Serial Entrepreneur Reveals What He Learned Launching 5 Companies & Creating Over $1.5B In Shareholder Value

Recently, I went looking for a serial entrepreneur to interview. My thought was simple, if a founder of just one venture can share so much value; imagine what a founder of multiple ventures would have to share.

With this in mind, I sat down with Bob Fabbio. Bob is the definition of a serial entrepreneur. He has launched 5 companies including multiple category creating companies across several industries.

During our discussion, we dig into each of his entrepreneurial endeavors to pull out actionable lessons you can take away and apply to building your business. Be sure to pay attention to his lessons from Tivoli (acquired by IBM for $743M), Dazel Corporation (acquired by HP for $180M), and his stint on Forbes’ Midas List Of Top Tech Investors while a VC.

Have comments, questions, ideas, or feedback? I want to hear it. Tweet me at william_griggs.

 

Topics Covered In This Episode

Founder/CEO @ Tivoli

  • What is Tivoli?
    • Why did you leave IBM to start it?
  • Why did IBM acquire it?
    • Did your employment at IBM have anything to do with it?
  • What 2-3 lessons did you learn at Tivoli that you have taken with you to the other companies you’ve built?
    • Can you give us an example or story to demonstrate this?
  • What are you proud of most about your involvement in this company?
  • Tell us about your departure from Tivoli. From my research, it looks like you founded your next company (Dazel Corporation) while Tivoli was still flying high.
    • What happened?
    • What can our audience learn from your experience here?

 

Founder/CEO @ Dazel Corporation

  • What is Dazel Corp?
    • Why did you start it?
  • What are the 2-3 hardest things you faced building this company?
    • How did you deal with them?

 

Venture Partner @ Austin Ventures

  • What 2-3 lessons did you learn at Austin Ventures that you have taken with you to the other companies you’ve built?

 

Managing Director @ TL Ventures

  • What do you attribute the success of getting on the Midas list to?
    • Do you remember the investments that you made that secured your spot on this list? If so, what were they?

 

CEO @ Vieo (Censura, Inc.)

  • What was Vieo?
    • What were you up against?
    • What did you get right?
    • What did you get wrong?
    • If you could go back in time, is there anything you would change about how you executed?
    • What did it feel like to fight so hard to build the business and have to shut it down?
    • What are you proud of most about your involvement in this company?
  • What did I miss about your experience founding Vieo that we should drive home for the founders in the audience, so they can learn from your experience?

 

Founder/CEO @ WhiteGlove Health

  • Why the switch to healthcare?
  • What does WhiteGlove Health do?
  • What 2-3 lessons did you learn at WhiteGlove Health that you have taken with you to the other companies you’ve built?
    • Can you give us an example or story to demonstrate this?
  • Why & how do you transition out of this company?

 

Founder/CEO @ eRelevance

  • What’s the problem you are trying to solve?
  • What are the 2-3 hardest things you faced building this company to date?
    • How did you deal with them?
  • What’s different about this business?

 

INTERVIEW TRANSCRIPT:

Startup Slingshot Radio’s audio transcription is done by GMR Transcription

William Griggs: In this episode I sit down with Bob Fabbio. Bob is the definition of a serial entrepreneur. He’s launched five companies including multiple category-creating companies across multiple different industries. During our discussion, we dig into his entrepreneurial endeavors to pull out actual lessons you could take away and apply to building your business. Be sure to pay attention to his lessons from Tivoli, which was later acquired by IBM for $743 million, Dazzle Corporation which was later acquired by HP for $180 million, as well has his stint on the Forbes Midas list of top tech investors while a VC. Enjoy.

Hi, Bob. Thanks for joining us today.

Bob Fabbio: It’s a pleasure to be here. Thank you.

William Griggs: Definitely appreciate your time. The audience, I know, appreciates your time. Thanks for coming on the show. The goal of today’s interview is pretty simple. It’s to dig into your experience as an entrepreneur, operator, advisor, board member, investor, etc. and pull out some of the stories and actual insights so that the founders in the audience can use it as motivation or use it as tactics to help them build their businesses. You ready to go?

Bob Fabbio: I am ready to go. Let’s do it.

William Griggs: All right. Let’s dig in, kind of reverse chronological order, and dig into some of the biggest milestones in your career starting with the founding of your first company, Tivoli, which I know, based on the research, went public and then later was acquired by IBM. If you could tell us a little bit about Tivoli, what it was, and why you started it?

Bob Fabbio: Yeah. Tivoli was actually my second company to start, although this isn’t common knowledge. I started a company almost right out of college, but Tivoli was my second company to start and my third startup. The essence behind Tivoli, and in fact it was an idea that I had before I even came to Austin or IBM, and again most people don’t this. I was at Prime Computers in Massachusetts and I was asked to work on a project to figure out how we could manage through software a network of computers that consisted of primos boxes, these new things called Unix workstations and PCs. The basic idea that I came up with was why can’t we manage a network of computers like a single computer and do it with a graphical user interface like the Mac. The Mac was just emerging and that interface was quite popular. That was the germ of the idea that ultimately, after I came to IBM and left IBM that I pursued to launch Tivoli here in Austin, Texas.

William Griggs: So, managing a network of computers with a single computer layered on with the GUI interface, like you said, there was that new interface that people hadn’t seen but was rolling out with the Mac.

Bob Fabbio: That’s correct.

William Griggs: Very interesting. You said that came out before IBM? What was the – I guess you had the idea before you even came to Austin and joined IBM. What was the catalyst for actually leaving IBM and saying “Let’s do this?”

