The May 2017 edition of Denver Founders featured Thad Eby, CEO and Founder of Ombud. Eby spent the evening providing valuable insights to the members of Denver’s startup and entrepreneurial community.
Eby’s story begins in Fort Morgan in the northeast part of the state. After finishing high school, he quickly moved on to college at Kettering University in Flint, Michigan. Kettering had a unique academic calendar that combined classroom education with real-world work experience. Students would go to class for six weeks and then work for six weeks (this eventually changed from six weeks each to twelve). The benefit of this for Eby is that he gained valuable experience at an early age.
Two of his earliest internship opportunities were with Samsonite (Yes, the suitcase folks. Cue “Dumb and Dumber” clip) and a meat packing company in Fort Morgan, Colorado. Seeing that he was in no rush to get back to Colorado at the time, he initially took the Samsonite gig, but then was turned on to a software development company called Parametric Technology Corporation, PTC. Parametric had a global reach so when his internship rotations came around the company sent him to France, Germany, and the Netherlands.
Circa 1999–2001, he got transferred to Sunnyvale, California for an internship rotation with a software company called Ariba. While there he met and interacted with a number of people who would become movers and shakers in Silicon Valley, across for Silicon Graphics, now the Googleplex. While watching SGI’s engineers engage in Star Wars live action role playing at lunch was endearing, he quickly realized that there were two kinds of people in the Valley. On the one hand, there were the smart guys who worked hard and were into Star Wars LARPing, and on the other were snake oil salesmen and “bottom feeders.” Fortunately, Eby was drawn to the former population segment.
Eby continued to work for a few startups that went on to be acquired by IBM and Oracle. One of those startups, Endeca, placed him in London It was during this job, which he held from 2007–2010 that he got the idea for Ombud. Eby was quick to highlight the positives of living and working in Europe. Although he was based in London, his work with Endeca took him all over the European continent. He said that working in Europe opened his mindset considerably. It taught him a lot about being respectful of others and he learned how to value different cultures and to deal with those cultures in a business context.
Back To Colorado
Originally, the idea for Ombud was to essentially be a social reviews site for enterprise software, i.e., Yelp for the enterprise. That is, a place to get relevant information and data about business solutions from a community of users. The genesis of the idea came from Eby’s background in pre-sales. There his job was to figure out customers’ pain points and problems and then figure out how to address those with his firm’s technology. As opposed to the actual sales team, the pre-sales folks were the ones who did all the heavy lifting of the product ahead of time.
The question for Eby became, how do you collect all the research that companies and enterprises need to make a business decision in one place and then evaluate the decisions that are made from that research?
The Decision to Leave
In late 2010, Eby left his job at Endeca and moved back to Colorado to start Ombud in Denver. He noted that leaving his job was one of the hardest aspects of the entrepreneurial process. While he had some money saved up, he noted that it was touch-and-go until that first revenue dollar came in. He was constantly questioning his decision and whether it was the right one.
There were also social consequences involved with the decision. He noted that his social life pretty much evaporated in the wake of starting Ombud. When asked why he chose Denver, he noted that the city was more serious and that Denver has more of the Star Wars LARP type of people than it did the talkers that are more commonly found in the Bay Area.
On April 15, 2011, Ombud officially became a reality. Eby and his co-founder, Brenda Harms began developing the platform that was going to be Yelp for the enterprise. Primarily bootstrapping the whole thing (Eby noted that they took some investment money but never actually used it. Instead, they saved it as more of an emergency fund.) he estimated they spent about $450k on the initial platform. They spent about 12 months developing the platform and actually went several years without pay in order to get Ombud off the ground.
Unfortunately, despite dropping a ton of money developing the platform, they still didn’t have any customers. The Field of Dreams approach of “if you build it, they will come” never materialized. In general, Eby doesn’t recommend that as a fruitful business strategy.
Ombud evolved into a “decision management platform.” It’s designed to help people make decisions and provide the resources they need to do that. By providing data, content, analytics that help understand how decisions turned out, and a workflow that codifies those things, the platform can help businesses make better decisions.
From a bootstrapped company consisting of two people, Ombud currently has over twenty full-time employees. When it came to building his team, Eby emphasized how important it was to define the company’s values first. Once you know what your values are it’s easier to evaluate job candidates because first and foremost you’re comparing them to your values.
Finding The Right People
Another challenge with finding the right people is trying to project a person’s career trajectory. Ideally, Eby said, he wants to find people who are four-to-five steps removed from the apex of their career trajectory. This ensures that people have the room to grow as necessary and gives them critical startup experience that can then breed more startups. Eby is more likely to develop talent from within than simply going out and hiring the “best” person in a technical sense. The idea here is that it’s better to bring on someone who is a value match and can develop into top talent than to bring in that talent and have them be a toxic influence on the company.
As is frequently the case, the subject of fundraising came up during the evening’s discussion. Eby primarily boot-strapped Ombud, but notes that they also entered a partnership with the venture firm, In-Q-Tel. Eby called this “strategic money” because it gave them an entry point within the intelligence community that Ombud could help in a different way.
On the subject of venture capitalists, Eby argued that the problem with venture capital is that investors want a return on their investment in a short time, usually five-to-seven years. Delivering on that is really difficult. Eliminating the pressure that comes with VC money allows companies to grow more organically and with a more solid foundation.
The Denver Startup Community
Somewhat related to this was a discussion about the startup ecosystem in Denver and a question about whether it was a problem that when local companies leave or get bought out. Eby suggested one of the issues was the lack of leading public companies in the Denver area. Co-host Josh Churlik said he thought that was all part of the process of building an eco-system; it’s what has to happen and stability emerges after twenty-to-thirty years. Eby and co-host Chris Franks agreed on Franks’ suggestion that Denver VCs haven’t had a huge exit yet and until they do they’re going to continue to pressure companies into leaving or selling.
Despite these quibbles, Eby says he’s glad he chose Denver as the place to start Ombud. His position on Denver has evolved over the years though. He said that in the first three years of his company’s existence he actually would have said he wished he had started it in the Bay area. But with time comes wisdom, and now he says Denver was the best decision. Two of the primary reasons he provided were that the cost of capital is cheaper in Denver than in the Bay area. What he’s done in Denver would have failed in eighteen months in California. The other factor is that the Valley has a short memory and a “what have you done for me lately” mentality to it. He argued that you can’t compete as a bootstrapped company in an environment like that.
Of course, being from Colorado helped too.