watching for when the desktop computer got strong enough, that was in 1986, so I shifted from doing the type of programming I was doing, which was procedural programming, to object technology. At the time I had 14 or 15 employees already. By 1986, I had about 15 employees, and we were doing procedural coding for oil companies in Houston.
Andrew: How did you get those customers?
William: Well, I lived in Houston at the time and they were the logical people. I just practiced my sales skills and went and called on them.
Andrew: What was your technique for selling to them?
William: Well, interestingly, there wasn’t so much competition in those days as there is today, but I would always call and ask for [inaudible 00:33:02] in the computer department.
Andrew: We just lost you for a second. You’d call and ask for who?
William: Like a secretary or an admin in the computer department. And then I would ask them . . . I would put on my poor me thing and say, “Look, I really don’t know anybody over here. Could you possibly help me? I would like to speak to somebody who manages projects.” “Oh yes, absolutely.” So now you’re speaking to a project manager in the computer side. You know, think about it. Nobody’s calling on them. There are several layers. They’re not a business-facing person. They’re an internal guy. They’ll tell you everything about all their projects, what their needs are and all this stuff. So I would find out what all their needs were and I would ask them, “Okay, if I’ve got some programmers that can help you with that, [inaudible 00:33:43] for having them do that. And if it was a purchasing group or something, then, of course, you’re going there but now you’re going there with the internal guy backing you up and saying, “Hey, these guys can help us.”
Andrew: They would just tell you what they needed, even though they didn’t know you, they didn’t hang out with you, they didn’t play golf with you?
William: I don’t know if you ever did any door-to-door sales. Back when I was learning to sell and I was selling insurance at night, right, you’d walk up to this door. Now, they’ve already set an appointment with you, but you would walk up to a door and there’s a plaque hanging there saying, “I shoot every third salesmen and the first two just left,” or something like that. Of course, this is Texas and they have guns here. They’re scary. But you know what you find . . . In other words, it’s virgin territory. Everybody else looks at that sign and runs, you know, and so you’re actually getting to talk to somebody who hasn’t just been overwhelmed with sales stuff.
See, if you’re talking to a purchasing agent at one of those big companies, that guy is constantly talking to sales guys and he says “Yeah, yeah, yeah, right, right, right.” If you get to talk to a project manager, that guy’s not overwhelmed. He’s not having a lot of people talk to him or her so they’re much easier to talk to.
Andrew: I think I’m beginning to learn here. “I’m new here. I’m trying to understand how this works. How do you guys do things?” It’s not even selling.
William: Exactly. “Here’s the skills that we have. I want to know if there’s any way that we can be helping you. Why don’t you tell me what you guys do?” I would say if I spent half a day on the telephone, I would get a contract. I could add two people a day if we had the resources to do it because, obviously, you need people too, so there’s an aspect of that business that’s recruiting as well as sales. In any case, it was really not that hard. It was work. Don’t get me wrong. A lot of people aren’t comfortable making those calls. A lot of people aren’t going to get past the secretary. A lot of people aren’t going to get to the project manager. You know, a lot of people aren’t going to get that information. But after having 18 months of insurance sales practice while I was in graduate school, I felt very comfortable doing that, and I was good at what I did. In other words, I wasn’t hiding anything. I was good at what I did and I knew it, right? They knew right away when we spoke that I knew what I was talking about. Everyone was comfortable.
So I grew with that, and I had about 15 guys by this time. When those lines cross, which was all I was waiting for, I sat down with my employees and I said, “Okay, we’re ready to make the shift now. We’re going to make the shift to object-oriented programming and anybody who does not want to make that shift” . . . because these guys were also experts at what they did, which wasn’t objects at that time, right? I said, “We’re going to do training. We’re going to get everybody up on this new technology, which I believe is going to be the way programming is done in the future” and that has come to pass. “But if you don’t want to, for whatever reason, tell me now and I will help you get positions with our clients.” In other words, I’ll do a permanent placement kind of thing with them.
And about one-third of my staff did not want to make the jump. They were quite content doing what they did at that moment, and they didn’t want to make the jump into this new technology, so I went from about 15 guys down to 10 guys when we made the jump. But those 10 guys all got educated. After that, we just grew with the technology, with the business as it grew. As more companies began to try this technology and make some investments in getting their staff trained and up and running, there wasn’t enough work in Houston even for those 10 guys, so I had to expand my marketing base. I immediately started advertising in national magazines.
