Episode 79: Part 1 Meet Tony Petrucciani, the humble programmer turned successful entrepreneur

The hardships of starting a business with Tony Petrucciani
Episode 79: Part 1 Meet Tony Petrucciani, the humble programmer turned successful entrepreneur

SHOW NOTES

Today, I’m joined by entrepreneur and angel investor Tony Petrucciani to discuss the hardships of starting a business and how he stayed motivated through the tough times…

 

Tony Petrucciani began his entrepreneurial journey as a software developer and analyst, before moving to angel investing.

 

Now Tony’s extremely successful, but it wasn’t always easy and the first few years of his business weren’t exactly smooth sailing.

 

In this episode, he shares with us the troubles he had starting a business, how he got his first clients, and how eventually his company grew to be so successful…

 

“If you’re good at something and people appreciate it and you don’t take advantage of them, they’ll reward you by not only paying you but getting you to do work again, again, and again.” – Tony Petrucciani

 

“Write it once and sell it a lot.” – Tony Petrucciani


Time Stamps:

01:38 – What fertilized duck eggs taste like.

05:05 – The importance of having parents with a good work ethic.

07:26 – The downside to having parents that work a lot.

10:55 – How Tony found his passion for tech.

13:01 – Why Tony went to college instead of working at his family’s business.

17:36 – How Tony found his first coding clients.

25:10 – What made Tony start his own company and the struggles he had starting off.

30:37 – The troubles Tony had living with his Dad.

34:59 – Issues Tony had with employees and having clients refuse to pay.

37:27 – How Tony’s business grew quickly.

41:09 – How Tony ended up being owed almost a million dollars.

45:45 – Taking pay cuts and dealing with stress.

Connect with Tony Petrucciani:

LinkedIn

 

Connect with Ben Jones:

TRANSCRIPT

BEN: Hello, welcome to Money with Mak and G. I am Ben Jones. Today we have a very special guest, someone that started a software business his senior year in college. The business was later acquired 27 years later after he had started it. And now he’s a managing partner and an angel investing company here in Indianapolis who has invested in over 50 different companies that he’s helping to succeed. Let’s stay tuned for some up close and personal time with Tony Petrucciani. Tony, hey, it’s great to be here and have you here. You’re a pretty humble guy which I really love, who’s done some extraordinary things and is currently working with 50 different startups. That’s pretty huge! We also brought your son along, who we featured the last couple of weeks, which is really cool. And you’re doing this like huge exposure to so many different companies and helping so many companies. We just wanted to sit down with you and get your story. How’re you doing today?

TONY: Doing great, thanks for having me.

BEN: Doing great. All right.

TONY: Long time listener, first time caller.

BEN: There you go. And Cobi, you were here, what do you call it, last week?  And we’re doing the two-part story on you. How are you doing today?

JACOBI: Yeah, pretty good. Thanks for having me.

TONY: Cool. Should we start with the magic fishbowl and pull a question for Mr. Tony Petrucciani, go ahead, Tony. Oh, he’s pulling it out. Let’s see if he gets a good one.

TONY: Just better not have anything to do with your sister.

BEN: It seems to never get old with you. What do you got?

TONY: What’s the worst food you’ve ever tried?

BEN: Okay. I don’t think it can be sushi, right?

JACOBI: That might have been hot sauce recently.

TONY: But it can’t be any better than your sister’s cooking, that’s for sure. I would say, it’s probably not the worst but it’s the weirdest. I was on a trip. This is back, when I was getting into the international stuff with my company. So I had to go around the world and deal with different sales teams and know that feeling. And we were actually visiting, we did a little stopover in Manila in the Philippines and we got to meet a development team whom we were using as some offshore development resources. And the guy from Southeast Asia was taking us around. Hey, whatever you do, if these guys try to talk to you about this delicacy that you need to try, don’t do it. Whatever you do, don’t do it. And I’m like, what is it? And I’m going to pronounce it, Balut. And I’m like, what is it? He goes, don’t worry, you don’t want it. Okay, so we go meet with them all day, have a long meeting. And afterwards, we went downstairs to the local pub there. And we’re having a couple of beers and just kind of reflecting on the differences between what we normally see on a workday. And they saw and it was really cool, learning about their culture and all that. And after we’re getting on to beer three, and when the guy goes, hey, I’m going to get some blue. Does anybody want it? I look at my partner that I’m traveling with over there, my buddy, Larry, and we both have been warned to say no and I go, well, I’ll do it. They come back into cost at the time. Oh, gosh! This was in the early 2000s. So at the time, this was like 10 cents a piece. Basically they take a fertilized duck egg and then they wait until just before they hatch, and they hard boil it.

BEN: I’ve heard this. I’ve seen that when I was in vanilla. They’re carrying it around.

TONY: Yeah. So they came back with a bunch of eggs. I’m like, oh, eggs. No big deal. I love eggs. I eat lots of eggs. So you chop the flat and off. There’s a little air pocket, and there’s a bunch of fluid you drink that. Then you peel it the rest of the way and you eat what’s in there. Anything too hard to chew, you spit that out like the beak is formed on this thing.

JACOBI: I was about to ask, are they like bones in there too?

TONY: Yeah, a lot of those are pretty soft.

BEN: Mildly crunchy, got it.

TONY: And there’s the feathers, but they’re all wet because they’re in that fluid. That turns out, I haven’t validated this, but I think it’s uric acid that it’s in there. Which is basically the things peeing in the egg shell the whole time, right?

BEN: That sounds absolutely delicious!

TONY: Thanks for the magic fish bowl piece there!

BEN: I think you’re the one that came up with the idea. You’re like, do the magic fishbowl. I found 40 kinds of unusual questions, and that’s a good one. Well, we’re here to talk about your success story, not successfully drinking, what do you call it, bird pee out of an egg. So how about we started back just a little bit way back, give us a little bit rundown on your story.

