What It Takes To Go From Bootstrap Start Up To Successful Exit

Founders start companies, but teams build companies. We do design and engineering, and they're like, well, nobody's good at both. And we were like, that's just crazy. Like, to build great products, you have to be good at both of those things. We did all the work ourselves, all the selling, all the building. When you're a bootstrap startup, I mean, your first mission is to survive. We didn't even know what the hell we were doing. The business needs to be ready, the market needs to be ready, and you need to be ready.

Today on The Deal Table, we're joined by Scott Harper, Dallas-based entrepreneur and co-founder of Dialexa, the digital product engineering firm he launched in 2010 with just $50, a domain name, and big dreams.

Under his leadership, Dialexa grew into a powerhouse consultancy serving clients like Uber, Amazon, and Toyota before being acquired by IBM in 2022. Scott helped define digital product engineering as its own category, incubated ventures like Venli and Robin Autopilot, and earned recognition as E&Y Entrepreneur of the Year.

Hope you enjoy. So, Scott, welcome. Thank you for being here at the Deal Table. Old Parkland Pig Room.

Have you been to the Pig Room?

I've never been to the Pig Room before. I feel like every time I come to Old Parkland, I'm just blown away by some new little nook or cranny, you know, in the facilities where you just had no idea it was there before.

I totally agree with that. I literally was on an elevator ride earlier today and opened up and just said Civil War. And I'm like, Everywhere you go, this is a museum.

It is a museum. Yeah, it's in Crow.

Another Harlan Crow whimsy here of his affection for swine. We had a putting tournament here. There's a putting green on top of one of the roofs, and I think maybe 50 people, 100 people showed up for the putting contest at Old Parkland.

That's amazing. Yeah, I played one. I had a guy who officiated here and he said, hey, you want to come play squash? I said, I know they had squash courts. He said, yeah, they're down in the garage. And it's like Yeah, who does that? Well, they hate— they think parking garages are ugly, so they're trying to make them more interesting. And so there's squash courts in some and, you know, other things, other ones. And that's fun.

Well, it's a great spot for a podcast that's focused on entrepreneurship because we're in an ecosystem here of people that invest capital. And you certainly are a great fit as a guest for sort of our focus because you are a founder owner-operator who then sold your business to IBM. Congratulations. Thank you on that whole journey. As someone— I didn't sell my business to IBM, although it was sold ultimately to Goldman Sachs. So, you know, I was one step removed from that. But I understand the entrepreneurial journey of starting a business, growing it, scaling it. Can you tell us a little bit about Well, first, you know, you, you started a business from what I see of $50 and a domain name.

Yeah.

How did that turn into the business that you sold to IBM?

Yeah, so we started the company, you know, a bit unintentionally. We, I mean, we really started because we left the company we're working at prior due to some disagreements we had with some ethical things and So we just said, hey, this is not— it's not right for the company for us to stay, is not right for us to stay. And we both left. And he and I had worked— this is my business partner Mark Hadar— had worked really hand in hand together. And we said, let's go do something together. And we really thought about— we were, you know, we worked at a SaaS company and we were building products. Like, that's what we had done. Like, that was our background and had worked with a lot of, you know, big companies, mostly, you know, Fortune 100 companies. The is the was our clientele at that last business. And, um, you know, we were thinking about starting some new product company and we just went and brainstormed for a few weeks and we said, you know, let's, let's do some consulting, you know, here while we figure out what we want to do next. You know, we just need to make some money, pay bills, make ends meet until we figure out what we really want to do. And, um, you know, we didn't even really know what that meant. You know, we were like, let's start a consulting firm and neither of us have ever done consulting before, you know. So that's something only maybe, you know, 26, 27-year-olds would say, But we were 26 and 27, so it made perfect sense. And, you know, I think we recognized was that most of these companies that we were serving at the SaaS company, like, we were having to integrate into their systems and working a lot with their IT teams. And we thought, you know, really, this is around the time where it was really becoming very clear to us, like, every company was going to be defined by technology, every industry was going to be defined by technology, every industry is going to be one with technology in some way. We decided to do some consulting, trying to figure out, you know, how to make it. We were just trying to make some money, try to pay the bills, try to make ends meet while we figured out what we really wanted to do. And so we were like, let's do some consulting, you know, let's call, you know, everybody that we know and let's start, you know, calling and see who needs help building things, right? You know, we build technology products, like that's what we'll go out, we'll help people do that. And, you know, we had never done consulting before, but, you know, that's what you do, right? As an entrepreneur, sometimes you're like, all right, well, how hard can it be?

Was it the joyful idiot of being.

A young— That's right. Yeah, I think it's, you know, you're 26 or 27, you're like, you know, let's start a consulting firm. We've never done consulting before. Like, that's, you know, again, something only 26 or 27-year-olds would say. But, you know, when we— what we really found and like where we found like our, you know, place in the market and our niche in the market was really in product engineering is what that space became known as in around 2010. 2011, like even really that term didn't even really get widely adopted until the late 2010s, but it ultimately became known as product engineering. And, you know, when we first started it, you know, we saw it as very different from like traditional IT that these big companies we had been serving, their IT departments, you know, do lots of corporate IT things and IT functions. That's very different than somebody designing, architecting, engineering a product in a line of business that maybe they're going to take to market to drive revenue for the business. Or maybe some proprietary technology that delivers some sort of unique competitive advantage for a business. That's not what most IT departments focus their time on. If you look at an Amazon, an Apple, a Google, that's not what their IT department does. Their product teams are who does those things. But in like the non-digital native companies, like that's not— they didn't really differentiate between those two sides of the world. If it was software and technology, you know, the IT department owned it. But what we really recognized in serving that clientele was that they really didn't understand how to build great products. That just was not what they did. They were— they didn't really understand like what was so different about that. I think the market didn't even really see what was different about it. When we came out and said, you know, we're, you know, doing product engineering, we build technology products, people would say, okay, so you're, you know, IT. And we're like, no, we're, we're product people, you know, design. Oh, you're a design firm. We're like, We do design and engineering. And they're like, well, nobody's good at both. And we were like, that's just crazy. Like, you know, like that's to build great products. You have to be good at both of those things. And, you know, really, you know, we— I think we were part of a very early group who really understood that every company really needed these capabilities to win in their space. You know, that was their industry. I mean, all their industries were going to be one with technology, right? Like, I mean, you can see that now. It's pretty You know, it's everywhere, right? Everybody sees that. Everybody uses technology to gain an advantage over their competition, to do things better, faster, cheaper, differently. Right. You know, there's lots of advantages with technology. That's, that's a very obvious thing at this point. But I don't think people really understood like what that meant and how to get there at the time. Since then, you know, this stuff has really become commonplace. But, you know, we're thinking back, this is in 2010, 2011, right? Really 2011 when we started doing that, kind of singing from that songbook, you know, along with a handful of other firms. And really it ultimately became its own space. It got— I think it started getting recognized as something fundamentally different, as a different capability than these companies had had historically. I think everybody now really agrees that they need that. And if a product mindset, you know, you can't walk into a company now where they, you know, would debate this anymore. They'd say, oh, of course we do that, you know, we, we absolutely do those things, we know we need it. Um, but when we started the business, that was not common at all in the business.