I opened an office in New York a little while later. I opened an office in Zug, Switzerland, because we had European clients, and the European clients wanted to work with a [inaudible 00:37:35] so I set up a European client just to hold the contract. All the workers were still at this time from the U.S. And then in 1991, I opened programming facility in Bangalore, India, so we started training people over there 20 at a time and bringing those guys on board.
Andrew: So these were people with the aptitude but not the skills yet and the understanding. You taught them. The first 10 people who you had on your staff, who taught them?
William: Now, those guys brought those skills to the table. Those guys came . . .
Andrew: No, you were saying, “Look, we’re going to shift the company to this new way of doing things. You’re going to get trained.” Who did that training? Was that you?
William: Yeah. For better or worse, it was me.
Andrew: So you had to go learn it for yourself and then come in and introduce it to your people.
William: And write the courses. I wrote all of the initial courses. There were no courses available yet for this, so yes, I read everything that was possible, I got everything from the Palo Alto Research Center that I could. I wrote the first handful of courses and in those days . . . This was before, I call it the Netscape model of marketing, right, where everybody figured out the best thing to do to get a big base is to give things away and then you can charge them for other things later, right? I mean, that model of marketing wasn’t there yet. I was having to pay for the development environment to train the people on. I mean, it was not to make that decision to do that but our clients often needed those courses, so the courses I used to train my own guys we also then used and charged for to train at the client sites as well.
Andrew: Because they were seeing the shift and they wanted to understand it. How did you find customers? How did you find customers when this thing was so new?
William: Well, knowing the financial reasons why the big industries were going to accept this, the concept was that this type of coding is so much more maintainable, right, and over the history, over the life of an application, 90% of the money is spent on maintenance of that application. So if the numbers were saying that we could reduce that, that it’s going to cost you only 10% as much to do the maintenance, well guess what? That frees up so much capital in these large companies, so I knew the Fortune 100 companies were going to buy into this.
Andrew: How did they know what the benefit was down the line? It was more expensive upfront but savings down the line, they had the foresight to understand that and accept it.
William: Because there was such a huge amount of money being saved. If they could actually pull this off, the returns were huge. It wasn’t like we’d tell them “You’re going to save 5% or 8%.
Andrew: We’re talking about 90%.
William: Yeah, exactly. So even if they missed by half, you know what I’m saying? That’s still 45% of savings directly off their cost of IT. So it was a huge amount. We knew the large companies were going to buy into it. Of course, I called on those guys as well. I did the same thing, calling and talking to project managers and in Houston, I already had a little client base that I was able to push my way through to start off with. But we started running in “Computer World” and there was one magazine that somebody started doing that started featuring object technology, so we started running monthly ads in those magazines. We had, much like you were talking about, an email campaign. We had a letter campaign all charted out, so if we get a contact from this person and they’re in this category, this is the set of letters we do, and if they’re in this category, this is the set of letters. If they’re over here, I call them immediately. If they hit that button, they get a phone call right now. But we had all these letter campaigns.
Andrew: Yeah, this is just like marketing automation that we do via email and online now, all done by hand. The sales cycle or the initiation into this process happened because they’d see an ad in a computer magazine?
William: Okay. In my experience . . .
Andrew: You know what? Let’s just pause this for a second. I want to understand in more detail the sales cycle but I’m looking at the clock and I want to make sure that I do my sponsorship spot and then come back here.
William: Gotcha.
Andrew: Okay. The sponsor, by the way, is a company called Toptal, which I’ve been talking about for a long time as a place to hire developers but I had this experience with them. Should I call you William or Bill?
William: Bill, please.
Andrew: Bill. You prefer Bill. I thought it was a little bit odd if you keep referring to yourself as Bill. So, Bill, I’ve been talking about them for developers but I’ve got this issue here at Mixergy where I keep having the same pair of eyes looking at my financials forever. It’s mine and then it’s this person who oversees my books and the bookkeeper’s. I want someone new. I want someone to say, “Andrew, you’re making a stupid mistake over here. You’re missing this opportunity.” I had this issue years ago. I was paying taxes, paying taxes, and paying taxes. I had a loss year and someone new looked at it and said, “You know what, Andrew? You can actually get back some of the taxes you paid last year because you lost money this year.” I said, “I didn’t know taxes worked that way. I thought I pay when I make money and I don’t when I don’t make money.” He said, “No, no. You can get some.”
