When Jeff Sprecher was 23 years old, he had 26 MasterCards and Visas because they were the only means he had to fund his business. Then he realized that was a poor way to finance a company, a lesson that has impacted the way he does business today as chairman and CEO of IntercontinentalExchange, an online marketplace for global commodity trading. Last year, his company had $156 million in revenue and didn’t use credit cards to raise capital. Smart Business spoke with Sprecher about the importance of setting a good example and why you can’t dwell on mistakes.
Reflect your ethics in the organization. Have a certain ethic that says you’re honest, trustworthy and fair. In any place in life, people respect those qualities. It’s hard to operate in an environment where you don’t have a highly ethical, highly honest work environment.
Set the example at the top of the organization. Just like a parent, you can’t say, ‘Do what I say, not what I do.’ People admire good leadership and want to work in companies that have good leadership. They want to emulate the actions of good leaders, so it’s important that you live by example.
Hire and surround yourself with people that reflect your own ethics and hope that they do the same. Over time, you can change the culture of an organization through individual employees.
Trust your people. Be a person that believes in the good. Have a ‘glass is half full’ attitude, and when things are going wrong, insert yourself and make sure that people recognize where things have gone wrong, and try to learn from those mistakes.
Businesses make mistakes. A good business will figure out the mistake early, correct it and move on, and not paralyze the organization in that process.
The worst thing you can do is admonish somebody who took a calculated risk that they felt was valid and was wrong. Reward somebody who takes a calculated risk, was wrong and corrects it.
Don’t create a fear-based company, where people worry about losing their jobs because they make decisions. Create an empowerment-based company, where people feel that they are required to make decisions and required to be responsible for them and take ownership of their mistakes.
Innovate. Go into a mature market, look at things and re-innovate.
I have grown up having always been able to order a pizza and have it delivered to my home. Yet people have come up with all different ways of making pizzas and delivering them to homes and create amazing franchises in a space where one would say the market is largely served. You can find that same kind of example in any industry where someone goes in, innovates and takes the calculated risk to invest and apply that innovation.
You need smart people that can see opportunities, and those opportunities are usually presented to you by talking to your customers about what their needs are or where others are not fulfilling their needs.
Don’t get ahead of yourself. Don’t hire people too much ahead of the need. One way to empower people is, as the company is growing, put more responsibility on people and not let them hire that responsibility away.
By running relatively lean, you’ll find those people that are willing to take on new responsibilities. Build businesses and growth areas around them.
In a growth environment, look to the people that have leadership skills and have good decision-making, and give them that part of the business and let them run with it. It’s almost a self-policing activity.
Raise money and think bigger. It’s easy to have great ideas but lack the resources to implement them.
It takes a certain amount of salesmanship and entrepreneurship just to raise the resources that you need to operate in business. Get that balance right because you can’t spend all your time raising money, because then you’re not doing the business, and you can’t do the business unless you’re raising money.
A lot of articles say there’s a lot of capital in the world looking for opportunities to invest. Finding the neck of the funnel where your ideas and those dollars come together is incredibly difficult. It takes just as much energy for an investor to invest $5,000 as it does to invest $5 million.
Anyone who is on the investment side of the business has a certain amount of due diligence that they want to do to protect any amount of money that they want to put into a venture. Once you figure that out, you’re better off thinking big and coming up with an idea that warrants the $5 million, as opposed to the $5,000 investment.
People come to me to ask for help for ideas they have that are relatively small. Can that idea be bigger? Can it be national or global? If it has applicability in what you’re doing locally, would it have applicability around the world? If it does, think about setting up a business for that because it may be easier to raise money for a good global idea than for a small regional idea.
Be prepared for change. The world and the capital markets have trends. Recognize that whatever you’re looking at in the market today is not constant and is likely to change. Always be evaluating: Is it going to change, and is it going to change for the better or the worse? What do I need to do to position myself for that change?
I made mistakes as a young person because I didn’t realize how rapidly markets and environments can change, and it’s not forgiving. You cannot control that change, but you can benefit from it.
You’re going to jump in a river. If you try to paddle upstream, you’re not going to make it. That river is going to take you somewhere, and you don’t really know where you’re going to come out at the other end.
What you can do is paddle to the left and paddle to the right. Make sure you’re going left when you need to go left, and go right when you need to go right, and avoid the rocks as you go down the stream.
HOW TO REACH: IntercontinentalExchange, www.theice.com