After nearly three decades of entrepreneurship, Steven Sperry has experienced all the highs and lows of a seasoned startup veteran, from a successful IPO to crashing and burning during 2001’s dot-com collapse. For the past several years, his attention has been focused on investing in and mentoring new entrepreneurs—first in Seattle, where he spent most of his life, and now in Portland, where he relocated to in July.
A Maine native, Sperry decided to return to his birth state in part because of the burgeoning startup community he became aware was growing in Portland. It didn’t take him long to get involved.
Venture Hall, a new innovation hub and accelerator program in Portland, has named Sperry its first Entrepreneur in Residence. The role will mean Sperry will work with the Venture Hall team, including co-founders Jess Knox and Mike Sobol, to develop and deliver programs that provide value to Maine’s startup ecosystem. Once the accelerator and other Venture Hall programs are up and running, Sperry will also work directly with startup founders in a mentorship capacity. He’s already begun contributing to the local dialogue, publishing a blog post on Venture Hall’s site titled “Raising a Round? Know the True Costs of Selling Equity.”
“Having repeatedly navigated the full startup lifecycle from founding to venture funding, hiring, rapid growth and exit, we’re truly lucky to have Steven as an active part of our community,” Sobol, Venture Hall’s CEO, said in a statement. (Full disclosure: I serve on Venture Hall’s advisory board.)
I sat down with Sperry to discuss his experience as a startup founder, why being a mentor to other entrepreneurs is important to him, and what he believes is Maine’s primary weakness and what he plans to do about it.
MSI: Tell me about your entrepreneurial background.
Sperry: I originally planned to be a physicist. I was working as a staff physicist at Boeing in the mid 1980s. We were developing an experiment to fly on the space shuttle when the Challenger disaster occurred. So I decided to refocus my career in a different direction. At the time, I had been working on a software application that was going to run this experiment and I decided I could take certain elements of that software and commercialize it. So I left Boeing and started my first company, which was called Primus. And we developed an enterprise software application to help large corporations manage technical support knowledge. That was in 1989. It followed a fairly typical venture-funded trajectory. We started out raising capital from angel investors, using that to develop a minimal product and then went out to sell that product to customers and used that success to attract venture investors. We were fortunate because in the mid 1990s there was wave of interest in a category of software now called CRM—customer relationship management—for managing call centers, technical support operations, because a lot of big tech companies like Microsoft and Apple were experiencing explosive growth and having trouble keeping up with customer support operations. We served that market and experienced really strong growth. In 1999, the company went public. About two years after the IPO, the company was acquired by a larger company in the CRM space.
But my involvement with the company ended at the time of IPO. I left the company to start my second company, which was called Acadio and that company was in the online education space. This was in 1999. It’s hard to describe the feeling at the time. There was a feeling of … it was almost a Gold Rush mentality. It was much stronger than it is today. It was feeling that the Internet is opening up a world of new possibilities and there’s nothing that can’t be done and you have to be part of it. That was one of the reasons I decided to leave my first company and start Acadio. Also, at that point my first company was 300 employees and I really came to understand that I enjoyed the early stage of companies. When it got to 300 employees it became more about a management isue and less of a creative process. So I went on to start my second company. That company was unfortunately a casualty of the dot-com crash that followed the dot-com boom. It was a typical situation where we had a double-edged sword. On the one side, we had a booming market that enabled people to raise capital—I raised over $30 million for my second company in a matter of months—but the flip side of that is that too much capital flowing into a market ultimately is going to create a bubble and that bubble is going to burst. So I ended up shutting down my company in 2001 and returning about a quarter of the money back to investors, which at the time was a controversial decision. But it turned out that after we shut down the company we had 9/11 six months later and the whole startup tech industry was completely eviscerated. So it was clear if we hadn’t shut the company down when we did, it would have failed completely and I would have lost all the money. It was a great learning experience.
Then I took a couple years off and recovered from that experience. I then joined a small software company in Portland, Oregon, that was looking for an experienced CEO. They had a promising product in the energy efficiency space—a sofware product that controlled the power settings on computers on large networks to reduce their energy consumption—but like a lot of startup companies it was group of people that had got together with an idea and they lacked experience and knowledge of how to turn that idea into a business. How to raise money, how to position and market a product, how to build a product that can scale and support thousands of users. I moved the company to Seattle, got it funded, scaled it up in terms of revenues and hired a CEO to replace me in 2006. That company was acquired in 2015. Since that time I’ve been advising entrepreneurs, doing some startup investing, working with startup companies, and helping entrepreneurs take ideas and turn them into actual businesses.
What do you like about mentoring other startups?
