WEBVTT - A Counterintuitive Approach to Success

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<v Speaker 1>This is Bloomberg Business Week with Carol Messer and Tim

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<v Speaker 1>Stenebeck on Bloomberg Radio.

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<v Speaker 2>So Arianna Huffington calls her next guest new book quote

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<v Speaker 2>a must read for anyone, from seasoned entrepreneurs to recent grads.

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<v Speaker 1>Cheril Sandberg says that quote every entrepreneur should take advantage

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<v Speaker 1>of her experience and knowledge as they start their own

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<v Speaker 1>journey in business.

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<v Speaker 2>So's so true. Please to have back little, Please to

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<v Speaker 2>have it back with us, Liz, I blame John Tucker

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<v Speaker 2>for this.

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<v Speaker 1>It's okay, we're not live, Carol, that's fine.

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<v Speaker 2>Take two. Please dad back with us. Liz Elton, co

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<v Speaker 2>founder of the translation company Transperfect. They began back in

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<v Speaker 2>nineteen ninety two at NYU Stern School of Business. She's

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<v Speaker 2>also the founder and CEO of the Elizabeth Elting Foundation,

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<v Speaker 2>and she's got a new book out, Dream Big and Win,

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<v Speaker 2>Translating passion into purpose and creating a billion dollar business.

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<v Speaker 2>I'm Liz, great to have you here in studio. Ah

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<v Speaker 2>starting a business, though sometimes you have to have a

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<v Speaker 2>lot of failures along the way. Did you have a

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<v Speaker 2>lot of failures?

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<v Speaker 3>Yes, Carolyn, I had many, many failures, and that was

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<v Speaker 3>what prompted me to write the book. I thought, I

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<v Speaker 3>can create something based on what I did right and

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<v Speaker 3>the many things I did wrong.

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<v Speaker 2>What's the absolutely what's the biggest thing I always think about,

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<v Speaker 2>like you know the mistakes that you really learned from?

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<v Speaker 3>Okay, well, one thing that is very big that I

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<v Speaker 3>learned was when you start a company. And it seems

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<v Speaker 3>so obvious now, but you need the right paperwork in place,

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<v Speaker 3>A proper shareholders agreement which determines roles, responsibilities, debt, what

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<v Speaker 3>happened or sorry, roles responsibilities, what happened in the event

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<v Speaker 3>of how decisions are made, dispute resolution, debt, what happened

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<v Speaker 3>in the event of death, disability, a buy sell provision,

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<v Speaker 3>and an exit strategy. That's critical and we did not

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<v Speaker 3>have one.

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<v Speaker 1>Well but but come on, if you're just two people

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<v Speaker 1>in your twenties with an idea, you know, a in

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<v Speaker 1>a dorm room at NYU, you know this is not

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<v Speaker 1>what you're thinking about. You're thinking about the idea of

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<v Speaker 1>translating the world's business documents exactly.

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<v Speaker 4>And the goal was to bring in the business.

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<v Speaker 3>We had no money, so we couldn't even hire an

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<v Speaker 3>attorney and hire an accountant, so We certainly couldn't get

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<v Speaker 3>together a shareholders agreement.

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<v Speaker 4>There was nothing to fight over it.

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<v Speaker 1>Give people your story about business in case people aren't

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<v Speaker 1>familiar with your story. I mean, you built this business

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<v Speaker 1>with your co founder to hundreds of millions of dollars

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<v Speaker 1>a year in revenue, and then he eventually bought you out.

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<v Speaker 1>But talk a little bit about that and sort of

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<v Speaker 1>like the lack of shareholders agreement there and what happened.

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<v Speaker 3>Sure, And so one issue was we did not have

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<v Speaker 3>a shareholders agreement, and I looked at getting one along

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<v Speaker 3>the way. We talked about it, but we could never

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<v Speaker 3>agree on one once there was something to fight over.

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<v Speaker 4>So that was one issue.

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<v Speaker 3>And related to that, we couldn't agree on decisions day

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<v Speaker 3>in and day out. And we were fifty to fifty owners.

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<v Speaker 3>So that's the other piece of it. I advise against

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<v Speaker 3>being fifty fifty owners whereby you have no one to

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<v Speaker 3>resolve deadlock, no tie breaker, And that was the case,

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<v Speaker 3>fifty to fifty owners and no deciding votes.

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<v Speaker 1>Were you in a unique situation though? Correct me if

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<v Speaker 1>I'm wrong. You didn't raise outside funding.

