Steven Morris, Chairman, ESM Investments (part 1)
Founders often talk about their businesses as their ‘babies’. We are emotionally invested in it. We’ve dedicated a decade or two of our life to it. There’s often a personal story behind it. But when founders exit, they have to remember that the buyer is never going to have that same passion for the company.
Steven Morris is now the chairman of ESM Investments, an angel investing group he created that focuses on technology start-ups. Before ESM, Steven created, built and sold ETV Interactive, a software business that pioneered video on demand, in room entertainment and digital television in hotels. Steven sold ETV to American technology giant iBAHN in 2007, and recounts his first meeting with the CEO of iBAHN.
“I was excited about the meeting because I could see the natural product fit between ETV and iBAHN. So I preached about the future opportunity for ETV and how it could elevate the iBAHN brand globally. He let me talk, and talk, and talk some more. I was in the zone. I was flowing. And I felt I’d communicated the exciting opportunity for iBAHN. But when I was done, all he said was: ‘I get it. But show me the data’. In other words, that’s great Steven, but so what?”
Talk about the wind being taken out of your sails.
When buyers and sellers value different factors
Steven the founder had been leading the conversation with his right brain – sharing his creative, exciting vision of the future. Meanwhile, the iBAHN buyer was coming at it with his left brain – focusing in on the financial reality of the potential transaction, and what’s in it for him and his shareholders.
Thankfully, Steven picked it up straight away. He didn’t try to persevere with the emotive pitch. He pivoted in the moment and was able to give the buyer the data he needed.
This moment was a great example of one of Steven’s superpowers – calmness under fire. As a leader, he never got too high with the great news, and never too low with the inevitable bad days. Steven talks about the ETV culture he created as being a supportive, learning environment and never the pressure pot that’s often associated with fast-moving tech firms. Knowing Steven as I do, I think that style worked because it was authentic to his personality – a calm, stable, safe pair of hands, which employees prefer to work under.
Of course, technology is a dynamic, exciting and competitive market, so you have to move quickly. So, how does a calm leader create the fire in a team that inspires them to greatness. Steven believes that the answer was to employ people with the same values as him – people that are self-motivated, willing to learn, excited about the product, looking to make a difference and be part of a team. He actively avoided big personalities and ‘alphas’ who wanted to be centre of attention.
When the buyer wants to acquire the seller’s culture
That created a unique culture in ETV. And interestingly, the culture Steven created as leader was a big part of the sale to iBAHN. Steven explains:
“ETV was absorbed into iBAHN, a much larger company with a traditional corporate culture. But the iBahn CEO saw what I’d created and wanted to graft the ETV culture onto iBAHN. So as part of the sale agreement, he asked me to keep my CEO job title and embed the ETV culture into iBAHN.”
Steven stayed with iBAHN for four years after his exit. Only two of them were part of an earn-out; the other two years were voluntary – extremely unusual for exiting owners. But Steven is certain it was the best four years in his working career. That’s despite working for someone after nine years as his own boss, and being part of a global 500-person company.
Steven says the evolution was relatively painless and happened slowly from month 1 to month 48 of that four-year period. As a conscientious leader, Steven wanted to complete the transition well. This meant integrating the product set from ETV into iBAHN, and that unfinished business took four years.
As much as iBAHN learnt from Steven about creating a supportive culture, Steven learnt a lot about managing a product range at scale in a large organisation. In a global firm with competing demands, Steven needed a more methodical approach to prioritising resource. With dozens of potential developments and product enhancements, Steven asked three critical questions of each opportunity: does it make money; does it create any intellectual property; and does it have wow factor. In other words, a more detailed version of the famous ‘so what’ question.
Looking back on his exit, would Steven have done anything differently? He says it would have given him more personal satisfaction to have had more employees involved in the ownership of the business and therefore benefit from the exit.
I think he’s being a little self-critical though. The key members of his team were all rewarded in the sale of ETV – I know Steven made sure that everyone who contributed to the success of ETV and Steven’s exit became winners from that deal.
Steven is a great example of quiet leadership. He’s proof of the virtue of qualities like calmness, vulnerability, thoughtfulness, empathy and putting the team before the individual. And I know that founders who secure investment from ESM Investments will be lucky to benefit from Steven’s experience and wisdom.
theleadstory.co 