Bob Fabbio: I came down to IBM to work on what was called at the time distributed computing/cluster technology. I was one of 15 architects in an organization of over 18 people helping design the AIX operating system for their new UNIX platform. As soon as I got here, they switched my job from working on distributed computing technology to asking me if I wanted to work on systems management because I had worked on this a bit at Prime Computers. I actually was disappointed because what they meant by ‘systems management’ was figure out to get the single UNIX computer to boot, and ultimately add and delete users to the machine and all that kind of good stuff.

I went on and took on that role, and we got very entrenched in it, ultimately had hundreds of developers building the ideas that I and my team were designing. Was one of the most inventive people at IBM, but what I knew was the world was far more than just a single computer. It was a network of computers, and in fact, it was a heterogeneous network of computers. I kept saying this to IBM, and because we were always behind in getting this machine out and the operating system done, no one could focus on anything but just getting this box out the door.

So, I decided at one point to go to IBM and say, “You know, there’s a bigger world out there and we should really start to connect with the folks at Sun and the folks at Apollo and the folks at [inaudible] [00:04:55], and figure out what they’re doing to manage their networks of computers, and what we all can do to manage the collective heterogeneous group of computers.” Ultimately, IBM let me go and start to participate in standards meetings and industry forums where I became one of the chief spokespersons in the world, frankly.

What I learned was my hunch, back in my days at Prime, was spot on. That no one was really looking at how to manage a network of mixed computers. HP and Apollo and Sun were very focused on distributed computing, but it was primarily around their own machines. So, I knew that I had to go pursue this. About two plus years into my stay at IBM here in Austin, I decided to leave IBM without a job and launch Tivoli.

William Griggs: Gotcha. So, you validated that hunch in IBM and you bounced out to launch Tivoli. Is there any relation between you working there previously and IBM eventually buying it other than just that was the way the industry was heading?

Bob Fabbio: No, none whatsoever. I had already left Tivoli at the time. There was certainly a lot of knowledge about me and the things I had done, but it really had nothing to do with my employment at IBM.

William Griggs: Gotcha. Very interesting. We got lots of early-stage founders in the audience, and they’re facing a variety of problems. What we like to do here on the Startup Slingshot is basically to bring some of the problems that the entrepreneurs that eventually overcame those problems were facing in the building of their business to set the expectation that either they’re gonna face similar problems or that they’re gonna face problems and there’s light at the end of the tunnel. As you built Tivoli, are there any problems, any of the biggest, hardest, toughest problems to tackle that come to mind?

Bob Fabbio: If you have a brain and you pay attention and you wanna learn, there’s always lessons learned, right? For me, this was my – I had been in a startup in Massachusetts that had done very well, but I started out as a developer and then ultimately ran a piece of that business. This was my first time being a CEO, and back in the day, when I started Tivoli in 1989, Austin was a little sleepy town. There weren’t a plethora of angel investors and mentors and service providers. In fact, Tivoli was the first venture-backed startup here in Austin, Texas. Many will argue it’s what put Austin on the map.

It was a very lonely place to be a first-time CEO. I felt like many days I was banging around in the dark using pure instincts with no one to turn to and hoping that I got it right. Pretty challenging. And the truth is that there were some big, big lessons learned. Probably the most important was to listen to my gut. And the lesson learned is that if you can’t listen to your own gut and trust it, you’ll never trust anyone or anything. There were things early on that I knew weren’t liked from the very beginning, frankly, and I just kept outthinking them and pushing them away and rationalizing them away. The truth is my gut was spot on and I should have dealt with it early and I didn’t. It ultimately was a big problem for me.

William Griggs: That’s interesting. It’s kinda like some people talk about colds versus cancers when they’re analyzing different problems, and it seems like, like you said, if you listen to your gut early on, that cold which started off kinda easy and easy to dismiss ended up turning into a cancer, it sounds like.

Bob Fabbio: Yeah. The truth is that in the end the other couple of lessons that are tied to that is I was too young to know any better. I was 31 years old my first CEO gig. I’m now on my eighth one or more; I think it’s actually more than that now. I didn’t appreciate or know that one of the things that you absolutely have to be clear about as a CEO is what kind of culture do you stand for? What are you values and beliefs culturally so that people understand how to fit and thrive? Not knowing that and not understanding that and appreciating that, it was happenstance. Of course, with happenstance there’s often anarchy.

The other thing that I will tell you that I learned, and this has been a process through time, but certainly it started back in the days of Tivoli, is once you recognize it, you should be clear about what culture you want to have and have people working. You also then have to learn how to find people who will fit and thrive in that culture. That’s also a significant challenge. Through the years, I’ve worked very hard to figure out how to refine those two things so that ultimately I’m assembling a high performance team and a high performance environment.

William Griggs: Is there anything else on your first tenure as a CEO in addition to culture and trusting your gut that you’ve taken with you to future startups that you’ve been working on?

Bob Fabbio: Certainly, in this day and age, where there’s lots of folks, especially in Austin around here, that have been there done it, I think it’s highly critical for young CEOs to find a couple of people they really trust and listen to them. That’s in part why I’m involved in the Capital Factory. It’s a great organization doing great things for entrepreneurship here in Austin. I’m having a great time mentoring young CEOs these days, and really being on their shoulder, if you will, whispering in their ear constantly, “No. Don’t do that. No. That’s good. Yes. That’s…” I didn’t have that benefit.