TONY: It’s better than drinking bird pee from you know, another spot.

BEN: Yeah. A kid show, so when you’re growing up, you are in a part of town from a part of town that was a little rough. And your parents were kind of getting started with a business of their own. And so maybe you just start real quick back then. What was going on?

TONY: Yeah, you know, thinking about things to talk about is work ethic is one of those things. Starting at a company, people talk about work ethic a lot. Mom and Dad were first married, he would work. They were up in the Chicago land area. And at one point, he had three jobs. So he just worked his butt off trying to make a living.

BEN: And were all three jobs in the same industry?

TONY: No, they were different. One of them was a dry cleaning route and one he worked at the post office, and I think he had an employment agency that he bought from somebody.

BEN: So he was just kind of always a little ADHD. And then just don’t be a hard worker, and he got out there and did some cool stuff.

TONY: He’s a hustler. You know, having the side gigs going, side hustle, I guess you can call it. So I kind of watched that early on, because what happened was, he got offered a job selling equipment, in the area in the medical equipment area called OTO, Rhino laryngology. And did he know what that was? No, he told my Mom, he said, I just took this job. We’re going to go sell this stuff down in Indianapolis, we got to move. I don’t know how to say it. We’re going to sell this stuff and you can make a lot of money. So he ends up moving down there to sell EMT, your nose or throat instruments, and become successful enough that he actually starts his own business selling it. But it wasn’t an overnight success. They did it and they’re out of the house.

BEN: That must have been fun! Eating and past the EMT nose thing.

TONY: We had? Yeah, no. We had the range and then the sink. And then we had a desk with two phones on it because back in the day, in case one line was busy, you had to be able to have two calls at same time. And then we had the dining room table. So, they would work all day. My Dad would travel a lot and come home, and then we’d eat dinner and my Mom would just move from the work desk, because she ran everything except for sales. And that she would come in, and then we’d sit down at the dinner table, and we’d listen to him talk about everything going right and wrong. All the right things, all the wrong things.

BEN: Mostly rong, probably. So you got an experience. We talked to Cobi. Cobi came up with a new idea. But the idea of owning his own business wasn’t really that scary, because your Dad had a business. And so for you, you saw that your Dad had this business. But did it turn you off a little bit? Because it sounds like that’s a little too close all the time.

TONY: Yeah, one of the things that, my Dad worked his butt off, my Mom worked her butt off, I mean, they built a business together. But I just hated being at home at dinner and talking about work again. I mean, you just live through it the whole day. And they’re going to the dinner table talking about what I was like, where’s the fun time? The downtime. But I learned a ton but it was, you know, fast forward when I’d come home from work and I’d hang out with Laurie for dinner. How was your day, what happened today? I don’t want to talk about it. I was so used to it. It just wasn’t always a pleasant experience, I mean, you’d have some wins and all that. But it was always the same stuff all the time you talk and work.

BEN: So how old were you when you actually learned what an account receivable was, or revenue recognition?

TONY: Yeah, probably way too young. My Mom handled accounts receivable, accounts payable. They did shipping and inventory control, they did manufacturing. Well, they sold stuff and made stuff.

BEN: And where are you back there? You did some of it. Didn’t you tell me a story about burning your hand?

TONY: I kind of liked to experiment and investigate and learn. And so yeah, we had this one room. Have you heard about this Cobi? I don’t think so. We used to make these things, called myringotomy tubes. So they’re little drain tubes. If you heard kids get ear infections, they have to put a tube in their ear to drain the infection out. So they’ve got all kinds of different shapes and sizes, but we used to take this little skinny, Teflon end tubing. We had this little iron tip that looked like a little pinky finger, and it had a little hole in the end. And you’d stick this, you put this tubing, they put this wire down and you push the tubing into that iron and flange it out. We cut the edges and that would be, when it went in, it wouldn’t go all the way in your ear, it would stop it. So they made these things all day long. And then they would clean them, and then they put them in individual packages. They’d sterilize them, and then he’d sell them and they made pretty good money. And one day I was probably six years old, seven years old, and I’m in the work room which used to be our playroom, but they took over the room. It was technically the dining room of the house, a little dining room. That was the play room, and as soon as they started growing, it became the work room so we didn’t have a place to play.

BEN: Do you want to come over to my house? No, I don’t want to go well.

TONY: So one night, I walked up to that thing, and as before I made these things. It was early on, and I went up and I was going to touch this thing. It was the end of the day at 4 o’clock, and I reached up to touch it. My Dad goes, don’t you touch that, you’ll burn your finger. It was really hot. That’s when he showed me how you make those. Okay. Later on that night he leaves us at 6 o’clock, 6:30 pm. I walk in the room, it’s dark, but there’s light coming in from the kitchen. And I see that thing, I go up now I’m going to touch it, because obviously it’s been turned off, and I want to touch it. He had not unplugged it. So I touched the end of it and it burned the bejesus out of my finger! Instant blister. I scream out, I’m crying. I go to my Mom. Mom’s like, what happened? I burned my finger. So she’s running it under cold water. My Dad goes, did you go touch that thing? I go, yeah. He goes, I told you not to. I go, oh, I know, I thought it was off. He goes, alright, but you never do that again.

BEN: We might need to get your Dad here in order to tell his story, because he is an interesting guy, to say the least. Yeah, we need to get him on the show. But you were definitely learning a lot by being there and exposed to it. You saw what was going on and that took a lot of hard work, right? Yeah. And so you moved on into grade school, high school. And then kind of what led you down the path that got you to where you are today?

