What You Need to Know to Start your Own Business – Interview with Jim Estill

Hey everyone, my name is Nader, the founder of ColdAd™, a Toronto Inbound Marketing Agency.I’m here with Jim Estill. He started a computer distribution company (EMJ Data), from the trunk of his car in 1979. With a great team, he built the company up to 350 million dollars in sales, and [it was subsequently] sold to Synnex in Septemeber, 2004.He became CEO of Synnex Canada [and remained there] until May 2009. Now he’s a partner in Canrock Ventures, an early-stage active technology investment fund. Jim was on the board of RIM (Research In Motion), Blackberry maker, since before they went public [and remained with them] for 13 years.NADER: Hi Jim.JIM: Hi.

 

NADER: Okay, tell us a little bit about how you came to start your own business.

JIM: So I was an engineer [at the] University of Waterloo and I wanted to design circuit boards cause I thought that’s what I should do. And I went to buy a computer, which I needed to do the design, and I got a better deal if I bought two of them. So I bought two of them and sold one. And then someone else wanted one, so I bought another two and the next thing you know I’m selling computers and not doing much circuit board design.

Although I did keep doing some of the contract engineering work and eventually (when I needed the space), I sold most of that company – which became a product company (that’s still in business today called: ConnecTech). And they make multi-port serial boards (asynchronous communications boards.)

But I basically did it because I needed a computer and wanted a better deal so I bought two of them.

NADER: I think the concept was a little early at that time (1980). RFID (Radio Frequency Identification) and this stuff was a little new for everyone. So you started something to distribute: which was completely new [too] … Right?

JIM: Oh yes, absolutely. I mean that was before the IBM PC. Like, this was back in the really, really early days of the computer industry. And part of what allowed me to grow very quickly was [that] the industry was not formed. So I could help form the industry. There were no computer stores, so at first I was selling to anybody who would buy a computer. Then computer stores started popping up, so I started to sell to the stores instead of selling direct to individuals or individual companies.

Another advantage I had was that computers were very expensive back then and they were not well understood. So people would actually pay you to show them how to use them and pay you to install them. They were much more complex and of course the margins were correspondingly much higher. And the years I was in the computer business, every single year the margins would decline and the prices would decline. So it was a really tough business to keep going for the (laughing) 25 years I did it.

But one of the things I’m very proud of is I was profitable for 99 consecutive quarters. So that’s one of the achievements I’m very proud of.

NADER: So you’ve almost answered my second question. What kind of challenges did you face when you first started your business? So nobody knows about the market and the product. What else?

JIM: Well part of the problem I had was I actually didn’t have any business experience to speak of, and I was too young. And I tried to raise capital and was unsuccessful raising capital. But it was probably a blessing because I ended up owning most of my company. And it also created a frugality in me that has continued forever. So I’m a very frugal person, because in those early years I had no money. Cause I tried to raise money but was unsuccessful.

I guess other challenges… being young. To get people’s interest and respect when you’re… I was young and I looked younger than I was – I looked very, very young. People didn’t want to talk to a kid that much when I was buying products and even when I was selling to some extent.

And then I had all of the usual growing pains of outgrowing space. I moved every single year for probably 10 years in a row. So moving from a tiny office to a bigger office to a bigger office to a bigger office…

I was hiring at a very great rate, so you’ve got a problem with your people (laughing) not knowing enough about what’s going on. Because they’re all new. I can look around the office and I have 20 new people. But it wasn’t that I had 20 people quit, I had 20 people that were in new positions.

NADER: Yes, the situation that you have started was in 1979, I think the concept you are talking about right now is the same. Many, many things are new concepts, new technologies and new ways of looking at something. Entrepreneurs are young. And the difficulty is that they have to prove themselves: to the community and to other people.

JIM: Right.

NADER: Okay, so what’s your definition of success?