William Griggs: As far as for the audience looking for these mentors, since they can be so valuable, are they looking for people that will have them or are they looking for people that will have similar industry experience? What are the bars that they should set when they’re looking for these mentors?

Bob Fabbio: Industry experience is certainly helpful. Basic business experience and startup experience is probably more critical. I’ll run into young folks, and I’ve been doing this for almost 30 years now, and they’ll look at me and go, “I’m not sure how you can help me. Or how you can provide value.” I think, “Huh. I’ve been doing this for 30 years. There are so many lessons I’ve learned. I can’t even begin to tell you how many things you don’t know.” We learn every day, right? Over the course of 30 years there’s too much to even encapsulate.

I guess the point there is that we all don’t know what we don’t know. I find that some folks that I run into really live in a place of unconsciously incompetence and get stuck there. That’s a shame in this day and age when there’s so many good people out there trying to help these young CEOs.

William Griggs: Do you think it’s important for them to get mentors that are experienced but also still active so they have their ear to the ground still? Or is that not necessary?

Bob Fabbio: I don’t think that’s necessary. One of my mentors and board members, Jimmy Treybig, and now he’s a legend and he doesn’t run companies anymore but he’s so wise and he’s got such great advice when I need to call on him. I don’t think that’s necessary. I think that the key is at the end of the day, and I said this earlier, find people you trust. You can find people that are looking to take advantage of these young kids. That’s no good, either. So, find people that you really trust. Find people that, over time, continue to give you good advice. Then really leverage them because I can tell you if I had one or two people like that around me when I was starting Tivoli, many of the things that went wrong in my tenure there would have never happened.

William Griggs: Very good. Definitely a point to drive home for the audience. As we wrap up this section on Tivoli and start to transition to your next venture, what’s one of the proudest achievements or moments that you remember having been involved with Tivoli?

Bob Fabbio: There’s a couple things. One is I said I participated in students organizations and industry forums all over the world. That’s true. Ultimately, the thing that I remember most is walking in a room and everybody wanted to know what I thought about, how Tivoli was going to shape the next set of discussions around standards in this area. That was by and large through a whole lot of efforts on my part, really outthinking and out-positioning and out-strategizing the industry.

Ultimately, I’m very proud that we created this idea that came out of my head, and created one of the largest software categories in the world. Candidly, I would never walk around and say this, but I recounted it a minute ago, so many people have said to me, “If it weren’t for Tivoli, Austin would have never launched in the way it did.” That’s a pretty amazing statement in and of itself.

William Griggs: Very cool. Very important, obviously, to get the city up and running, having some success, and getting the talent in town and the capital, etc. As you mentioned earlier, you departed Tivoli before IBM eventually acquired it. Can you take us to that moment where you have your baby, you’ve been building it and what happens around why you decide to leave and when you leave?

Bob Fabbio: It wasn’t a good time – I’m sorry, I’m suffering from allergies. It wasn’t a good time in my life. I was living the dream. I was the young kid, 31 years old, running a company that was one of the hottest in the country, and I found myself in the midst of a divorce. Already being ill-equipped to run a company and then the distraction of that, ultimately it just wasn’t something that I could continue to do. The board ultimately brought in someone else. After I got, frankly, back up on my feet, I decided that unfortunately Tivoli was no longer the right place for me, and so I left.

William Griggs: Gotcha. That’s definitely taken us to that moment. That’s a hard time, it sounds like, in your life, and then how did you think about transitioning from that to the next company? Did you take time off? Did you just dive back into work? How did you think about that?

Bob Fabbio: You know, I did take a little time off, but not much, maybe a month and a half. Then I actually, and this is again something most people don’t know, is I got a call from Steve Jobs who was starting NeXT Computer, and he asked me to come out and speak with him. I didn’t know Steve. I was flattered, and so I went out and spent a couple hours with Steve interviewing with him. He wanted me to recreate Tivoli inside of NeXT. If I had done that, that would have found its way into Apple. But, in any event, because I had a young daughter I decided that I wasn’t gonna leave Austin and so I chose to stay in Austin and then focus on what was next.

At that point, it was looking for another market problem to solve, and that I think is probably the knack that I’ve had. I’ve been able to find very large markets that have significant problems. Another one emerged. I launched Dazzle, brought on others. What Dazzle did, and I’ll tell you what problem it solved and then how we solved it.

People thought we were building the next Oracle at Dazzle. Like Tivoli, in fact, all of my startups are big ideas. What I uncovered at Dazzle was the corporate world, globally, was moving ferociously to desk-top apps all over the network and large back-office apps, like SAP and PeopleSoft and others at the time. When we went into large organizations and asked them, “How do you get the output, meaning the invoices, the bills of lading, whatever the printed output was, out of these systems, and reliably deliver it or get it into the hands of people wherever they are in the world?” what we heard is “It’s a struggle.”

The fundamental invention was, and again, I came out of this world where I had invented infrastructure for – or software for the corporate infrastructure called systems management. There was already database management and there now there was systems management. I said, “Why isn’t there output management? Why isn’t there a subsystem just like a database management system that’s an output management system that will take all output that comes out of any application, whether it’s a desktop app like Word or a back-office app like SAP, and reliably get it into the hands of the people on the other side and deliver that to them in the way they wanna receive it?”

Some will like it printed. Some will like it in email form. Some will like it via the web. Some will like it via interactive. We built an output server, and within that output server was an output management system. This is akin to a database server and a database management system, so, this is going back into the client server days –

William Griggs: Uh-huh.