TONY: Well, that’s a good question. I was always kind of young for the class I was in and I was always kind of geeky. So I always liked the technical stuff, I like math, I love math. Computers were just coming out. We lived in an area town that had a strip mall. And in the strip mall, they had a radio shack. So we go run around the strip mall all the time and just kind of up and down. And we’d go into the drugstore and buy an occasional candy bar or whatever, run next door to the Radio Shack and hang out there. I think I was 12 and the TRS 80 had been released. RadioShack computer, 4K RAM baby. You were excited. I was very excited, and the manager at the time who was probably 20 years old, showed me how to get in there. It’s a program that he showed me in the programming language. So I would go over there in the afternoons and play around with the programming. Oh, really? I didn’t know that. Yeah, so I think I was 12 at that time and I was young for school. So I was actually 13, When I was a freshman in high school. In our high school, it was one of the first high schools in Indianapolis to have a computer programming class back, they had a mainframe downtown Indianapolis. I don’t know what it was, but we didn’t have a monitor, we had a teletype 300 baud teletype. So when you type into it, we show up on a paper. Then you’d say, you’d have commands to save the routine, save your program. And then you’d say, I want to print it, and it would come back and print out on the paper, there was no screen.

BEN: So it was awesome, you just love this new technology. Learning how to do it, you told the printer to print.

TONY: I could tell the printer hello world.

BEN: Was that your first girlfriend kind of thing?

TONY: Wow. I thought that was a kiss thing, and I can go there if you want.

BEN: But you did and you got excited about it. Do you understand what it was all about? Could you see the potential of what this thing was going to do?

TONY: Well, it was funny because my Mom and Dad were both pretty much computer illiterate. But they got to the point where they finally when we were in high school, they leased a building. They had a 3000 square foot building, they moved the business there. So we got the house back. And you know, they had hired a couple people, and next thing you know, they’ve got to have three terminals on their computer system to do the stuff they need done. Cows, sheep accounts payable, inventory invoicing. So I’m working at high school, I’m doing computer programming, I got the TRS 80 that I played around with. They bought their new computer, they need to make some changes to it. So my Dad would pick me up from high school at about 12.30. My sophomore year, I got an early release. Really kind of sounds like prison. Yeah. That was kind of the place over there good because it’s like a prison. Actually, it was more like the place where you hang out with before you go to prison. It’s a little rough part of Indianapolis. It’s a little rough area, where the paddy wagons come in and fire tear gas into the school to break up the riots. Did that happen? Yeah. So unfortunately, I wasn’t hurt because I learned to be a little guy. I learned to walk fast and not make eye contact. So I didn’t get beat up very much, I got picked on. Nothing ever really bad.

BEN: So you were in a tough position. And the interesting part that at least we said about this limited series, was the fact that people are coming from essentially not very much to making something of themselves. So you had this interest, can we call it a passion yet?

TONY: Yeah, I mean, I loved computers because, you know, getting picked on, nobody listened to me, but I could tell a computer what to do and who would do it. I was the boss, so I was doing work for my Dad. He picked me up at 12:30. Take me for lunch, early release and we’d go to the office, and I would program his computer, I would do stuff on the computer. And he had no qualms about you doing this. Now he didn’t know what it was. He loved the fact that he had free labor. Yeah, well when free I mean, I’m sure he was paying me three bucks an hour.

JACOBI: You’re sitting like, oh, Tony wants to hit the buttons on the machine. If it makes him happy, I’ll let him do it.

BEN: So you’re over there programming and you’re digging it?

TONY: Yeah. We had a five megabyte hard drive on the system. And every night we do a backup, we’d take a 14 inch removable platter, we put in a copy of the five megabytes, and take that big thing. We’d put it in a big phone box and take it home so we had a backup. Disaster recovery and all that. We didn’t know what that was at the time. Yeah, so basically, I was getting close to graduating high school, and I’m like, my buddies are going to college. I really love computers, I kind of want to go to college. And my Dad’s like, Hey, you don’t need to go to college, you can work in the family business. You’re already doing work here, you just come in and work. I really wanted to go experience a college thing, I didn’t know what it was. But I knew I wanted to go. Because you’re the first one in the family. Right? First I want to go. Yeah, Mom and Mad didn’t go and so that you know that.

BEN: They’re doing well. Your Dad’s finally moved to a spot where he’s got a membership with a country club. Right?

TONY: He got in, he got introduced to golf by one of his buddies, and he joined a country club by this time. Yeah.

BEN: So you’re starting to see a resemblance of people around you that had a little bit of money. You’re starting to see your parents are working hard and things are going pretty well. You’re doing the computer, the programming, and you’re sitting there going, this seems to be working and do I go to college or not. And so what made you go to college?

TONY: Well, my best friend was going to college, I want to go to college. So I’m like, hey, Dad, I want to go to college. No you don’t need to go to college. Well, what happens if somebody buys your company and they don’t want to keep me on? I need a degree to fall back on, don’t I? And he goes alright, you can go to college.

BEN: That was a simple conversation.

TONY: Yeah, probably wasn’t exactly that simple. That’s what you remember. Yeah. We have so much time on this, right?

BEN: Yeah, exactly. What do you think?

JACOBI: How much college costs back?

TONY: You know, my total cost of college, four years of room aboard, tuition, the whole bit was just under $16,000, so just under four grand a year.

BEN: Because I thought mine was like 24 or something. Because I came a handful of years after you. Two decades.

JACOBI: When I went to Purdue, that was like 25 grand a year.

BEN: Yeah, that’s definitely changed me.

TONY: But the cool thing about Purdue is, it’s been the same tuition for eight years in a row. That’s true. They froze the cost, which is good. Yeah.

BEN: So you’re going to Ball State now, you’re on your way.