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<v Speaker 4>We did not.

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<v Speaker 1>Oftentimes with companies these days, especially if they go after

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<v Speaker 1>venture capital. Then you get like a you know, VCS

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<v Speaker 1>with experience on your board, you get all the answer

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<v Speaker 1>to right and you do have to answer to them.

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<v Speaker 4>Yes, you're absolutely right.

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<v Speaker 3>And what happened is with the original company, trans Perfect,

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<v Speaker 3>we didn't raise outside funding. We did start a sister

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<v Speaker 3>company in nineteen ninety nine, seven years after we started,

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<v Speaker 3>called Translations dot Com, and for that we did raise

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<v Speaker 3>some raise some outside funds initially, so for that we

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<v Speaker 3>handled it differently, but we ended up buying those investors out.

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<v Speaker 3>So back to the original company, no shareold agreement, no

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<v Speaker 3>tiebreaker when we didn't agree, and fifty to fifty ownership,

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<v Speaker 3>and I advise against that. I say, you need a

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<v Speaker 3>shareholders agreement. You want to own more than fifty percent

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<v Speaker 3>if there are only two of you, or you want

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<v Speaker 3>to be the decision maker if they're more, and that's critical.

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<v Speaker 2>What would you say in terms of advice of going

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<v Speaker 2>into business with someone who is your partner.

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<v Speaker 4>And your partner meaning.

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<v Speaker 3>Meaning you have a personal relationship, so I should be no, No, absolutely,

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<v Speaker 3>he was my boyfriend at the get go. And again,

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<v Speaker 3>as I said, we started with no money whatsoever, and

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<v Speaker 3>we just focused on sales, not on raising money. And

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<v Speaker 3>what I advise is, no matter who the person is

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<v Speaker 3>that you're starting the company with, whether they're your boyfriend,

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<v Speaker 3>your girlfriend, your husband, your wife, your child, brother, sister,

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<v Speaker 3>you need a proper shareholders agreement specifically to deal with

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<v Speaker 3>the issues I was saying. And so over the years,

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<v Speaker 3>we didn't agree many times, day in and day out

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<v Speaker 3>because there was no tiebreaker, and we kind of diverged ultimately,

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<v Speaker 3>and then we had a very interesting and crazy situation

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<v Speaker 3>at the end and a very intense litigation where I

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<v Speaker 3>spent fifty million dollars selling the company on legal fees

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<v Speaker 3>and the process because we didn't have a proper shareholders agreement.

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<v Speaker 1>Well, I don't want I don't want people to get

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<v Speaker 1>the wrong impression about the company that you built. However,

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<v Speaker 1>because even though you had all these challenges while you

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<v Speaker 1>were building, the company, ultimately became a very successful company

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<v Speaker 1>that brought in hundreds of millions dollars of revenue per year.

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<v Speaker 1>And today you're able to do whatever you want after selling.

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<v Speaker 3>Yes, absolutely, And I am so fortunate. And that's one

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<v Speaker 3>of the things I say. I say, work today like

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<v Speaker 3>no one else will, so you can live and give

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<v Speaker 3>tomorrow like no one else Can, and it did end

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<v Speaker 3>up being the largest company in the industry. That was

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<v Speaker 3>the goal from day one, because there were thousands of

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<v Speaker 3>translations companies out there when we started. It wasn't a

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<v Speaker 3>brand new idea in the early nineties, but the goal

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<v Speaker 3>was to build the biggest, a top tier company along

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<v Speaker 3>the lines of a high level law firm investment bank.

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<v Speaker 3>And fortunately, after twenty five years, we were able to

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<v Speaker 3>accomplish that goal and become the largest in the industry

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<v Speaker 3>and be a billion dollar company. And so now I

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<v Speaker 3>have the good fortune of having a foundation and being

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<v Speaker 3>able to focus on other things.

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<v Speaker 2>Well, talk to us about that focus and how you're

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<v Speaker 2>helping maybe others create their own dreams.

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<v Speaker 4>Sure.

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<v Speaker 3>Well, one of the things I'm doing is I do

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<v Speaker 3>focus a lot on entrepreneurs I'm a big believer in

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<v Speaker 3>entrepreneurship and education.

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<v Speaker 4>I think they're the two great equalizers.

