Yodlee CEO, Anil Arora, MBA '84
Entrepalooza 2012: Passion, Persistence, and Belief
Yodlee CEO Anil Arora, MBA '84, and other innovators at Entrepalooza 2012 share what it takes to make it as an entrepreneur.
ANN ARBOR, Mich. — There are a few principles critical to any business — a clear vision, differentiation, and the ability to execute.
Take those and add a few more for the entrepreneur — passion, belief in one's self, and the guts to play a game where the odds are stacked against you.
Anil Arora, MBA '84, is in a prime position to drive that message home, which he did with his keynote address at the Ross School's Entrepalooza symposium Sept. 21. The annual event — hosted and sponsored by the school's Samuel Zell & Robert H. Lurie Institute for Entrepreneurial Studies and its Center for Venture Capital & Private Equity Finance — includes students, faculty, and the business community discussing and learning the nuances of entrepreneurship.
Arora, CEO of personal finance solutions provider Yodlee, has done the big corporate gig and the entrepreneurial one.
"In a corporation, you have a safety net," he said. "Sometimes things work, sometimes they don't. When you're an entrepreneur, there's no safety net."
Arora managed big brands at Kraft Foods and Pillsbury before joining Gateway Computers in the late 1990s. Innovation in packaged goods had run out of steam at the time, but was fast and furious in personal computers. He was intrigued by Gateway's personalization model, as opposed to the mass-production models of other PC makers.
"I'm convinced the personalization model will always trump the mass-market model," he said.
Arora joined Yodlee about 11 years ago, when the company was in the early stages with about 10 employees. It now has more than 700 employees and 40 million users. Arora said he made the leap into entrepreneurship using a "rocking chair" exercise favored by a former mentor.
"Imagine you're 85 years old, sitting in your rocking chair and looking back," he said. "I was doing well in corporate America, but if I continued doing that, would I have fulfilled everything I wanted to do by 85? I don't want to say I could have, should have, but didn't do it."
Arora soon found out how different entrepreneurs were. At Yodlee, he put together his plain, plastic office furniture himself. Even as the company grew in a year to about 50 people, he found nearly half of them used the office as their permanent address. They were living there.
"The whole startup world was crazy," he said. "It was a whole different time. It was about passion and persistence and working like crazy. To be an entrepreneur, you have to be passionate about what you're doing, or it's not going to happen. You have to be living, sleeping, and dreaming your product, your company."
It's best to focus on that because the odds of making it aren't worth dwelling on. Arora said that for every 100 companies that start, less than 30 percent return money to their investors. About 70 percent fail, and only 2 percent make it to $100 million in revenue.
"How do you win a game with 2 percent odds?" he asked. "You have to be passionate and persistent, and you have to have patience."
Yodlee, for example, has grown into one of the leading personal financial management solutions for financial institutions. It's the magic behind the scenes for many global banks and financial firms, allowing their customers to manage all of their accounts, bills, and investments.
To get there, they needed some important principles on top of the passion and persistence.
A business has to have a clear vision, both for its own sake and those of its stakeholders. That means sometimes declining opportunities for quick revenue on a project outside of vision's scope.
"This is hard," he said. "You have zero revenue and someone asks you if you can do something, and they will pay. And it's so tempting. It's a trap."
Yodlee, a business-to-business company which specializes in aggregating, was tempted to do some direct-to-consumer business, with an Internet dashboard that could help people centralize their websites and email.
"We realized we can't be all things to all people," he said.
A business, especially an entrepreneurial one, has to have a differentiator. The good thing about technology is that it allows personalization at scale. The bad thing is that it can become obsolete really fast.
"Google is kind of old news in the valley right now," he said. "And I'm amazed by that. It's one of the most impressive companies that exist, and they're old news already. The only thing that's constant in technology is change. I still have a paper on technology I wrote as an MBA, and none of the companies in it are there anymore except for Apple."
To keep moving ahead, Yodlee had to be first with its aggregation specialty, first in applying it to personal financial management, first with fully integrated money movement, and first with apps for personal financial management. It has worked to keep up with the open platform model.
The third thing a business has to have is the ability to execute.
"When I walked out of here in 1984, I thought it was all about strategy," he said. "I used to think it was about 85 percent strategy then. Well, 95 percent of business success is execution. Apple isn't doing something nobody else can do. They just do it really, really well."
Panels at Entrepalooza hit on the topics of innovating in corporations, financing deals, starting a company as a student, and successes and failures along the way.
Echoing Arora's comments on patience and persistence, several entrepreneurs said that success comes in spurts and small victories along the way.
"It definitely feels like a journey," said Eric Ersher, BBA '86, founder and CEO of Zoup!, a restaurant and franchise company. "After a really long time, I feel we're out of the woods, sustainable financially. I don't think I'll ever feel I've crossed the finish line of success, but I'll take it."
Starting a company as a student takes a special kind of persistence, said Sherman Powell, MBA '09, president of ArmyProperty.com. Committing to a business at that time means shunning some temptations and things people say are musts, such as mock interviews, the recruiting circuit, countless resume rewrites, and a social life.
"It's like escaping the force of gravity and getting to escape velocity," he said. He and Tyler Paxton, MBA '11, founder and CEO of Are You a Human, both said extracurricular activities at school — such as networking and business case and grant contests — are critical.
The fear of failure shouldn't be a deterrent, says Adrian Fortino, BSME '00/ MBA '10. Failure has lost its stigma and is now considered a badge of honor. Fortino was involved in a startup that didn't make it, and now is co-founder of Shepherd Intelligent Systems, SideCar, and FlockTag.
"The key is what you learn from those failures," he said.
— Terry Kosdrosky
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