• December 2012

The Case for Start-Ups Not Taking Venture Capital Too Early

By Kenneth Krogue
President & Co-Founder

When Dave Elkington (pictured below) and I started InsideSales.com in 2004, we wanted to build a company that was well prepared for hyper-growth without just throwing money at it.

We wanted to build it from the ground up based on great ideas and sound execution. We wanted to test and vet the business by growing it organically based on its merits in the marketplace. We wanted to learn what we needed to do each step along the way. We wanted a PhD in Entrepreneurship from the University of Hard Knocks.

We realized that the company grows only as fast as we do.

But that’s okay. It means a lot more when it is your money. You don’t spend it as fast. You learn to rub two pennies together. You want leverage. You make do. You invest in great people and technology, but you don’t care how fancy your chairs or desks are. You force yourself to stay disciplined. You figure out a way.

Building our company from the ground up also has yielded other benefits:

  • We didn’t give away the shop.
  • We control our own destiny (with help).
  • Both of us had known entrepreneurs who had great ideas and thought all they had to do was raise some money and grow like crazy. Very few of them are still at the helm of their own companies years later.

Dave Elkington, our CEO, is a legend of fiscal innovation.

That is a nice way of saying he is tight as can be. But it is paying off big time. He is amazing. I could never do what he can do.

Anyone can say “Yes.” Few can say “No.” It is by far the greater of the two disciplines. It will become even more important with the direction the economy is continuing to go.

We outgrew our competition while growing organically. We forced ourselves to run the tightest ship in our entire industry. We learned to out-innovate our tech competitors, to be data-driven, to make hard decisions, and to stay hungry. Because we had to.

One of my favorite success stories is that of Hyundai. They set a big, hairy, audacious goal of being able to offer a 10 year, 100,000 mile warranty on their automobiles, which made the industry think they were crazy. They weren’t crazy. They forced themselves to raise the quality of their cars until they were the best and could survive the bold commitment they had set for themselves with their warranty. They pushed Toyota and Honda and all the American brands back on their heels.

Hats off to Hyundai.

When the crash of 2008 happened, and Wells Fargo yanked our only small credit line for no reason and with no notice, we pulled together as a team, tightened up the belt, and grew. In fact, we grew like crazy.

They said there is a recession happening. We voted as a team not to participate. Because we could. You see, we were profitable.

Nobody I have ever seen gets as much done with as little as our scrappy team here at InsideSales.com, leading our own corner of cloud computing, the world of remote sales. We all owe that to Dave. Very few can boast being the leader in their space and twice being on the Inc. 5000 list of America’s fastest growing companies without raising money.

I love reading Nuts!, the crazy story of Southwest Airlines. Why?

  • It’s the only airline that is consistently profitable over the last four decades because they out innovate everyone else combined, and they run a tight ship. I choose to fly them now whenever I can. When a downturn comes, they barely notice. They fly one plane because it keeps parts, service, and training costs low. Why do I fly them when they serve peanuts and I love the ginger cookies on Delta? Lots of great reasons, but most importantly …
  • They are profitable.
  • They have a sound fiscal policy, unlike many of our government leaders, past and present (where are the fiscally responsible entrepreneurs in government?).
  • They don’t charge extra for luggage … because they don’t have to. For years they did what nobody else was willing to do. Now they can do what nobody else can do.

At the end of last year we finally took a round of investment from Hummer Winblad Venture Partners and several SaaS industry leaders like Josh James, the founder of Domo and Omniture (which sold to Adobe).

It was a rather small round. We didn’t need the money. We wanted the expertise, mentoring, and coaching from folks like Mark Gorenberg (pictured right), Lars Leckie, John Hummer, Ann Winblad, and Josh James.

Now don’t get me wrong.

With some additional resources and investment, you can afford to put your foot on the gas. We are growing even faster now. But we are bound and determined to stay disciplined and in control of our own destiny.

Just because everyone else thinks that the formula is to come up with a good idea, raise money, spend money, and grow like crazy doesn’t mean it’s right.

A lot of out-of-work founding entrepreneurs who are watching other people manage the companies they started say otherwise.

About Kenneth Krogue

Krogue co-founded InsideSales.com in November 2004 and currently leads its marketing, business development, consulting, education, implementation, and support departments. He has more than 24 years of experience in sales, development, and marketing in both domestic and international markets.

Prior to joining InsideSales.com, Krogue was one of the original founders of UCN, now inContact (NASDAQ:SAAS). Prior to inContact, he built and directed the inside sales division at FranklinCovey (NYSE:FC), a leading provider of time- and life-management training systems. He has received many industry awards, including being recognized among the Top 25 Most Influential Inside Sales Professionals in 2010 and 2012 by the American Association of Inside Sales Professionals (AA-ISP).

Krogue is a weekly contributor to Forbes.com and an active thought leader in the inside sales industry. His blog is the top-ranked blog in the world on the topic of inside sales. Krogue attended the US Naval Academy in Annapolis, Md., and earned a BS in Psychology from the University of Utah.

For more information about Krogue and his company, visit InsideSales.com.