Gordon Whitten speaks on ‘Seven Secrets to Entrepreneurial Success’
"I thought, what if we could do something different … how can we make money while we sleep?" said Gordon Whitten, who presented last Thursday at Cornstalks. Photo by Danny Schreiber.
Gordon Whitten, who founded Sojern and recently popped up in the news for teaming up another Omaha entrepreneur to launch VoterTide, spoke at Cornstalks on Thursday about his entrepreneurial career. Cornstalks is a monthly gathering hosted by the Greater Omaha Chamber of Commerce for individuals interested in high-growth entrepreneurship.
Gordon Whitten, serial entrepreneur
"I started my first real business of my own when I was about 17," said Whitten, who's now 40. "It was a carpet cleaning business."
His next business came just a couple years later. "In college, I lived in the dorms in Hastings College and I had an idea …" Whitten said. "Everybody was building these lofts for their beds out of wood, because that's the only option that was available … and I thought, what if I made one out of steel, that would be adjustable and would fit in any size of a dorm room? So, I created that."
Shortly after college, Whitten was living in Lincoln, Neb. when he had the idea for a family entertainment center called Champion Fun Center. "When I was 22 years old, (an investor) wrote me a check and said, 'Here you go; here's the money for the project,' and it was 2 million bucks," Whitten recalled. "And I thought to myself, 'Wow, that's a lot of trust.' But I worked for him in college and he trusted me a lot."
Three years later, Whitten started a software consulting company with three other partners. "We had a problem though," Whitten said, "because we basically billed by the hour, and what I learned during that process was, that really sucks. I thought, what if we could do something different … how can we make money while we sleep?"
He and his team "brainstormed like crazy" for a product. "We finally came up with an idea … and that was to take this ugly purple book ('Cash For Your Used Clothing') that was created by an accountant in Lincoln, Neb., which contained a database of all the items that people give away to Goodwill every year, and what they're worth, used items.
"And he went around the country and did surveys of thrift shops and ended up creating this database, and we wanted to take that online to a software product. So we built this, called ItsDeductible about early 2000s."
"I spent four years at Intuit then," Whitten said. "We took ItsDeductible, our little product built right here in Omaha, and we built it into every single copy of Turbo Tax … there's about 8 million people a year that use Turbo Tax."
In 2007, he founded his latest startup, Sojern, a company that provides destination-specific content and advertising on airline online boarding passes.
"While I was flying back and forth to California all the time, I was going to the airport and realizing, 'Man, look at all the people standing there in line at the airport holding these board passes,' " Whitten said. "And I thought to myself, how hard would it be to put advertising and content, taking that data right there that they already have – they already know who I am, where I'm going, how long I'm gonna be there, how much money I spent for the ticket, how often I fly – and turn that into a product."
He eventually raised $16 million from venture capital firms to get Sojern off the ground and stayed with the company as CEO through April, at which point he brought on Yahoo! veteran Mark Rabe to take over the position while he remained on the board of directors.
"I had been at Sojern for four years, gotten it to almost $10 million in revenue and been to these monthly board meetings four years straight," Whitten said, "and just decided it's time that I bring in a CEO to run this because the company's doing great but we have a long ways to go. … I can switch from being an operating manager to an investor, and I can go start something again I really want to do."
Seven Secrets to Entrepreneurial Success
After telling his entrepreneurial story, Whitten presented lessons he's learned throughout his career. (Slides courtesy of Whitten)
1. There is nothing more important than what you choose to invest your energy in
"There is nothing more important than what you choose to work on," Whitten said. "That's by far the most important thing."
How do you do that? Whitten said to look for the "big problems that you can solve."
2. Go where the wind is at your back
"A while back I was on a cruise, and one of the things you can do on a cruise is you can take a shore excursion," Whitten said, "and a shore excursion down to St. Maarten you can take is this sailing shore excursion."
He continued: "And what amazed me the most was sailing is all about one thing, positioning that boat to maximize your wind. And I felt, as I did that, it reminded me of business. It's like I want to be in businesses where the wind is at my back. All I know is the industry is growing like crazy, 'cause if it is, than my odds are really good, than I can just ride the tide some how."
3. Seek durable competitive advantage
"How do you get durable competitive advantage?" Whitten asked aloud, "It comes down to these four things."
- High fixed cost, low variable cost
- Exclusive source of supply
- High switching costs
- Ownable network effect
4. Secret: Purple gorilla marketing
"So I read this book by Seth Godin a while back called 'Purple Cow,' have any of you read it?" Whitten asked. "Go pick up a copy of that for 10 bucks and read that thing. It'll take you two hours, but it'll be one of the most powerful books you ever read."
Whitten explained Godin's message: "All the greatest brands that we knew about … they were created in the TV advertising revolution, when you could throw money at it and get huge. Well now, it takes something totally different to be able to succeed unless you've got billions of dollars to be able to spend, and that is creating that purple cow product and that purple cow marketing strategy that everybody finds out about you virally and comes to your great product."
5. Innovate on a business model
"The vast majority of innovation in the world is done on product performance," Whitten said.
This use of resources, however, doesn't equate to value added. Whitten continued: "So that next little feature you get on your TV — you know, a remote control with the back that has a digital keyboard on it or something — that's something they spent millions of dollars to develop, but it really doesn't create that much value for them."
"Think more than just product," he added, "which a lot of people do."
6. Relentlessly invest in relationships before you need something
"I would never be anywhere I am today," Whitten said, "if it weren't for relationships."
7. Crash through barriers
"I've had a few failures," Whitten said, providing an example of a time he invested in a startup that "basically flopped."
He continued: "What I learned is, that's OK. You know, life is about crashing through walls."