So what makes a startup successful? Is it mainly a combination of hard work and luck, or is there a winning formula?
Colin C. Campbell has been a serial entrepreneur for over 30 years. He has founded and scaled various internet companies that collectively have reached a valuation of almost $1 billion. In his new book, Start. Scale. Exit. Repeat.: Serial Entrepreneurs’ Secrets Revealed! Colin shares a wealth of experience, with an in-depth guide featuring interviews with industry experts and points readers in the right direction on their entrepreneurial journey to help answer the questions they’ll encounter.
M.R. Rangaswami: What is it about what you share in Start. Scale. Exit. Repeat.: Serial Entrepreneurs’ Secrets Revealed! that you feel hasn’t been shared before?
Colin Campbell: Start. Scale. Exit. Repeat. represents 30 years of my experience as a serial entrepreneur, a decade of research and writing, and over 200 interviews with experts, authors, and fellow serial entrepreneurs. The book deconstructs the stages of building a company from inception to exit, and lays out strategies to replicate this success repeatedly.
At each stage of a company’s life cycle, it’s crucial to fine-tune your narrative, assemble the right team, secure adequate funding, and put in place effective systems. The strategies for achieving these vary dramatically, from the chaotic, founder-centric startup phase to the more structured approach needed to scale. As you near the finish line, your strategy will have to pivot once again.
The core message of Start. Scale. Exit. Repeat. is that entrepreneurship isn’t a “one and done” affair. It’s a skill—akin to any other trade—that you can master and continually refine. There’s a recipe for launching a successful startup, and this book simplifies it into actionable steps to be taken one at a time.
Furthermore, the book challenges the prevailing obsession with unicorns. We exist in a “unicorn culture,” where a valuation under a billion dollars is often frowned upon. But this mindset is perilous. The high-velocity chase for unicorn status has led to a wreckage of dreams and fortunes along the Silicon Valley highway. I’ve witnessed countless founders succumb to this “Silicon Valley disease,” sacrificing years of labor and significant capital.
There’s a more pragmatic approach to building wealth, and it’s far simpler: start, scale, exit, take some money off the table, and repeat.
M.R.: What was your biggest lesson from one of your biggest setbacks?
Colin: Let’s take a trip down memory lane to the early ’90s. My brother and I launched an Internet Service Provider (ISP) in Canada. We were pioneers on the “Information Superhighway,” connecting hundreds of thousands of Canadians to the internet. We found ourselves in the whirlwind Geoffrey Moore famously described as the “Tornado.” It was an exhilarating ride, especially for a couple of 20-somethings who had grown up on a farm.
We took the company public later in the ’90s and merged it with a wireless cable company, closing at a valuation of approximately $180 million. After receiving 50% of a wireless spectrum for fixed wireless internet from the Canadian government—yes, they handed out spectrum back then to encourage competition—our company’s valuation skyrocketed to over $1 billion. Technically, it was a stock-for-stock swap, with our shares being locked up for 18 months. At 28 years old in 1998, I owned almost 14% of the company.
We thought we were invincible. The internet was poised to change everything, and we were on the forefront.
Then, out of nowhere, the .COM crash hit.
Our company pulled its secondary offering to raise $50 million because the Nasdaq had tanked to 4,000. And it kept falling, plummeting to 1,300 and not recovering for over a decade. It was indeed the .COM crash, and the music had stopped—without enough chairs to go around.
Did we make mistakes? Absolutely. We shouldn’t have relinquished control without securing liquidity. “Liquidity or control” has since become our mantra for all future ventures. And let’s face it—stuff happens. Technologies evolve, regulations change, and market climates shift. That’s why it’s crucial to exit when times are good. When the party’s in full swing, make a discreet exit, take some money off the table, and focus on your next venture.
As for that unicorn of ours? It filed for bankruptcy protection, and our stock plummeted from a high of $19 a share to the paltry sum I sold it for: 6 cents a share.
Thankfully, we regrouped and stuck to our strengths. We launched Hostopia, a global leader in hosting and email solutions for telecoms. We took it public and eventually sold it to a Fortune 500 company—this time for an all-cash deal—just a month before the Lehman crisis in 2008.
M.R.: In your experience, once a business is past the first 5 years of failing, what’s the next riskiest precipice they encounter?
Colin: The vast majority of companies in America are small businesses, and most struggle to scale. But make no mistake—there’s a formula for scaling your enterprise. Some companies might find it more challenging than others, and some may opt out due to the stress and transformative changes that come with scaling.
In the SaaS (Software as a Service) industry: if you’re not growing, you’re dying. After the .COM crash, we found ourselves running low on funds while operating our hosting and email platform. Still, we remained optimistic. Why? Because even though we were bleeding $500,000 per month, our customer base was growing. Growth is the lifeline in SaaS; losing money is acceptable as long as you’re expanding.
Hostopia, for example, adhered to the Rule of 40, maintaining a growth rate plus profit margin that exceeded 40%. We achieved 32 consecutive quarters of growth, leading to an IPO and ultimately a successful sale at a 60% premium over our trading price to a Fortune 500 company. Another venture, .CLUB Domains, also operated in the red for several years. Nevertheless, we managed to cut losses by about half a million dollars annually until we started adding the same amount to our bottom line, culminating in an exit to GoDaddy Registry.
Am I a genius entrepreneur? As much as I’d like to think so, that’s far from the truth. In 2005, our company was facing internal strife, stalled sales, and a board questioning my role as CEO. One board member even remarked, “He’s too young and way in over his head.” That’s when a friend introduced me to Patrick Thean, a coach at Rhythm Systems. Patrick taught us invaluable systems like goal setting, strategic planning, daily huddles, and KPI tracking. In addition, we partnered with other coaches to transform the organization from a tech-centric company to a sales driven organization. The ultimate effect of all of these changes: we tripled our size within a few years.
Since then, we incorporated these systems along with countless other insights I’ve gathered from serial entrepreneurs, experts, and authors. We’ve encapsulated these stories and lessons in the book, laying out a clear roadmap for SaaS companies aiming to scale.
M.R. Rangaswami is the Co-Founder of Sandhill.com