I want to help people avoid the mistakes I made when I started my first company. Because in the late 1980s-early 1990s there weren’t a lot of mentors and there weren’t methodologies. Like today we have the Lean Startup methodology. Those things didn’t exist back then, so it was a process of trial and error. You made lots of mistakes and just hoped none of them were fatal. I made lots of mistakes. Fortunately, none of them were fatal and the company was able to ultimately have a very successful exit. So by mentoring I have a chance to convey those experiences and lessons to people who are just starting out on their entrepreneurial journey so they can hopefully avoid some of those mistakes. They might make other mistakes, but maybe not ones that have been made before by people like me.
Did you benefit from mentors yourself?
In a sense I did. The main mentorship I got came from my investors, but these generally were not software people. They were stockbrokers and successful business owners of various kinds. They generally weren’t people who had started a software company and built it from the ground up. Because that whole thing was just starting. Nowadays we have hundreds of people who have gone through the process at Microsoft and Amazon and Google and have spun out as wealthy tech angel investors and are able to provide capital with expertise, which didn’t really exist. So I got some good general business mentoring, but not at the level of detail that would have helped me avoid making big mistakes.
How did you end up in Maine?
I’m originally from Maine. I was born in Caribou. I left there when I was a kid, ended up in Seattle, grew up in Seattle, started my companies in Seattle, and eventually decided I wanted to come back to Maine. Seattle is a booming city with serious traffic problems and sky high housing problems, all things that go with rapid growth. I just wanted a higher quality of life. I was also attracted to Portland because of the food scene here and the fact there are a lot of entrepreneurial people here. But until recently there really hasn’t been the sort of startup infrastructure that you see in places like Seattle–the accelerators and the various programs. I thought I could contribute to helping getting those things in place.
You said you were aware there were lot of entrepreneurial people here. When you were in Seattle, how did you learn about Portland’s startup community?
I had read an article in the Portland Press Herald that talked about the startup scene in Portland…
There’s a very good chance I wrote it…
There’s a good chance you wrote it. It was either last year or the year before. And so I visited Portland last year. It was in the summertime. So the weather was perfect and I was just like this is a beautiful place. I thought it would be a great place to come and help foster that startup environment, which I think is spreading throughout our culture now. We have accelerators in most major cities and they’re starting to appear in smaller cities like Portland now.
When did you actually move here?
I moved here in July of this year.
What’s your initial take in the short time you’ve been here on the local startup community?
From the people I’ve talked to there seems to be a lot of enthusiasm. There’s a great deal of support. As you know, besides Venture Hall there are number of groups and organizations—some public, some private, some a little of both–that are trying to foster entrepreneurialism and creativity in maine. That’s great. I think the primary weakness, from what I’ve been able to determine so far, is there isn’t a large pool of technical talent to draw from. So if you’re someone like me and I come to Portland and want to start a software company or a really software intensive company, I foresee it could be difficult to recruit the kinds of skill sets I would need to do that. To get the people I need I would have to take them away from other companies. As opposed to for example in Seattle you have companies like Microsoft and Amazon, which are producing thousands and thousands of engineers and at some point they leave those companies to join startups or start their own companies. You also have the University of Washington that has a school of computer engineering, which is funded by [Microsoft co-founder] Paul Allen, that’s producing thousands of high-quality software engineers every year. There are also coding academies. It’s an easy place to recruit technical talent. So that could be a limiting factor for a city like Portland in terms of fostering high-impact, high-growth tech companies.
Since it’s not going to get a university or college of engineering any time soon, Portland needs that anchor company like Microsoft to start here. Even if it started here tomorrow it would still take 10 years before it starts to bear fruit. In the interim, accelerator programs like what Venture Hall is offering are a good sort of fill in, but ultimately for Portland to be a thriving tech center it’s going to take that kind of a company starting and growing here.
What do you hope to accomplish in your new position as Entrepreneur in Residence at Venture Hall?
I hope to bring my experience to Venture Hall in terms of helping entrepreneurs build tech companies in ways that are more likely to lead to their success. The failure rate in the industry is still high, it’s still somewhere north of 90%. The thing that can be frustrating about that is the reason tech companies fail are well known, well documented, but people keep failing the same way so I think an organization like Venture Hall with people like me and other experienced entrepreneurs can help companies avoid those well-known mistakes and increase their chances of success.
What else are you working on now that you’re here in Portland?
I am thinking of starting a new company here in Portland that could be the kind of anchor company I was talking about. Though I don’t have anything to announce yet. Not to say that that’s what’s going to happen, of course. I just think this is a time of tremendous opportunity and I think Portland would be a great place to start that kind of company.