TONY: I’m on my way. My Dad, when I was in college, bought a new upgraded computer system. And he called me from, I’m at the college one day and he calls me he’s like, Tony dammit.

BEN: Just sounds like your Dad already.

TONY: I just bought this new computer system, and I need to get this commission program, so I can pay my sales people. And now I just spent like $100,000 on this computer system, and they want $3000 more to do this custom program for commissions. I go, well hang on a second there. You bought a new computer system, it may involve me in the process, you’re paying for my college to go up here, right? I mean, a little side note, I end up paying my fourth-year college. So it was Computer science Ball State University church. They didn’t have tripster back then, by the way. Now they do those angry birds see the fiercest Robin sighs bird on the planet.

BEN: So you go up there, you’re taking computer science class. Has to be pretty new.

TONY: They had a pretty good program up there, actually. So I learned a lot of different languages. But in my junior year, maybe at the end of my sophomore year, he had bought a new computer system, because this business had grown a little bit. So I said, hey, let me come down there and check it out, I’ll go look at it. Well, the sales guy had sold him source code. My Dad didn’t know what source code was. He just bought it. Turns out with the source code, I could go in there make changes. I’ll take one order of source code. So with the source code, though, I could make changes, and he didn’t have to pay this firm $3,000 to make the changes. So I always joke around with him, I said, it took me about 12 hours to write this commission system up. Did you charge him three grand? No, it was $4 an hour. But he had to pay, match taxes on it. So it was about $50 bucks he paid me to write this thing.

BEN: It sounds like your Dad, that’s a very believable story.

TONY: So I saved him the entire cost of a year of college.

BEN: So he took over your fourth-year and just kind of paid it now.

TONY: So what happened there was the guy that sold him the system was like ,dude, you can do that? Do you want to do that for some of my other customers? And what do you say? Hell yeah. Let’s talk about this. Now. I didn’t know how much to charge at the time, I had no idea what was going on. I knew I got paid four bucks an hour for my Dad, so I figured I could work for us guys, for a little more.

BEN: Five and a quarter, right?

JACOBI: What was minimum wage back then? Three?

TONY: I don’t know. It was probably around there, I mean.

BEN: So you got into this thing, you had a little bit of passion, you kind of messed around with your Dad. Your Dad was kind of using you in a good way. Because you’re losing using the skill. But you weren’t really sure where the heck this was going to take you. You’re just like, okay, I’m kind of digging it, I’m just going to go with the flow.

TONY: Yeah, I’m going with the flow. So this guy calls me his office and says, I got this project to do. And I would like you to quote it, because I’m using some other contractors, like the one that bid for your Dad’s work that you did. You’d be bidding against him. So it’s competitive. So he goes, here’s the project, he laid it out for me. And I want to say it was like a 100 hours of work. Yeah. So I was thinking to myself, Man, how much should I charge for this? And so I go, I think it’s about 100 hours of work. Now, that was me. Now, I wouldn’t charge for any of the design and analysis, I just thought you should only charge for when you’re hitting the keyboard. So the most important part is to design, right? Because you’re solving the problem, not just coding it. But anyway, I figured I was 100 hours work, and I go, I’ll bid and I’m talking to him, I’d never done a formal bid. And you’re how old? At the time 19 years old. So you are ripe to be like exploited? Yeah. And he wasn’t trying to exploit me, he was telling me the rules. I mean, this guy was great, too, he was another guy, Bob Berg was his name, and he had this great work ethic. Now. I don’t know if the family is great, because he just worked so much, all the time. So I saw these two male role models just working ungodly hours every day, and I thought, that’s normal. That’s what you do. So I’m like, yeah, I’m going to work the heck, I’ll do this over the weekend, I’ll work in evenings. So I go, like a Bob, this is 100 hours. I said, I think I’m going to bid $10 an hour. I was being paid $4 an hour, right? I’m going to do two and a half times, $10 an hour. He goes, well, are you sure you want to bid that? And I’d say, well, I want to win this thing. But I know, you couldn’t tell me what everyone else was bidding, right? He said, that’s not fair. He goes, Tony, you could probably go up a little from that. But he wouldn’t tell me how much. I gather my bravery and then I go $15 an hour. And he goes, are you sure you want to do that? I go, I’m sure. He goes, you win! I think everybody at the time, the contractor, was charging $35 to $50 an hour. And I knew what I was doing but I didn’t have the experience with pedigree.

BEN: I thought you have to figure it out that with the other one, you could have gotten $3,000 for how many hours? 12 hours?

TONY: Well, I did 12 hours. I didn’t know how many hours they had. But you still got it done. Okay, I wasn’t very smart back then.

BEN: Sorry, I wasn’t trying to rub it in. I was like, that was your one point that you definitely had.

TONY: You know, I had zero experience. I watched my Dad talk to doctors to sell them stuff. But I didn’t really have any sales training. So here I am, I was super nervous. When I went to $15, I was like, holy cow, this is so much money! I’ve got to be rich. Yeah, super rich. And then I did that work, and then he started introducing me to other clients. Did you do well at that job? Yeah. You were pretty good, it’s your estimate out of the gate. Yeah, and even if I wouldn’t have been, I wouldn’t have charged him. So something similar. Then I’ve got a client up in Muncie, where Ball State University is. He hooked me up with one of his clients, who was not too far off campus. So I would drive over there three days a week, and do work for them, like after classes when I was in college. And one of the first things I did was I did all this work for them. They had some changes, I needed them with their invoicing, and some other things and they appreciated me. But I built up and hadn’t invoiced them yet. And I built up time over, I don’t know what it was, three or four weeks, and they’re like, hey, you need to send us an invoice so we can pay you. I’m okay, so I typed up the invoice and I sent it to him. And again, I didn’t do any of the design time or analysis, I would just charge him for programming. And I sent him the bill, which I think was $900 bucks. I think that was my first invoice to him. And you know, what did they do? They kind of shook their heads a little bit. They wrote me a check for $1,800 because he just felt so bad. Dude, you did way more work than $900 worth. You need to understand what your value is. They actually paid me more than I invoice them. So they taught me this stuff’s worth more. Again, I didn’t really have a lot of sales skills, but then I started figuring out, if you’re good at something, and people appreciate it and you don’t try to take advantage of them, they’ll reward you by not only paying you, but having you do their work again and again.

