A month before announcing a new $80 million investment in his travel tech company, Brian Egan knew he needed help to manage this next stage of growth. At the invitation of a low-profile business organization that focuses on fast-growing companies, the cofounder of Evolve Vacation Rental shared his quandary with a group of seasoned entrepreneurs who already had built or run their own million- and billion-dollar companies.
“I’m personally the CEO, and sometimes do the job of a CFO (chief financial officer) and COO (chief operating officer) and, at times, general counsel and head of HR, all of which, by the way, is totally normal for a startup,” Egan said he shared at the July meeting. “It was almost just having to articulate this and seeing their faces. They were horrified. One said, ‘Clearly Brian, I can’t underscore this enough but …you’re going to burn out. You really need to invest (time) in this as fast as you can.’”
He took their advice and free help. Within six months, Evolve had a new CFO, general counsel and senior vice president of people. Nothing was mentioned publicly about the help.
Known by its acronym BEN, the exclusive Blackstone Entrepreneurs Network works behind the scenes. If it seems like the region’s technology community has been thriving, some credit could go to this group of business veterans who’ve already made their millions. They mentor founders and CEOs and don’t ask a dime for their time. They swoop in when it feels local businesses are ready to grow beyond the startup stage, and have advised companies like Guild Education, real estate firm Trelora and retail software firm GoSpotCheck.
And now two things will happen this month. The non-profit BEN runs out of its original $3 million funding from the Blackstone Charitable Foundation, an arm of the private-equity firm Blackstone. And its leader, Greg Greenwood, has decided to step down. The search for a new director has begun.
The network isn’t going away, said Greenwood, who committed to a two-year stint but stayed an extra year at the board’s request. He helped build up a $1.5 million purse to keep it running a few more years. He’s expanded the program to include younger and more diverse companies that aren’t profitable yet. And he created a partner network to focus on raising enough money to create an endowment. (Boulder venture investor and BEN adviser Brad Feld just donated $100,000.)
Greenwood said it’s time to take BEN to its next level of building companies that attract more talent, investment and attention.
“There’s wealth in the community. And as long as those entrepreneurs stay and invest, that’s a good thing. Maybe we are just a middle player with a few tentpoles,” Greenwood said. “…But will we ever get our tentpole companies? I think in the next 10 years, we’ll have way more possibility with what’s being built here right now.”
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What makes BEN so special
BEN doesn’t sell anything. It’s not a consultant for hire. It doesn’t ask for equity. There are no membership fees, but firms are typically referred or invited and must be willing to share company financial secrets or toxic board struggles.
In return, they might find themselves lunching with Larissa Herda, who spent 17 years as CEO at TW Telecom. Or strategizing with Chris Onan, a cofounder of Galvanize and venture investor, about whom to hire — or not hire. Or asking growth questions at a fireside chat with Andre Durand, founder and CEO of cybersecurity firm Ping Identity, which in three years has doubled its employees to 1,000.
It’s the kind of organization that has come to define the region’s been-there, now-share entrepreneurial spirit. But it’s also a group that wants Colorado to find that unicorn and groom it into a force that will attract legions of workers and spawn more startups to feed a growing and sustainable business ecosystem, akin to what Dell did for Austin or Amazon for Seattle.
A few companies have put Denver on that roadmap, such as email provider SendGrid or telecom’s Zayo Group. Both were acquired this year by out-of-state firms, which in the past has meant a decline in local operations. But both remain committed to Colorado.
“There is so much support at the top of the funnel for startups,” said Egan, who first heard about BEN last year as the Evolve was ramping up. “There are so many networking events, meetups and blogs. But no one does all that stuff for the company scaling up to the next level because it’s not a big enough audience.”
There are other organizations that help entrepreneurs or CEOs grow their startups, but there’s usually a financial give and take. The Young Presidents’ Organization is an oft-cited one, with membership dues and other costs. Boulder-based Techstars also has teams of experienced mentors working with a diverse group of startup founders, though an equity stake is typically involved.
But there’s something about BEN, which got its start in Colorado in 2014 with a grant to Silicon Flatirons Center for Law, Technology, and Entrepreneurship at the University of Colorado. In turn, the center, founded by current state Attorney General Phil Weiser, modeled it after Blackstone’s similar operation in North Carolina.
Under its first executive director J.B. Holston, now dean of the Ritchie School of Engineering and Computer Science at the University of Denver, BEN built out a network of veteran entrepreneurs in targeted industries like energy and natural foods, and began identifying “gazelles,” or fast-growing companies that could become a tentpole in the much-craved business ecosystem.
Under Greenwood, BEN was stripped down to the entrepreneurs — no lawyers, no business development distractions, no sales people.
“As a CEO, you get invited to go to all these networking events. It’s just all service providers pushing their business cards at you. It’s kids asking for internships,” said Nicole Barbera, operations director for the very lean, four-employee BEN team. “One CEO told me that what’s special about a BEN event is that everyone there is going to add value for him and he can add value to them. He actually looks forward to going to a BEN event.”
In five years, BEN has gained hundreds of loyal founders and busy CEOs who eagerly attend events, seek and share advice and do the unthinkable — open emails from the organization. Emailed invites average a ridiculously high open-rate of 75-80%, according to BEN staff, compared to the more realistic industry average of 20-30%.
“I have a really high expectation for the BEN community and I do always open their emails,” said Sherisse Hawkins, cofounder and CEO of Pagedip whose company has a tool to embed multimedia, spreadsheets or other data within documents. “That’s a really good measure of usefulness — whose emails you open and share with others. Without question, BEN falls in that category.”
