Privia, Inc. (www.privia.com) began operations in 1999, with a strong belief that companies could reap substantial benefits from a solution that would help them manage their revenue pipelines. Known for taking business concepts and turning them into profitable software companies, Chanan Greenberg's Leadership approach reflects his passion for building a successful software organization.
Sterling-Hoffman Management Consultants: Over the years the role of a CEO has changed especially in the Technology industry. You've started up a number of organizations prior to Privia, what do you think the role of a CEO in a start-up organization is today versus 10 years ago?
Chanan Greenberg: I think changes in technology and even market conditions do not change the fundamental duties of a CEO. New technologies and E-Business applications require CEO's to have a greater understanding of these opportunities so they can reap the potential benefits for their organizations. However, the basic requirements of CEO's remain very much the same, as they were long before the dot COM bubble.
In a start-up, the role of CEO is to execute on a vision and to lay down the foundation for a corporate culture that will successfully support a growing profitable business. The CEO needs to establish a clear vision of the opportunity or un-served business need. From there, he or she needs to determine that there is a big enough market to support a company servicing that need and establish enough differentiators that will give the company a fighting chance and get funded. Keeping the company funded is the CEO's on-going, never-ending duty. To be successful the CEO must build the company to last. This is accomplished by establishing a profit-driven culture, setting up measurable standards of performance, building a great team and balancing all of this with the need of the company to be "light on it's feet" and responsive to customer needs.
Current market conditions may make the game tougher but the rules for building a profitable business remain the same.
Sterling-Hoffman Management Consultants: What talents do you feel you bring to Privia?
Chanan Greenberg: As a CEO & founder driving the company's direction, building a great team and keeping the company funded come with the territory. I think my personal and professional background allow me to bridge business and technological concepts and present them in a compelling way that helps attract customers, experienced executives and investors. I also focus on driving the determination to succeed through the entire executive team. It would be easy to blame "market conditions" for the adversity we face out there, however, it's conviction and determination that will keep us moving forward acquiring new customers.
Sterling-Hoffman Management Consultants: Many say that the entrepreneur's success is mainly due to luck. There are so many people that are talented yet never achieve success. Is it really luck or is there some magic formula that determines who succeeds especially as a CEO in this industry?
Chanan Greenberg: I can't think of any CEO who would object to having luck on their side. However, no serious CEO would build a business plan factoring in "luck". Building a business requires a lot of planning and plenty of hard work, having luck on your side is great, but luck is an element we cannot control or count on.
I don't believe in "magic" formulas. There are some good business practices and some "golden numbers" you aim for when building the company. Experience shows that following certain guidelines helps build a better team and achieve better financial results. But it's important to keep an open mind and adapt to change. Getting some experienced executives to join the company and its board of directors can provide important perspective and help CEO's avoid making some mistakes. It's true that some excellent people who followed "golden rules" have not achieved success - some of that can be attributed to "bad luck" some of it due to bad management. The past few years have confused many of us, with regard to what it means to succeed. We have seen many lucky people get rich from companies that have since been written-off. They were definitely lucky and talent was only a part of the story. You could say that Mr. Gates and Mr. Ellison are also "lucky". But you can't be lucky all the time; their track record of building great companies indicates that talent and hard work are still a big part of their story.
Sterling-Hoffman Management Consultants: If I were thinking of starting up a company today, do you think this is a good time to launch an enterprise software business?
Chanan Greenberg: I think it is an exciting time to start building a new company. If you can identify a critical business need that is underserved, a large enough market that would pay for your product and you are able to establish some barriers for competition - you might be on to the next big thing. It's true that it's harder to get funded and harder to execute - building companies is never easy. Investors as well as customers are carefully checking to see if what you offer provides real value. But if a start-up company does get funded and is successful in generating sales in this difficult market it's obviously providing a truly valuable product or service and has a serious management team leading it. Privia was funded by Benchmark Capital in late 2001 and started generating sales in early 2002 with Fortune 500 companies, yes it is very difficult, but we are seeing that it can be done. Young companies who survive this market and continue to grow will become greater companies down the line.
Sterling-Hoffman Management Consultants: How important do you feel your Board of Directors is? Could you describe a situation or provide an example where they played in an integral role in decisions made.
Chanan Greenberg: The board of directors is tremendously important. It's not just a reporting committee. It's an active forum in which important issues for the company are discussed and decisions are made. In a start-up stage, management is often busy working on the day-to-day tasks and the board is a forum that periodically gets management to look again at the big picture and evaluate its progress. Active board members contribute on an on-going basis to recruiting and sales efforts. Privia's board consists of experienced investment and professional executives who lend their experience and contacts to help Privia's management build the company.
Sterling-Hoffman Management Consultants: Many CEO's feel that choosing the right executive team is essential to succeeding. What criteria do you use when choosing executives to join Privia?
Chanan Greenberg: The importance of selecting the right executives to join the team cannot be overstated. In early stage companies, each executive has a great individual impact on the company's performance. The criteria we use at Privia for choosing executives are:
Relevant professional experience - start-up companies need executives who can hit the ground running and get results.
