Capital efficiency. Don’t focus on a fancy office but focus on how you are going to be efficient with money. So that means saving money, driving to trade show and not flying, staying a motel instead of a hotel. Saving money is very important.
Startups have such a glamorous reputation. Companies like Facebook, Instagram, Youtube, Uber, and Airbnb once started as scrappy startups with huge dreams and huge obstacles.
Yet we of course know that most startups don’t end up as success stories. What does a founder or a founding team need to know to create a highly successful startup?
In this series, called “Five Things You Need to Create A Highly Successful Startup” we are talking to experienced and successful founders and business leaders who can share stories from their experience about what it takes to create a highly successful startup.
I had the pleasure of interviewing Somen Mondal. Somen is a serial entrepreneur that has successfully exited two companies. Most recently, Somen was the CEO and Co-Founder of Ideal, which was successfully acquired by Ceridian (NYSE: CDAY) in 2021. Prior to Ideal, Somen served as Co-Founder and CEO of Field ID until it was successfully acquired in 2012 by Fortune Brands (NYSE:FBHS). Somen’s accomplishments include spots on both the Profit Hot 50 and Deloitte Fast 50 lists. In 2012, Somen received the EY Entrepreneur of the Year award, and he is a member of YPO.
Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
After completing Computer Engineering at the University of Toronto, I started working at a software consulting company. On my first day, I was placed in the cubicle right next to my business partner, Shaun Ricci, who I would end up working with over two companies spanning almost 20 years. A few weeks after working at the consulting company, we realized that we were being billed at a rate far greater than we were being paid. We immediately thought if could somehow get that delta, we’d be set. With that in mind, we started doing side projects after work. Custom software, websites, we would do anything. A potential client, who was in the business of conducting safety inspections, asked if we could develop custom software that could collect inspection data using mobile devices and manage everything on the web. That was how we created our first product and company, Field ID. That company grew to service some of the largest companies in the world helping them manage safety and was successfully acquired in 2012.
What was the “Aha Moment” that led to the idea for your current company? Can you share that story with us?
Our first company, Field ID, was an inside sales machine. One of our biggest problems became hiring salespeople. We were making all the classic mistakes. We would hire people using bias. For example, if someone played college sports, we somehow concluded that they must be good at sales. We were terribly inefficient. We would only start looking at the last couple of candidates who applied at the end of the week. Finally, we were not accurate. We started hiring two people knowing that one would be let go. We were collecting resumés, performance and psychometric data, and being data-driven by nature, we thought there had to be a better way to select candidates. That was what sparked us to create Ideal in 2013. Our mission is to be the data behind every talent decision to be accurate, efficient and fair
Was there somebody in your life who inspired or helped you to start your journey with your business? Can you share a story with us?
When I was doing my MBA at Queen’s University, the entrepreneur in residence, Paul Hyde, really helped me on my journey. I remember he drove a blue Ferrari to campus, and I thought to myself that I really needed to meet him. I wanted to understand how he was able to buy the Ferrari and what path he took. I was able to schedule a meeting with him through the faculty, and he helped by giving me advice as well as providing the blueprint for most tech companies, which is the book, “Crossing the Chasm,” by Geoffrey Moore. Paul became one of our first angel investors in our first business, an investor in the second, and we’re in touch to this day.
What do you think makes your company stand out? Can you share a story?
What really stands out is that we are driven by a mission, and our mission is to the be the data behind every talent decision to be accurate, efficient and fair. The fairness part is really important, especially these days, where people want to avoid using bias when making hiring and talent decisions. The common example is 50 percent men and 50 percent women apply to a position, but why are only 5 percent of the women being interviewed? There is inequity in that process. Our whole mission is to help equalize or make that decision making process more equitable looking at a variety of demographic factors. That is what really stands out at our company and what the whole team focuses on.
At our first company, we got to the point where we were hiring two people a week, and we were terribly inefficient and inaccurate, hiring two people knowing we would let one go. We were making all the classic mistakes when it came to bias — for example, when I would see someone who went to the same school as I did or someone from my hometown, I would put them at the top of the list.