BEN doesn’t track the number of times a member company gets advice on hiring or making a business decision. But it does track how companies fared before and after being part of the network. The 105 companies that have been part of its network overall saw revenues grow to $5.22 billion from $1.5 billion; and employees rise to 16,866, from 9,628. The adviser network has grown to 345 people.
“The whole goal was to build the ecosystem and take a step back,” said Amy Stursberg, executive director of the Blackstone Charitable Foundation in New York. “There’s enough money to continue without us. …We’re a catalyst funder and this is the perfect example.”
But to get the Denver region to the level of a coastal tech ecosystem, there’s a sense that more companies must reach tens of billions in revenue and tens of thousands of employees.
Andre Durand, whose homegrown cybersecurity startup Ping Identity has been called a gazelle, said Denver is still far off from being able to grow those $10 billion companies. And he feels that Denver remains a risky place to bet on building a unicorn.
“We’re on our journey to become a billion-dollar (town) and for Denver, that’s a lot for us,” said Durand, whose company was acquired by Vista Equity Partners in 2016. That gave him access to an even more exclusive group of CEOs, assembled by the private equity firm owned by billionaire Robert F. Smith, a Denver native who is also the nation’s wealthiest African American (and the guy who paid off the student loan debt of Morehouse College’s graduating class this spring.)
“We have great innovation, lots of startups,” Durand said. “And if they’re all being acquired by companies on the coast, we’ll never achieve the breakout. Because what happens is the senior management is asked to move. Even if you get them here, you attract them and the company sells out and senior management moves back to the East Coast. It’s self-perpetuating.”
But, he added, “It only takes one company to do it, by the way. One company to achieve significant scale.”
Many had hoped SendGrid would be that company. Founded in 2009, it joined the Techstars accelerator in Boulder and focused on transnational email, or the receipts and welcome messages companies send on a regular basis. The company grew to become a top player in its niche and went public in 2017. In February, it was acquired by Twilio in San Francisco in a deal valued at $3 billion. It’s now a Twilio business unit with its headquarters in California.
“The acquisition didn’t change our commitment to the Denver community, the Denver tech scene or our presence here,” said Pattie Money, chief people officer for Twilio SendGrid. She declined to share how many still work in Colorado. It had 400 employees at the time of its IPO.
“If anything, Twilio is very interested in growing our brand here and our leadership presence,” she said. “We’ve continued to grow here in Denver and haven’t slowed down our hiring plans.”
Small steps but more of them
After meeting with BEN advisers, SuiteHop, which rents out luxury suites at sports stadiums, ended up hiring two of them to help with operations and technology.
The company realized it needed to pivot its business, shifting from one that owns the suites to more of an Uber and Airbnb sharing model that provides the technology so private suite owners can rent out their spaces.
“Carrying the inventory made it very hard to scale,” said CEO Todd Lindenbaum, who started the company in 2007. “We ended up hiring two of our BEN advisers, one for a year and one for 16 months. They were working full time in the business and helping me execute the pivot. We also tried to raise venture capital, but that failed. But we got the business to be profitable and at a self-sustaining state because of the pivot.”
The company went from offering the service in three metro areas to 42 markets in North America and has grown 400% since pivoting five years ago, he said.
BEN isn’t for everyone. The organization added companies in Grand Junction and Colorado Springs, but it’s been difficult to build adviser and peer networks outside of the Denver area, Greenwood said.
It’s also not for just any startup. Tech companies must have $5 million in top-line revenues or have raised $10 million in capital. Natural products companies must have $2 million in revenue and out of state or distribution agreements with a national partner. Other industries have different requirements.
Some entrepreneurs balk at BEN’s approach and prefer to go it alone. And that’s OK, Greenwood said. Whether a company thrives on its own or with BEN support, it’s still considered a success. BEN can only help founders who are coachable and willing to share not just dreams and goals, but also misfires, ineptitude and financial failures.
“We’re getting real here and if you get real, we will help you,” Greenwood said. “If you’re not telling us everything, then we probably aren’t really able to help you realize the opportunity.”
While new entrepreneurs have a lot to gain, advisers get what they want out of it. Herda joined BEN’s steering committee last year after turning down other business opportunities. She’d known Weiser for a long time and became one of those advisers who listened to CEOs and their woes.
“You get to listen to what the challenges are and you get your brain working again about running a business,” said Herda, who’s hosted BEN events at her home. “I’m not a person to come to for funding, but I can help you if you have operational issues, cultural concerns or a number of things if you’re growing revenue. …This is a time in my life that I can really help companies. And for a lot of these people, it’s probably nice to know that someone wants to help and doesn’t want anything from them. I get jazzed over their success. That’s fun for me.”
Stursberg said there’s just something about the culture in Colorado. “People want to pay it forward there. It’s not about their own agenda. It’s not about their own success. The ability to get high-growth entrepreneurs from day one was unlike any region.”
That mentality has some thinking that Denver may never get that incredible growth company like an Amazon for Seattle. But who here really wants that? Already Denver communities complain about the rising cost of housing and increasingly congested roads.
“I tend to say let’s just focus on being us,” said Brian Egan, who moved to Denver in 2004 as an early employee of Exclusive Resorts, a members-only luxury vacation home rental company.
He went on to start vacation rental site Evolve in 2010. A lot has changed in the region’s startup world since then. It’s much easier to find small amounts of seed capital these days. His own company has more than doubled its staff in two years to 350 employees. It just takes time.
“I do think it’s a process, and what people often miss is in this whole startup world, we talk about funnels. But it’s all one big funnel and it has to start with a lot to get it going,” Egan said. “If you look at the first 25 Exclusive Resorts employees, they’ve gone on to start interesting businesses all over the city. It’s pretty cool that you can point to true growth companies in Denver.”