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Getting Customers to Prepay to Start Up, Then Building a $300M Business: RMS CEO Hemant Shah (Part 5)

Posted on Friday, Jul 26th 2013

Sramana: Most CEO changes fail miserably. Most VCs will tell you that they want an entrepreneur who will scale up to a certain point. They do not want a CEO change right out of the gate. Most of the relationships don’t work out, but you obviously were successful. What did he do that made it successful? Entrepreneurs by nature are arrogant people.

Hemant Shah: It was a long time ago. I did feel that Tom was looking to learn from me as much as I was looking to learn from him. He was genuinely excited and interested in seeing me grow. It was not like the young founder CEO who had to get a pat on the head and then shoved in the corner when a real CEO walks in. We truly worked together. Perhaps our personalities just worked together. It did work.

Sramana: A CEO comes in to put in a level of sophisticated business processes. The founders have all the product knowledge. That understanding of articulated rules, responsibilities, and contributions helps. I think you were wise to let him play his role. A lot of founders are not good at that.

Hemant Shah: In hindsight, it is easier to build a narrative. I do believe that part of what helped me let go is that I loved the company. I am still here almost 25 years later. I had a long-term vision for what I felt like we could accomplish as a business. I was patient because I figured that really big ideas would sometimes take time to bring about.

Sramana: The culture of the Valley was a little different when you were doing it. The culture has become shallower since the dot-com crash. Long-term visions have become rare. Everyone wants to build something and flip it.

Hemant Shah: We addressed a generational problem. If you really want to make an impact, and make the world safer, then you have to realize it is a generational journey. As kids in our 20s, we knew that this was a big problem. There is a lot of work left to do 25 years later.

Sramana: What was your next major milestone or strategic decision you made after raising your venture round?

Hemant Shah: The key strategic move, which was necessary to make, and was enabled due to our funding, was to change our view of the product. Up to that point, our view was that the product was an earthquake model for the United States which could be used to help solve certain business problems. We had to step back and realize that it was a global problem, not a US problem. We also had to realize that it was not just an earthquake problem, it was a catastrophic risk problem. There are other natural hazards. You can do that incrementally.

Over the years it has been tempting to be distracted by other opportunities. Part of what has made us successful is that we understand who the customer is. We know how to add value. Cycle after cycle, there is a trillion-dollar global risk market. We make an impact by helping them add value. We spent the 1990s building foreign earthquake, flood, and wind models.

This segment is part 5 in the series : Getting Customers to Prepay to Start Up, Then Building a $300M Business: RMS CEO Hemant Shah
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