Are you referring to the Dylexa business?

Yeah, that's Dylexa.

Dylexa. And how big was your, your founder team on that?

There was two of us. Yeah, okay, just two of us. We were two broke guys, two broke guys, and my business partner's mother-in-law's garage. So that was where we started, and we lasted there for all of a few days. And then we did a trade-out. There was a guy who had started the first co-working space in Dallas, which I had worked at, at a prior startup before I went to work at the company where Mark and I met. And, um, we ended up cutting a deal with him. He had a startup, and we said, hey, we'll do some work for you, and, you know, just trade us out for rent. And so we moved there, and then we hopped around for, you know, quite a few places. But, um, I think we had like 5 offices in the first 2 years or something.

And what was the process to go from 2 broke guys in a garage to like, who was your first hire?

We hired a couple of young guys that were, we had met through just the startup community. One I had known for several years and then another we met like this coworking space we had was, it's like kind of like startup party central. It was called Cohabitat. So a lot of the people that were around in the startups in the, you know, mid, mid-late 2000s, and, you know, early 20-teens, you know, knew that place. And it was really a gathering point for a lot of the startup community. And so they had lots of social events and we started getting a lot of, you know, engineers and designers who a lot of who had corporate jobs, worked at big companies and would come to this who were interested in startups and maybe not staying in a corporate job forever. And one of those guys worked at Lockheed Martin. Another one was a startup, you know, community guy that I had known for a few years and we hired them. Really, I mean, I feel like within, you know, a week or so of each other. So we kind of hired like 2 people quickly. But it's always that balance of like, you know, we didn't have any money to hire anybody, so we did all the work ourselves, all the selling, all the building, everything, uh, just us for a bit. And then we hired those 2 guys, you know, as soon as we landed enough work to really support them.

Yeah, were they engineers?

And both engineers, yes.

And then what was the, because I'm fascinated with like the process of going from scrappy startup to something eventually that IBM picks up.

Yeah.

Because that, I mean, obviously that's a full evolution of a building a business.

Yeah. How much time do you have? Right.

All night.

Yeah. I think, I mean, I think that you do that one step at a time. Right. You know, and a few leaps here and there. Right. And so I think that, You know, you start by surviving when you're a bootstrap startup. I mean, your first mission is to survive, right? You know, like if you don't— if you die on the vine, then, you know, you never have a chance to get started. So I think it goes from surviving to then like, let's get some sort of team and let's see if we can start to get a flywheel turning, you know, to then getting some sort of like real structure in place, some real organizational structure in place that can actually support and facilitate growth. Into something much bigger. If you, if you look at the journey, I'd say that you go from that survival of like 2 people really where we didn't even know what the hell we were doing, to then starting to understand it, seeing the big opportunity, really, um, making those first few hires, delivering great work for your early clients. I mean, I think that's really how we built our business, was doing what we say we were going to do. Really business fundamentals, right? Let's You know, let's do what we say we're going to do. Let's deliver great work. You know, let's finish things on time. You know, let's be good to work with. You know, all the real basics. But, you know, at the end of the day, let's do really great work. And that's how we built our business, was on that foundation of excellence. And that's really what we sold into market, and we delivered on that, and we continually delivered on that. I think for, you know, really forever. I mean, I'm not gonna say we never made mistakes or, you know, we're perfect the whole time, but it was really important for us to try a really great job. We weren't just out trying to bill hours. And I think that that's, it's plenty of consultants like have a bad name, you know, for doing that kind of thing and for bad acting, just like in any industry. But we were just trying to be different in that regard. Let's do really great work. Let's execute fundamentals. And, you know, we were word of mouth, so we didn't really have a marketing engine. We didn't really have a sales engine for 5 years or so, you know, um, It was really founder-led selling and, and delivering.

What do you think was the, the, the real turning point where everything started clicking and going okay? Because I can imagine you probably had a growth like this and then, you.

Know, an exponential— Yeah, so I think that, you know, our growth curve, it really is like, you know, big step functions, right? You know, like it was— we'd, we'd go from like really like steady state and then we go boom, we'd hit a growth spurt., and then we'd be like steady, and then boom, we'd hit a growth spurt. So it never went like, you know, that it was never just smooth hiring. It was like you'd have 5 people and then it was like, hey, we need to hire 7 more, right? You'd double in 2 weeks or something, you.

Know?

Um, and I think that that was just, you know, when you're small, like it's easy to see how it can happen, right? It's like we've got one project and we need 3 people to do that. We hire, we landed another project, we need 4 more. Oh, your company just doubled, right? You know, as you hit scale, that becomes a lot, a lot harder. But, um, I think there were.

Several.