When someone has a fresh pair of eyes, new understanding, and a new experience to bring to financials, they can help you, so I thought, “Toptal has this new division where they have finance people on hire. Kind of like you could hire a developer for part time or full time through them, you could hire a finance person. I contacted them. I said, “Here’s my problem. I’m looking at the same things over and over. I have the same experiences that I’m bringing. I want someone who has multiple clients, multiple experiences to look at my financials and tell me what I’m doing wrong. Am I overspending on this contractor? Am I not organizing my numbers right?” And so they found someone. They’re going to introduce me to them in the next few days.
I was kind of hesitating about whether to talk about it or not but I think it’s important to bring up that this stuff is available. We always think we have to do things the same way and I think we should be aware right now that online sources make people like this available to us so I can get someone from Toptal who will look over my finances. What do you think about that, Bill? Is there something I should be asking them? Am I making a mistake by bringing the part-time person to look at my books? My vision is, every month, a certain number of hours, look at my books, help me organize them, and tell me what I’m not realizing.
William: I think you’re doing it perfectly. I think you should bring that temporary person in and I think a fresh set of eyes helps a lot and I do believe that it’s a very viable way to do it through a contract arrangement. So, for me, it sounds right.
Andrew: Yeah, I don’t know why no one brings this up. And partially, I’m hesitant to do it because I think that they’re making a mistake, but then I look at the numbers. It doesn’t cost that much. I get the guy by the hour. I make sure he’s got the right experience. Frankly, he’s a Toptal person, so I know he’s going to be solid. Great.
So if you’re out there and you’re interested in something like this, like, I know some people in my audience are interested in figuring out the right pricing structure or I interviewed one entrepreneur who’s got a great business. It took him too long to raise his next round because he hated putting the spreadsheets together. Well, you can go hire someone from Toptal to put your spreadsheets together. You can hire someone from Toptal to put together your slides for your investors. You can hire someone from Toptal to help you think through your pricing strategy or cohort analysis, which is such a draining process to figure out on your own. Well, you might as well hire someone who’s an expert at this and let them take on your finance issues. So, if you’re out there listening to me and you want to do what I’m doing . . . I’m paying them full price, I don’t have any special deal with them, and they’ll take care of my people just as well as they take care of me.
Here’s the URL where I went to get started and where you can go. You’re going to get a couple of things. First, you’re going to get tagged as a Mixergy person, which I think carries a lot of weight. I know them really well. And second, you’re going to get 80 hours of Toptal developer credit when you pay for your first 80 hours and that’s in addition to a no-risk trial period of up to two weeks. So if this guy works with me two weeks, I look at the work he gives me and I’m not happy, no risk. I say, “Guys, this guy sucks. Give me my money back.” All right, the URL is toptal.com/mixergy. I’m grateful to them for sponsoring too.
Okay, that one went a little bit over too. This is my problem, actually, that if I have sponsors I like, I have a hard time cutting back. All right, but let’s go back into the sales process. You were starting to tell me about the ad and what was the process?
William: Well, I was going to say that what I found was the ads got me some notoriety. We also started a user’s group for object technology. We called it HOOPLA, the Houston Object-Oriented Programming Languages Association. It became the model for almost every city in the U.S. They all came and asked for the bylaws and things because we were the first. We were the first one to create it. Because we were the first, every speaker in the object technology industry wanted to come down and talk with us, so I got to be best friends or at least first-name basis with almost every player in the business because I was [inaudible 00:46:01] talks. I could put an audience together and people would come and talk in front of these people.
But the thing that I found was that all the marketing was good but people bought once somebody else referred them. That’s when they actually bought my services. The guy at Chevron bought my services when he talked to his buddy at Texaco and the guy goes, “Yeah, you should use these guys.” That’s when they buy. And they’ll go, “Oh yeah, I’ve heard of them.” They’ll say, “I’ve heard of them” because they’ve seen the magazines. They’ve seen all the stuff, so yeah, you’ve tilled the field so to speak but they didn’t grow plants until somebody else said, “Yeah, these guys are good.”
Andrew: Were you doing anything to encourage that?
William: You know, probably not. I mean, I learned to always ask for referrals from people and I always asked for a reference letter from somebody, so when I would send a package off to a Chevron, it included a reference letter from somebody at Texaco and somebody else. You know, I had 40 different reference letters in my files and I would pick which one was appropriate or two or sometimes three that were appropriate every time I sent a package out. So, we were encouraging it at a certain level. I actually think the mail and phone campaign . . . As I told you, we had different paths, and people would come down different paths, depending on where they were in their process if something was hot or it was coming up in a year.
