From dot-com crash to $1B exit: Fieldglass CEO Jai Shekhawat shares 6 startup survival lessons

September 6, 2014

Fieldglass, the Chicago-based technology provider for procuring and managing contingent labor and services, made huge waves earlier this March when it was acquired by German enterprise software corporation SAP for over $1 billion. So much attention has been given to this dollar amount (an amount that is surely making some new Chicagoans millionaires) that it is easy to overlook the struggles Fieldglass went through in its early days.

With the leadership of co-founder and CEO Jai Shekhawat, Fieldglass has grown from a three-person venture in 2000 to about 300 employees today. Shekhawat co-founded Fieldglass after also co-founding IT outsourcing firm Quinnox and graduating with an MBA from Northwestern’s Kellogg School of Management.

He took investor money shortly after starting Fieldglass (then called b2bpeople), which happened to be around the time of the dot-com burst. The market crash timing couldn’t have been worse: Shekhawat already had investors in the company and realized that Fieldglass would eventually need more capital. But Shekhawat was relentless and knew that his company would continue to do meaningful work in the long run: “There’s always money with your investors, it’s just a matter of making the case to them,” Shekhawat said.

As Shekhawat and his team continued to build up Fieldglass for the next 14 years, they learned countless more lessons about building a meaningful business while under stress. Here are a few pieces of the story:

 

When the Internet market crashed, how did you keep your employees motivated?

It boils down to having a compelling reason to exist and doing meaningful work. You have employees working within one skillset but then you constantly extend it; people like being challenged and stressed. It becomes a very powerful thing. Also, markers of success are important; you have to celebrate the smallest successes. You need that sense of everybody being in it together. You win and lose at the same time.

 

Fieldglass has been through two market crashes and several fundraising stages. But was there ever a time when your own optimism faltered, a time you thought Fieldglass wouldn’t make it?

The biggest moment where I actually had a sense that we might not make it was around September 11, 2001. In August of 2001, we had about six months of cash left and I had already slowly began the process of raising the next round. But then after 9/11, the market shuts down.

Then, a few weeks later I was playing squash and I ripped out my achilles tendon. I was actually immobilized for a period of time. I remember thinking, “We are screwed. I cannot even get on a plane to pitch investors. Everybody’s panicking, the customers aren’t buying.” 

Later, EVP of Sales Chris Mortenson and I were trying to catch a flight at O’Hare and I was hobbling through the longest security line. Then we remembered, “Hey, you’re handicapped. That means you can use a wheelchair.” In the handicapped security line, there was no wait and I made the flight. You look for these little signs as pick-me-ups. And, sure enough, we got another round done in February. All successful startups will have this similar story of pulling it together against odds.

 

How did you continually overcome stresses?

There was a lot of stress as a young firm with investors. The job of the founder and of the CEO is to shield people from stress that they can do nothing about. It doesn’t help to let people know that you are almost out of money. We almost ran out of money multiple times. There was a point when we had 20 to 25 people and we couldn’t meet bills. That’s not a time to call a meeting and tell everyone they have a week left.

There’s always money with your investors, it’s just a matter of making the case to them. Learn to speak each constituent’s language: learn to speak the language of the employees and their families, the language of the investors, and of the customers who don’t want to be stuck with a dead product.

 

Who are the people that have stuck with Fieldglass since the early days?

My first hire was Sean Chou, who was CTO for 14.5 years. I remember interviewing him and told him I had an idea for a startup. And then he said had one too. So we pitched each other.

Chou was responsible for building it and Mortenson was responsible for selling it. I also credit Rob Brimm, our EVP of Global Sales, with our sales success in the past 10 years (EVP of Global Sales). Dan Bell, our VP of QA, has been with Fieldglass for almost 15 years now and so has Jeff Basso, our VP of IT and Infrastructure, and CTO Vish Baliga.

 

What was your hiring strategy?

We never over-hired. We always kept it tight. It’s much better to be somewhat stretched because you don’t want to get too fat too early. People should feel a bit stretched. That’s the fun of a startup. Plus, it preserves the equity base. The hiring falls in three categories for me: building the product, selling the product or directly supporting somebody who is building or selling the product.

 

How did you define your own role as CEO during the first few years?

You better have a pretty good idea of what you’re not good at. One way of finding out is looking at the things you prefer not to do. I can’t pretend that I like being deep in the weeds of IT. I clearly preferred the strategy and the communication and getting the team motivated. I loved the initial product design. The bottom line is that you have to jump in - and everybody does everything. And then slowly from that the true preferences of the team members emerge.

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