Um, there were several moments in time where I think growth really ramped. And, you know, I'm— if I think back, I can think of a handful of really impactful moments. One was when— I mean, one was when we hired— when we landed our first deal. Like, that was great. And that was for a company called Natural Dental Implants. And they were doing— changing the way dental implants were done. And we built this image processing software for them. That was really neat stuff. Still, it's one of my— I think one of the more interesting things we ever did. We landed our first big corporate deal. That was probably in 2013 or so. We then, we launched a couple other companies out of Dialeks, out of a thing called Dialeks Labs, which was essentially an internal R&D unit incubator. That really opened a lot of doors for us because we got a lot of attention for those companies. We spun them out as separate ventures, got venture funding around those, got a lot of publicity around them. That opened up doors. You know, we had never done anything in automotive and we launched an automotive technology company and that all of a sudden, like, you've established credibility in that space. You've got a really hot startup that came out of there. Clearly you have, you know, some sort of knowledge base that you can, you know, do some things in that world, right? Um, I think then, you know, we will— after that, like, I think that we tried to really understand, like, how do we go from this, you know, that's probably 30, 35, 40 people, you know, around that time. And then we tried to, like, go charge the hell I used to say this was like, you know, in about 2015, like through 2015, really the consulting firm, we thought we'll just use this as like a means to like make a living and fund these startups we're gonna spin out. And we really figured out like, no, no, there's really a big opportunity in the market. This product engineering space is gonna take off. Like it was pretty obvious to us and like we're doing quite well and we're really not, we've taken no funding. We've really not tried to ramp up a sales and marketing engine. We've been feeding everything we're making, you know, just to be able to actually pay ourselves and our team and then to spin out these other companies. But we've really got something here, like we need to try to scale that. And so my business partner around 2014, 2015 stepped aside as co-CEO with me and went to run the automotive technology company called Venley that we spun out. And what I realized was that we had a lot of like startup people, a lot of product people, we did not have a lot of internal consulting knowledge. And so what, you know, to me, I thought, what does that mean? So I think, I mean, if you think of your Bains, you know, your BCG, your McKinsey of the world, your Accentures, your IBMs, you know, whomever, I mean, their whole giant business is focused around consulting. Like pretty much nobody at our company had ever done consulting before. And we made it— we were about 40 people at that point, right? So, you know, what we felt like we really needed was we know how to do— we knew how to— we know how to do great work. We know how to really design, architect, architect and engineer really great software, great technology solutions for people. We're really good at this. We still don't really know how to really run a consulting business terribly well, right? And we don't know how to like really run accounts inside of these big businesses, you know? And that's, you know, we started and we did a lot of early stage companies like early on because that was pretty obvious, like why they needed somebody who had like domain expertise in a certain industry. But they were not, you know, let's say it was, you know, you're an expert in car dealerships and you've got an idea for some software around car dealerships that you think is going to change the world, but you've never built software before. You know, how do you build a startup where you need somebody who actually knows how to build software and help you get to market? So we had a lot of those type of clients early on. But what we really recognized was that, you know, those were very much feast or famine. They're trying to like help. They want you to get them to market and then they're going to go away, which means now you better have another one right behind it. You're, you're constantly on the hamster wheel. Those are not really accounts, right? They're deals. And so to grow a consulting business, you have a consulting business grown is based on accounts and you need really strong account management. You need to know how to get into these companies, but then also how to stay in there and how to grow your presence inside of those businesses. There's a lot of consulting fundamentals around that.. And that's the thing that we didn't really understand very well. We didn't have experience in that. And so I went out and started looking for, you know, some hires of people who did understand that, started building out, you know, that, that aspect of our business, some people who had been there and done that, some of the gray hair in the room who could say, you know, you guys have something really great here. You got lightning in a bottle. You just don't know what to do with it, you know, and how to take it there. So, Made some bad hires, made some really phenomenal hires in that regard. That really stepped it up. And then I think that the market catching fire and really understanding, you know, fast forward a few years from there, the market really understanding that product engineering was really a thing and something different. I think it was Gartner who came out and said, I think they were the first one to call it, but I could be mistaken. But they said, you know, something to the effect of, hey, this is fundamentally a different industry than traditional IT consulting. And, you know, it's going to be a $600 billion a year industry by 2026. So any time, like if you follow like tech M&A and like, you know, especially in services M&A, when the analysts come out and they kind of have some sort of new insight or they deem something a new space or some new shiny object, And everybody reads those things and it kind of really like, you could say they either start the trend or they're like following the trend and they're putting a megaphone on it. But what it does is it causes a feeding frenzy of sorts because then everybody feels like, hey, we've got a, that's something different. We don't have that, we need it. Or we're doing it, but we're not doing it that well. Like we need to go faster, right? So it definitely starts like an M&A frenzy around that in the services space anytime that happens. And you can really look at that from, you know, mobile. You can look at it with product engineering. You can look at it with, you know, data science. You can really look at it with any kind of trend. Once it really catches on, the whole market starts really, you know, ramping up around that. And so that was another, you know, major tailwind for us.

We see that a lot as an M&A advisor, the pendulum swinging back and forth as, as sort of that herd mentality. They all start chasing deals. They bid up prices.

Yep.

Then they back away. It's great if you have the opportunity to sell or buy depending on what side of that trade you are. I saw a quote attributed to you that talked about the value of having the right team in place and how that drives success. And I'm thinking about that in the context of these big stair-step moves, that it's not this linear, you know, thing that's nice and smooth. How did you maintain— you said you made some great hires and some bad hires. Talk to me about that a little bit, because you're growing very rapidly and you're having— but you're having to add people in fits and starts, but you're adding a lot of people, right, in fits and starts. Did you, did you get better at the hiring process?

We definitely did, right? We definitely got more systematic in like how we did it. Um, everybody that grows a business is going to make some bad hires. I think that, you know, I think what I got a lot better at there was like fewer bad hires, but also just recognizing when somebody wasn't a great fit. I mean, sometimes a bad hire is not fault of the individual. It's that you didn't recognize what you needed, right? So I mean, put them in the wrong place. Yeah, there's some of my bad hires I made where, you know, in retrospect, it was really obvious they were not going to be able to be successful at that job. And so, and there's other people who oversell themselves or really just can't operate in a startup. You know, you get somebody who's been at a big company. Some of my best hires have been people who operated at scale and could really bring that knowledge, and they knew how to operate there, and they knew how to operate at a startup and a growth company level. And there were other people who were probably great up here based on what we heard and knew. And they came down here and they had no idea what to do. Then they've done that. Yep. And so that's just, you know, I think you do get better at filtering that. You do get better at, you know, understanding what questions to ask. I think more importantly, you get better at recognizing it and fixing the problem quickly. I think one of the hardest things to do when you're a startup or a growth company is you know, you're trying to hire somebody who really you think knows a lot more about something than you do. Yeah, I think if you're a good entrepreneur, a good CEO, you're hiring people that are a lot smarter and better at, you know, any individual thing than you are. Right. And like, that's how you build great teams. You're like, all right, we need somebody who really understands this really well. What you're saying is like, we probably need somebody who knows more than anybody here about that. So, you know, there's a trick of, you know, how do you hire somebody who you know, is much better, much more experienced, much more knowledgeable about a thing than you are? How do you interview that person and know that they're not just full of shit right now? And because you don't know, you're, you're essentially saying, I don't understand that that well, I need somebody who does. And so there is definitely like an art and a science to that. And that's something I think I got a lot better at over time too. But I don't think anybody ever perfects it.