Relevant occupational experience - not everyone fits into a startup. People who have spent 20 years working for large corporations and have never worked in a startup environment can go through great adaptation pains and at the end may discover they only perform well when they have a large organization backing them.
Stability - when asking an executive to join a start-up you want someone who you feel will have the will and desire to stay for the long run. People with a history of leaping from one job to another would not be on the top of our priority list.
Personal fit - building a new company, requires a lot of hard work, putting up with long hours and pressure - but it is also fun. There is a bond that is built between people going through this experience and when adding someone new into the picture its important to have them fit in.
Sterling-Hoffman Management Consultants: How do you motivate your people?
Chanan Greenberg: Salaries, options and dreams are part of the motivators in an early-stage company. The spirit and experience of working in a startup environment are important too. But the most important thing is to believe that you are building something great, a company that is going to make a difference and make a lot of money. Believing this makes it easy to show others, with conviction, what we are doing and getting them excited. And whenever we get a new customer that validates we are on to something, it becomes tangible and the excitement level grows.
Sterling-Hoffman Management Consultants: Aside from setting revenue goals, what kind of quantitative goals do you set for softer areas such as Marketing or Human Resources?
Chanan Greenberg: All expenses, including HR and Marketing must show a clear and direct connection to increased revenue, if they cannot, management needs to carefully evaluate if it can justify those expenses. If money is being spent on a marketing program then Marketing should produce plans that shows how that is going to increase the sales pipeline and that plan will be used to measure if the program was successful or not.
Sterling-Hoffman Management Consultants: How important do you feel Vision and Values are to an organization? To Privia?
Chana Greenberg: Without vision there cannot be a company. A company is not established out of thin air - there has to be some drive, an idea or an objective that shows merit for investing resources to start a new company - that is vision. Values define what you stand for - customer service and customer satisfaction are derived from the values you instill into the company. In Privia management and employees share the same vision and values, which enable us to provide increasingly better products to our customers and continue growing.
Sterling-Hoffman Management Consultants: Looking at the market today, has the attitude towards an 'IPO' changed today? How so?
Chanan Greenberg: Attitudes have changed. In 2000 we saw many software companies go public, many of which are still not showing profits and growth today. In 2001 fewer than 10 software companies went public and all have shown considerable growth. The market is scrutinizing companies much more carefully now. Only companies that have a true business that can sustain growth will be going public and for much more realistic valuations. This may turn off some people who were looking for a quick and easy exit, but this creates opportunity for those who choose to build long lasting strong companies, which will provide lucrative exits for their investors.
Sterling-Hoffman Management Consultants: Current market data indicates that customers are extremely skeptical about new software purchases. Are you having the same experience? How do you convince a customer that Privia's applications will impact their bottom line?
Chanan Greenberg: Yes. Customers are very careful when considering buying new software. The market seems to be broken down into two types of companies: those who are still busy deploying enterprise software they bought 2 years ago or are still licking their wounds from a bad deployment; the other type are those who heard about those difficult experiences and are very careful not to experience those problems themselves. It is not easy to sell enterprise software. However, Privia has managed to identify a critical business need that is completely under-served in large organizations. Privia provides Revenue Pipeline Management applications to companies that sell and deliver big ticket, highly customized products and services. Privia helps organizations focus on the most lucrative business opportunities, increase profit margins and improve visibility and control over recognizable revenue. These companies have serious challenges in managing their revenue and keeping costs under control - explaining Privia's benefits is made easier by the fact that our customers are aware of their business problems and their negative impact. By providing a suite of applications that address Business Development, Proposal Management and Delivery Management, Privia helps these companies' instantiate best practices, gain visibility into cost overruns and control their revenue.
Sterling-Hoffman Management Consultants: How often do you as a CEO get involved in sales situations?
Chanan Greenberg: I get involved as much as I can - probably not as much as I would like to. I often go on sales calls with our Director of Strategic Accounts or our VP Sales - it's important for management to have direct contact with customers to better understand their needs and drive the company towards better serving those needs.
Sterling-Hoffman Management Consultants: What have been some of the more significant achievements of Privia since 9/11?
Chanan Greenberg: Immediately after 9/11 Privia closed its first VC backed financing with Benchmark Capital and Venture Strategy Partners. We established our HQ in San Mateo CA, built the sales and marketing team and closed our first 5 customers that include 3 Fortune 1000 companies.
Sterling-Hoffman Management Consultants: What other lessons or insights can you share with anyone who is about to take on a leadership role with a software startup business?
Chanan Greenberg: It's important to qualify the opportunity. Ask yourself do you believe there is a viable opportunity that you can get excited about and want to dedicate many precious days, weeks and months to building. Check who the management team is, who is backing the company, and if they have customers talk to them. It's an exciting time to be building a company - find an opportunity you believe in and a team you want to work with and go for it!
Angel Mehta is a Managing Director at Sterling-Hoffman, a retained executive search firm that represents venture capital firms and enterprise software companies in VP Sales, VP Marketing, and C-Level recruitment projects. He can be reached via email at: amehta@sterlinghoffman.net.