BEN: And help you go ahead and work you into the network, and say, hey, I got a buddy over here, that needs some help too.

TONY: So any other company that said, hey, should I use Tony, they would give glowing reviews, you know.

BEN: And so now you’re to the point where you’re getting comfortable with one, your parents had a business, you’ve seen that you could do this type of work. What kicked you over the edge and said, Hey, I’m going to literally form up a real company and go from there?

TONY: Well, so here we go, coming down the stretch of my senior year, and by this time, I have five or six companies. I’m working with my Dad’s company. So sorry for that again. No, that’s good, I mean, they were giving me good work too. I’d go home on the weekends or work there. You know, doing coding and stuff. So what happened is, we’re getting ready and Dad’s like, hey, you’re coming home from school, we’re going to come back to the family business, you’re going to do our coding and stuff, you take care of the computers. Well, I’m going to have to tell these other five companies I’m working with that I can’t do anything with them anymore. And I was having a great time with all the different stuff. We were manufacturing companies, distribution companies. I learned more and more about business, so I decided I’ll start my own consulting company. And my parents will be one of my clients, but I’ll have all these other clients. So I started a company.

BEN: I think that’s kind of funny because your Dad likes going, I’m the smartest guy out there. I told him to go to school and get a computer science degree. Now he’s coming back to work with the family business. So now you got your Dad on there, you got your new business started, you got 434 clients, and now you’re off to the races. And I think I remember you telling me a story one time which was, man, I’m getting out of school, I got this other guy that’s making x dollars. I’m going to make five times as much as that guy is because I’ve got my own company.TONY: 

The guys, the kids coming out of school, the ones that were the better kids in programming with the programming degrees were making about $30 grand coming out of school. And I’m like, man, I’m going to graduate, I’m going to charge $25 an hour. There’s 2000 hours in a year, work in a normal job. Yeah, so I’m going to do $50 grand, easy! These chumps are making $30 grand. I’m going to make $50. So my first year, I made $8,000.

BEN: I want to do this some more, because I made less than a quarter of what these other guys are making.

TONY: Yeah. So I realized you have to sell something. And you have to keep that pipeline built up so that when you do the programming, you get paid for it.

BEN: So what did you do, you just didn’t have enough clients in the pipeline?

TONY: Yeah, I did. I was always coding, I wasn’t selling, because I was busy coding. And then I’d be done and I’d wait and then have to wait for a lot of times. Bob, the guy that ran the business, the reseller business, he would refer me to somebody. So if they got something, he’d referred to me, but if he didn’t have something going on.

BEN: So did you have lulls in there, then? Yeah, you just kind of worked like crazy, and then you’re off.

TONY: A lot of times I just code and learn more about the operating system, the programming language, I’d be playing around with stuff just trying to…

BEN: Because you had a passion, of course. So the first year you made eight grand but you graduated from college.

TONY: But the flip side is, by the end of that first year after college, I remember I bought a used car. I think my payment was $104 a month.

BEN: And where were you living?

TONY: I was living at Mom and Dad’s house. If they had a basement, I’d been in the basement. But I still live in their home, Mom was cool about it, that was cool. Because I was still doing work for the company, so I was taking care of them. But I had $104 a month car payment, and by the end of that year, I started paying myself $1,000 a month.

BEN: Now you’re going big, now you’re at 40% of what the other guys are making.

TONY: Yeah, well, because the first four months, I didn’t pay myself anything. So now after taxes, it was only $770 a month. I don’t know who the FICA was, nobody likes that guy. And then I had to pay for gas, I might have still been on the oldest parent parental insurance program. I’m not sure. But the rest of it went towards beer and hanging out my buds. And I’m having fun. That’s so much disposable money for somebody at that time. I felt like, dude, this is what it’s like to have a business in the United States baby! The American dream. I work my own hours. Now, most of my own hours were like, sometimes I get 100 hours a week, whatever 100 hours a week you want. So later on as I started getting some other projects pretty rapidly, and within the first 12 months later, fast forward, I had to hire somebody because I had so much work.

BEN: Because in all respects, you were not successful. You were living at home, you were making that 40% of what anybody coming out of school was making. You were driving, was it a used car? So it was a used Kei car.

TONY: It was an old government looking car. When the people got out, they expected to see a federal agent.

BEN: Yeah. So if you’re wearing sunglasses, tie and in a bad suit. So at the end of the day, you had this passion, you’re doing this stuff, you weren’t getting paid anything, you’re living with your folks. And you were so smart, you said, hey, I’m going to continue doing this, because this is awesome.

TONY: It was fun and I kept trying to figure out new ways to build code. And then we started picking up some customers. So in some projects, I started to hire some people.

BEN: What’s your mindset? Oh, my God, I just kind of persist, I got to keep going to be successful, or was it just like, I’m just going to keep doing this and because I’m liking it and I love it?

TONY: Yeah, I was liking it and I had enough disposable income to go out with my boys and run around.

BEN: So it was really kind of your mindset. You’re hey, I like it, I got this money, I don’t care if I’m living with my parents, I’m just having fun.