I was speaking at something. I was actually out at a Sun Microsystem Convention. I was speaking there and afterward, somebody came up to me and he was introducing somebody who I had never met. And by the way, I didn’t know him either. This guy comes up to me and acts like he knows me. It turns out he’s one of the people in my mail campaign, so he’s gotten letters from us and he’s gotten some phone calls and things, but he’s coming up and introducing a person who doesn’t have anything to do with us. He introduces us and he says, “Oh yes, this is my object technology consultant.” And I had never worked with him before, but I thought it was great that he viewed himself to the point where I was his consultant even though he hadn’t actually paid us any money yet.
Andrew: Because he’s learning so much from the materials you’re sending them.
William: Yeah, exactly and the process that we had done. He was that attached with if and when he was going to spend money, it was going to be with me. And when he was introducing other people, he was introducing other people as if I am his consultant, so I thought that was a cool moment. I had to stop and think about that one for a moment, but yeah, it was working out. And it was a smaller industry then because, you know, companies were coming on board with object technology. It wasn’t [inaudible 00:48:44] he was doing it like they should be now. If you’re not doing object technology today, you’re not doing it right but in those days, it was all new.
Andrew: One of the challenges you had was the difference between when you got paid and when you had to pay your team. Can you talk about that and how you dealt with it?
William: Yeah. That was, as far as running the business, the single biggest issue was cash flow because when you’re dealing with Fortune 100 companies, they don’t pay you upfront, okay? They pay. By the way, you’re never in danger of not getting paid. That’s the good news. It’s not like they’re going to go out of business and not pay you, but you’re going to invoice them in 30 days and then you’re going to be on a Net-30 payment from them, so you’re out at least [inaudible 00:49:27] days before you get your first check and in the meantime, you’ve hired a new employee and you’ve had to train them and you’ve had to pay their salaries. You know what I’m saying? So let’s say there’s a month of training before they start on the job and then there’s two months of them starting on the job before you get a check. You’re out a minimum of three months of salaries and U.S. programmers are not that cheap, right? So every time we hired somebody . . .
Okay, it was a different time. Let’s say I was out $15,000 before I got my first check in. If I’m trying to hire one guy a week, guess what? That’s $180,000. You know what I’m saying? We were so upside down in cash because our growth was so good. You know, on paper we looked wonderful because all of our paper was from Fortune 100 companies. They all owed us money, but I had no cash. I mean, I couldn’t afford to take the toll road. You know what I’m saying? I didn’t have quarters in my pocket much less money. On paper, we were doing great, but with cash flow, it was seriously [inaudible 00:50:32].
Andrew: So how do you deal with that?
William: Well, the first thing I did, of course, was go to a bank and try to get a line of credit at the bank. You know, manufacturing companies do that all the time because the thing is they have the goods, if you will, as collateral, even import companies. If you go import a container of products from China, you can get money advanced against that because the goods themselves can be the collateral in case there’s an issue. It’s a little different when your company is a services firm, but I was trying to maintain that they should do it because my paper was from Fortune 100 companies, right? My clients were J. P. Morgan and Texaco and people, right?
The funniest one was when I first had to do it. I had to. I either had to stop growing, or I had to have some cash. I went to a bank. This was in Dallas, Texas. I walked into the bank and I’m prepared like to the nth degree, right? I’m prepared for this long sales pitch to convince this banker to do this. So I sit down with the guy out in the office and we fill out some forms and we discuss it a little bit and he kind of nods his head and he’s got my business plan in front of him. And he says, “Let me go show this to the president of the bank.” And so I see him walk into an office and it’s all glass. I can see them in there, but I’m not meeting with him. Then I see them stand up and I see them both looking out at me through the window and stuff and then the guy that I had been talking to comes back out and says it’s all approved. It’s done. It was approved. It was like 20 minutes and it was all approved.
Andrew: Wow.
William: That’s what I said. I didn’t find out why for six months. I walked out of there in shock, you know. Hey, you know in sales if you get what you wanted, you better stop talking, right? So I closed up my [inaudible 00:52:17] and said, “Thank you very much” and I left, but I walked out of there marveling at what happened. I found out six months later what happened. When I was in school, one of the things that I did to help put myself through school was I was playing guitar and singing with my brother actually in nightclubs and restaurants.
