There are few people better than Rob Frohwein to give advice on being an entrepreneur. He’s seen the lowest of low points and, now, the highest of high points. And, everything in between.
Today, Rob is the CEO of Kabbage, a fast-growing technology company allowing small businesses to access working capital in minutes. He knows what it takes to be successful, and his story is pretty incredible.
Rob and a couple of close friends were trying to bootstrap Kabbage in 2007, just in time for the economy to go into the worst recession in 75 years. Let him tell the rest:
“We worked three to five months before salary and took nine months to raise the first $500,000. We went through several cycles of raising, building and proving.
“Our big break came in 2011 with eBay. We were lending to eBay sellers at the time. One of our co-founders, Marc is a great sales guy and convinced eBay to put a blurb (about Kabbage) in its free newsletter to 300,000 users that sell on eBay.
“I remember that night. We got a new account, then two accounts and all of sudden orders just started rolling in. We all went to the office that night and received nearly 200 new customers. That is when we knew we had something to provide value to our customers.
“I just wanted a chance to know the business would work, and that moment proved the chance. I was so thrilled with what had happened, I told our first employee to go down the street and buy every tater tot and he showed back up with thousands. While I didn’t lose my excitement, I learned a lesson on literal communications😊”
Today, Kabbage has more than 150,000 customers, but Rob hasn’t taken his foot off the gas.
What is your definition of success?
“You either accomplish it all or you fail, so I fail a lot. Everything you set out to do changes.”
I contemplated expanding on this topic but believe it’s wildly important for people to understand the simplicity of Rob’s definition of success. You either hit your goals or you don’t, and that is a simple way to measure success.
Are we saying that every goal you miss is a failure?
No, the point is that every missed goal is a learning experience and while your efforts may have resulted in some level of positive gain, you still have something to work towards.
What is your elevator speech on your professional career: Who are you, what have you done and how does that translate into value for your customers?
“I’m an entrepreneur. I tried to come up with some fancy answer here, but ever since I was a little kid I wanted to start a business. I used to drive past six-story, mid-rise office buildings and get chills thinking about the possibility of having a business in an office with a few employees.
“As for what I’ve done, I’ve done just about everything. My best friend from first grade and I started a trash hauling business during a summer in college. We’d go clean out someone’s basement, yard or garage and then haul it (usually several trips) to the dump, where we’d try to avoid pigeon poop as they swarmed overhead. Boy, did it smell!
“I understand what keeps small business owners awake at night. I spent many nights walking out of the bedroom I shared with my wife and lying on the couch because I just couldn’t sleep because I was too freaked out by our finances.
“I want to solve that for small business owners. I want to replace the Ambien (sleep medicine) that many SMB owners must take on a nightly basis. Running a small business is both the hardest and most rewarding thing in the world and most SMB owners I know would never even consider doing anything else.
“I love the passion.”
Let’s show everyone you’re a normal human being. What’s your personality, hobbies, favorite places to visit, pet peeves? Tell us about YOU.
“I like to say I take my business seriously, but not myself seriously, and I look for that attitude in others.
“I’m a pretty simple dude. I don’t buy clothes; my wife buys for me. I wore the same five shirts for three years.
“Tough times drive me to succeed and force me to win. I rarely celebrate the touchdowns during the game. I’m extremely self-aware of the situation I’m in and never take anything for granted.
“I’m satisfied when everyone else doesn’t have to go through what I have gone through.
“I never assume one day is better than another. Each day requires winning and being present in life and business.”
What are two examples of how you consistently work outside of your comfort zone and how have they impacted your personal and professional growth?
“This may sound awful, but I watch our volume constantly. I never let up. I’ve watched it every 10 minutes, other than the 5 hours I’m asleep, for the last seven years. I have a total pulse on the business and I know when things are working and not working.
“So, my advice would be never let up. No one will care about the business more than you.
“Despite what the last statement might suggest, I also make sure that I’m home for dinner at a reasonable time every night. Before my kids went to college, I attended every one of their events (when I was not traveling). It’s cliché but nothing is more important than family, and my kids and wife know that they’re absolutely, positively number one in my life and heart.”
Tell us about the lowest point in your life professionally and how it helped you get where you are today? And, how do you handle the emotional part of failure?