TONY: My parents were pretty cool. If I roll in at 2 o’clock in the morning, they’ll be good. Because a lot of times, if we’d get a big project, there were times where we have big projects that we’re doing and I’d work all day. We’d eat dinner, you know, we’d have Chinese brought in and we’d still code during the evening. Roll home about two or three in the morning, get up at 10 in the morning, come back and do it all again, do that six days a week. Now, part of the problem living at home is my Dad who had been like this, it was all about working as a schedule, you got to be there. He would come and yell at me to be heading to work at 7:30, because doors open at eight. You got to get your but out of bed, you got to be responsible. Be responsible, you got to be at work at eight, and I’m like, Dad, that’s not how the coding world works. I just have to deliver this by you know, February 16, I got to deliver this project, so I just got to get it done. I’m working six days a week. I don’t care if you got to be there at 8 o’clock. What if somebody calls at 8 o’clock?

BEN: You’re my son. Your kids respected me. Get out of bed!

TONY: So that was funny, that kind of went on for a while. After about two years of that, I ended up moving out into an apartment on my own.

BEN: So you pulled up your Kei car, you filled it in and you moved into the Kei car. It’s not that better, a hole in the front, what do you call it? Where you put your feet at a hole there, you can literally reach and touch the gravel road. A Flintstone car.

TONY: Yeah, so part of that I didn’t tell you the story about the car. My Dad, you know, his business was going well, he’d have a company car for you know, to travel, do his sales calls and so forth. And so I told him after, you know, I got to the point where I was making more than 12,000 a year, now making 18,000 a year. Which is still not as much, and my buddies are making income, I can afford a car payment. And I want to get, you know, I want to get a car, and go so that’s a great idea. He drives this kei car here, I’ve got a lot of miles on. I’m done with it, I’m ready to get a new car, you can buy this one. I go, I don’t want to buy that car. He goes, no, you understand? You are buying this car, you live at home. So he drove me over to the savings alone, and cosigned for me to borrow enough money to buy the car from him.

BEN: Is that just hilarious? No, in your Dad, I get to see him say, no, you’re buying this.

TONY: That wasn’t a question, statement. And so that’s how I got that car, and I had that for a couple years. And finally, as I started getting to the point where I was making a little bit more money, I finally bought my own new car. Which is incredible! So tell your Dad. No, I told him what to do with my car. I have paid it off now. Fine. I got to trade it in on a new car. Was that the Ford Mustang five? I did, It was a Ford Thunderbird. It was funny, because this kei car had been driven hard, and put away with as they say, and because your Dad’s, it was my Dad’s car, he drove it all over. I mean, he drove, you know, 50000 to 70,000 miles a year. Probably more than that early on. So this thing had a lot of miles on it, and it was all reference. So I will try to test drive a brand new Ford teebird. And the guy who’s the sales guy is in the passenger seat, and I go up, and I stop at the stop sign or stop at the stoplight, when I’m driving. And then I stopped my goat cheese, and I grabbed the key and he goes, What are you doing? It stalled? I got ta restart it and still run. I go, I’m just not used to having a car that doesn’t make noise, when you’re setting the stoplight.

BEN: When things change, James Yeah. So well, now you’re at the point, where you’re actually getting some jobs, and you’re working up and I know, we’re about 35 minutes in. But what happened next? I mean, you must have started to see some success. We want to hear about anything from the edge, meaning like, there’s rough stuff, because Tony, I used to look at you, and he says he ‘s just a magnet for good things. He’s always smiling, but when I think back and put it together with your stories. I’m like, how did he ever get through that with a smile on his face?

BEN: It’ll do that, you know for so long.

TONY: There’s a lot that, a lot of hit and miss, you learn a lot of things. You try stuff to get new customers, you try stuff with projects.

BEN: Do you have any big losses, you know, I did this and it was real? I did this. Oh, my God, I was awesome.

TONY: Yeah, there’s a couple of them. One was I had a guy that started not showing up for work on Monday mornings, when we had three employees. Let me moorings that did come on Tuesday, and act like everything’s okay. I didn’t feel good, It just kept going. And we started getting behind on our projects, the project he was on. And at one point, it finally didn’t show up on a Monday or Tuesday, and it shows up on Wednesday. And then I get a call from the client, and they’re like, Hey, you guys are late delivering this thing. And you’re supposed to have it done two weeks ago, and this guy said he was going to have it done. And so here’s what we’re going to do, you’re costing me a lot of money. I know that I owe you $17,000 for all the work you guys have done, but you’ve cost me more than that. So here’s what we’re going to do, you’re going to finish the project, and I’m not going to pay you anything. So that happened, that was a real world and back then $17,000, When yet three employees, and I’m making 810, I was paid a whole year. So anyway, that guy, we had to let that guy go, we parted ways with that guy, we did finish the project. And that customer really didn’t do a ton of work with us afterwards, because we didn’t pay you anything or not. He didn’t pay us, he didn’t pay us the PCC. You said we cost him. Wow. That legal? Yeah. If we agree to it. I mean, at the time, I guess I said, because you’re taking them to court.

BEN: You’re probably pretty young, you probably were a little bit…

TONY: And I talked to some people, you know, who I would consider. You know, Bob, who’s the guy, and I told him what was going on. And you know, talk to your father, your mother, and you just get some advice. Well, your guy screwed up, and your guys your responsibilities, your company reputation. So you could go to court, and what if you lose them, then you have to pay a lawyer and you lose?

BEN: Is that kind of like the soldering iron? I’m not going to do that again.

TONY: I tell you, what the best problems to learn from are the ones that are the most painful and most costly, because when people warn you about something, it doesn’t really stick. I tell you, what I don’t touch anything, that looks like it might be hot, still to this day. Yeah, that’s 50 years later, I still talk, I won’t touch stuff that looks hot.