So it was in Commerce, Texas. There’s a Texas A&M campus there, and it turns out we were playing at some little college kid dive place, you know, hamburger joint, beer-drinking place and I guess we were a lot of fun or whatever. People liked listening to us. It turned out the president of that bank in Dallas a few years earlier had been transferred to be the president of a bank in Commerce, Texas, and he had a teenaged, high school daughter leaving the big city of Dallas to come to a small podunk town of Commerce, Texas, which was only an hour from Dallas but still, it’s a small town. She’s leaving her friends, she’s going to a small place, and he had brought her to this place where we were playing and she had so much fun at this place that it changed his life because his daughter was all of a sudden okay with living in Commerce, Texas because of the night of hanging out at this kind of loud music, beer-drinking joint that we were playing in.
Andrew: A chance experience is what endeared you to him because of how you changed the way his daughter felt. He remembered your face and that’s why they were pointing at you and he said yes after that.
William: And my name. And my face. He looked on this and when he looked he said, “Yeah, this guy helped me out once.” That was it.
Andrew: How do companies like yours solve it otherwise? Because you’re right. There is no single product that you can point to and say, “Look there’s a bucket of them over there,” or “There’s a whole warehouse of them. If I don’t pay, take it.” There isn’t anything like that.
William: No, it’s a tough sale. Even that deal. That worked for the first year or so, but all of a sudden we hit a real high growth mode and, you know, he gave me a line of credit up to this much, but he didn’t give me a line of credit up to this much, which later I needed this much, so when it got to that point, we did have to sit down with accountants and all sorts of things and prove where everything was. By the way, I was going to mention when you were talking about your third-party financial person looking at your books, you actually should have them write a report with their third-party name on it, because that carries a lot more weight when you’re going to a bank than an internal report, right? So you can say “Yes, here’s a person who’s been auditing our books monthly and helping us out and this is their report.” It carries more weight.
Andrew: To be fair, I’m not very sentimental about old photographs because I have digital versions of them. I don’t need it, but old audit financials, I keep those because you’ve got the name of the person, the name of the company that audited them, but then you still are in a situation where you don’t have tangible product to say “If I don’t pay, you take this,” so how did you convince bankers to give you a loan?
William: Like I said, the only reason I was able to eventually get that is because my clients were all golden. You know, I was working with only the biggest companies in the world at the time, so they were pure gold.
Andrew: Knowing that those were big customers who have the means to pay, they have signed contracts where they’ll pay and a track record of having paid you, that’s what you take to the bank and that’s what you get funded.
William: Exactly and it was still a hard sell beyond . . . This initial amount was here but when I needed this amount, it was still work.
Andrew: You told Brian on our team you still remember the day when you actually were cash flow positive, where this whole stuff was behind you. What happened on that day that’s so memorable?
William: I went out and bought a plant. Literally.
Andrew: A plant?
William: A plant because I had this nice backyard, right, and I had this little water garden that I had built with my hands, but I actually went out and bought a plant that I could hang right there because I literally didn’t have the money to do things like that for so long. But the thing is when it changed, when the cash flow finally caught up to the growth, obviously, the growth was tapering off at that point, but when the cash flow finally caught up, it caught up with it in such a big way that I went literally from, like I said, not having the coins in my pocket to take the toll road to “Oh, I’ll pay myself $50,000 a month now.” I mean, it went from here to here so fast that it was like your head spins. You know, like, wow. I mean, you could see it on paper. You could see it coming but still, when it finally happened, you know, I went out and bought a Jaguar and [inaudible 00:56:44] and we started taking some real vacations and, you know, later I bought an island.
Andrew: Why did you sell the company considering that you’d finally got it to the right place?
William: That’s a very good question and this goes back to some of the things we were talking about earlier, about knowing who you are, right? The fact is, when I started the company I was dealing with my clients, and I was dealing with hiring good technology people. I was dealing with cool projects. I can tell you about some of those cool projects if you’re interested, but that was a lot of fun. But by the time the company got to 300 employees, I was dealing with insurance and parking spaces. Do you know what I’m saying? I mean, it was like “Oh, my goodness.” That wasn’t fun to me. That absolutely wasn’t fun, so when we got to the point where I was starting to get a few phone calls from [inaudible 00:57:35] saying “Hey, I’ve got customers that want to buy your business, I hired a president for the company. I still did all the hiring and I was the front person for all the clients, so all of the work was still me, but I hired a president of the company to be the facing guy to handle insurance and parking and, quite frankly, to handle the sale of the business.