Bob Fabbio: And we were suddenly viewed as one of the hottest companies in the country, leading this new category called output management. It was a big idea. There were many analysts and many Wall Street broker – bankers that thought we were gonna be the next billion dollar company.

William Griggs: That’s really interesting. You talked a little bit about the why. You talked about the why. Let’s go back. Let’s take one step back to that Steve Jobs call. I’m still a little bit – I wanna dig a little bit deeper into that. You got the call from Steve. At the time with Steve, he was with NeXT, so, it was after he got booted out of Apple originally, right?

Bob Fabbio: Yup.

William Griggs: He was not the living legend that everyone remembers today. You got that call. Do you remember what that conversation was like in detail and how he took the rejection of you wanting to stay in Austin?

Bob Fabbio: I think I got the call, it wasn’t directly through him. It was either through his admin or a recruiter. I don’t remember. It’s too many years ago now. I remember hopping on a plane and going out to see him. I went into this really large office, and he had his desk way back and then lots of space and these couches with a coffee table in the middle. He sat on one couch across from me, and we literally talked for a couple of hours.

The one thing – it’s funny. There’s all this stuff written about Steve, good and bad, but I think anybody that blazes trails, of which I’m one, there’s always good and bad. Even in that short encounter, which was just two hours, I developed a very deep respect for him, but also felt equally connected and an equivalent. I related to him and his temperament and his personality and what he was trying to do and his ability to see things. Those are attributes and characteristics that people would call out about me as well. It was a good discussion, I recall. There was nothing negative about it. In the end, I relayed back that I couldn’t do it for personal reasons.

William Griggs: We had a guy named Scott Abel on the podcast not too long ago. He’s the founder of Spiceworks. He actually worked at that time with Steve Jobs. One of his funny stories is he got fired five times by Steve Jobs but kept showing up at work because he had that temperament where he would fire you on the spot but not necessarily mean it. So, it’s kind of a fun story. People want to dig into that interview, they can.

We’re talking about Dazzle which is a company you eventually sold to HP for $180 million. As you’re building up towards that success, what were some of the hardest things you faced? Again, you’re blazing a new trail here, talking about output management which was a new offering in the market. What are some of the obstacles that you faced?

Bob Fabbio: One of the things that I learned at Dazzle, and I worked with some great marketing people, Doug Miller and Floyd Tamer recruited those guys, was we typically created a new category called systems management. Again, I was younger and didn’t appreciate how you do that, necessarily. What was hard but fun was purposefully creating a new category called output management, and taking this to the analysts and taking this to the street, and really differentiating yourself in an unfair way where people set you apart and said, “Wow. This is really special.” Not only was that challenging but it was great fun and it worked.

I think some of the other hard things or lessons learned in all of that was when you build a general purpose thing called an output server, it can be used in a gazillion ways. While that’s interesting and people can see the bigness of the idea, if you will, the challenge is how do you apply it in a very focused way to get a business launched. A couple of the lessons learned at Dazzle was after banging around for a couple of years and sort of opportunistically selling this into one company and then another company and then another company, all in sort of one-off use cases, really figuring out that it was all about getting focused around the Geoffrey-Moore-speak of a bowling pin.

Who are we going to ride behind in a very focused way? What serious problem are we going to solve and really use that as a catalyst to get this business going? Ultimately, what we chose to do was go and talk to people who were deploying SAP, and learn because that was sort of the predominant back-office app that was very popular back in the client server days, and learn what were their challenges with SAP. Were any of them related to getting the output out? What we learned was absolutely there was a big problem. SAP as an application hadn’t really dedicated much time or effort into reliably getting whatever information could be generated out of their apps and their systems into the hands of others.

We went and figured out how to bolt onto the back of SAP and then walk into every SAP account with cred. That caused the business to take off. And then after SAP, we moved to the next bowling pin which was, I think, PeopleSoft. But the point was not only was it challenging, but lessons learned here, was getting very clear about what I ultimately now have spoke to so many entrepreneurs about and have lectured about in so many forums, is what I call the Whats.

Getting great clarity around what’s the target audience you’re trying to cater to? What’s the problem they have that they’re willing to spend money on? What’s the solution that you’re going to bring to them? What’s the packaging and pricing of that solution? What are the messages that you use to reach and influence these people that cause them to raise their hand? What’s the channels of distribution that you ultimately use to sell? What’s the competitive landscape like? What’s the business model to make money? What’s the macro trend that you’re riding? Etc., etc., etc.

That is the overarching lesson of all eight startups that I’ve learned and I’ve shared with people is young companies and big companies fail every day if they don’t figure out how to be clear about the Whats.

William Griggs: That’s fascinating. We’ll dig a little bit more into the Whats, but it seems like when you combine those, and you can correct me if I’m misinterpreting this, but when you combine the Whats, it sounded like as you took this new opportunity to target output management and this new market that you’re helping to build, as a startup you had to zoom in and think about your bowling pin strategy, meaning you had to figure out instead of knocking down a strike, you had to knock down at least that first pin that would make it easier to knock down the next pins and the next pins. Then you dug into the real world feedback to determine that next pin or that initial pin was, like you said, the SAP market and going after them.

That’s when you were able to clearly define for that SAP market your target market, what are the titles, the problems they’re facing around the SAP integration, etc., the solution, the packaging, all that good stuff. But it sounded like you kinda had an understanding, you can correct if I’m wrong, you had an understanding at a high level, but once you zoomed in and you picked a very specific pin, you were able to make a lot more progress and knowing the very specific Whats for each of those – for that one pin, you were able to get the momentum you need to knock down the rest of the pins.