So I agree with you.

One thing on the hiring aspect is, you know, I've been in the entrepreneur space for like 15, 16 years, and, uh, it wasn't until I went to the executive MBA program that I even realized that there's a completely different human out there, which is the corporate person. Because in my, my cohort, with all the respect in the world to them, you know, there's 35 of us, but only about 4 or 5, maybe 6, are entrepreneurs. Everybody else VP track, C-suite, whatever. And they have all fairly impressive careers, but just the way they look at a problem is completely different than an entrepreneur will look at it. Because maybe they have all the budget in the world. And as an entrepreneur, you're like, there's no more money. Right. You know, so you have to be way more scrappy. But at the same time, there's some individuals that, you know, there's always somebody else to fix their problems for them. Yeah, but we're in the entrepreneur world is you're usually an island.

Yeah, I think that it's a good thing that not everybody wants the same thing and is a good fit at the right time. You know, if everybody was like, you know, at their best at a 2 to 3 person company, like, I mean, who would you hire when you're at 1,000 people or 10,000 people, right? You know, so I think that there's like different people who are better fits at different stages of the lifecycle of a company. And I think that, I mean, that's what makes the economy work, right? Is it not everybody really thrives at, you know, the handful of people stage and then, you know, other people don't thrive when something is at 100,000-person stage and then there's everything in between. And it really is amazing how much things change from when you're just a handful of people to where you're 10 or 20, to you're 50 to 100, then you hit a couple hundred and it's totally different to then you get into a big organization. I've had the experience of all of those, and it's just incredible how different it is. And I think some of those people that, you know, are more corporate-minded, like, I mean, they can be super valuable at scale, but it's just, it's like it's a different skill set, a different personality, a different mindset. And I think that, you know, people are always looking to understand each other. I think when you're, you know, what I found when I joined a really large company was that A lot of those people were super inspired by entrepreneurship and startups. They had always been in corporate and they really wanted to learn and like get some of that DNA and that mindset and understanding, like what's that lightning in a bottle thing like, how do we get some, how do I get some of that? And then I think when you're, you know, at an early stage company or you're at a growth company especially and you look up and you kind of feel like constantly you know, we don't know what the fuck we're doing. And I hope it's okay. I swear on the show because I'm guilty of that far too often. But you do, you feel that way, that you just have no idea what you're doing. There's that constant feeling of we don't have our shit together. And you kind of look at these companies that are like very well-oiled, seasoned, have been around a long time, and it feels like, you know, and they've laid their playbooks out and you pitch against them and you're like, oh my God, they've just they've got all this stuff really well, you know, oiled and ironed out. And I think as you grow, as you, you kind of crave that, right? You're like, man, this is so chaotic down here. You know, we're agile, we can move quickly, we can adapt on a dime, we can make decisions on the spot. But you never feel like that you just have things like really as well oiled as you'd like them to be. And I think what you, I think one thing I have learned at least, you know, is that all these really fancy pitch decks and things that seem super well organized and like, oh man, every— this machine, like, it really just— everybody knows exactly how it works and everything. Like, there's definitely some like BS in that, you know, like, you know, in the shiny slides, you know, at the same time, like, you down here, like, you know more than you think you do and you don't really need to be that, you know, buttoned up, but you can learn from each other, right? I think that's my big takeaway was that having had those experiences, I'm like, there is really a lot to learn from all these different, you know, these different people and these different, you know, lifecycle stages of a company.

So the batting average for companies to achieve what you achieved and grow and scale, it's got it. I don't know the exact numbers, but it's really, really small. So what you achieved is you were an outlier. I think that— and I've started businesses and run them and scaled them. The hardest part for me, particularly when I was your age or a little bit older in my first business, was stepping out of the role of being the guy that did everything, which you described, you and your partner. So I left a Wall Street firm and became an independent registered investment advisor, wealth manager. It was myself, a partner, and one assistant, and I did everything. I literally would call the Schwab trading desk and place the trades. I would rebalance the portfolios. I would do the Excel spreadsheets. So most businesses get stuck there, right? And the owner's not willing to sort of give up, you know, that level of control and that involvement. You did. So what was that evolution like? At what point did you and your partner say, we got to stop being— Yeah, the business development engine and the guys that are doing the product development.

That's, that's a really hard thing because I think that, you know, I swung that pendulum too far both ways. I think my natural tendency is, is a control freak. And I think that, you know, it's really hard, like, especially if you build like a business on excellence and quality, right? And you're like, you know how things should be done. Like, you know how you want people to treat your, your clients. You know how you want, you know, what good looks like. I think bringing other people in, like, there's always that feeling that like that injects risk and that people can't do it as well as you can or like, like, you know, there's never a good time to transition, right? And so like, well, if I bring somebody in and let them do that, I mean, are they going to drop the ball for a while? And people like, oh, you got to let them learn. And you're like, well, I'm gonna let them learn and like disappoint my client, right? So like, there's like, how do you do that? How do you safeguard that? You know, how do you bring people in? How do you scale? I think part of that is like by hiring the right people. You know, I think by— we looked for way more talent than, uh, experience at Dialyxa for years and years and years. I think that was something that you know, probably, you know, until I left, like we still would say that. Now there's a certain amount of like we need experience and skills as well, like, you know, but take like a, you know, a one-year, you know, a software engineer who's super talented with one-year experience over somebody who has 5 years experience and is mediocre talent, right? That one-year person, put them in the right environment in the next 6 months, I mean, they'll be better than that person with 5 and a half years experience now. And at 2 years they'll be 10 times better than that person will ever be, right? And that's, you know, um, that's really what I say when we, we looked for talent, you know, it was like we really wanted like to find the best and the brightest and we'd help mold them into things. Now I think later you need to bring those people in that like have been there, done that. So it's part of it is like I think understanding of like when you need internal knowledge versus external knowledge. Right? And, you know, there are certain things like we didn't need to go, um, try to define like a, an account management playbook and start that from scratch. Like, that would have been pointless.