BEN: So now you got some good projects, you had this thing fall apart, I know that, you’ve grown considerably. So how long did it take you to get some significant growth?

TONY: Yeah, we had at that point, we had three or four employees, and we had five, it took a while to hire some people. We started getting into not only doing software, but we were doing networking, selling servers, desktops and wiring them together. And all of a sudden, we start growing really fast. We ended up hiring, I want to say, over an 18 month period, we hired 13, 14 pianists. How far in was that 4 years in or 10 years. That’s probably 6 years, 7 years in.

BEN: So you know, part of what we want to do is, we want to help or teach people. I mean, it doesn’t all go awesome at the beginning, you have to have persistence. And then once you get some traction, and you get your name out there and things are going well, and you know what you’re doing, then the hockey stick starts to pick.

TONY: Yeah, for the most part, we you know, outside of that guys project, that we’d let get out of hand. And we got a little better at Project Management, communication internally, as well as starting high. So we actually grew so fast that we made the list in 1993. We were on the Inc 500 list, which Inc Magazine, does a list of the fastest growing privately held companies in the country. And we were ranked, we were ranked in the top half number 248.

BEN: Hey, a little greasy, just snuck right in.

TONY: That’s right. So they look at your base year, and then they look at that over the next five years of growth. They look at how fast you’re growing.

BEN: But with 16 people that you hired, how many did you have before that? Were you? Did you go from five to 21, 33?

TONY: Yeah, that’s a good question. The base year, I think that time, when they were doing that, was like our base year’s income or revenue was $140,000. And we went to 1.4 million, over that time period. Whoa, that’s awesome. And then we repeated it again, in 1996, we made the list again. So we were really starting to grow. We got connected with a bigger company, and we were doing a lot of programming for their product that they were selling. And then they started you know, we started getting connected with a lot of their customer base.

BEN: They would kind of have an off the shelf. You’re almost a tailor, right? Yeah. You pull it off the rack, and it’s like, I need a little more here, a little cut down there. And then you come in there and design those extras, and that’s what you would do. And that would make the people really happy, because they need some customization on their stuff.

TONY: And on top of that, they would say, we just bought this new software, but we need a server to run it on and we need a new PC, and all this so we would do everything we do the training. is a single source. We were the single source. So people didn’t know about single source systems.

BEN: And so if you ever see a license plate that goes SSS, Inc, that’s you, right? Yeah. That’s your big Petra.

TONY: Petroni, buddy. Yeah. So what happened, we got a partner with this company. And we started building instead of doing custom programming, which we continue to do, we started seeing the same modifications being done customization. So we started productizing them and selling them, as what we call a bolt on or an add on, so they’d buy their software. And then they needed a solution, that did X, Y, or Z, and they would just buy ours, and it would just plug in, and they could use it day one, we would have to do any custom programming. And that’s got to be very profitable. Because you’ve already done the hard work. Right, at once and sell it a lot, that was our…

BEN: Kind of Chicago voting, vote often or whatever. Vote early often. Yeah, not exactly. Say, but you get the idea, If you already did it, you can just go ahead and replicate it.

TONY: I guess my grandfather used to vote every year, after every election. Well, no. Before he was voting just once in each election, after he died, he was voting three times.

BEN: I know, that stuff is crazy with you, read about it. So now you’re doing well, you have hit the Inc 500 Twice. One right over the halfway mark one higher up, I’m imagining.

TONY: A little over, the base year was higher, right. So the base, so what happens is we start getting connected with this company, and we’re coming up on the y 2k. And they’ve decided to go from this old technology, they used to rewrite everything in dotnet code. But you know, dotnet is, Okay see, it’s still a thing. Yeah. There’s a bag on lakes 98, there, like 9899, they decide they’re going to rewrite their entire ERP system, which is enterprise resource planning, which manages an entire manufacturing company, they’re going to rewrite it all in dotnet. So they spend all their time code, they run out of money, they’re a public company. But they run, they run out of money, and you’re helping them write all this. We are not helping them write much of this, but we’re selling our bolt on products, we’re selling their product, and then they’re selling my bolt on products. And each year for the prior three years, they would sell more of my stuff, than I sold theirs. So they kept owing me a little more, because they were a little slower to pay me. And so you know, at the end of the first year, they owed me $70,000 more, but they kept making payments. So we’re making payments back and forth, but since they were selling more of ours, that just kind of kept adding up. And then the next year, they owed me  $210,000, or something. And then the next year, they owed me  $500, and some $1000 More than the edge coming up. And then I got a call from the bank one day, because we had a line of credit. And the line of credit is typically used to finance accounts receivable, whatever people owe you, you know, you can borrow against it, as long as it’s not too old. As long as it’s not too old, I’ll just start too much, and we’ve gotten the point. Where it was automated, instead of everyday checking the balance, and moving money as they would just automatically transfer money to our bank account, when we needed it. And then when we had more money, cash came in that we would take, they would take it back. And they would tell us, you know, anytime we could look up, what was the balance? So they called me one day and said, we just noticed your $700,000 line of credit. You guys have $840,000 balance, they go you can’t do that, you’ve overbore borrow and I go, Well, we didn’t do that you guys did that. We didn’t tell you to transfer anything, you guys just did it. He goes, well be that as it may, Tony, you and Marry my partner, you and Marty need to pay this down, by the end of business tomorrow, you got to get back to $700,00. I said well is what he does well, you just need to pay it down. So I said, that’s going to be a problem, because Marty and I don’t have $140,000 between the two of us.

BEN: Right? You could sell a couple of your kids, but it wouldn’t get you anywhere.

TONY: And we each had several young kids. I think at that time it was 98, we probably had four Marty had four. So we all had them very close together, so in five years, we had eight kids, between the two of us.

