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Stephen J. McHale

Established IT entrepreneur sets out to solve the mystery of the economy

September 19, 2018

By: Mark Scott

Stephen J. McHale has built an impressive resume over the past 35 years founding, investing in and building information technology companies. He’s yet to have a business fail, a feat he credits to the emphasis he puts on creating win-win scenarios whenever he makes a deal.

McHale serves on the investment screening committee for the North Coast Angel Fund and is a member of the Global Center for Health Innovation Industry Advisory Board. He’s also on the board at JumpStart Inc.

His latest venture is the Unify Project, where he and other innovation leaders are seeking a way to optimize not just a business, but an entire economy.

“We believe we’re not really leveraging all of our assets in our economy to the fullest level,” says McHale, who founded Explorys and sold the health care technology platform to IBM in 2015. “We’ve got a bit of a dysfunction going on related to dislocation and upward mobility, income equality and concentration of wealth. We believe there is a real issue that that an optimized economy can solve. That’s our project.”

In this week’s Dealmakers Live, McHale shares his thoughts on deals he has made and the approach that leaders take when things don’t go according to plan. What follows is a transcript of the above video, edited for readability.

 

 

Two different worlds

I’ve learned that I’m very input-oriented. The experience of selling to a very large company and the environment, the culture being so different, was extraordinary. It was really phenomenal to see how different the world is between a startup and a tech startup and the large organization culture. How do you blend the two, find a synergy that’s still ultimately fulfilling a mission and a purpose? I think we did pretty good with that.

A flawed deal

As businesses, I’ve been fortunate that I haven’t had any fail. I’m not making that up, I just haven’t. I’ve been fortunate with that. I will tell you that I did have one with a culture clash that was so significant, I felt like it wasn’t the best outcome I would have hoped for. That business was corporate driven, and I found out after we had done the merger, sold the business, that the leadership had a different vision than what they had articulated. I felt ultimately, it wasn’t the success I had hoped for. As an economic return to the stakeholders, the shareholders, everybody involved and all the employees, everybody won financially. I just don’t think it was optimal as it could have been. Would we have made a different decision? Probably, given the insight.

Difficult decisions

It’s interesting. I had a friend that just pulled the plug on a startup, just got this email, a very strong individual. That judgment and discernment is so important as it relates to your quality of life and your impact on society and the world. He made a very good decision. It’s, what do you say, fail fast and then having the judgment and deal with the immediate consequences to defer away from what would be the long-term consequences of pouring a lot more into it. It’s a lot about trusting your gut. It’s really hard. If it doesn’t feel right, I’m a sensing person. I’ve had those situations. It wasn’t at the level of pull the plug on the whole business, but I’ll give you an example.

At Explorys, we had to do a major pivot and shut down a segment of our revenue stream because we were spread too thin. It’s not quite a power down of the business, but it was a refocus and it was a very challenging decision to make. We made it. We had to do it to survive and thrive. Fortunately, it was the right move. But it was a lot of gut. This doesn’t feel like we can maintain the velocity required to obtain big impact, so we have to stop serving one segment, which was pharma. We had to shut down our pharmacy effort and focus just on health care providers and health systems.

Complementary leadership is critical

I think we would have done better selecting complementary leadership. We didn’t have a great profile of our strengths. We do now. We didn’t work hard at complementing those strengths with other strengths. For example, mine is ideation, strategy, competition, things like that. We had three of us that were really great at that. We were very powerful. But we needed stronger operators, organizers, things like that to kind of herd us. I would have invested heavier in a process of selecting leadership to complement myself and a few of our other key founders such that we would have been more balanced.

A new project

I’ve launched a new project with some partners and co-founders called the Unify Project. Essentially what we’ve allowed ourselves to talk about is we’re developing an operating system to optimize the economy. We believe we’re not really leveraging all of our assets in our economy to the fullest level. We’ve got a bit of a dysfunction going on related to dislocation and upward mobility, income equality and concentration of wealth. We believe there is a real issue that that an optimized economy can solve. That’s our project.

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