That is using what is called a conscious bias, which a lot of people don’t think is negative, but it is because you are precluding other people from being selected that might be a better fit based on trying to hire people you are familiar with. So, because of that problem in our first company, that is why we started Ideal.
How have you used your success to bring goodness to the world?
We really wanted to evolve from our first startup at Field ID, taking our knowledge, connections, supporters, and help solve an important problem by creating Ideal with the intention of eliminating the bias in hiring with AI. In addition to eliminating the bias in hiring, we are helping companies measure how well their DEI initiatives are working. So once someone is hired, companies have further support in ensuring they are helping them feel included.
You are a successful business leader. Which three-character traits do you think were most instrumental to your success? Can you please share a story or example for each?
- Be resilient, especially in an entrepreneurial setting. Most people fail because they don’t give themselves enough time, and they eventually give up. My second business we started — it wasn’t going well — and we spent years on a concept that wasn’t successful. We could have easily given up, but we didn’t. We pivoted, took a big risk and that eventually worked. A trait I see quite often amongst people who are successful is that they just don’t give up — be it getting a promotion, getting to scale, whatever the case may be.
- Be a good salesperson. People do not always bring this up as an important trait, but in the business world, you are always trying to sell something — whether it is your product, trying to raise money or trying to find a job. It is always about sales, and it is a skill that is overlooked. Sales is not usually an area you can study although I think that is changing, but having that experience is a great trait to have. We never thought sales was super important when we started our first business — the product was the most important. When we went to our first trade show, very naively we thought people would just buy our software and that was not the case. That is how we learned about sales. We had no sales at that tradeshow, but we left with a full list of attendees and cold called everyone to try to get them to buy our product. That is when we first grasped the importance of sales and still do to this day.
- Be curious. Constantly want to and need to improve upon one’s self or one’s business. Our work is never done. You can always improve, learn new sales and marketing tactics, expand your knowledge base. Ideal’s acquisition by Ceridian represents a monumental opportunity for learning. I am going to be able to learn best practices from talented leaders at one of the fastest growing, publicly traded human capital management technology companies in the world.
Often leaders are asked to share the best advice they received. But let’s reverse the question. Can you share a story about advice you’ve received that you now wish you never followed?
The advice we were given was to just hire a bunch of salespeople and then they are going to be productive. Get them on the phone, and the sales are going to start pouring in. That is not a) accurate for all businesses as they have different types of salespeople and organization and b) without the right infrastructure, they aren’t going to be successful.
The advice was go find salespeople at the superstar companies and plug them into your company. That doesn’t work as you don’t have the infrastructure, and it has a huge cost. Selling at a startup is much different than selling at a larger company. Hiring salespeople is very important; you just have to do it differently than a much larger company.
Can you tell us a story about the hard times that you faced when you first started your journey?
In our first business, we were super naïve. We quit our jobs, went to this trade show thinking we would get a bunch of sales and took that risk. And, as I previously mentioned, we did not get any sales. And that led to months of zero income, zero sales and we just felt bad about ourselves since we left good opportunities to launch this business. We got the point where we were using our line of credit to pay bills and that was really tough. Luckily, sales picked up, and we were able to raise a small financing round.
The same thing happened in our second business. We were successful in the first business and didn’t have the issue of raising money, but things weren’t going well at first and we had to self-fund for a while.
Where did you get the drive to continue even though things were so hard? What strategies or techniques did you use to help overcome those challenges?
For us, it is really simple. We have the attitude of zero optionality. You have to have no options — you have to move forward and make things successful. And to be honest, not being a success was not in our vocabulary.
And in addition to that, it is critical to surround yourself with a support network who can help.
The journey of an entrepreneur is never easy, and is filled with challenges, failures, setbacks, as well as joys, thrills and celebrations. Can you share a few ideas or stories from your experience about how to successfully ride the emotional highs & lows of being a founder”?