Andrew: I see. Even with someone who could handle parking and insurance, it still was too much of the running of the business and not of the business. I don’t know how to describe it. It was too much of the stuff that you don’t want to do and so you said, “I’m going to sell it.”
William: Yeah, exactly. I don’t know, it got to that spot. You know what I’m saying? And, you know, I’ve been working and raising kids my whole life. I had three kids that were getting near college age, you know, and it was just time. Hey, that island looked really good.
Andrew: [Inaudible 00:58:33] as we were talking and I think at a point there you were looking at me like maybe I wasn’t paying attention. I was doing research as we were talking and looking at stuff. Here’s one of the things that I came up with. The deal went through on August 8, 1996. Is that right?
William: Yeah. That sounds right.
Andrew: How did you meet the people at Perot Systems to make that deal happen?
William: I was the featured speaker at a software quality control conference for NASA, which happened to be in Houston, right? So I was kind of a hometown boy there. I was speaking there and I believe the topic was Programmers, Users, and Other Humans because at the time there was this huge emphasis on almost like crack the whip, put all the programmers in a room, throw meat under the door, and make them write code until they finish the project as opposed to treating them like people, as opposed to treating them like humans, and users, the clients, were feeling the same kinds of issues, right? Everybody was trying to be very methodical, don’t get me wrong and certainly, methodologies are important but I think a methodology that leads out the fact that we’re all human beings is a problem, so I was talking about how to keep the human aspect in there and still do good work across the board and have good processes in place.
So there were a couple guys from Perot Systems in the audience and afterward, they came running up to me and said, “We have just set aside a whole bunch of money to go out and we want to grow by acquisition and we want to talk about this.” I said, “Yeah, I’ve got 300 guys.” They said, “Fine.” So, yeah, the conversation started there. It took a little while to converse.
Andrew: I’m looking at the Securities and Exchange Commission Form 10k from the year ending December 31, 1997. I thought, “Well, this is a big acquisition. They’ve got this whole section on it.” No. In that section, it’s you and then there are four other companies. It’s like you’re one of four different businesses they acquired all at once, including Doblin Group, Chicago based consulting company, Comsat Corporation in Reston, Virginia, Technical Resource Connection in Tampa, Florida. So this is a collection of companies. They just said, “We’re going to get into this base. We’re going to go big,” like you said, “and we’re going to buy them.”
William: That’s right. They got in an acquisition mode.
Andrew: But you know what’s so . . . I don’t see your name in this 10k, which would make sense. What I’m wondering is . . . as I keep fact checking as we’re doing stuff, why the name? Where did you end up with Rothwell?
William: You know what? Nobody’s asked me that question in a long time, but I think it’s got a good story. There’s an expression and I believe it’s originally Chinese, but it’s been translated into English and it is, “There are only two things we can bequeath to our children. One is roots, the other wings.”
Andrew: What is it? Roots and wings?
William: Yeah. Those are the only two things we can bequeath to our children. One is roots and the other wings. So I wanted to have an R and a W for Roots and Wings. And I already had this cool logo designed with an R with the roots coming down and a W with the wings coming off the back. I already had it all in my head, but I didn’t have a name that had R and W in it. So it was studied and thought and practiced. It was almost named Red Wine for a little while, but you could tell what we were doing while we were thinking about what to name the company, but no, we came up with Rothwell. Rothwell because it kind of had a ring of Rothchild and Rockwell. You know what I’m saying? It kind of sounded like some other big companies, but it wasn’t and it had the R and the W so that’s why we named it Rothwell.
Andrew: It’s got that little air of familiarity, so when they’re getting a call from someone they never heard of before, it still sounds familiar and still sounds important.
William: The day that they made the acquisition of my company, it made the national news and I am quite certain it’s because they thought Perot was acquiring Rockwell. You know, I’m pretty sure they thought Perot was acquiring Rockwell, and that’s why it made national news. But it was actually Perot acquiring Rothwell.
Andrew: I think they soon went public after that, so it seems like that was part of their process, right, to acquire, to grow, to go public. Okay. I see it. I see the success. We’ve talked about the island as a result of it. AlphaDog Fast Trading then. I don’t understand then why you would go from that to not saying, “Hey, you know what? I’m going to build another consulting company just like that one, but we’re going to focus on this new technology and I’m just going to repeat. How did you get into trading? How did you get into education? Why this business? Why now?
William: Well, after . . .
Andrew: Sorry, I have never had an issue where my assistant would call me up and say, “Andrew, it’s urgent.”
William: Have you got to go?
