Should You Stay or Should You Go? LockPath CEO Talks About How to Make the Leap (and Compete) (Page 1 of 3)
Categories: Strategy and Leadership
In June 2005, Chris Caldwell decided to leave his safe, secure job at Archer Technologies (now RSA Archer). It wasn't that he was unhappy with Archer, Caldwell explains; he was simply looking for more. Sound familiar?
"I worked for the founder of Archer -- I was VP of Products -- and it was a great experience," Caldwell says. "He's a visionary in our space. I didn't leave Archer with the intention of starting a new company. But there were some things I wanted to do, and didn't have the opportunity.
"We just had some different ideas, some things I can't talk about. I saw some other things coming into the market that I thought would be important. I wanted to move into an organization where I had more control."
From Archer, Caldwell went to PPM Information Solutions, where he was president and COO.
Chris Goodwin, who was Archer's first employee, also left, albeit in a different direction, in September 2005; he went to work for Saepio.
In December of 2006, Caldwell hired Goodwin to be CTO of PPMIS. "Since PPMIS focused on the healthcare industry, all of the customers we were working with were struggling with compliance," Caldwell says.
"We also worked with our sister company PPMRRG, a small insurance company that faced various ongoing IT and compliance audits, working with outside auditors and insurance regulators."
The combination of those two experiences solidified Caldwell's and Goodwin's thoughts that there was a need for a better solution for smaller regulated companies to manage their governance, risk and compliance programs -- known by the acronym GRC.
So, they decided to do something about it. In June 2010, both men left PPMIS to co-found LockPath; Caldwell's the CEO, Goodwin's the CTO.
"We worked for a period of six months with PPMIS to transition our roles to our successors," Caldwell says. "We loved working at PPMIS, and all of the people there. We worked extremely hard to make sure the transition was successful, which it was."
LockPath's first product was launched in October 2010, and the company landed two Fortune 100 customers within the first quarter. Caldwell says 2011 revenues will be 10 times 2010, and he expects 2012 growth to slow only slightly, to the range of 500 to 700 percent.
Based in Overland Park, Kansas, with sales offices in Minneapolis, Santa Clara, Calif., and Herndon, Va., LockPath had 22 employees when we spoke with Caldwell, but it's probably considerably larger by the time you read this: He was on the hunt for 19 to 20 new employees ASAP, and wants to hire a dozen to 15 more in the next quarter.
"We're rapidly adding to the sales team, and also to support," Caldwell says. "We started very strong on the product and development side, because we put the product first. We didn't add sales people until July of 2011."
Here are some of the nuggets Caldwell shared about leaving your current employ to start and grow your own software company:
Tip #1: Your best startup ideas often come from your current employer.
As we outlined in our opening paragraphs, it was while working with PPMRG, an insurance company, that Caldwell and Goodwin recognized a huge need for GRC solutions in small to mid-size companies.
"Here was a small company, less than 100 employees, that was being audited as if it were a large enterprise," Caldwell says. "This is where our ideas started coming together.
"Here's a company that doesn't have the manpower of an enterprise to manage all the pieces you need to put in place. Archer was not focused on that market; they are focused on the Fortune 500, primarily in the financial services sector. Sarbanes-Oxley really drove the appetite."
Tip #2: Don't burn any bridges, and be prepared to swim.
Even though LockPath and Archer are now sometimes competitors, it wasn't planned that way, Caldwell says. He thought they were aiming for a different segment of the GRC market.
"We didn't even think about solicitation [of Archer's clients], and honored all our agreements with Archer," says Caldwell. "We each left on our own, we went to separate companies, and reconnected only later.
"Once we really had the idea for the need in the market, that's when we formed LockPath -- it was more of a mission than about compensation. PPMIS was supportive -- they are now a customer of ours -- and we spent a lot of nights and weekends building the product.
"It wasn't until the product was finished that we left. I was well compensated at PPMIS and at Archer, but at LockPath we went without salaries for months."
Tip #3: In the best products, pain and passion always have roles.
"We had a burning passion to build the product," Caldwell says. "We were in the healthcare space, also working in the insurance space, and we saw the need.
"We understood that a lot of companies out there didn't have the teams and sophistication to manage the regulations that were coming down. They didn't know how to build something that was easy to use.
"We really knew the market. I was on the other side of these audits, so I felt the pain of these companies that had to be in compliance but were understaffed and didn't know how to comply. It was really about building a product that solved the problem that I had."