Ray Simonson
From The Waterloo Way Wiki
Ray grew up in Golden, BC as the oldest of 10 children. Like many entrepreneurs, Ray’s father was also entrepreneur. But early in life this actually discouraged him from pursuing an entrepreneurial life, due to some hard times as a child. Upon completion of high school in 1966, he received a scholarship to UBC. When asked about his education, Ray chuckles and says he was asked to leave after one year and not return.
Following the experience, he took an entirely different path and worked in a BC sawmill for 3 years. Then he met a girl, whom he would later marry, and followed her to Toronto. Ray became a Teamster, and drove forklifts. At this time, Ray decided to return to school. He decided to pursue his life-long dream of becoming an astronaut, but was crushed to learn he did not have good enough eye sight. However, Ray still wanted a career in astrophysics, and felt computer skills would help him achieve that goal. He took night classes to develop his computer skills. He decided to take this path more seriously in 1971, and applied to the University of Waterloo. After being rejected from the Computer Science program, Ray applied and was accepted to Systems Design Engineering at the age of 25, which was more accepting of mature students.
After three years at UW, Ray left due to personal reasons. After leaving school, he started his first business, with his wife, selling cosmetics as part of a pyramid scheme. However, it was not successful and he lost $5,000. He ended up getting a job in the computer department at UW, building hardware and software, and assisting students. After short time, Ray was recruited by Mutual Life, who needed someone with his computer skills. He planned to stay for 2 years and then return to finish his degree; however, 17 years later, Ray was still at Mutual Life.
When Ray was first hired he was developing software and computer systems. He was problem solving, which is something he has always loved. However, near the end of his time at Mutual, the company shifted its focus from in-house development of these products, to purchasing them from external sources. Ray travelled the world as part of his job, where he saw the quality of the document management system he had created. At the time, Ray proposed spinning off this world class document factory, in order to service other companies. However, this did not fit with Mutual’s strategy, and they declined the proposal. It was at this time Ray decided to leave Mutual Life as he was no longer stimulated at work. Ray always had difficulties with tact and diplomacy, often telling colleagues, “That’s stupid”. Upon leaving Mutual, Ray’s boss and mentor informed Ray he had saved him from being fired numerous times for this reason. After leaving Mutual, Ray decided to take a break from corporate life and started a consulting firm with a business colleague Hal Davis. At this point, Ray got divorced and lost everything.
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A New Opportunity: Bluegill
Ray was at a crossroads in his life; he had job offers for senior positions at IBM and major financial institutions, he could continue consulting, or he could pursue a new venture with Hal. He considered the fact that consulting has a fixed-rate step, as you can only work for a certain number of hours. Ray was also not quite ready to return to the corporate life. As Ray had nothing to lose he decided to join BlueGill. This offer was the riskiest, but most exciting, as BlueGill was working with a new product in a new market, and also had the greatest potential for returns. This was 1996, the internet was still new and there was no online bill presentment system, like the one BlueGill was going to offer. Also, at this time Ray got remarried, and his new wife strongly encouraged Ray to pursue the opportunity at BlueGill, as she knew he would regret it otherwise.
To become a founder of BlueGill, you had to invest at least $50,000. Between the original six members they raised $400,000. Ray raised his share from his wife, children, and other family members. When BlueGill first started, they operated out of Ray’s basement and Hal’s garage. For the first 2 years they worked 6-7 days a week. During this time money was tight, and Ray maxed out all his credit cards and personal lines of credit. At this point Ray’s wife stopped answering the phone, as creditors were often calling. They had no money, and Ray was too stubborn to ask for help; he often went without food or on a diet of Kraft dinner without margarine or milk. Eventually, in 1998 they received $5.8 million in financing from a venture capital firm. This was not the first offer BlueGill received, before they even had their first customer they had a pretty attractive offer, but they held out for more, and ended up getting less. This was during the internet boom, where companies were getting financing for crazy .com ideas, but BlueGill was considered boring in comparison. They approached 30-40 venture capitalists before they finally got funding from 2 firms in Silicon Valley. Silicon Valley was the first choice of Ray’s partners, due to their understanding of the tech businesses. Ray did not see the value in this at the time, but later realised they had made the right decision.
At this time, BlueGill signed its biggest client, IBM, who accounted for about 75% of its $25 million in sales. BlueGill was about five times bigger than the number two competitor in the market. BlueGill then began negotiations to takeover the number three player. However, the day before the deal was set to close, BlueGill was contacted by CheckFree with an offer of acquisition. BlueGill put its other deal on hold, and called an emergency board meeting to discuss the CheckFree offer. They had never before considered their selling price and after throwing out several figures, they decided on $250 million. They felt this number was very high considering they had annual sales of only $25 million, and 75% was from one major client. Nevertheless, CheckFree agreed to the price immediately, and renamed the company CheckFree i-Solutions. Ray was required to stay as part of the deal, but the remaining founders retired from the company. Ray continued at CheckFree for another 4 years, and saw it grow from 40 people to 160 people. Ray found it difficult to be in this position, as he went from having unlimited power as a founder to having very little power in the large corporation, CheckFree. He eventually was fired in 2004.
Life After Bluegill
Following his venture at BlueGill, Ray invested in Software Innovation, a company that provides web-based worksharing software for managing capital projects. Ray also became a partner in Verdexus, a management consulting firm, started by Randall Howard. Verdexus specializes in helping grow small firms by finding financing and providing hands-on management expertise. Verdexus bought out Software Innovations, and Ray became the Chief Executive Officer of Software Innovations. He moved the head-office to Kitchener from Toronto, and this is where he currently works. Ray became a dormant partner in Verdexus, while Randall Howard is searching out new investment targets.
Community Involvement
Following the buyout by CheckFree, Ray took an active interest in giving back to the community. He is currently a member of the board for Communitech and spends time supporting local and provincial political parties. He is currently the Entrepeneur-In-Residence for the Center of Business and Technology (CBET) at the University of Waterloo. Here, Ray meets with students and provides financial and funding advice for their ventures. Ray is also supporting the fundraising efforts for the Hanson Athletic Complex in the KW area. Ray has also taken an interest in his family’s ventures, as 5 of his siblings are entrepreneurs.
Advice
Ray has attributed his success to many different factors, but states that trust and communication are key elements in a successful business. He states the complete trust the BlueGill management team had in each other’s ability contributed to their strong working relationship. To this day, this group has an annual reunion in South Beach Florida, where they get together and discuss the past, the present, and the future. They seek advice on current business problems, and strategize about the future of the internet industry. Ray states that finding good people to work with is the key to success for any business. The majority of his employees are people he, or someone he knows, has worked with in the past. He hires smart people, and pays them well to work hard. Ray believes by treating employees fairly, they will treat you well in return. He sets an example for his staff by working hard himself. Ray further motivates his employees by giving them challenging work and smart people to work with.
For someone looking to start a business, Ray offers the following advice:
• Seek the counsel of people you trust
• Know your strengths and take advantage of them
• Know your weaknesses and hire people to compensate for them
• Don’t give up on your idea because of the criticisms you receive
• Hire a good lawyer to handle the paperwork
• Find good people to work with
• Hire and fire employees well
• Make sure your spouse/partner is supportive and understanding of your decision
At this point in his life, Ray is open about his future plans. He is taking life one step at a time, and seeing where it leads him.
Links
CBET - http://cbet.uwaterloo.ca/About_the_Centre/executive_in_residence.html Communitech BOD - http://www.communitech.ca/about_us/bod_raysimonson.shtml Software Innovations - http://www.softinn.com/ CheckFree - http://www.checkfreecorp.com/cda/corp/