Andrew: No, I’m going to keep this going, but we’re going to keep it in the interview and see what’s so urgent. Oh, my goodness. She has never said urgent call. Hey, I’m still in the interview, recording. Is everything okay?
[Assistant talking on phone 01:03:43 – 01:03:54]
Andrew: Okay. We’ll work it out. I’ll finish this interview, and I’ll call you back up, but I’ll tell them what happened. Okay. All right. You bet. Bye.
I’ll tell you what that was. I thought I was speaking on Thursday. I’m scheduled to speak tomorrow at a conference, but I’m flying into the conference tomorrow. I like to always fly in a day ahead of time to give myself time to prepare. It turns out they gave us the wrong time. I can solve that problem. But I can see why she would see that as an issue. Meanwhile, behind you, was that your dad walking through?
William: Yeah. He’s old.
Andrew: Well, he wasn’t doing anything embarrassing. For a second there I thought, “Did someone naked just walk through?” because of your reaction.
William: No, I had told them that I was going to be doing this call and here I’m visiting, so I’m sitting in one of their rooms and I had told them, “Please don’t disturb me.”
Andrew: Because we are going a little bit over. I can’t let you go. I keep asking all these questions. I’m looking at the time myself and I still want to keep going.
William: Yeah.
Andrew: All right, now that we’ve gotten both of our issues out of the way . . . And by the way, I like keeping this stuff in. I found that now because of the NPR style of editing, everyone is editing everything out and what I feel it’s becoming is it’s becoming like the fashion magazines that will edit out people’s knees and women’s legs down to a stick. We’re really misrepresenting how humanity works, and we’re really coming up with this fake thing that doesn’t feel good, doesn’t feel natural, doesn’t feel any connection. This little bit where my assistant was calling me up with an urgent issue, where your dad was . . . It’s giving people color about my life. It’s giving people color about where you are and why that background is there. That is what makes this conversation more than just like a Wikipedia article or “Forbes Magazine” blog post. There’s my little post.
William: No, I completely agree with you. That was actually the theme of that talk I was saying about where programming was going, right? We’re also humans here, right? You still have to factor in the human side of things or else you’re going to make errors, quite frankly.
Andrew: [Inaudible 01:05:54]. Okay, so you were saying about the trading.
William: Okay, so after the three years of Perot Systems, I bought the island and developed that. I took a few years completely off, a sabbatical or whatever you want to call it. During that sabbatical, I actually was studying the quantitative side, the mathematical side of trading. Obviously, my background in math and physics led me to that, so to speak, but it was something I was always interested in and again, being a nerd, even though I was on a private island, I sat and read math books and studied quantitative finance. So when I decided to get back to work, I had been traveling a lot in Central America at the time and knew that Panama was a great place to be, so I set up a small business in Panama, but in this case I focused on the financial industry and I didn’t want to grow hundreds of employees like the last one, only because if you have 10 employees, you have 20 headaches because they’re all married to a headache as well, right? I mean, because you have to deal with all the people.
Andrew: Yeah, it’s people, not software.
William: Yeah, exactly. So I wanted to have a smaller company, which means I wanted to have some software, some things that could make money without having so many people involved. So we started developing things. Bloomberg carries about four applications that I developed. You know, they’re distributed through the Bloomberg world. We built some other things that we were leasing software to people.
The whole financial industry changed in 2008 and 2009 when the whole crash came. It hasn’t been as much fun since then, but I already had all this intellectual property and I had these ideas. Being a nerd, I had these ideas about how people learn and how people think. And I decided that the whole thing with trading, you could actually improve how you think if you studied trading methodically, right? That your ability to make decisions in I’m going to call a risk scenario, in places where you have to put some money down, even if it’s buying a car or whatever it is. Anyplace you’re going to have to put money down, you become a better decision maker if you’re a good trader. A trader will do better in those scenarios than other people.
So I decided to figure out a way to make a system that people could actually try to . . . I call it a trader’s intuition, but I think it’s a potentially life-changing thing for a lot of people. I think if you can improve your ability to make decisions when you have to take a risk in this world, and buying a house or buying a car or investing is all risk, then I’ve helped you. If I can improve your thinking with that, I’ve helped you do something.
Andrew: So the way that Ross Perot was able to make a decision and give you a response within minutes in that meeting, that’s the way that you want to help us think.
William: That’s right. I want people to look at these scenarios and because they’ve practiced them and done them, to make those decisions immediately.
