Entrepreneurship is like riding on a roller coaster in the dark. There are pitfalls at every twist and turn of your entrepreneurial journey—and you can’t see them coming—which is why it’s important to become comfortable with being uncomfortable.
While there are a lot of facets to building a startup, I’m going to zoom past the excitement and uncertainty associated with the early days of struggling to figure out a business model and product-market fit. Instead, I will focus on the inflection point that most entrepreneurs hope to reach: building an extraordinary company with a lot of loyal customers that is attractive to investors and ultimately acquirers. Many entrepreneurs fail to focus on their exit plan until circumstances necessitate it, at which point there may not be enough runway to implement changes that could have a material impact.
When I cofounded Vatica, I started with the end in mind: building an innovative company that rewarded employees, shareholders and investors for their commitment and support. This required intentionality, strategic thinking, long-term vision and leveraging some earlier professional experiences.
Prior to Vatica, I spent several years in investment banking and corporate restructuring law. I paid careful attention to the specific business attributes that led to investor enthusiasm and higher valuations, as well as operational mistakes that precipitated financial distress. I attempted to infuse these lessons into Vatica and obsessed about building a pioneering business with talented people and coveted characteristics, such as:
- A unique value proposition
- A strong management team
- High growth (20%+ per year)
- A diversified customer base with recurring or predictable revenue
- Strong margins
- High customer retention and satisfaction
- A solid growth strategy that can deliver predictable results into the future
Of course, this was easier said than done, and we had many challenges along the way. Building something from scratch and gaining market share in a mature industry is hard. Fortunately, we got very lucky in that we were able to secure rock-star talent. This was critical, as was our strategic blueprint that enabled us to endure setbacks and remain focused on what matters.
Many entrepreneurs fall into the trap of working exclusively “in” the business instead of also working “on” it. Without a clear long-term destination in mind, entrepreneurs can get ensnared in the myriad daily challenges and opportunities that besiege early-stage companies.
Fortunately, our hard work and long-term strategic focus paid dividends. We successfully innovated within a mature industry of multibillion-dollar competitors to become theleaderin provider-centric risk adjustment and clinical quality solutions. In addition, we’ve successfully recapitalized Vatica on two separate occasions. In both instances, we were fortunate to attract prominent private equity firms that have appreciated our unique value proposition, high growth and top-notch team.
While many factors and people contributed to our success, our ability to consistently zoom out and reflect on Vatica through the lens of an acquirer played an important role in building a company that has been successful beyond my expectations.