From Tomato Salesman to Tech Entrepreneur: Steven Kaplan's Journey in Business

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Hey, welcome to the CTO advisor podcast. I have with me a good friend from the industry. Someone I've respected for years, Steve Kaplan. Steve has authored several books, started two publicly, two companies that went on to be publicly traded companies from Nutanix fame and managing and starting Nutanix's channel, extremely accomplished. Arthur was like nine books, Steve. The latest one being, what was the ROI? What was the title? The ROI story, a guide for IT leaders. And just one quick correction on the two startups.

They were acquired by publicly traded companies, ultimately. You know what? That's the ultimate exit, right? The, you don't have to wait for the IPO. We were a long, long, long way away from an IPO, but yeah, it's nice to have it that way. So Steve, the reason why I had you having you on is because you've seen both sides of this equation that we talked about on Twitter, which is the entrepreneur turned full-time employee or the full-time employee turned entrepreneur.

And then the hiring manager who hires the entrepreneur. And I wanted to talk kind of about, I wanted to talk to you about that journey and your perspective and help for those of my audience thinking about stepping out on their own and the risk associated with that. And then does that ruin them for life to come back as a full-time employee later? And then from the hiring manager's perspective, what are they getting when they hire a entrepreneur? I think I saw a stat the other day.

Research firm did an experiment. They put out resumes based on same level of experience, same fictitious person. One person ran a startup. Another person was a full-time employee. And the other person yet ran a startup that failed. Funny enough, the person who ran the startup that succeeded had the lowest hit rate for the resume, the person who had the highest hit rate with the FTE, but you know, it was a software engineer and they all got callbacks. It's just the rate of callback.

So I wanted to kind of explore this a little bit. So Steve, tell us a little bit about your journey, your first journey to entrepreneurship. How did that transact? Well, first of all, Keith, thank you again for having me on the podcast so many years later again. Yeah, you're a returning guest. That's right. Many, many years ago. Like when you're just starting. And my personal journey, you know, ever since I think I was 11 years old, I loved the idea of entrepreneurship.

And in fact, even when I was seven, I ran around the neighborhood selling tomatoes in a wagon. So I've always been enthralled with it and but never quite had the courage to do it got my MBA, went to work, you know, it was director of finance at a company, but it was right at the beginning of the PC craze. And nobody knew how to use the Radio Shack handy computer sitting up in the warehouse. So I took it down and figured it out and said, this is amazing.

And it changed my career there and eventually started a computer reseller store. And then we got into networking and became a VMware, what was it called back then? Platinum partner and, you know, we got, and then we got into Citrix and we were named the first Citrix partner of the year. And, you know, the offer started coming in and it's hard to resist it when people offer you a lot of money, at least it's hard for me. And then especially- Money, the, you know, you're an entrepreneur, your eyes get big.

You're like, you know what I can do with that money? I can start another business. You know, or just, you know, the security, you know, entrepreneurship is, I don't care how successful you are, it's always scary, right? At least it was for me, because you just never know, you know, you're responsible for this massive payroll and the direction of the company and technology is always changing. And if you misstep, you know, you could lose everything. So it's, you know, when you get that offer coming in, it's, at least again, it was hard for me to pass up and after the dot-com burst especially.

So yeah, sold my first company and worked for the folks who bought that and then the folks who bought that company. And then after about five years, ran into VMware, a product called VMware. And I told my company that, who's a big national channel partner, you know, you guys should really look into VMware and selling this. And they said, no, we're not interested. And I said, well, I'm gonna leave then. My non-compete didn't cover VMware and started, you know, a new consultancy around VMware and within three years, we were named the rising star of the Americas and then partner of the, kind of the VMware's version for partner of the year and sold that.

Same thing, got another offer and hard to pass up. Sold that and worked for that company and the company that bought that company for about five years. So let's talk about that, you know, that experience of working for that company that started that. One of the things that me and Melissa cherish about the CTO Advisor is the freedom. You know, I get to buy my little Airstream, we get to travel the US and do our thing. But at the same time, there's this constant uncertainty.

You know, I'm not making the kind of dough I could make if I worked for one of the cloud providers, et cetera, but it's a really nice balance. We do well enough. It is a good life. And one of the things that we've talked about is a potential exit of the business, you know, selling the CTO Advisor and me having being the face of the CTO Advisor needing to work as we grow the business after that. What was that time like after, you know, you had reigns of the control?

What was kind of the pros and cons of working for the folks that you sold your business to? Yeah, I think the pros, as you mentioned, were the no more really uncertainty. You know, you got the money sitting there in the bank. I mean, there's earnouts and so on, but for the most part, you know, you're financially secure. So that's very comforting. The cons are right away losing the ability to make the decisions, the strategic direction, you know, calling the shot, being in the room where it happens, like they say, you know, those are all the cons.

And, but, you know, I think the right organization, you know, it works well though. So that's really interesting. I didn't think about, you know, the concept of not being in the room where it happens, you know, as a entrepreneur myself and, you know, kind of making every decision. There's this stress of having to have to make every decision but I get to be in the room when I'm making every decision. What was that shock like when you weren't kind of, you know, there's a major decision and, you know, there's these, I don't think you ever lose the feeling that when you bring employees to the deal that these are still your people.