Andrew: So it’s working right now on Facebook at an app called AlphaDog Fast Trading, right?
William: Yes. Push “Play Game” and you’ll get to play it right now.
Andrew: That’s right. If someone heard the music in the background, that’s me [inaudible 01:08:58] ad that had that in it. I hit mute on the tab. How long have you been running this business?
William: Oh, it’s not even launched yet. I started developing the ideas more than two years ago, but I still do contracts for people, right? I still go out and do work. As a matter of fact, I just finished a 10-month contract in Chicago, so, unfortunately, the game has been a sideline thing so it suffers when I’m out building applications for other people, and so it’s taken us a little longer to get it out the door. In other words, it wasn’t linear. There’s actually been some really good news in that though because some of the things like chatbots, for instance, have come along since I started the whole idea and I think chatbots are a great marriage for this tool to help keep people engaged, so when people play something like this, they need feedback. They need information coming back to them. The game has a lot right there in front of you, but the chatbot now has courses and has, you know, statistics.
Andrew: You’ve got a chatbot up and running that does this.
William: Yeah and the first course is now bilingual. It’s now in Spanish as well.
Andrew: Where do you get that chatbot?
William: You can get to it from the game, but you can get to it from the page there too. It’s called the Alphabot. It’s on the page. I think it’s on the right side of the page.
Andrew: I’m going to say hi to this bot.
William: The bot . . .
Andrew: I’m actually looking at live trade, like a live stock even though . . . Oh wait, there’s a ticker symbol, SPY and I get to decide in real time whether I should buy or sell, but I’m also seeing in real time how the stock would have done, right?
William: Okay, everything in here is historical data. It’s not . . .
Andrew: You’re not making it up.
William: No. So it’s basically picked a point in time, sometime in the last five years, and it shows you two months of data and then the next month is going to be coming at you during the game and you have to buy and sell during the game. You get to put what’s called supportive resistance lines on the screen. If you look down on the lower right there are some little buttons on there and you add those. There’s a whole process around this that forces you to think about the trades and then you buy and sell, basically.
Andrew: I forget, what is the kind of trading called, where you’re buying and selling based on the price versus based on the fundamentals of the company?
William: Well, people are going to call it technical trading, but even in technical trading there’s a lot of different categories. We call this price action trading. Price action because the thing is I want you to understand that chart. I want you to look at that chart enough times in the next three months that any time you look at a chart in the future, you will have seen a pattern similar to that. I mean, that’s what makes a chess player. How could a chess player look at a position and tell you a good move within seconds? It’s because they’ve seen those patterns. They’ve seen those positions so many times, right? And that’s what I want to burn into your brain with this trading. I want you to look at those price charts so much and see the results and feel the pain or the victory based on that so that when you’re there it . . . I think that’s my dog knocking at the door. I was thinking a human. So basically, the . . .
Andrew: That is your dog trying to come in.
William: It is my dog trying to come in. She’s a big dog, too.
Andrew: All right. I get how this works, and I think really, the more explanation we give, the more complicated it will seem. But in reality, as soon as you fire up this page, it automatically . . . I think I got 50 coins. I could automatically go in and trade. I see that my account right now is at $24,957, and as I buy and sell intelligently, that amount will go up and down and I kind of get a feel for it. But just when I think I know it, it turns out that I’m a little wrong. The idea is we’re seeing a chart in real time. I get to buy and sell based on where that chart is going. Anyone who wants to try can try it right now for free. It fully is working. The URL, if you want to just do this in your spare time . . . I should have given this out maybe at the beginning of the interview because it’s the kind of thing you can do while you’re in a conversation or listening to a podcast.
William: Yeah, absolutely.
Andrew: But guess what guys? You’re going to have other podcasts, other conversations to get involved with and here’s something that you’re going to want to try. Check out alphadogfasttrading.com. And you can just hit the Login with Facebook and start playing right away. All right. How did this interview go for you?
William: Awesome. Very cool.
Andrew: Me too. Good. I’m glad to hear that. All right. Thank you for doing this. I want to thank my two sponsors. The first is a company that I have used for developers and designers and now for a finance person. It’s called Toptal. If you want to hire the best of the best, go check them out at toptal.com/mixergy. And finally, if you want to do marketing automation right in a way that you can pass onto someone on your team, know they can manage it, know you can actually use all the features, go check out activecampaign.com/mixergy. Bill, thanks so much for being here.
William: Thank you, sir. Thank you, Andrew.
Andrew: Thank you all. Bye, everyone.
