Carol Leaman thought she was coming in for a small, informal chat with a handful of startup entrepreneurs, so she didn’t bother with notes or slides.
When the Axonify CEO and serial entrepreneur instead arrived to find 150 people waiting to hear her speak in the Communitech cafeteria, she was, nonetheless, unfazed.
That’s the thing about experience – when you have enough of it, the stories have a way of writing themselves. And so, over close to 40 minutes, Leaman had no trouble sharing many of hers, along with the copious wisdom she earned along the way. (The talk was part of Communitech's Pizza with the Prez series, featuring area tech leaders).
Leaman started with her current role and worked back, telling the crowd how Axonify came to be the fast-scaling company it is today. In 2011, Leaman joined a tiny, local startup called 17 Muscles based in the Communitech Hub, which had developed a piece of software to help employees learn and retain critical job-related knowledge.
Brought on board to turn that bit of source code into a business, Leaman ultimately bought the startup, tossed out the code and “started over from scratch,” renaming the company Axonify. She raised investment, hired some people and started building.
“Today, seven years later, we have about 165 people,” Leaman said. “We will be somewhere around $21 million U.S. dollars in A.R.R. (annual recurring revenue) this year. We’ll have about 175 customers by the end of this year, most of whom are large corporate enterprises...some of the biggest companies in the world, actually.”
Those companies will use Axonify’s software, which uses cognitive science and gaming, to train tens of thousands of employees and, as a result, improve their financial results.
Leaman can trace the roots of her success in building Axonify, along with the previous companies she led, to what is an unconventional background for the tech industry: She studied accounting at the University of Waterloo, “which was, as it turns out, an incredible foundation for running a business. I understand finance up the wazoo, and how to make sure the companies that I’ve run never run out of capital. And I have raised capital right from very early in my career.”
At Axonify, she has raised about US$22 million, with about $15 million currently in the bank to be invested back into the business.
“One of the lessons – and I didn’t necessarily learn it, but sort of walked into it a couple of companies ago – was that you do need to pay attention to your realistic growth rate in terms of customer acquisition and your spend, to make sure that you clearly understand how much runway you have before you need to start fundraising.”
Too many entrepreneurs, Leaman said, don’t give themselves enough time to raise capital. “You need, easily, six to nine months,” she said, citing the many factors that need to be weighed to figure out how much to raise and when.
Before Axonify, Leaman was CEO of a local startup called PostRank. Founded in 2007 by “a genius young man named Ilya Grigorik,” a University of Waterloo computer science student, PostRank had figured out how to rank web content based on the amount of online social interaction it induced – this at a time when Google Analytics only measured web traffic.
“That allowed him to start looking for capital,” Leaman recalled. “So, in the fall of 2007, I was asked to invest in their seed round, which I did. And then, in March of 2008, Ilya asked me to come and run the company.”
PostRank generated most of its revenue by selling its social-engagement data to public relations firms who worked with content-creation companies. In 2010, a California-based online ad company approached Leaman wanting to buy PostRank.
“It was two brothers who had founded this company in Toronto and moved it to San Francisco,” she said. “Long story short, they thought that because I was female, that they could basically bully me into selling the company by insulting me and doing a variety of other things. And little did they know I’m not one to be bullied.”
Leaman spurned their offers over much of the next year, until early 2011, when the CEO redoubled his efforts and begged Leaman to sell PostRank to him. “They were petrified that we would get sold and their data feed, on which they had built a product that they were selling to customers, would get cut off,” she said.
So, Leaman flew to San Francisco and spent a nine-hour day in hard negotiations, by the end of which she had made a handshake deal to sell PostRank. “We shook, but we didn’t sign anything.”
Later that evening, everything would change.
“At midnight, I was in a taxi going back to my hotel and I looked at my email,” Leaman recounted, “and it was a guy by the name of Avinash Kaushik at Google,” a key member of the company’s analytics team. He wanted Leaman to meet the product manager for Google Analytics.