I get the, you got to bring in talented people, you want the right people in the right seats doing the right things, and sometimes the person with less experience is the better hire. I'm curious about how you and your partner stepped out of being the guys doing the stuff day to day in transition gave that— because you're right. I mean, I had the same challenge, which is I'm better than the person I'm going to hire at doing the task I'm going to ask them to do because I've done it and I've built the system and I'm experienced. So I'm by definition empowering somebody to do something that's going to interface with my client. And initially they're not going to be able to do as good a job. So there's a, I think, a, a real struggle there, uh, that, yeah, you've articulated. How did you get past that?

I mean, I think you have to if you want to grow, right? I mean, that's the simple answer is me, just you have to. And so I think that, you know, part of that is coming up with a way that you're going to onboard new people, how you're going to get them in. Um, we had that struggle even when, you know, we were at scale for several hundred people, and a few of my co-workers you know, built a system called Ready to Grow, Ready to Serve. And it was talking about like, how do we rotate new hires into experienced teams? Like, you know, for example, if you have, you know, let's say, you know, Dialyx is part of IBM now and we land a new project with, you know, we're fully staffed and we land a new project that needs 20 people on it. Well, if we hire 20 new people and put them all on that project to staff it, not one of those knows how Dialyx does things, right? Right? So you can't staff that with all new people, you know, like that's not going to work out. They've all been at different companies or used to doing things different ways. That's going to be a total cluster. That's not going to work. So, I mean, I think that you have to have like certain systems in place. There's also just a personal side of that, which is like you have to let go, you know, and know that if you want to grow, certain things have to happen. You have to give people enough room to grow.

And breathe.

And then, you know, I think that You know, you just, yeah, you just do it.

You, you do it. Well, it sounds like, I mean, it's the whole working in your business versus, or working on your business versus in your business. When do you make that transition?

I think that's, there's always a balance of that. You know, there's working in your business and on your business forever. And I think that you just like tip the scales with that more of one than the other at any given time. And I think that like, if you, when you're scaling, like, you know, you can't be caught down in the minutia too much. Or else you kind of lose sight of the big picture. I mean, that's assuming as a founder, if you're serving as CEO, which not all founders do, and they grow sometimes that they, you know, take a different role than that and maybe they want to be more operational or, you know, technical or something versus like leading the whole business. In my case, being the CEO, I needed to get out of the weeds because I would slow people down, right? I mean, a certain point, like you become the bottleneck for sure. And like you are a growth inhibitor. Like I wanted to be a growth catalyst, not a growth inhibitor. And so I had to start working far more on the business. But that doesn't also just mean like putting systems in place. Like I brought a COO in and she helped put more of these like systems and structures in place and was way better at that than I would ever be. I focused— I was very customer-facing, right? I was very client-facing. That's what I was good at. That's what I was passionate about. That's where I was most impactful, was on our clients and our people.

When you hired that COO, What were the traits that you were.

Looking for? Um, I definitely needed somebody who was, you know, very passionate about like the operational elements of the business. You know, in our business, that was running staffing, right? Running recruiting, running sales, and, um, you know, other internal ops like core business functions, like understood how to make all the different pieces of the business work together. You know, business, especially at scale, is definitely a machine, and you've got all these different things that need to work together, and there needs to be a rhythm the business, right? And so like I wanted somebody who really understood how to work all those things, but how to work all those things together more importantly, and really enjoyed being down in the weeds operationally of like the day-to-day and that rhythm and establishing that consistency in the business, the day-to-day of the week to week, the month to month, you know, which was not what I wanted to be doing every day. And frankly, like it got into a scale where, you know, that was not what I had experience and expertise in. I knew I could bring in somebody who understood that way better than me and who also would be more passionate about it than I was.

Were they from the similar, similar industries?

She was from the consulting industry. Okay. Yeah, she had worked at PwC, then Hitachi.

Because one of the things that I've gotten a kick out of doing this podcast is the realization that, you know, we all have the same problems. It's just where's the comma, right? You know, so like if you're a startup with 2 or 3 people versus, you know, $2,000 or $3,000 versus $200,000 or $300,000, it's— you probably have the same problems. It's just, you know, much larger scales.

Yeah.

Yeah, definitely. At what point in the— in this process, obviously when you were 26, 27 years old and you're a work sharing space and you're trying to pay the bills and ramp this up, you're not thinking about building a business to sell. At some point you decided that you wanted to sell the business. How long before, from the time you started thinking, I think we want to sell, you and your partner obviously had to agree upon that, how long was it before you started down that path?

I mean, I think even early on, like, we knew we would sell it. I don't think we ever had this, like, you know, um, attachment to the business that said, hey, we'll never sell this thing, right? Um, again, both of us are very serial entrepreneur-minded and thought, you know, We probably will sell it. Okay. Probably will sell 5 more by the time that we're dead, you know. And so I think that, you know, what we didn't know though was like if we were actually going to scale this thing or if this was just like a means of making money for a while. That was at the very beginning. But we did see some, you know, really interesting trends in the market. We knew every company needed these capabilities. I think it was just not, you know, we didn't see early on like if that was going to be our passion to grow that business.. And I think that we became really passionate about it when we realized the impact that it could have. You know, it could actually be something substantial and meaningful and really drive change. And then once it starts growing, I think that's just like the realistic, inevitable outcome that if you grow something that is valuable, people are going to want to buy it. Right? Right. And I think then it's a matter of like, what's the right timing for that? And there's like— you're right. I mean, I think part of what you're driving at is like the personal element of that. There's, you know, I think there's really like the business needs to be ready. The market needs to be ready and you need to be ready. Right. And I think that all three things have to come together to have a really successful outcome. If you try to sell a business when any of those three things are out of whack, like you're really not going to have the type of process.