Bob Fabbio: That’s right. Another lesson learned is it’s important, assuming you’re interested in creating a big footprint business, to have a positioning that feels big. Talking to analysts and bankers about how we’re building an output server that within it has an output management system akin to a database server with a database management system in the client server go-go days is a big idea, big positioning, right? But that’s a strategic message or strategic set of messages. Equally important is the tactical messages.

What we did is we got away from talking about output management and output serving when we did leave generation, for example. What we did was we targeted folks deploying SAP and saying, “Are you having troubles getting your bills of lading to your customers?” Or “Are you having trouble getting your invoices sent around the world?” Those were very tactical messages that ultimately caused people to raise their hand, and then when they said, “Yes, we’re having trouble,” we then talked to them about how our output management system behind SAP can solve those problems.

William Griggs: That’s very actual for the audience, to kinda zoom in and think through those approach, like you said, the strategic positioning, the tactical positioning and the messaging that goes along with that. Talked about the blowing pin strategy. We’ve talked about digging into real world feedback like you did to get the SAP nuggets of wisdom. You talked about the Whats. Are there any other or one other lesson that you learned at the Dazzle Corporation that you took with you to the next ventures?

Bob Fabbio: There’s many, but to summarize, the thing that I’m very proud about is we did create a new category. The category has persisted and we ultimately were poised to go public. The RED was done. Goldman Sachs was gonna lead the deal. Right before we went public, HP and Xerox got in a bidding war to buy the business. Ultimately, we sold the company for more than public companies that we would be considered as comps that were generating three times the revenue. It was a great exit. It was for more than $180 million.

Both of those deals were back in the days when it was hard to make money. It wasn’t in the go-go days where you had an idea on a napkin and then you were suddenly a billionaire. These were days where it was very hard to make money.

William Griggs: Yeah, a hard-earned $180 million. Take us to that time where you’re going through the preparations for an IPO. You’re working with Goldman Sachs at a high level. What does the process even look like?

Bob Fabbio: What’s the process? You meet with a lot of bankers. You spend a lot of time out, late nights, talking with them and eating with them and ultimately getting to know them. In the end, when it came time to get ready to go public, what I did was go through a very thoughtful exercise with our CFO at the time of who we wanted to take us public. We had, because we were hot, I think we were on the cover of Software Magazine. I was on the cover of Software Magazine as one of the top ten hottest software companies in the country. It was really figuring out what was the right financial partners. We were able to put together a great syndicate. Ultimately, we didn’t go public, though.

William Griggs: That’s a little inside baseball for lots of people, but it’s definitely interesting to learn about those concepts and who you’re working with and what you’re looking for, as most of the people in the audience wont’ there, but hopefully some of the will and they can use some of those nuggets of knowledge to help further their success. But the next approach or the next opportunity you took was as a venture partner at Austin Ventures. Were they an investor in your previous companies?

Bob Fabbio: Yes. They invested both in Tivoli and in Dazzle. I think for many years I, as an entrepreneur, had made more money for them than any entrepreneur here in Austin. I don’t know if that’s still the case but certainly it was at that point. I and two others, Jimmy Treybig and Scott Harmon, were the first three ventures partners that Austin Ventures ever had. Our role at Austin Ventures was to play an active board member or an interim CEO role at portfolio companies that Austin Ventures decided to invest in. That was fun.

In addition, the guys at AV said to me because I had this history of inventing ideas or inventing companies, “Go out and try help to incubate some.” I actually did. We incubated a company that ultimately rolled up into and was a big part of Motive. I was an interim CEO and an active chairman in a company called Deja that nearly went public in the go-go days and would have been worth a fortune, and then the market came apart, a company called Trajecta and a variety of others. I was involved in a variety of portfolio companies in the early days before mentoring and venture partnering was a concept. AV got out in front of it and used Scott and Jimmy and myself to do that.

William Griggs: Very cool. Did you hold similar positions at TL Ventures which was the next stop on the roadmap?

Bob Fabbio: No.

William Griggs: Or did you actually hold more of a managing director position?

Bob Fabbio: No, TL was a pure investment professional play. I was recruited out of AV by TL who was looking to pursue the Southwest and more specifically Austin. They were looking for an operating guy. They actively recruited me and made me an offer I couldn’t refuse. So, I went over to TL to open up the Austin office, and we managed billions of dollars.

One of the insights that I gained from being a venture partner at AV was that most of the money around this town were from – the venture capitalists were more business school guys and there really wasn’t any venture capitalists or very few at the time with an institutional checkbook that had operating backgrounds. We positioned ourselves as a venture firm with a checkbook and operating backgrounds. I brought in a bunch of guys that had been parts of startups and had success in startups in the past.

We were one of the first in Austin to actually do boot camps. That was a brand new concept. No one had ever done it. I said, “Why don’t we market to the startup community and entrepreneurs and have weekend sessions where we fill the room with business ideas and entrepreneurs, and we try to mentor them in this boot camp setting? A couple might just be interesting for us to nurture further and ultimately invest in.” That was a very cutting edge idea for venture capital, especially here in Austin back in the 2001/2002/2003 timeframe, but it proved to be effective.

William Griggs: While you’re at TL Ventures, you all made the Midas List. Can you talk a little bit about the Midas List and the companies that helped get you on there?

