He helped US Order grow from a few dozen employees to hundreds, and ran revenue from a few million to around $50 million.
They took US Order public in 1995 and made some money.
It might have been a home run, but US Order thought people would use their phones to conduct transactions in those days — not their computers. That was the wrong guess.
“We had the right idea with the wrong platform,” Backus said.
He learned an important lesson: If you are a hard-charging young company with blinders on, you need to have outside advice — either a board member or a consultant — to see the big picture.
After leaving US Order, where his management included current local stars such as Joe Payne of Eloqua and Mark Lynch at Appian, Backus plunged into venture capital.
In 1998, he invested several million of his own money to found Draper Atlantic, which eventually became New Atlantic. He went nearly two years without taking a paycheck as he tried to get the VC firm off the ground.
New Atlantic’s big home runs locally include Mobile 365, a text-messaging company that it sold for $425 million in 2005. The sale earned the VCs more than 10 times their investment — known as a “10 bagger.”
Their biggest failure was ReturnBuy, which helped consumer electronic manufacturers such as Hewlett-Packard and Palm get rid of returned products and make some money on them. If something sold for $50, ReturnBuy might take $10, and the manufacturer and eBay would split the rest.
ReturnBuy went bankrupt and its infrastructure was sold because it could not sell enough of the returns online to put a dent in HP’s or Palm’s returns.
“We weren’t listening to our customers,” Backus said. “We weren’t solving their problem.”
Almost every manager I interview says good hiring is the hardest part of their job, and Backus echoed that.
What does he look for?
“For people who want to win at all costs. Who will dedicate as much time as it takes to be successful.”
How can he tell?
“The best single predictor I have found is upward mobility within a company. Someone who has been promoted quickly two or three times in the company is a superstar. Someone who got promoted by going to a new job at another company . . . is generally not a good performer. They probably left because they didn’t get something they wanted.”
He also looks for subtle signs, such as whether someone breezes too quickly through a PowerPoint presentation or gives canned sound bites to answer questions.
“One trick I find is how long does it take entrepreneurs to get back to me? If entrepreneurs are corresponding to me at 2 a.m. or 11 p.m., then I like that. It tells me that their business is their life and not just a job.”
Spoken like somebody who has been there.
More business news coverage:
- Feds push back on sequestration panic
- Aspiring engineer learns how to build companies
Loading...
Comments