Why Entrepreneurship with Scale Computing’s Jason Collier

Entrepreneurship is hard and littered with failures. So why do it? Jason Collier, serial founder most recently of Scale Computing, recounts lessons learned from the dot-com crash and gives no-BS advice on the pitfalls of fundraising, learning to adapt, and what really matters in running a startup.  

Register for Jason’s personal playbook and see if you qualify for membership to Founders Network and get actionable insights on: 

• Bouncing Back from Failure
• Understanding Deal Terms
• Keeping Your Equity
• Learning to Adapt
• Focusing on People

Starting a company is a long journey — rife with pitfalls, emotional ups-and-downs and with a high rate of failure. So why choose entrepreneurship, anyway? 

It’s an excellent question — and one that serial entrepreneur and technologist Jason Collier is uniquely well-poised to address. Collier’s experience as a founder dates back to the dot-com boom, where he first co-founded an anti-spam company, Corvigo, that sold for $43.5 million. More recently, he co-founded Scale Computing, a pioneer in hyperconvergence infrastructure, where he also served as CTO. 

“But it wasn’t all a cakewalk,” says Jason. Early failures, or not-so-pleasant surprises, steered the course for his highly productive career in startups. 

Take Radiate, an early Internet advertising firm where he led operations. The company took $5 million from a venture capital firm at a time when “liquidation preferences were ridiculous,” Jason recalls. That was near the apex of the dot-com craze, but Radiate ultimately grew to a $20 million run rate, and filed to go public. 

To learn more about starting a company, see if you qualify for membership and check out the global keynote from February 15.

At a meeting with investment bankers around the time of Radiate’s planned IPO, Jason recalls that he and peers were told that their equity was worth $150 million each. But then the market crashed. The IPO was scrapped and Radiate sold for relative peanuts. Jason walked away with a whopping $652.17.

Therein lies a valuable piece of advice: “Planning is important, but you have to be able to adapt,” Jason says. “You can sit there and plan all you want, but you need the ability to adapt to changing environments. I think COVID has done nothing but prove that right.” 

Although failure is rarely fun at the time it happens, successful entrepreneurs will learn to embrace it.

“One of my favorite quotes is that good judgment comes from experience, and experience comes from poor judgment,” Jason adds. “When you’re an entrepreneur and doing a startup, learn from those bad experiences and you’ll have better judgment next time.”

In Scale Computing, it was a different story. The company accumulated a number of customers before raising an A round, and that had the effect of popping up the valuation, and making it easier for the founding team to hang on to equity. 

“What that meant was: After our A round, the founders of the company still owned 80% of it. That’s pretty much unheard of when it comes to venture funding,” he says. “We’ve taken significantly less money than a lot of people typically take in startups. Why? Because we’ve been there. Scale Computing’s A round was $5.5 million, $2 million of which was in grants, and it’s raised $110 million in total smaller slivers of equity,” he says. Scale Computing has about 6000 customers today. 

“You can have the greatest idea since sliced bread, but if you start pitching VCs before you have a customer or before you’ve identified how important that market is, you’re going to get raked over the coals by any venture capitalist,” Jason adds. “What they want to see is an air of profitability.”

While startup life can often be fast-paced, founders should also plan for things  to take longer than they expect — sometimes much longer. 

Jason calls this the F:3 rule — coined by his wife, Freda. This rule of thumb dictates that no matter what you’re expecting in either business or life, plan for it to take three times longer than you initially expected. 

“No matter what timeline you put on anything, it is always going to take three times longer than you actually think it will. You think you’re going to IPO, sell the company — whatever time horizon you’ve got, go ahead and multiply that by three.” 

In terms of the actual work of running a business, if there’s one overriding piece of wisdom that experienced entrepreneurs like Jason will point to, it’s to focus on people. The people are your best assets, and successful founders should never have that thought far from their minds. 

“So many people can get hung up on their products, or branding, sales, marketing and those things. But understand that it’s the people that make it happen, and it’s your job to create a work environment that basically treats people in a phenomenal way,” he says. “It’s a CEO’s job to maintain a work environment that keeps people coming back every morning, and all the other stuff is just BS in my opinion. The people are the company.” 

To learn more about starting a company, see if you qualify for membership and check out the global keynote from February 15.