Bob Fabbio: It’s for an individual. It’s not for TL Ventures, so, I made the Midas List. I’m not saying that for egotistical reasons. I’m just trying to be clear. I think that what they did is they looked at the – I very quickly came into TL and got some number of deals done that ultimately achieved liquidity pretty rapidly. I think one of the deals that contributed the most to that was, and this is going back to this idea of incubating, I met an inventor in Dallas. I got a call to go visit with this inventor in Dallas. I got up there at the Admiral’s Club, and he was a pretty quirky guy. Smart as all get out. Really hard to understand. I spent a couple hours with him.

He started the discussion with “I’ve talked to 21 other venture capitalists. They’ve all turned me down. I hope you like my idea.” I thought, I was new into venture capital, TL. I thought, that’s a pretty odd way to start a discussion.

William Griggs: Yeah, for sure.

Bob Fabbio: If I like this idea, I’m either – maybe I’m an idiot, or I’m pretty good at this and see things that nobody else does. Well, at any event, to make it short because I know we’re short on time here, he essentially patented a chip set that he claimed he could study what was going on inside network packets, meaning he could see the content inside network packets as they flowed across the network and not degrade the performance at all. Deep packet inspection at wire speed, it was called.

I couldn’t believe it. In fact, I got the goosebumps. I said to him at the end, “So, Vick. Let me get this right. You’ve invented a technology or chip set that can study what’s going on inside these packets at wire speed.” He said, “That’s right.” I said, “Oh, my word.” I got on an airplane to come back to Austin, and I’m all excited because I’m thinking, “Whoa. If he’s done that, that could revolutionize network. That’s sort of the Intel of networking.” I bring this idea back and I start to institutionalize it around with some venture capitalists here in Austin, and they all think I’m out of my mind. I’m thinking, “All right, maybe I am.” And then I thought, “Nope. I think he’s really built the Intel for network packet processing here. Now I need to go find some software guys to build the Microsoft on top of it, so there’s a programming environment.”

Now, people thought I was really out of my mind. They’re going, “You’re looking for software guys to go work in a networking company.” I said, “Yup.” What I did is I ultimately helped incubate and I was the active chairman of a company called Agara Systems. Agara should be in this interview because it was a gigantic accomplishment for myself and Ford Tamer and Eric Rofus. I basically called Ford Tamer and Eric Rofus out of Dazzle, two of the smartest guys I know. Ford ran the company. Eric led the development. Ultimately, in 18 months, we moved that company from a germ of an idea to a company that got sold for half a billion dollars to Lucent. It led the industry in network packet processing.

William Griggs: Did not uncover that in my research. I’m very glad that you brought that up. That’s a really interesting story. I bet you’re glad you didn’t pass on that investment.

Bob Fabbio: I am. In essence, I saw things that others didn’t.

William Griggs: Yes. Very true. Contrarian and right is what a lot of people talk about. It was contrarian to invest and you were right to invest. You had the Holy Grail right there. As far as TL Ventures, like we talked about, you were on the Midas List which is that combination of ridiculous returns compared to your peers, which we talked a little bit about how you got that, as well as, I think, some voting by other peers in the market, which it sounds like were some of the influential and new things you were testing out, boot camps, etc. Probably why you ranked highly on that piece of the puzzle, as well.

Bob Fabbio: Likely.

William Griggs: Like you say, we’re kinda running short on time. We do have a couple other ventures that we wanna get into. So, let’s crawl over these lightly, the next one being Censora.

Bob Fabbio: Yeah, the company was VIO. It was a portfolio company of TL Ventures, and to make a long story short, there had been a lot of money put into this company. It was around the infiniband space, which is a bus technology that was very hot at the time. It was a company that was burning through money and in bad need of a CEO. So, I on the board headed up the CEO search committee, found us a CEO, walked into a board meeting to talk about the offer I was gonna make to the CEO, and I was stopped in my tracks by the board. They asked me, “Why aren’t you running this company? You’re the best candidate out there.” I said, “Because I’m happy. I have a lucrative career in venture capital. I’m doing fine. I like my lifestyle.”

And frankly, it was so exciting after they mention – it didn’t even occur to me, but after they mentioned and planted the seed, it propelled me to wanna go do it. That was a big deal because I had a very lucrative career in venture capital, and here I was finding myself in this early stage, fledgling startup and turning it around. We did. We became one of the hottest companies in the country. What we built was an appliance, back in the appliance days as the appliance was just merging – emerging, I should say, that essentially was autopilot for the data center.

No one had ever heard of this concept, seen this concept. It was completely revolutionary, where you could snap an appliance into a very complex n-tiered environment and it could study all of the layers, all the seven layers of the stack, and measure the performance of a web application, which was then the hot app, and look for performance issues all through the seven layers, and auto-remediate without any human intervention. No one believed we could do it. We built a human brain that essentially could spot problems and auto-tune any part of the stack dynamically. We demoed this and it blew people away. We were one of the hot demonstrators at demo and all that other stuff.

But the truth is in spite of a ton of market testing and validation, when we tried to sell it, it really scared people. It threatened their jobs in IT and so on. We struggled to sell it.

So, we flipped the company over, repositioned it as Caesura; used the appliance ourself to provide a managed service, where we’d go into companies and say, “Look. We can, with this device, plug it into your network, rapidly pinpoint when you’re having performance problems, and tell you what to remediate,” and offer this as a service. The business started to take off, but unfortunately the investors that had been involved in this were getting tired. I got a call from one of the lead investors saying, “I think you’re gonna struggle because the insiders either aren’t gonna be able to be around or don’t get along, and so you need to fold this thing up.”