JIM: That’s a real tough one. I mean, the world measures success in business by money. So the measuring thing… But I would measure it more by reputation. And the number of people who are willing to do business with you again. I always say reputation is more important than money – uh, money at all costs – money is actually a by-product. Another definition of success is doing things that I like to do. Right now, essentially, I’m retired — is what I say. But I work more hours than most people. Why do I do that when I’m retired? I do that because I love it.

NADER: So, the best thing is loving what you do? Do you have any advice for people out there interested in starting their own company?

JIM: Sure, I mean, I’ve invested in over 100 start-up businesses and I’m a consummate entrepreneur and love the challenge of start-up and the excitement of start-up. One thing I see in some people who are thinking about starting up a business, is they “think” about starting up a business. My suggestion is, don’t “think” about starting up a business — just start a business. (…)

One of the other problems with entrepreneurship is everyone wants to know the answer. So what’s the best thing you should be doing? Is it best for you to be spending your time interviewing me now? Or is it best for you to go bang on doors and try to get new customers? And the answer is — there is no answer.

Every entrepreneurship involves time choices and you never know the answer — is the problem. If you want certainty, go get a job at the government. Then you get paid every two weeks.

NADER: So the most important thing to take away is: Go and do your job! What do you think?

JIM: Yes, go and do it. Another thing I believe in is: fail often, fail fast and fail cheap (…) If you have a failure you are not a failure (…) I can’t even tell you the mistakes I made because I shake them off. I don’t dwell on them. But I’ve made hundreds of mistakes, and I’ve made more mistakes than anybody. The more mistakes you make the more successfully you’ll be. But the key is: So you fail often, and you fail fast (so you don’t keep doing the same thing – pounding your head on the wall for 10 years), and you fail cheap. Early on in business I made a mistake sometimes where I didn’t fail as cheaply as I could have. So that’s another trick. To not risk your entire company, but to try different things.

The other thing is, people say, “if you do what you’ve always done, you’ll get the same results.” Well unfortunately that doesn’t work in business. If you’re a successful business person doing what you’ve always done, you’ll go bankrupt. You always have to change because the environment changes. So looking at what’s happening around you (…) When I started selling computers, I sent faxes to people (laughing). I didn’t send them emails because we didn’t have email back then. So I’d still be sending faxes, doing what I always did, wondering why nobody buys anymore.

I don’t think I’ve gotten a fax in the last two years.

NADER: You mentioned that you are helping many start-up companies. So these types of people have already started. They come to see you about the thing that may show profit. For them, what’s the most challenging issue or problem you see? Is there any common problem with new start-up companies?

JIM: Well, the biggest thing that will kill a company is: no sales. So every single start-up company needs sales. And that is a totally critical area. I’m an engineer, and like engineers, and I like new ideas.

I often find people who are great in technology (you’re a rocket scientist – you design the best thing in the world), but if you can’t sell it, then you will not have a business. So sales is where I see many businesses challenged or they need to spend more resources on, in my opinion.

NADER: How do you start? How do you get your first sales?

JIM: My belief is that companies should sell and then buy, not buy and then sell. So what I mean (in an R and D company) is I see many, many companies say, “we spent three years and we developed this product.” So they’re buying first and then they want to sell it. The easiest and best way is to find a customer who’s willing to pay you. And then go develop what the market wants as opposed to you imagining what the market wants.

Now of course I’m exaggerating. You can’t always pre-sell everything. But the best business models are the ones where you sell and then buy. And in my business, I often do that. I would go up to the customers and say, “would you buy these printers if I sold them?” And I would go the customer and say, “what are you looking for?” And they would say, “I need this monitor… I need this bar code reader…” And I’d say, “well great, I’ll buy one for you” and what not.

So listening to customers and giving them what they want as opposed to selling what you think they want (…) I’ve never had any luck going out and trying to sell what I want to sell. They buy what they want to buy.

NADER: In your career you’ve hired many people (talent). I recently read an article in LinkedIn. It showed that many good, talented people are not good at writing resumes. It suggests that if you’re a CEO or recruiter, you should pick randomly from your pool instead of just looking for the best resume. What was your methodology (approach) to hiring the best talent?

