When Groupon's Eric Lefkofsky turned down $6 billion from Google, some business analysts praised his chutzpah; others questioned his judgment. Turns out he was right. Groupon filed for its IPO at a valuation of about $20 billion. When I spoke to Eric for my book, "How They Did It," he admitted that to be in today's business environment, "you sign up for some level of insanity."
Whether you believe such ballsy business moves are smart or crazy, the fact is that successful company founders often identify those "chutzpah moments" as the decision that ultimately triggered their rise to success.
Based on interviews with company founders, each of whom started, grew, and sold their company for $100 million or more, or took it public for $300 million or more, here are five ballsy business decisions that became the pivotal moment in an entrepreneur's success story.
Stand next to the big boys.
Viresh Bhatia's InstallShield wasn't always on every single PC on the planet. When he was starting out, there were lots of competitors with the same technology, most of whom would put small ads in the back of computer magazines promoting their products. His chutzpah moment? He and his partner, working out of a 10x10 room, sank their money into a full-page, four-color ad right next to Microsoft, Lotus, and IBM in PC Magazine. The phone rang off the hook after that because customers assumed InstallShield was in the big leagues. Now it is.
Be your own guinea pig.
Dane Miller, founder of Biomet, believed that titanium was a safer metal for implants than the industry standard, stainless steel. To prove it to future investors, he asked a surgeon friend to insert a piece of titanium about the size of half a toothpick into his own arm. When it came time to make his case to investors, Miller's implant proved to be a powerful promotional tool, and a testament to his passion. Twenty-five years later, his company now generates about $17,000 every three minutes.
Sell them an empty box.
Don Mauer's medical device company, Empi, had almost everything it needed in the beginning -- a great idea for an electro-therapy pain-control device, a scientifically sound study run by a distinguished neurosurgeon, and a huge market demand. What it didn't have was a backer or a prototype of the product. So Mauer made a wooden model of his concept, painted it, glued on some knobs, and pitched his idea to some investors. With that empty box, he raised half a million dollars, enough to get Empi started. He later sold the company for $161.4 million.
Eat your young.
By the time he was in his mid-20s, Scott Jones had a profitable business enterprise called Boston Technology. But Jones had a bigger idea around a little-known technology called "voicemail." That fledgling segment of his business was losing money, while the other two segments were making money and growing at 2 percent a year. His solution? Shut down the two profitable segments and bet on the one thing that wasn't proven yet. From that one risky move, Boston Technology generated 1,000 percent growth, created hundreds of millions in revenue and billions in valuation, and changed the way we use our phones. No more busy signals!
Walk out on your backers.
David Becker saw his credit union clients lacking the software needed to utilize their new powers following the 1979 deregulation of the financial industry. After six months of research, he found a software product he loved, and presented his plan to the league of credit unions' board of directors. In the midst of discussions bogged down by indecisiveness, Becker stood up, whistled to get everyone's attention, and announced: "Ladies and gentlemen, let me solve this dilemma for you. I'm going to quit and do this myself." He thanked them for their time, invited them to be his customer someday, and walked out. Later, more than half of those board members became his customers. After selling that first company for $24 million, then selling a second company for $52 million, Becker went on to launch First Internet Bank, now at $500 million in assets, and is recognized as a founding father of the Internet.
The lesson from these ballsy entrepreneurs? In business, chutzpah pays off. If you're passionate about your business idea, don't let obstacles of any size prevent you from taking a stand, pursuing your goal, or sticking to your vision.
Robert Jordan has been launching and growing companies and helping other entrepreneurs do the same for the past 20 years. He is author of"How They Did It: Billion Dollar Insights from the Heart of America" (RedFlash Press). Learn more about the 45 founders and the book at www.HowTheyDidItBook.com.