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Scaling to $10 Million from Kentucky: Steve Huey, CEO of Capture Higher Ed (Part 1)

We don’t hear a lot of entrepreneurial stories from Kentucky. Here’s one that is scaling nicely!

Sramana Mitra: Let’s start at the very beginning of your personal journey. Where are you from? Where were you born, raised, and in what kind of background?

Steve Huey: I grew up just outside of Cincinnati, Ohio. My father was an entrepreneur. He built a nice real estate business back in the early 70s, experienced the incredible credit crunch of the mid-70s, and lost his business. That had a big impact on me because I saw the success on one side and the problems on the other. From the time I was six or seven, I’ve always loved the entrepreneurial spirit. I went to Miami University and was an Accounting and Finance major. After my undergraduate studies, I became an auditor with Chiquita Brands International. I was an international auditor. >>>

Scaling with Angel Money Only in Canada: Joel Lessem, CEO of Firmex (Part 7)

Sramana Mitra: That’s an interesting position because venture capitalists manage portfolios. Entrepreneurs manage their life. Your life is not a portfolio. Life is life. You can do one company. If you fail, then it’s writing off a lot of your life.

Joel Lessem: I’ve had a couple of conversations. I once said, “Here’s the problem. We have different economics.” I said to another venture guy who came by, “You’re playing with your career. It’s other people’s money. You’ve got your eggs in 12 different baskets. I’ve got my eggs in one basket. I don’t have the hurdle you have. You have to make your fund on a couple of deals. I just have to make some money.”

Sramana Mitra: For most people, making money doesn’t mean making hundreds of millions of dollars. In a lot of situations, making a couple of millions is a very happy scenario.
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Scaling with Angel Money Only in Canada: Joel Lessem, CEO of Firmex (Part 6)

Sramana Mitra: There are tons of unhealthy business practices. Pursuing growth at all cost tends to make people practice unhealthy business practices. We don’t believe in that. We believe in sustainable growth. We are much more in tune with what you’re doing. We actually appreciate what you’re doing. The more fundamental-driven approach is what we promote in our accelerator. Our belief is that over 99% of the entrepreneurs out there actually will never qualify for venture funding. Your TAM is not a venture style TAM, yet with $4 million in capital, you can build a $50 million to $60 million company. What’s wrong with that picture?

Joel Lessem: I employ 80 people here. We’re probably hiring another 20 next year. I’m actually on the Board of an organization called Ace Tech here in Toronto. I helped build it to a 100-member company. I did a survey and half of them are unfunded. Combined, we employ 6,000 people. Obviously, the unfunded ones are generally profitable.

Sramana Mitra: Yes, they have no choice.
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Scaling with Angel Money Only in Canada: Joel Lessem, CEO of Firmex (Part 5)

Sramana Mitra: Talk to me a bit about the verticals where you have good adoption. You have a horizontal platform product. What vertical is your strongest?

Joel Lessem: Investment banking is 30% of our business.

Sramana Mitra: What’s the next one?

Joel Lessem: Law firms are 20%.

Sramana Mitra: Is there any other dominant vertical?

Joel Lessem: Resources are 17%. Life sciences are 12%. >>>

Scaling with Angel Money Only in Canada: Joel Lessem, CEO of Firmex (Part 4)

Joel Lessem: I didn’t like the venture capital model. I sold my house to take this job. I have a wife and a child. I put too much into this to play venture casino. I’m here to make money. I don’t care how big the company is. I just want to make money and build a business. I don’t mind if it’s not a thousand-employee business. It can be a 50 to 100- employee business. The more I talked to ventures and understood their business model, the more I realized that this is a very high-risk business because they have a very limited timeline. Most businesses take many years, if not decades, to build a solid company. If you go slowly, you can make wise operating choices versus Hail Marys. I said, “No, I’m not going to do that.” We were very good at forecasting. I said, “I’m going to get to cash positive in 18 months and I still have $300,000 left in the bank.” What happened was I got to cash positive in 17 months. Then, I began investing heavily in the product. We were about 25 to 30 people.

Sramana Mitra: What was the revenue level at which you got to cash positive?

Joel Lessem: About $3 million. >>>

Scaling with Angel Money Only in Canada: Joel Lessem, CEO of Firmex (Part 3)

Sramana Mitra: Is this the company that we are talking about right now?

Joel Lessem: Yes, I wrote the business plan 10 years ago. There was no documentation of who owned this IP. Then I had to go to the client and say, “I want to sell this to all your competitors.” I had to structure something with them. I took about a year to actually get the business legal, papared, and moving.

Sramana Mitra: So you bought the IP from these people?

Joel Lessem: That’s not really that important. I structured a deal where we owned it.

Sramana Mitra: However, you started a different company.
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Scaling with Angel Money Only in Canada: Joel Lessem, CEO of Firmex (Part 2)

Sramana Mitra: Very quickly, how long did you work for this entrepreneur?

Joel Lessem: That was a year and a half here and a year for another one. I worked for many of them.

Sramana Mitra: When was the first startup that you did?

Joel Lessem: The first startup I did was in 1999.

Sramana Mitra: What was that?

Joel Lessem: That was in Toronto. It was during the dot-com boom. I had an idea for a piece of software and I partnered with a person who already had a design business. Like a lot of these early companies, you make some revenue off the design business and then you put it into the software. I >>>

Scaling with Angel Money Only in Canada: Joel Lessem, CEO of Firmex (Part 1)

Joel is scaling a profitable company in Toronto called Firmex, and has only spent $4 million in angel money to get to almost $10 million in revenue.

Sramana Mitra: Let’s start with the very beginning of your story. Where are you from? Where were you born, raised, and in what kind of background?

Joel Lessem: I was born in Israel but raised in Toronto from the age of three. I grew up in Toronto.

Sramana Mitra: Where did you do your schooling?

Joel Lessem: I did a pair of history degrees at McGill and a Master’s degree. I was actually in the Ph.D. program for History and Metaphysics.

Sramana Mitra: What did you do after your Ph.D.?
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