Why Centro's founder chose sleeping in a car over VC money

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In 2001, Shawn Riegsecker, a 29-year-old fresh off a career in digital media, wrote a manifesto about he thought how a company ought to be run. Today, that manifesto provides the foundation for Centro, a digital advertising software provider with more than 300 employees in more than 30 U.S. offices. Rob Walsh founded Scholastica, a Web service that manages academic journals, in 2010.

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Rob Walsh: [In the beginning] you were sleeping in your car, not paying for hotel rooms, sleeping in server rooms. How do you feel that’s shaped you as an entrepreneur?

Shawn Riegsecker: I work in the advertising technology industry. There is so much venture capital and private equity money that flows into this. It’s a very unhealthy industry because all of the growth of these companies is being funded through losses, which is being funded through VC money.

You know what happens when you raise a lot of money early on? You get really good at spending a lot of money. You’re not good at creating profit, you don’t even need to worry about revenue. I think it completely sends the wrong message.

Maybe it’s a Chicago thing, maybe it’s a Midwestern value, but that’s very important to us. So every single year, we’ve been able to grow as fast as other companies, but we just don’t spend money foolishly. We keep our eye on what’s going on at the door and [we’re] creative [in using the] little amount of resources that we do have.

RW: With Centro, you thought about what you wanted the company to be like ahead of time, and actually wrote a manifesto. Why did you do it?

SR: I firmly believe that [when] you start a company, the worst thing in the world is to let your people define your culture. As a CEO, as a founder, you’ve got to make sure you determine what you want your culture to look like long-term. If you don’t, someone else is going to define you. Then, you’re like, well I’ve got a bad apple over here. Maybe I’ll keep that person around because I don’t know if they fit my values. But when you’ve got a set of values, you can crash everyone against [that] set of values and make determinations about the right people to hire and who are the right people to stay on.

And when you make a mistake, you’ve got to rectify that mistake fast. One of our phrases we have in the management team is hire really slow but fire fast. If you made a mistake, you’ve just got to make that decision and move on.

RW: Was there something that happened that made you think, ‘Hey, I need to figure this out from the get-go, before I even start hiring people?’

SR: All of the companies I’ve worked for in my life — not that they were bad companies, I think that they were just normal companies — but I kept always looking up at senior management, [thinking] we would all work a lot harder if you treated us all a lot better, if you respected us, if you actually told us you appreciate us.

Everything is great when business is going well. But the moment bad times hit, all of a sudden it’s your values and culture that are going to define you. I’ve seen too many companies implode from the center out. They’ve got a rotten culture, people don’t like each other, they’re bitching, they’re moaning, they’re gossiping. That will crush an organization as much as anything else.

RW: We’ve also had to think about [stock] options for employees. I know that Centro has an order of magnitude larger pot of stock options for employees than most places do. Why’d you decide to do that?

SR: I think most companies, about 10 percent of their equity or options will end up put in for employees. I think we’re somewhere around 25 percent. About a quarter of the company is owned by people who are currently employed with the company.

I view it as a complete return on investment. I want Centro to be incredibly successful. I want us to dominate the industries that we live to dominate and be the category leader in everything I attempt to do. If I do that, the fact of the matter is, I’m going to be fine. My investors are going to be fine. What I want to make sure is that everyone feels connected to the success of this company.

RW: How important do you think it is for employees to meet the founder and what do you think they get out of it?

SR: As companies grow, there’s dissipation at every ring farther away from the CEO. You’re going to find out it’s easy when you’re three or five people sitting in a room, it’s easy when you’re 15 or 25. It’s harder when you’re 75, 150, 350. At that point, I need to make sure that there’s at least a connection in line of sight to every single person who works here. I knew everyone’s name up until 300. I still try really hard, but at some point my mind just cant hold everything.

I remember starting out my career, when a publisher of the newspaper where I worked had no idea who I was. The executive vice president, the editor, nobody knew who I was. But anytime a senior executive would actually say my first name to me, I would say, oh my god, I feel like the most important person in the world. I think that connection to the history, to how we started, to what’s important to us — and having a personal relationship and knowing if you need to walk in my door you’re not scared to do it, I think is a really great way to set a tone for a company.

RW: Every day, it’s like, ‘OK, we’ve got to put out this fire, make this customer happy.’ But we have to keep our eye on the prize of solving the big problem.

SR: There are so many companies I see [where] an opportunity comes and they say, ‘Let’s go chase that opportunity or let’s go chase that opportunity.’ I think we have been successful because we’ve said no a lot more than we’ve ever said yes. And I think that has always kept our focus. If we try to chase down every opportunity, we’re going to lose focus, we’re going to become nondescript. If you do everything, you’ve got no definition.

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