BEN: So you’ve got that stress, you get mouths to feed. Now you have these bank colonies, and they cough up 140 by tomorrow.

TONY: So I call the CFO this public company, I’m like, Dude, you guys, and at the time when I looked at it. They owed us $900,000, we had borrowed most of that to keep them, we had to make payroll, of course she did. So now they go whoa Dude, you got to get me some money goes, I’m sorry. We’re just we’re in a tough spot, now I don’t have anything to send you. I wish I could I don’t have anything send you, so I was like, Oh my god! So I was like, Dude, I was freaked out, so I went back to the bank, I’m like, gosh. Mr. Banker, we don’t have the money to pay you back. Well, you need to tell us, how you’re going to make this right. So basically, you said, you go back and make a new plan, how are you going to cut headcount? Cut your expenses, whatever, but we need to figure out, how you’re going to pay this down as soon as possible. So we went into panic mode over the weekend, and wrote up a new plan, and we had to fire, I don’t know, four or five people to reduce the expense, out of at the time was probably 25 people. There’s about 20%. Yeah. So we had to let them go to make the bank whole, because our partner wasn’t paying us. And so we put the plan together said, this is what we’re going to do. And they said, Okay, here’s what happened, and this was the week, before Thanks giving actually, we end up having a conversation. I think it was, we were going to have payroll was Friday, the day after Thanks giving. He was talking to us on Wednesday said, Hey, we’re going to be closed by tell you, what I’m going to do is, I’m going to call you on Friday. and we’re going to be close, I’m going to miss your phone call. I’m going to let you know, for covering your payroll on Friday, but I’ll call you later, and let you know. So Oh, my God! So we’re going to let you know. Yeah, so we didn’t even know it, and we could, so we had already let the people go. But he was like, we’re going to tell you, we’re going to support your payroll, and they call it said, they would owe.

BEN: So a lot of people think, when you own a business, it’s kind of you’re really rich,  your own business, the stress level, there it doesn’t always go really well. And at this point, you literally have 2025 people that could be blowing up your phone the next day, when they can’t pay their mortgage, can’t pay for the kids’ school, can’t pay for their clothes, and you got all this stuff going.

TONY: So Marty and I had taken pay cuts, to try to have to try to make payroll. So we had started reducing how much we were taking to try to make things work. And you know what, when there’s four employees or five, and you take two of you to take a big cut in your pay, you can make payroll last for a long time. But when you’re talking about 25 people, taking a pay cut doesn’t really help a lot, but we did. And I got the point, I was just think, about that earlier today. I had run up and fortunately, I was able to get credit. You know, I have credit cards over the years build up credit cards, you know, I did a lot business travel and whatnot, so I could use them right. But I ended up racking up our credit cards. I think I was in the mid $40,000 balance on that, because I couldn’t even spend more, you know, with four kids. And when I was spending more than I was making, because I took the pay cut, so I mean, that’s pretty easy, actually. No, it was very stressful, and I actually got to a point. When I could not make it, I did not have enough extra money to pay the interest that came in every day, or every month on the credit cards, it was $700 a month in interest. And I wasn’t even, I didn’t have enough extra to make that payment. I remember just kept going up, and so here we are closing in on $2000. The bank supported us by shutting us off. And then at the same time, we thought this business, this partner business was going to go out of business, which then we’re going to go chapter 11. Because they had a lot of customer income, they just had a lot of bills. So if they go chapter 11, we were called one of these things, called unsecured debt. Of course. Unsecured credit, right. So basically what that means is, they would just not pay us, and or they pay us something four cents on the dollar, or 10 cents on $1, these things and they get worked out, where they’re horrible. They’re not horrible for the company, they kept that company would have continued, but they would have gotten to pay us over four years or five years, and they pay you quarterly, four cents on the dollar, then they divide that over $16 payments. And that’s really small. It’s a really small amount, and so you basically have to wait for your money, they can’t pay it to you quicker, because they don’t have it. And even if they do have it, they don’t pay you, because I’ve got a plan. So we thought they were going to go out of business, and or at least chapter 11, and so thought our business was done anyway.

BEN: We made $100,000, Pretty much you’re not getting much of that back, thinking they’re going to go bankrupt.

TONY: And you’re going to go bankrupt, we were able to. I went over, I did go over one last ditch effort. And I went to the CFO, and I said, Dude, I talked to my lawyer, and he’s seeing if you can collateralize some of the debt.

BEN: So, which means that if they go, what do you call it belly up, you at least have something you can get.

TONY: Through it just give me some stock, because you’re a public company, give me some of your stock and exchange. And then that way I could go sell that on the market to get some of my money back goes out, we can’t do it. So I’m driving back home, and we’ve always dreamed of building our own software product. And they were doing this dotnet thing, so on the way home, I called them. I’m like, Dude, what if we took a part of this money you owe us, and I buy a license to the software, you’ve just written. And I build my own service management software on it, not manufacturing you guys, but I use the same tech stack, and the same setup, and I’ll build my own product. I won’t compete with you guys. And you guys, can write off some of my accounts receivable. And he’s like, because little known little did, I know at the time, they were in the talks of getting acquired. And because I took some of that debt, the accounts payable down it, made their numbers better to help you know, with their numbers in position. And it helped me, because if you go fast forward six months later, they got acquired, and then that new company after they audited everything. I made good on the whole, $900,000, they owed less this amount, we worked out for the software. And so less than a year later, my personal credit card was all paid down.

BEN: People were getting, their checks for their pay were sweating bullets, every Thursday night.

TONY: Yeah, it was incredible, our account with the line of credit was paid all the way down. Yeah, I mean, so all of sudden, we looked like we were in great shape. This stuff’s easy. Everybody’s like on the outside, as easy you guys are an easy business, but it was a little bit painful.

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