JIM: I like to hire good people – intelligent people – and the cultural fit is more important than the true genius. The true genius is – how do they get along with people and the team? And how does the culture work? So I hire for integrity and intelligence because most other things can be trained for.

The other problem you have with a start-up, I’ll tell you, you don’t have enough money to hire the best people. You will have to get by with some people. And what you have to do is develop systems and processes of training in order to hire, I’m going to say, some average people. Because you simply can’t afford to hire only the best rocket scientists.

NADER: Because we do inbound marketing, the most important part (for us), is search engine optimization and content marketing (which means blogging). For many business to business companies, and even business to customer companies, it’s hard for the sales team, the CEO, for everyone to get engaged in the idea of blogging for the company’s website. Which is very, very important after Penguin and Panda algorhythms changed in Google and many other search engines. They look for fresh, meaningful and useful content.

But you are blogging! So my question is, “why are you blogging about leadership?”

JIM: You know, I originally started my blog when I have bought my company because I had a communications problem. They had an extra three to four hundred employees and they treated me differently than the three to four hundred I had. Because the three to four hundred I had already knew me, and they knew my sense of humour. So I basically said, “how do I solve this problem?” And blogging was one way. It was not the way, it was one way.

When I first set up my blog, I intended it to be for my employees to read. I didn’t intend for it to be for the world to read. But what happened over time is someone forwarded [it] to their friend and someone else forwarded it to their friend. And I guess search engines picked up some stories and linked to me.

The advantage I had was I was blogging in the very early days of blogs. And I’m a little bit of a tech-ey guy. So one of the things I’ve done is: I’m probably one of the first users that you’ve ever seen on many, many things. So I’m the first user on Twitter, the first user on Blogger, the first user on Foursquare.

Now, a lot of times, I will use something and then drop it. So I was very early user of Foursquare – and I don’t Foursquare at all. So I try things and some of them resonate and some of them don’t. So I do do Facebook, I do do Twitter, I do LinkedIn (which I think is how I think I met you). And I do continue to blog.

I guess the other thing about blogging is I actually like writing. And I think telling everybody they should blog is wrong. It’s sort of like saying to everybody, “you should do accounting.” (laughing) Cause, yeah, if you’re good at accounting, you should do accounting. If you don’t want to do spreadsheets, then don’t do spreadsheets. Get someone else to do it. Not everybody is a good writer.

The other problem is you know in search engine optimization – what Google is trying to do is, they’re trying to [help] the person who’s doing the search [to] find good stuff. And the problem is a lot of people are out there producing bad stuff and saying, “Google, find me, find me!” If you’re not a good writer, and you’re not writing from the heart, and if you’re not doing real stuff, Google is trying to figure out how to not get your stuff on the first page of Google. And everyone else is sitting around saying, “well how do I get first page Google?” It’s being sincere. It’s being true to yourself (is my view).

It’s also a lot like networking. Like how do you get sales? You get sales just by networking and knowing people. You can’t do that fakely. It takes time and you have to do it right.

NADER: Yes. Being fake will cost you more that doing it in the right way. What do you think is the effect of social media and blogging the way modern companies approach marketing?

JIM: If a company is not blogging and using social media, it’s the same as the old days when I would say to somebody, “can I send you an email,” and they say, “I don’t use email.” Or it’s the same as saying you don’t use any new tools. Now just because you have a tool doesn’t mean you need to use it for everything and use it for the wrong things. But something like the social media LinkedIn is a great tool.

What I like about LinkedIn is you keep your own contact information. Whereas in the old days I would get your business card – I’d put it into my contact database. And then three years later I’d say, “oh I want to call Nader,” — I’d call you and oh, the number’s been disconnected, or you’re not at the company – whatever.

Now LinkedIn: I can go find someone that I knew and they keep their information. Oh, you’ve moved to this company, oh you did that. So LinkedIn is perfect.