When she replied to say she was actually in San Francisco, Kaushik invited her to give a PostRank demo at Google the next day, “and 15, 20 minutes into the demo, this other guy, his name is Phil Mui, said, ‘OK, you can stop there, I’d just like to buy the company.’ And he goes, ‘Is that a problem?’ And I said, ‘Kind of. I kind of sold it last night.’”
But, since nothing had been signed, PostRank was still very much in play – and Google’s offer would ultimately carry the day.
“I told Google, ‘Giddy-up, I need a term sheet and to not have this other deal happen,’ so they were very quick,” Leaman said. “We got a term sheet within 48 hours and 12 weeks later the company was sold.”
All but four members of PostRank’s team moved to California (Grigorik remains there, working for Google as a web performance engineer). Leaman stayed behind and bought the company that would become Axonify with some of the proceeds from the sale.
“I had the choice to go to Google at the time,” she said. “Not my gig; I’m an early-stage gal. Google’s an amazing company; it’s just not what I’m interested in doing.”
Leaman’s brand of calm self-assurance was hard won. Before PostRank, she had served as CEO in two other established companies, the second of which was near death when she joined.
“In the first week I didn’t realize how dead it was and I ended up having to write a personal cheque for $70,000 to make payroll that week,” she said. [She eventually got the money back].
The company had done pretty much everything wrong; it had the wrong product, built in the wrong way for the wrong market, Leaman said. It spent too much money, had poor relationships with customers and was staffed with poor performers.
“It was a dog’s breakfast,” she said, “and it was everything I could do to get that thing turned around, get the technology rebuilt and then get the company sold a couple of years later.”
The first company Leaman helmed was Fakespace Systems, an early virtual reality company based in California. Its technology could not overcome the fact that its market at the time was exceedingly small – a fact she used to caution Tuesday’s audience of budding entrepreneurs.
“I see tons and tons of entrepreneurs who overestimate their total addressable market,” she said. “It is often much smaller than you think, so pay attention to that. Who is actually buying this technology, and can you get your fair share of that?”
The early stage of Leaman’s career was also when she learned that “who you work with is incredibly important.”
Asked during Tuesday’s Q+A session how she approaches that very issue at Axonify, Leaman said she can usually tell within the first five minutes of an interview whether a prospective employee has the right attitude – and whether there will be ego issues.
“I don’t give a flying hoot if you have an I.Q. of 160,” she said. “We’re all here to do the same thing, work on the same problems and move the business forward, and ego is not something I value.
“I just want somebody who is going to work extremely hard, be respectful of other people and know their domain.”
Leaman related a horrific anecdote about a boss, early in her career, whose behaviour helps to explain the emphasis she places on workplace culture, as well as her strength in standing up to bullies.
Shy and lacking in confidence, she took a corporate finance job at age 26, working for “a crazy bully boss.” He had a 160 I.Q. and “was a screamer, he demeaned people every day, he threw things at people. He was extremely bright, but he was a brutal person to work with.
“I was terrified every single day at work,” she said. “He’d come into my office, whip two business cards at my face and they would fall to my desk, and he’d say, ‘We need $40 million; go find some money.’
“I’d pick the cards up and look at them, and they were from bankers, and I was so terrified that I just did it. I just figured out how to do it.”
The company she worked for was buying and selling companies (Fakespace, which Leaman would later lead, was one of them), which further taught Leaman the ins and outs of acquisitions – key skills she would use later.
“Working for him was sort of the best years of my career from a learning perspective,” she said, “at building confidence and backbone, to know I can withstand anything.
“He taught me, through trial by fire, just go f-ing do it.”
Asked if women entering tech entrepreneurship today can expect less bullying from men than she received, Leaman said, “I think there’s less of it that is going to happen, simply because of awareness. Also, though, as females, you need to have confidence to stand up to it and not just accept that that’s the way it is.
“That can be difficult if you’re raising money and somebody’s got a cheque that they’re dangling in front of you, and then they want to come home with you,” she said. “My particular perspective is, that’s not money you want. Turn it down.”