The lows are you are alone, especially in your first business. People are discouraging and telling you what your chances of failing are and asking why you are leaving your job. You are missing out on travel, new homes and those other milestone moments your friends are experiencing.
The highs are pretty good — giving back, donating to the universities I went to, being able to treat my family.
The common thread throughout the lows and highs are the importance of having a great community of friends and family to help you ride through the lows and thank them during the highs.
Let’s imagine that a young founder comes to you and asks your advice about whether venture capital or bootstrapping is best for them? What would you advise them? Can you kindly share a few things a founder should look at to determine if fundraising or bootstrapping is the right choice?
It is always dependent on the situation, but for most people, including myself, venture capital doesn’t work. If you are trying to optimize for the best outcome for yourselves and your employees, you are most likely better off bootstrapping the business. Unless you are at point where your business is at scale and the extra funds will go into growing the business in a systematic way, I would suggest in the early stages, bootstrapping is definitely the way to go. It is much more capital efficient, much more sustainable and you have more of the business in your control.
Not all situations are the same, but at ours, and probably for most people, being able to build a real business is more important than being able to raise money.
Ok super. Here is the main question of our interview. Many startups are not successful, and some are very successful. From your experience or perspective, what are the main factors that distinguish successful startups from unsuccessful ones? What are your “Five Things You Need to Create a Highly Successful Startup”? If you can, please share a story or an example for each.
- Team. Make sure you have the right people that create a positive environment, especially in a startup, because what you are doing is already an uphill battle and you don’t need negativity or someone who brings the team down.
- Sales. One thing that never goes out of style is generating revenue. A lot of time people forget that and focus on raising money. If your sales are good, the money will always follow.
- Capital efficiency. Don’t focus on a fancy office but focus on how you are going to be efficient with money. So that means saving money, driving to a trade show and not flying, staying a motel instead of a hotel. Saving money is very important.
- Co-Founder. Have the right co-founder. My business partner and I complement each other; we have worked with each other for almost 20 years over two businesses. I do things well, he does things well, and they are completely complementary– having that dynamic where you are in line and complementary is very important, and you can see that time and time again in large corporations, whether it is Apple, Google, Microsoft. It is very difficult to do it alone and very rare.
- Customer focus. Being able to show value and focus on your customers is so important because not only is that going to lead to more customers, but it is also going to lead to a fan base that will refer other customers.
What are the most common mistakes you have seen CEOs & founders make when they start a business? What can be done to avoid those errors?
People often focus too much on wanting to be part of a startup versus trying to run and grow a real business. I see a focus on fundraising instead of sales. The focus should be on building a sustainable business, which is always predicated on sales and generating revenue. Someone once gave me this great advice: If the activity is not related to generating more sales, you probably shouldn’t be doing it.
Startup founders often work extremely long hours and it’s easy to burn the candle at both ends. What would you recommend to founders about how to best take care of their physical and mental wellness when starting a company?
For my physical wellness, I stick to a very regimented schedule. I know when I am going to wake up, work out, what times a day I am doing cardio and strength training. I am very particular with what I eat and being healthy. I try to take the guesswork out of it and know what I am going to do every day in terms of my physical well-being.
In terms of mental wellness, it’s definitely an area I could improve upon. Historically, there hasn’t been a balance in my life, and it is realistically hard to have one when starting a company. I am working on it and learning how to improve, but it is difficult to focus on all aspects of health and have a work-life balance when your main concentration is building a business.
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
The best way to bring out the most amount of good is to build a company that has a purpose and a fundamentally positive outcome.
We are blessed that some very prominent names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US with whom you would love to have a private breakfast or lunch, and why? He or she might just see this if we tag them.
I would love to meet Bill Gates. To me, he is not only a visionary in terms of technology but what I see in him is his ability to be an amazing salesperson. He was able to close a licensing deal with IBM way before that was common, and to me, that is super unique. He is a true leader in technology and more importantly, in business in general.
How can our readers further follow your work online?
This was very inspiring. Thank you so much for the time you spent with this. We wish you continued success and good health!