Growth spurt Featured

7:00pm EDT December 26, 2007

When Timothy Hall, founder, president and CEO of Digital Blue Inc., was getting his fledgling company off the ground in 2002, he didn’t think he could spare five minutes to breathe, let alone enough time to develop a five-year strategic plan.

But he made the time, and it was time well spent. Hall’s start-up — which partners with brands including Disney and American Idol to target the tween and teen audience with products such as cameras, microscopes and binoculars — has grown into a $20 million company. And although its products and marketing strategies have changed since Hall created the plan, having it helped him deal with basic growth issues, such as capital, infrastructure and resources.

Smart Business spoke with Hall about how he’s grown his company by learning to suppress that impulse to tell everyone else what to do.

Q: What are some pitfalls CEOs should avoid?

When you hire new managers, there’s a tendency to tell them what to do. Don’t take your managers and tell them what to do. Ask them to recommend what they should do. Challenge and understand their recommendation and either support it or redirect them.

That’s pretty hard for CEOs to do. A lot of us are type-A personalities, who are used to ordering people and telling them what to do. We know it, we can do it faster ourselves, but we could certainly get the job done faster if we just tell someone what to do and they go execute what we asked. If that happens, you still can’t grow a company beyond a certain limit.

But if you start challenging them and mentoring the way you’re always looking at the subordinate for a recommendation, either the subordinate gets really good at that and becomes able to mirror the type of behavior you would do yourself, or they leave and you get somebody better.

Q: How do you make sure you’re hiring the best employees?

A major pitfall is when people don’t really dig in on the recruiting and really spend a lot of time in an organized process recruiting new people. When you’re busy in start-up mode or early growth mode, you’ll hire somebody who fits the bill and put up with that.

That’s a pitfall to be avoided because the people you put on the bus are the most important thing in the company — more important than the product.

We won’t hire a senior person unless we’ve interviewed them three times in different settings. We spend a lot of time with their reference checks and really dig into what they’ve done in the past that suggests they can succeed at a job here. We want to make sure they’ve done this job somewhere else and can hit the ground running.

Avoid the pitfall of recruiting too quickly and grabbing the first candidate who does well in a one-interview setting.

Q: What is the biggest business challenge you’ve faced?

The big change from being an executive at a public company to being in a start-up, then going from a start-up to a rapid-growth company was a second set of challenges.

I had to relearn how to do my job when I went from being a line executive with a couple hundred people beneath me to being a line executive with just a golden retriever at my feet. I had to relearn how to spend money wisely and watch the cash.

Entrepreneurs who start as entrepreneurs do this better than guys like me who come from public companies to do a start-up.

Then when we go from start-up to growth to a rapid-growth company, you have to relearn how to professionally run a company. When I left the public company, I said, ‘I’m so glad to go to a company where everything’s efficient, and we never have to have meetings, and everything is decided on the fly.’

That works really well up until your first $20 million in revenue, but then you have to go back to structure. You have to go back to having meetings. You’ve got to have human resources and vacation schedules and all sorts of things you associate with traditional companies.

Q: How do you deal with those changes?

My team had to talk me into having regularly scheduled meetings again. I always though that was anathema. In a public company, you’d have these ridiculous staff meetings that nothing got accomplished in. In a small company, we’d accomplish 10 times more in the hallway.

But, once you start having two-, three-dozen people, that doesn’t work anymore. Communication doesn’t flow from hallway meetings, so you have to have meetings that have agendas and carefully constructed reasons for being there and minutes to distribute.

As long as you keep those efficient, you can stay lean and mean and move quickly. You don’t have to get bogged down just because you have meetings.

The challenge to the CEO is to adapt to that world and run the company in a professional way.

HOW TO REACH: Digital Blue Inc., (888) 800-0502 or www.digiblue.com