“I remember it well. I had started a business in 2001 and by 2003 it just was not working, and I was 35 years old. Two kids, a house and a wife staying home with the kids and I was in a mountain of debt.
“I had finally received a whopping $500 check from someone for whom I was doing business. I put it on the kitchen counter to deposit it a bit later. When I got back to the kitchen, the check was gone and my wife was getting dinner together. I asked my wife about the check and she hadn’t seen it. Five minutes later I found myself digging through the garbage outside looking for the check, which I found stuck on an empty container that held the raw chicken. I wiped the grease off of it and deposited it.
“I had success at a young age prior to age 35 (pre-2001). Looking back, I didn’t know nearly as much as I thought I did, which showed through when I started my own business.
“I came within $1,000 of my home equity line, which was the last credit I had. I spent nights sleeping in the guest room and my kids were three and seven and I didn’t know how to make the numbers work. I have never experienced as much desperation as I did when I didn’t know where cash flow was coming the very next day.
“I had roughly $150,000-$200,00 in debt with no back up plan, no trust fund, and virtually no income. I was borrowing from home equity to pay for my living experiences. I had cashed in all my retirement. I literally had nothing.
“I just caught some breaks and a few things happened. In 2003 and 2004 things started to turn around and it’s because I stayed the course versus getting desperate. Things always take longer than you think they will take.
“I was always worried about my wife and kids seeing me sweat and feeling the stress we were in.”
What are your “Three Lessons I Learned from My Most Memorable Failure”?
1. “Focus on what’s important in the business. Most successful moments for businesses are not actually success. For example, raising money isn’t the end, it’s just the beginning of the next phase of the business. It’s not time to celebrate.
2. “Persistence is so vitally important. Too many people give up too soon and I think that’s because they don’t realize just how hard entrepreneurship is. It can seem glamorous but 99.9% of it is anything but glamorous. If you’re in it for the glory, don’t even start the business. Be patient.
3. “Don’t let competition get you down. The best ideas have competition; that’s a fact of life. Out-compete those companies. Do it better and don’t give up because you find yourself in competition with others.”
What is the best lesson you learned from your worst boss?
“You learn what not to do rather than what to do. The best lesson is the one that I mentioned earlier: take your business seriously, but not yourself seriously.
“I’ve been in too many businesses where the leaders are more focused on themselves than the outcome of the business. This leads to stupid press releases, unnecessary expenditures, distance from the heartbeat and people of the company, and thinking you’re successful before you really are.
“You shouldn’t be rewarded for humility; it’s how you should be expected to be.”
Many people say success correlates with the people you meet in your life. Describe two that most impacted your success?
“First is my wife. We met in college. She was an extremely hard worker and I was a lazy ass. She is simply the most focused and earnest person I know. She taught me the value of having a work ethic and it really motivated me in my life.
“Second is my co-founder Kathryn. She’s an extremely positive person who is able to put the challenges we face in great perspective; one which makes them seem manageable. You need that when you start a business.”
What one piece of advice do you have for aspiring entrepreneurs or business owners looking to catch their big opportunity?
“Great businesses die six or seven times before they succeed. We still probably have a couple of more deaths to get past.
“Success in business is about paying attention to the challenges in front of you and addressing them before they are challenges. I think the best businesses evolve over time. Kabbage is barely recognizable from the descriptions in our first PowerPoint deck and that’s a good thing.
“You have to take the shots to the chest every day and keep moving forward.
“Make sure your solving real problems and proving. We didn’t need to prove that small businesses needed money; we proved they needed a better process.”
Looking back, what was the most unconventional way you landed a memorable deal that made your success turn in the right direction? (Have fun with this one)
“When I was a young lawyer, I always read the local business papers and learned the names of all the major business leaders in Atlanta. One time I was driving home and saw that some joggers had found a stray dog on the street. They didn’t have a phone and I stopped to help. I looked at the collar and recognized the name of one of Atlanta’s top business leaders on the dog’s tag.
“At that point, I let the joggers know that I’d ‘take it from here’ and brought the dog home. I proceeded to call the number on the tag and, sure enough, the individual came over – very thankful that I had rescued his dog. We got to talking and within about a month, they became a major client of mine. Sometimes it pays to both read the paper and to do good deeds.”