Or outcome that you hope for. So did you, did you decide to go to market and take it out or did IBM come and knock on your door?

We took it to market, so we ran a process. We we had some people approaching us, which had happened for years. I mean, really, even like, I mean, since before I thought the company was like worth buying even, you know, which is flattering. Like really early on when somebody wants to buy it, you're like, really? Like, I don't think there's not really anything here. Like, that's pretty cool. But, you know, then, you know, as you start building something that clearly the market has validated as real money coming in, real clients, people are wanting to come work there and pursuing you, you know, that you've created as a team, like, you know, that we had created something something that was valuable and pretty successful and something we thought was really special in the market. But then, you know, there were just— those three things were out of whack at any given point in time. You know, mostly we thought this business just isn't ready yet, you know, and then the market really didn't get it yet. And, you know, when those two things started really coming together, I mean, I think that we, you know, just knew more and more that it was a reality. The more we grew, the more we knew it was a reality, the more people came knocking. And we had some people that were really serious, came in and really wanted to take a deep look and, you know, wanted to buy it. I mean, they just— they wanted to come in and take it out. And so we talked to some bankers that we knew that were extremely knowledgeable in our space, and they were specialists and, you know, had done some really, I think, marquee deals in our world, knew it like the back of their hand.

Right.

They said, well, let us put some stuff together for you because this, you know, this market is really gaining momentum and you guys should consider it. And so we started having a conversation with them and we did a bake-off with a few different bankers and we talked to— we had two really that we knew well and that were in contention. And, you know, once we looked at that and we just felt like, you know, that this market timing is really right, it's not going to get better than this, I think that of all the stupid mistakes I made and things I got wrong, I think that, you know, the timing of the market, we felt like this economy is pretty hot right now. Inflation's picking up like interest rates are going to, you know, are going to have to come up. This economy is going to cool off. That's going to throw cold water on, on this market. So either it's, you know, our board, we had a conversation and said, look, I mean, I think we either we should do something now or we need to be prepared to wait 5 or 7 years, right? And we all agreed that like now was the time. That was in, um, late 2021 when we had those conversations, um, and we sold in October of '22. So we really started, um, getting things together in January of, uh, '22.

Okay, what was the expectation versus reality? Because we, we've spoke before with other podcast guests where somebody thinks they have a $15 million company and the market really says it's $500,000. Right. Like, did y'all have a fairly accurate, uh, placement of market value, or were y'all surprised?

Yeah, I think that— for the better or worse— I think that we had a pretty realistic view of the market. We knew where it was. And then I think that we had— I'll call like a— what we thought was like a base case, and we had a downside case, and we had an upside case. We ended up in the upside case. So we didn't go out and like get something that was like way out anything we ever thought, but it was certainly like, you know, I think we had a— we were lucky in that— maybe fortunate is a better word, but we were fortunate to have a really competitive process and we had a lot of suitors. So, you know, for maybe people who don't really understand how those processes run, like, you know, you go out and you cast a net to, you know, however many companies and you see who's interested, like, you know, right out of the gate with a little teaser, right? Here's a one-pager about this business. Are you interested in learning more? You get to sign an NDA. You know, we had, you know, dozens of companies respond back and say yes. I mean, we had, I think it was like 85 or 90% hit rate of companies who wanted to like take a deeper look. Yeah. And then, you know, we had a lot of like people, you know, pushing really hard to get early fireside chats, early access to meetings and management meetings and, you know, try to preempt the process and all that, which we ultimately did not really allow anybody to do that. Right. Right. But we had some people that were really, you know, pushing hard for that. So we knew we had like a really strong process, which I think that competitive dynamic is one of the banker's biggest jobs.

So when you're going through that, is it, is what are the things that you're weighing to find the right partner on that? Is it, is it only price or is it price and the institution? Because obviously if they're acquiring it, they're, they're acquiring the full team that you've built. That you spent years, you know, and whether you love the people you worked with or there's just employees, there's probably still some sort of affinity towards them and doing right by them. So how do you balance price versus the right fit and all those things?

Yeah, I mean, I think it's a, it's a multivariate equation, right? So I mean, there's, you know, the variable that is price. Like, I think that's the number one thing that always comes to people's mind in a deal. And I think anybody who tells you like price didn't really matter is lying. Like, I mean, price matters. Like, it just does, right? You know, I mean, that's that's a big part of a deal. I mean, what we told people is, you know, look, I mean, this isn't like a highest bidder wins no matter what, but price does matter. So like, you better be within striking distance, you know, like you better be competitive with the top bids or you're just going to get filtered out. I don't care how good everything else is, like that's just not going to work, you know? So like, you know, if you're in a situation where you have, you know, multiple bidders, like there's no reason for you to go take a deal that's way under market regardless of how much you like somebody, right? You know, and so I think it's just we weighed that, right? We said, okay, look, we had, you know, a group of buyers. Like, I mean, you get a spectrum, right? You have that many bidders, you're going to have people that lowball, you're going to have people that just think it's, you know, different. It's not worth what you think it's worth or what the rest of people think it's worth. And you're like, well, it's the market gets to dictate that. So you're just, you're under for whatever reason. And so I think when we looked at that and then we said, you know, like like, what's the right fit? Where can this company actually, like, land and have impact, right? Because we knew that that was going to be something that was, you know, this, like, volume 2 of our story, right? We're like, look, I mean, it's pretty cool that we started this business in a garage. We're selling it, you know, it's a very valuable company. Um, we're selling it to, you know, a big business, you know, some kind, or, you know, PE firm. Like, there were, you know, uh, various PE bidders in there as well.. But where can this potentially have, like, you know, go from where we are now to a $50 billion company and have a really outsized impact? That would be a really cool volume too. So we looked at that and we also knew that that would translate into great opportunities for our people. But then there was just, you know, the third part, which is the people, right? And the opportunities that are gonna be there, you know, for them. And so those all factor in and I think you just have to like assign weight meets to them, you know. And it's hard to like— I don't know, we didn't have like some formulaic, you know, equation like we put out. We're like, hey, this is 40% and this is 40 and that's 20 or something like that, you know. It was more of like we kind of factored all those things in. And there were some people we just said, this is going to be a disaster. Like, we're gonna— like, we don't really like these people. This doesn't feel like a good fit. We're going to be miserable there. Like, we filtered that out, you know. Like, you there's no way that's gonna.