It was very disheartening because we had worked so hard. It had nothing to do with anything except for the investors were tired and it was a tough time. That was my first wind down, and not fun because we worked so hard and we had invented something very, very novel. But lots of lessons learned in that, absolutely.

William Griggs: As far the investors being tired, does that mean they don’t wanna put more money into the company to extend the runway?

Bob Fabbio: Well, it was a couple things. Again, this was back when the economy started to go to hell in a hand basket, and so some of the funds were actually going out of business. And a couple of the larger funds that were involved, they didn’t wanna invest together. They didn’t get along. It just ended up being – you can’t go on and raise new money when you don’t have your current investors supporting you. I had no idea of all this [inaudible] [00:45:12] and we ended up shutting it down.

William Griggs: Gotcha. That’s quite a turn from, obviously, the awesome experiences you had at TL Ventures with that portfolio company and helping grow that to a half a billion dollar exit to this next one where you have to wind it down, but that’s, I guess, that’s part of the game.

Bob Fabbio: And what’s more difficult than that is to be recognized as one of the hottest companies in America with this appliance that we built that essentially – like today. Autopilot for an airplane. It’s doing real-time process control. We built the same thing for the data center. No one had thought of that. Frankly, we were ahead of our time because today, there are devices like what we built, but we were just a good decade ahead of our time.

William Griggs: Then you start to transition kind of your career away from kinda the enterprise infrastructure stuff that we’ve been talking about to healthcare with White Glove Health and then your current company, eRelevance. I know, again, we’re a little bit short on time, but I definitely wanna talk a little bit about eRelevance and what you’re working on now. But if you wanna talk a little bit about White Glove, we can also do that.

Bob Fabbio: I took a little hiatus and then I decided I was bored with doing hardware/software managed service stuff, and I wanna do something different. Had this epiphany over lunch that maybe I should go do a service business, and thought, “No. They’re lifestyle businesses and there’s no barriers that you can erect for competition, and generally they’re not big businesses.” Then I thought, “Well, wait a minute. What if I could find a service business where I could leverage my technology background in an unfair way and where there’s a big, messy market?” So, real big messy market and I could leverage my technology background.

A month later, I get up to go to the doctor’s, and literally I’m gone for six and a half hours, between the parking, the waits, the lines, the whole thing of healthcare. Going to the doctor and then shuffling off to the diagnostic lab, then the pharmacy, then the grocery store. I’m coming down my driveway after this whole irritating experience and I went, “Oh, my word. That lunch discussion of a month ago, it’s healthcare. It’s one of the largest, messiest markets on the planet. There’s any number of ways technology coulda solved these problems today. And it’s service business.”

So, I launched White Glove Health. It was very novel and innovative. It still is. We were the first in the country to put medical records online. We were the first in the country to have scheduling online and labs online and all that stuff. But the real essence was we built Costcos for healthcare. It was a membership based model where care was paid for outside of insurance and when you called for care or you went online for care, the care came to your home or workplace within a few hours of you contacting us. It was all inclusive, the meds, the care, the diagnostics, the whole nine yards, all brought to you.

We grew that business over 650% over a four-year period. Took it public and again, in a lesson learned, timing is everything. We were a hot, hot company going public back in 2011. I think that was the year. In the middle of our road show, the debt crisis news hit and Wall Street and the market dropped 900 points that week and 900 points the next week. We never got the company public.

William Griggs: Man. That is quite the story. So, it’s still up and running, still going strong, it sounds like, but that was definitely a moment of crisis.

Bob Fabbio: Yeah. Revolutionary idea. It’s still today probably one that people turn to when they thing about healthcare. I didn’t know anything about healthcare when I launched in. I did it without any fear of the lack of knowledge and quickly became someone very knowledgeable about healthcare and delivery systems and insurance and all those nuances.

William Griggs: Was that from reading books or talking to people?

Bob Fabbio: All of the above. Immersing myself. That’s what I do, I immerse myself. I had this idea that, back in the 2004 timeframe, 2005 timeframe, I guess, that the intersection of folks that understood healthcare and that healthcare ecosystem, but also understood technology deeply, would be a good place to be because there were so many inefficiencies and problems to solve. That’s proven to be true. Everybody and their brother wants to be in healthcare IT today. I just was, again, a little ahead of many.

That leads me to eRelevance. After a horrible recovery from a knee replacement in 2012 and into 2013 where I had to resign from White Glove because I couldn’t even walk for six months, I was in so much pain, I decided to stay in healthcare and healthcare IT and launch a company called eRelevance. One of the things that I learned from White Glove with all the technology we used, and I didn’t mention this earlier, is we also built a lot of technology to engage patients digitally.

We watched all the insurance companies, like Blue Cross and Aetna, try to engage patients and it was abysmal. Less than 1% – .1% engagement rates. We watched every retailer like Walgreens try, abysmal. We watched every employer try to engage their employees and dependents that we sold to and again, horrible engagement rates. But we at White Glove had high engagement rates, anywhere from 8% to 18% per population. So, many, many orders of magnitude better than any of the large players I referred to.

I thought, “What the heck is the difference?” Then it hit me. We were the doctor. We had the trusted relationship with the patient. When we asked them to do something, they would go off and do it than having Blue Cross ask them or Walgreens or their employer. So, let’s do work to study are there any technologies, tools, or services that broadly could allow doctors and hospital systems to engage their own patients? And there weren’t. That was the launching germ of an idea of eRelevance. We were gonna provide a technology platform to the healthcare community globally to help them engage their patients.