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<v Speaker 3>So I'm involved in the entrepreneurship accelerator program at and

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<v Speaker 3>Why You Stern. It's called Endless Frontier Labs. I think

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<v Speaker 3>it's the best accelerator program out there. I'm also involved

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<v Speaker 3>in the American Heart Association Social Impact Fund, which is

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<v Speaker 3>also funding entrepreneurs and marginalized communities. And then I fund

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<v Speaker 3>other entrepreneurs and then I speak a lot about entrepreneurship

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<v Speaker 3>and HYU Business School, Columbia Business School, Stamford. And now

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<v Speaker 3>I've written this book largely to share the lessons.

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<v Speaker 1>Do you do any investing, yes, what's exciting to you

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<v Speaker 1>right now? What types of companies?

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<v Speaker 4>Oh?

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<v Speaker 3>As far as companies, yes, absolutely well. I do love

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<v Speaker 3>supporting other women entrepreneurs and ones that are doing good

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<v Speaker 3>as well as doing well. So you know, things related

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<v Speaker 3>to climate change or you know that are fighting climate change,

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<v Speaker 3>things related to technology AI and so I have investments

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<v Speaker 3>in each of those types of companies.

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<v Speaker 4>So do a lot with that as well.

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<v Speaker 2>What do you look for in a leader or an entrepreneur.

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<v Speaker 3>I look for someone who is incredibly proactive, curious, a

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<v Speaker 3>hard worker.

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<v Speaker 4>Focused. Now I say focus pocus.

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<v Speaker 3>If you're all in and you don't get distracted, and

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<v Speaker 3>make it all about the company and talk about it

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<v Speaker 3>and make everything you do related to it.

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<v Speaker 4>That that's very important.

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<v Speaker 2>You know, we saw a real surge in entrepreneurship coming

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<v Speaker 2>out of the pandemic. During the pandemic and out of

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<v Speaker 2>the pandemic. I'm just curious from your vantage point if

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<v Speaker 2>you can tell us you know, whether that momentum is

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<v Speaker 2>continuing or have people kind of moved back and are

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<v Speaker 2>going into more established companies.

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<v Speaker 3>Oh, I think it's definitely growing, and I think it's

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<v Speaker 3>a wonderful thing. It's a great way for all of

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<v Speaker 3>us to determine our own destiny. I mean, I'm a

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<v Speaker 3>big believer in that, and I'm seeing it more and

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<v Speaker 3>more and more.

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<v Speaker 1>So does it worry you though, that with rates going higher,

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<v Speaker 1>venture capital funding might be drying up? We did see

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<v Speaker 1>sort of a risk.

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<v Speaker 3>I don't.

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<v Speaker 2>I can't.

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<v Speaker 1>We can't call it a resurgence, especially with the way

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<v Speaker 1>that IPOs have performed over the past couple weeks now.

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<v Speaker 1>But you know there is some talk of a resurgence.

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<v Speaker 1>I mean, are you concerned that we're not seeing the

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<v Speaker 1>support for companies that are starting right now because VC

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<v Speaker 1>funding has dried up so much?

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<v Speaker 3>Well, I have seen that, But as I said that,

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<v Speaker 3>I think that's how we started the company, no outside funding.

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<v Speaker 3>And in the book I talk a lot about bootstrapping

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<v Speaker 3>and how to build a company without it outside funding.

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<v Speaker 3>And I'm a big believer in that because for so

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<v Speaker 3>many reasons. I mean, one is you retain ownership. You

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<v Speaker 3>don't have to be distracted by investors and their short

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<v Speaker 3>term goals rather than the long term goals at the company.

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<v Speaker 3>I think you don't have to dilute ownership. There are

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<v Speaker 3>a lot of reasons, of course, so if you can

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<v Speaker 3>do it without outside funding, all the better.

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<v Speaker 4>And that's a lot about what I.

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<v Speaker 3>Focus on in the book, because that's what we did

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<v Speaker 3>and that worked incredibly well.

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<v Speaker 2>You know, we've certainly had a fair amount of entrepreneurs

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<v Speaker 2>who have come in and it's all that bootstopping. They've

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<v Speaker 2>done it for themselves, but it can be really, really difficult,

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<v Speaker 2>and I think sometimes they would like that assist with

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<v Speaker 2>some extra funding. Thank you so much, really appreciate it. Lizelting.

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<v Speaker 2>She's co founder of the translation company Transperfect, and her

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<v Speaker 2>new book Dream Big and When translating passion into purpose

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<v Speaker 2>and creating a billion dollar business