That'S gonna go well. By the time you start with your partner, just you and your partner, into when you sold, like, how many other shareholders were there?

There was only one other outside party that we sold a minority stake to, uh, in, in January— no, we closed in February of 2020, a month before COVID hit. We sold a minority stake, um, to a PE group that was run by a good friend of mine. And basically kind of took on like a third, you know, third business partner. Right. And so there was me and my co-founder. We took on this, you know, what I'd call like a third business partner really, and their company, and they were great. It's Alterus Capital. And so, I mean, really the cap table was, you know, us three and then the employees. And there were, you know, well over 100 employees who had equity and had, you know, an outcome when we sold. So I think we were generous with equity. We wanted equity to be widespread at the business. We wanted everybody to have the opportunity to get equity. That was something that we felt important by. You know, founders start companies, but teams build companies, right? So like, it's not something that you do on your own, right? You know, it's— you start it, founders always get the spotlight. But, you know, really at the end of the day, it took a lot.

Of people to build that business. What was it like after 14 years of being CEO? You are semi-retired. You're on sabbatical. How do you feel? How does it feel to no longer.

Be running the business? It feels good. I'm really happy. I'm very much at peace, right? Like, whenever I left, I left October of '24. That was a couple of years after the deal happened. Really passed over the reins to my COO, Ellen Dowd, you know, to become the new CEO. It was really a great, you know, time and opportunity for her and what the business needed in that next phase. Something that really matched, you know, her skill set and her abilities and, you know, where she was. And I mean, she was doing, you know, a ton of the work anyway, you know. And it definitely felt like the right time for me, you know, as this business was entering that next phase and being part of a much bigger ship, because we ran it as a subsidiary for a few years. And, um, I mean, I think really everybody at the company just has to look when you're involved in something like this and say, hey, what's that next chapter look like for me? Is that a good fit for me? Is there very clear role? Is there something that I'm passionate about? Is there something where this business could really benefit from me? And then you factor all those things in. And, you know, for me, I just said, hey, I think this is the right time for me to step away. You know, there was nothing like wrong. There was no like, you know, event that happened or anything. It was the right time. And I said, this is a great opportunity for me to like just step out, spend a lot more time with my family, with my kids, like, you know, pilot's license, get a pilot's license, learning to fly, you know, which is— that's been a lot of fun. Get outdoors a lot more. You know, there's just— it really has been nice to not have the— I think be in the pressure cooker for so long, like to have that just kind of let off, to have like freedom to think about what I want to do next. I spend a lot of time thinking about, you know, what I want to do in this next chapter. And that's, you know, it's a— my wife threw a retirement party for me and she said, you know, that's the invitation said Scott's first but not last retirement. So Yeah, that was pretty funny. So, you know, it's a mini retirement, like it's a chance to take a break, a chance to like, you know, step back and not be thinking about what's next while I'm like, have a million things going on. So I really want to think about, you know, what does this next chapter look like for me? You know, what am I passionate about? What's the big problem in the world that I think I want to go solve and, you know, spend the next, you know, however many years doing that. So it's been really great. I have enjoyed it a lot. I haven't second-guessed the decision, you know, once. That was really clear as the right decision. I miss a lot of the people that I work with, and it's strange, you know, when you start something, you've been there that long, and then you leave. Like, it is weird, you know, it's.

Weird to leave even if it feels right. It's the family dynamic to, uh, to have all this time available.

How old are your children? They are 14— I have a 14-year-old daughter, a 12-year-old daughter, and a 9-year-old son.

Has that changed your relationship with them? Were you a workaholic? Were you in the office until 8 at night, and now all of a.

Sudden you're home and spending time? Definitely home more. I'm able to do a lot more with them, miss a lot less stuff. So yeah, I think it's been, you know, a good thing. I think sometimes, you know, they're like, maybe I'm around too much.

But I had that dynamic. My father was an early Holiday Inn franchisee, which was started in Memphis by a classmate of his in high school. And, and he was on the road where he had built and was operating these Holiday Inns, and then he sold out, and all of a sudden he's home all the time and he's telling me what to do. And I was like, wait, who are you? Why are you here? Doesn't sound like that's the dynamic in your household. But, uh, as a founder-owner-operator, he had to figure out where to put that time and energy, right? I think that people that start businesses and grow them are wired a little differently, and I'm sure your motor is telling you there's something else to do, although it sounds like you're placing that energy in some really productive and positive places.

Yeah, I am for now, but I'm, I mean, I think it took me 3 days into retirement to tell my wife, you know, I'm getting excited about starting a business again. And she was like, what? And I said, I mean, I don't know what it is yet, but like just the idea of doing something again is, it didn't take me long to like, you know, get excited about that. But I think I'm going to be very, I'm taking it slow to wait for the right thing to be there to like really dive back in because because, you know, you just— once you, once you dive into something, it's, you know. What do you think it'll be? I don't know. I don't know yet. I've kicked around a lot of different ideas and having a lot of conversations. I have started like just meeting with a lot of really smart people again that I know that are really successful, a lot of entrepreneurs, and just kicking around ideas. And what do you think about this? Is this— how do you feel about media?

Media?

Yeah, um, I need a partner. I don't know much about media, that's the problem. I'm not sure how much value I'd add.

To a media business. Speaking of that, you, uh, one of the companies you incubated is, uh, your wife's, uh, and, um, Rosie Wellness, if I remember the name correctly. What was that like? How did that happen? Where was the chicken and the egg in terms of that business and your.