For me, Facebook is more personal. There’s pictures of my grandkids, it’s personal. So actually I don’t connect with people who aren’t “social” friends. But a lot of companies encourage Facebook followers, they encourage LinkedIn connections – Twitter is another one. Twitter is one of the biggest search engines these days. A lot of people (myself included), looking for something at an instance in time, I use Twitter to search for it.

So if you Google and you want to find out the real situation on a hurricane, Twitter is a better way to find it than Google (on a webpage). Cause Google on a webpage – I might find something from eight hours ago. And eight hours ago doesn’t help me. I want to know: did someone mention the power outage in my area?

NADER: (laughing) Which sized companies do you think can best use social media?

JIM: The beauty of size is that it doesn’t matter in social media. If you are one person, part-time, it’s very easy and cheap for you to have a social media footprint. Twitter, blog: those are really, really easy to do for a company that has one employee.

Of course if you have ten thousand employees, you can also do it. But probably some of the bigger companies worry legally – but we worry too much, legally. Like, you can’t protect yourself from every eventuality. You have to put yourself out there and – (laughing) be real, people aren’t going to sue you. I think people actually like having companies with character. But you do, at the same time, need to have people with common sense. One of the problems with computers is people don’t remember that everything is being recorded.

What’s the first thing you do before you interview anybody? You Google them. What’s the first thing you do? You look at their social media footprint. So if they’ve got pictures of themselves naked and drunk at the party, I mean… they’ll never know they didn’t get the interview. These things are permanent records. It does require some sensibility. You sure as heck don’t want to say, “I represent my employer in this drunken stupor.”

NADER: You were a RIM (Research In Motion) board member. After the iPhone, you were challenged in the marketplace. What do you think about RIM’s future?

JIM: Well, I joined the RIM board before they were public, and I was on the board for 13 years, up to a couple of years ago. I think Blackberry 10 will be hot. I think that if Blackberry 10 is not hot – if you look at the financial numbers… if I gave you the financial statements of that company… the strength of that company – they’re still a very strong company – I’m Canadian and I really hope they thrive. I hope they thrive because it’s sort of my resume. Like you wouldn’t want to go a school and find out the school went bankrupt.

Oh, and actually another perfect case would be: if you were an Arthur Anderson auditor [but] never worked on the Enron account, it’s kind of bad to have it on your resume. You’d rather be a Price Waterhouse auditor.

So I really hope RIM comes back. The other thing (when I do talk about RIM), is regardless of what I say, don’t invest and don’t sell them short just because of what I say. Because I never really know, if you know what I mean.

NADER: What way do you think the trend is going? Which types of companies and what trends are going to be more successful in the near future?

JIM: I think social media is here to stay. And therefore, I think tools that are around social media and social media analytics are definitely trends. I’m a big efficiency guy; I wrote a book on time management. So I think anything that can help people be more efficient: that is also here to stay. Right now I’m mostly investing in Internet-type companies, less in hardware (although I’d like to find a good hardware company). I just don’t see enough opportunity in those right now.

NADER: So you think an application or a site or company that can gather data from social media, analyze it, and give good information to decision makers is a trend for future business?

JIM: I think so. Social media analytics makes so much sense. It’s the new market research. Why would you not want to know instantly what people are thinking about you and your product? And how do you do that? Well, you can go to Twitter and read all the Twitter comments. But that’s a lot of reading. You probably want some tools to help you do that. And maybe it’s not just Twitter, it’s what’s said in the blogs.

The power of social media and the power on the Internet are now with the consumer as well. Like, if you’re upset with a very large company, you have a ton of power – I have a ton of power. I could give someone a fairly black eye. So companies have to be much, much better – much, much faster – much, much more aware of what’s going on.

And also social media and the Internet allow us to test much more quickly. So we can test to say, “does this advertisement resonate?” You can do a test in Chicago and know the results tomorrow. Before you spend a lot of money on a full media campaign.

NADER: Thank you Jim. Thank you for your time. And thank you for sharing your experience with our visitors. We appreciate and hope that we will talk again in the near future.

JIM: Thanks for inviting me to be here.