I mean, these are your people. So when there's decisions being made about your people, what was that like, you know, kind of dealing with not being in a room when decisions about your people are being made? You know, I guess in my case, I'm thinking back to my first company now, especially, I kind of dissociated from that, you know, I didn't really feel so much. I mean, I had to for, you know, just kind of for self-preservation. I mean, kind of ironically, you know, we sold that company 23 years ago, just about.

This weekend, I'm having a reunion for a lot of the early team members, the management team and their spouses. So, you know, we're still friends and so on. But, you know, I think you have to see the name change on the door of the business. You have to be emotionally resigned that, you know, these are the employees you brought, your friends, but, you know, you don't have that control anymore. You're working for someone else. And in my first business, I actually backed out of a few acquisition deals the first time as it became more real to me.

Oh no, you know, this is, can I really give this up? So it's, you know, I tend to be an emotional person anyway, but when people ask me about selling a business, I always advise them of that. Be prepared for the emotional ups and downs. And, you know, it's your baby and you're giving up your baby. Yeah, I think, and for those of you who are listening, who've never started a business, it's really hard to describe how much time and emotional energy you pour into the business.

You can get to the point where you're actually quite irrational. You're making decisions that you promise you'll never make. I'll never ever borrow money to live off of while doing a downturn. And you find yourself, you know, loading the credit cards up because you believe in the thing so much. So that's really great advice. So we're, you know, we're talking about all this emotional baggage from the entrepreneur side. You know, this, we've made the decision to step out on faith and sell, you know, start a PC reseller, start a VMware partner business, grow a relationship with Citrix.

Then there's the inverse. You've made the decision that you've sold your business and you're gonna go work with someone and the hiring manager, or the, you know, that's kind of cut and dry. You're going to go work for the person who bought your business. That's clean transaction. What about the hiring manager that looks at the Steve Kaplan, the Keith Townsend, the Tim Crawford, who we both have a really interesting shared experience with. And you see that entrepreneur resume come across your desk is really tempting.

But, oh, can this guy or gal be a team player? What's going through the hiring manager mind or what should they consider? You know, I read an article many years ago about how former entrepreneurs make the best employees. And it's just one data point. And I think that is a possibility, but it has to be not only the right type of hiring manager, but the right type of organization. You know, if you get a good entrepreneur, they're gonna come in with lots of ideas and creativity and may not quite be the square peg fitting in the square hole.

And, you know, I think that they can be phenomenal employees but you have to have that open mindset. If you try and make them just a regular standard, you know, pegging the whole employee, you're not gonna get the value that you could get and they're gonna be unhappy and, you know, the relationship at some point will sour. So let's put some meat on that. Let's say that I work for, let's pick on the ultimate conglomerate GE. I'm a hiring manager within GE, 100 plus year old company.

We have processes, we have bureaucracy, we have everything that we have. And I need to roll out a cloud native infrastructure, Kubernetes. Do I look at a person that has run a Kubernetes practice, their own consulting company, that they have the skillset, but I'm questioning kind of the cultural fit. I'm the hiring manager, he's come across my, he or she has come across my desk. And what am I thinking if I work for a big conglomerate like that? Well, you know, GE is known for kind of making, if not entrepreneurs though, at least, you know, Fortune 500 business leaders.

But my gut would say probably not the best fit for a company like that looking to hire entrepreneurs. Because like you said, bureaucracy, processes, those are all things that are natural and similar to entrepreneurs. And I would think more or smaller to maybe a mid-sized company are gonna be more appropriate for bringing in the entrepreneurial talent. And smaller to mid-sized companies, again, that are open to creativity, to ideas that might diverge from what's been standard there. And I think I tend to agree with that.

I think the reality is I've worked in both extremely large companies, and obviously I work for a small, super small company now, but I've worked in between. And one of the advantages of an entrepreneur, people who have worked for startups, you've worked for several, is that they can do a lot of things. They can do and understand a lot of things. I can throw this oblong object or challenge as someone who started a business and say, kind of figure this out. There's no ropes or guidelines.

There's no manual to this, but it's a problem. And I need you to kind of go out and solve this problem. Versus large companies, there's a group that does DNS. There's a group that does collaboration email. There's a group that does accounts receivable. All of these things that an entrepreneur would do themselves, there's a group to do that. And putting the entrepreneur in that type of environment can be a challenge. So we're about wrap time, but I wanted kind of one last question, kind of a back to the beginning question.

This thing that I get all the time with people saying, Keith, I'm just not that brave to go out on my own. What advice can you give people who need to just jump off the diving board? You faded out a little bit there, but I think I got the gist. My advice maybe is more strict than a lot of people in the business. Again, being more of an emotional type of guy. Mine would be, don't jump off unless you feel like you're gonna die.

If you don't, because it's really hard. It takes tremendous effort and energy and your soul, at least again, for me, because if I'm gonna do it, I'm gonna grow it. So don't make that dive unless you just have to do it. But if you have to do it, then go for it. And God bless you. And America loves entrepreneurs. The world loves entrepreneurs in most countries. And you're doing wonderful things for society and for the people you hire and just go for it, but just only if you absolutely have to.

All right, Steve, I love that advice. We'll get ourself a screen mask to encourage entrepreneurs to be chased up the diving board so they have that feeling that they need, they absolutely have to do it. For those that wanna follow your musings, where can they find you? On Twitter, at ROIDUDE and LinkedIn, Steve Kaplan. com. com. Talk to you next episode of the CTO Advisor. Thanks, Steve. Thanks, Steve.