Wife and the connection with your her? Yeah, that, um, that was really interesting. We were, we were actually on our way back from, I think it was Thanksgiving. Um, we both grew up in Arkansas. My family's from Arkansas, so is hers. And we were in the car and she said, hey, I've got this idea. And I was like, she's like, don't roll your eyes at me, don't do that. And yeah, like, I've really thought about this, you know, like saying the business we were in like, you know, at Dialexa, we had people come to us all the time, these kind of just, you know, half-baked random ideas and wanting to meet and, you know, tell us about things. So I mean, I wouldn't— didn't, you know, feel that way about her bringing something up, but, you know, she had heard me all the time go like, gosh, I wish people just think through stuff for a little bit more before they want to like come like spitball it, you know. And, um, but she had, uh, really felt like there was a gap in women's healthcare that, you know, she could address and And she told me about it and I was like, that sounds like a really good idea. That sounds really interesting. And she had put a lot of thought into it and really knew a whole lot about this space. And that went on for, I don't know if it was like a month and I put her in touch with some other people that weren't me that were venture capitalists, other entrepreneurs. I was like, well, go talk to so-and-so, put her in touch with a few people. I was like, just bounce it off of people that are not me. And, um, and she came home, she's like, I want to do this. And she was like, I, I think I've got to go full time if I'm gonna do this. Absolutely. If you're gonna start a business, like, I mean, you got to jump in. It's hard enough if you dedicate 100% of your time. And I think there's, you know, very little to no chance if you don't do that, that it has, you know, that it can be successful. And, and she was like, I'm gonna sleep on it. The next morning she's like, I'm in. I'm, you know, she sent out letters to all of her patients and said, I'm, you know, moving on. I'm gonna go— you left private practice, I'm starting a company and referring you out. And I mean, she jumped right out into the deep end. And like, yeah, yeah, I never would have thought like our worlds would come together like that. Like, it just never even occurred to me that that was a possibility. She didn't, you know, she was never like at home like talking about being an entrepreneur or anything else, you know. Like, that wasn't like a thing where she was just searching for something. She just saw a market need. And it was really fun, you know.

Um, was it before or after you exited?

This was before, yeah. So this is like maybe, gosh, I think 7 years ago, 6, 7 years.

So when, like, oh, well, you did.

This, this was easy, I can do it? No, no, no, she, uh, no, she was there since the beginning, so she definitely knows it wasn't easy. Yeah, yeah, yeah. She, she lived through a lot of really difficult times, so she knew better than that. No, I think she just had, like a lot of entrepreneurs, like, you know, she saw a need and felt so passionate about it that she just said— I always told her, I was like, I mean, this is still the way I feel too, you know, like, see, you know, see if you can find something like keeps you up for, you know, keeps you up at night for a few weeks, right? If you're still thinking about it, then like there's probably something there. I think we all have, you know, ideas. I think, you know, most, most ideas we come up with are dumb, right? And they just are, right? If you have a creative brain and you're kind of constantly thinking of ideas, like you can, you know, for 5 minutes you think you've got the next greatest thing and then 5 minutes after that you figure out why it's a completely stupid idea and that'll never work and you move on. And I think when you get stuck on something, you know, for probably weeks and you're like, oh my God, I have to do this, you know, I've got, I've got a few of those things I've been thinking about for a couple of years that I'm like, I still like this. Maybe there's something there.

There. Um, so what's the end story on her business?

Is it still operating?

Yep, still operating. Yeah, yeah.

He's now the entrepreneur in the family. She's the entrepreneur in the family. So yeah, yep, a good— the active one.

Yeah, thank you. And what an interesting— and, and that was, uh, that worked out well. Um, you know, you never know when husbands and wives' business lives intersect how.

That'S going to play. I know. Yeah, we actually, you know, it always— it worked really well for us. I think there was definitely a period of adaptation for sure., you know, to where she would come home and that's all she'd want to talk about. She was just so excited. And I was like, I got to have some separation from this, you know, work. Like, you know, let's— I told her, I was like, you just schedule some time with me. And she was like, what? Like, I'm your wife. I'm not scheduling time with you. I was like, you're not scheduling time with me as my wife. You're scheduling time with me as an entrepreneur. Like, that's like, we're scheduling that time. Like, we just can't be like 24/7. Like, we got to have some space. And, um, you know, aside from that, you know, absolutely, yeah, they were a great deal. Um, no, I think that, you know, just like learning to like have some sort of boundaries with like home and work, and that's always, you know, I mean, we were both really excited about it, so it was a lot of fun to talk about it. And I was on the board for a while, which was also, you know, an interesting dynamic. And then, um, we raised a pretty, you know, decent-sized round of external capital, and I stepped off of the board, and she had a couple of venture firms jump in the business. And so, you know, one of those took a seat on the board and I stepped off. And I think that was probably like, you know, way healthier dynamic for a lot of different reasons for her to have, you know, just an unbiased party on there and somebody that, you know, really was going to not have that relationship. And I told her, I mean, she obviously always has access to me, so sometimes she wants my opinion and other times she doesn't.

Yeah. So, uh, you beat the odds, uh, with your business, and then your wife starts a business, uh, from scratch and ends up with venture funding and an operating business. Uh, I don't, I don't see many husbands and wives that start two separate businesses and, yeah, um, and achieve success. So there must be something in the water, you know, at the— and, um.

Maybe it's an Arkansas thing. Yeah, it could be an Arkansas thing. What part of Arkansas?

I'm from Fort Smith.

Yeah.

Yeah. I was going to say, you could always go back to school, you know.

In the executive MBA program. And I think I would enjoy school a lot more now than I did when I was in school.

So yeah, you take it more seriously, I think.

Yeah. Less distractions. You learn what you want versus like feeling like that natural continuation from high school to college and where you're just like, that's the natural next step. And it's just, you know, more school versus now you'd be like, I'm going to go learn about something I'm super interested in.. Right. And just like, I would have a totally different mindset, you know, about it. But yeah, I, I got, I got pretty bored in school too many times, so.

Yeah. Um, well, Scott, we appreciate you being with us on The Deal Table in.

The Pig Room at Old Town.

Yeah, thank you guys for having me. Yeah, you've had a really interesting entrepreneurial journey. Congratulations on the, on the success you've enjoyed, and we'll be looking forward to seeing what your next iteration is. You said that you had the mindset, you and your partner, that you would do this 4 or 5 times even when you were probably in your early.

30S, which is really interesting.

Um, and, uh, so we look forward.

To number 2, 3, 4, 5. Yeah, thank you very much for having me. I appreciate you guys. Thank you.

Thanks.