The underlying invention was how do we have a doctor talk to a patient where it doesn’t consume time from the doctor? Because the doctor doesn’t get paid to talk to people while they’re sitting around in their living room. And they don’t have the time to do it. What we invented was this idea of a synthetic conversation where we could emulate human conversation where a doctor could talk to patient but there was no doctor. The back end system could signal the tech like a doctor would and look for anomalies or problems or issues or revenue opportunities and then drive people in for care.

It began to work. But what we learned was nobody wanted any software in these environments, and so we flipped it over, turned it into a service where we were given their patient lists and we’d help them engage their patients as a service.

The epiphany occurred last quarter. We’re not a patient engagement company. We’re a conversational marketing company. Meaning in 1996 a marketing professor at Harvard said, “One day, marketing will move from a transactional medium to a conversational medium. When it does, you’ll be able to gather, remember, and use information from prior conversations for future conversations.” That’s exactly what we’ve built.

The landscape we’re playing in today is that 75% of all the dollars spent on advertising today, you can’t learn anything about the consumer. That’s billboard, print, radio, and TV. When you see a TV ad today, it can’t talk to you and learn about you or find out about you or ask you a question. Now, the other 25% is interactive marketing. It’s web, social, email, and – web, social, email, and mobile, sorry. That, at best, is a proxy for what people care about: what you click on, what you open, what you search on. No one’s asking anybody anything. There’s all this advanced analytics that are trying to guess what your next move is or what you’ll buy or what you care about, but nobody really knows.

What we’ve invented is a multi-channel offering where we provide a service to organizations where we can touch consumers in a multi-channel way, leveraging the interactive channels of web and mobile and email and text, ultimately to drive them to this new conversational channel we’ve invented where it’s proving to be ten-X more effective than any other interactive channel on the planet today.

The way we’re applying this today is we’re selling it to plastic surgeons, dermatologists, med spas, and other elective provider-types, where they seek to have more business leads. In essence, what we’re doing is that we’re going into these businesses, meaning healthcare providers, and we’re providing them a service that’s generating more business for them.

All they do is hand us their patient list and they don’t do anything else. Just their phone rings more, and we’re able to touch their patients via email, via text, via web, via mobile, via social, and ultimately drive them into a conversational channel where we can actually have bi-directional interactions between doctor and patient that surfaces interest, cultivates needs, discovers health risks, and educates to ultimately drive people in for care.

Healthcare, now, has become one industry in many that we’ll pursue. This is, frankly, the most exciting idea I’ve been a part of in my career and the largest idea ever.

William Griggs: That is a fascinating story, fascinating genesis story. It’ll be interesting to track the progress. If people wanna connect with you or learn more about eRelevance, how can they do that?

Bob Fabbio: My tweet handle is bfabbio. I can be reached at bob@erelevancecorp.com. I do have, and I think it’s applicable to this interview, I do have a blog on Tumblr, and the name of the blog is bfabbiobizblog. The reason why I bring this up in closing is that many of the lessons learned through all of these startup adventures are documented there in short vignettes, and people may enjoy reading about those.

William Griggs: Very cool. I’ll definitely link that up as well as to the website of eRelevance to the show notes below the interview. This has been a great interview. Definitely got more than I even knew I was gonna get out of you. I know the audience will definitely use this to help build bigger and better businesses. So, definitely appreciate your time, Bob, and thanks for coming on the show today.

Bob Fabbio: It’s a pleasure and I’m happy to do so. Thank you very much.

 

Bob Fabbio’s Bio

robert_fabbio_potraitMr. Fabbio is characterized as a visionary and successful serial entrepreneur. He has founded and built multiple industry-leading companies by identifying large emerging markets, gaining intimate knowledge of the market needs, challenging conventional wisdom, and bringing targeted, innovative solutions to those markets.

Fabbio has functioned as a Chief Executive Officer, board director, and venture capitalist for over 25 years with notable experience launching, funding, growing, and managing innovative and category creating companies.  He has had a transformational impact on the software, systems technology and healthcare industries resulting in the creation of over $1.5 billion of shareholder value at time of exit.

In recognition of his success in building world-class businesses, Fabbio was awarded the Ernst & Young Entrepreneur of the Year Award in 1997.  He has subsequently served as a chair person and a judge for the Austin E&Y awards.  He also has been a national judge for the E&Y awards. Fabbio has been recognized in the 1999 Digital South Magazine List of “Most Influential People In the South’s New Economy”, 2002 Forbes Magazine Midas List of the “Top 100 Technology Venture Investors (technology’s top 100 dealmakers)”, and 2013 Rochester Institute of Technology Innovation Hall of Fame, to name a few.

 

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About William Griggs

William Griggs

William Griggs is a product and customer acquisition strategist who has helped numerous startups including companies backed by Andreessen Horowitz, FLOODGATE, & 500 Startups. In addition to his consulting work, he has written for Mashable, VentureBeat, & ReadWrite. You can check out his podcast on iTunes (The Startup Slingshot TV) or follow him on Twitter @william_griggs for Tweets chock-full of delicious knowledge nuggets.

In addition to everything tech startups, William loves breakfast tacos, dogs, short emails, and Amazon Prime. He currently resides in Austin, Texas with his beautiful wife Elizabeth.

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