Written by guest author: Adam Whitaker
Leading a business to global success is a daunting challenge that only a select few are able to accomplish. Keith Krach, founder of Ariba, was able to accomplish this multiple times and was kind enough to share his journey with me. The lessons that I’ve taken from Keith’s success bring focus to the importance of strong leadership, empowerment and solid values and can be directly applied to my future as an entrepreneur in whatever industry I choose.
Keith Krach began his career in a corporate position that allowed him to gain knowledge and true leadership experience at a young age. He received his undergraduate degree from Purdue as a General Motors Scholar with his sights set on pursuing a career at GM. The company paid for him to receive an MBA from Harvard two years later and he returned afterward to quickly ascend the ranks and become the company’s youngest VP ever at age 26.
The Founding of Ariba
1996, Keith Krach took the leap and co-founded Ariba, a software company that specializes in business-to-business commerce. Ariba expanded as the B2B software quickly became the industry leader, obtaining yearly revenues of over $500 million after only five years. In 2000, he was selected as Ernst & Young’s Entrepreneur of the Year and Ariba won the Technology Pioneer Award at the World Economic Forum in Switzerland. I asked what leadership strategies were key to his seemingly unending success.
Lesson #1: Learn From Your Mentors
Krach mentioned that the 10 years he spent at General Motors provided the foundation on which he built his career. He was selected as a GM Scholar and began working for the company during college while they paid his tuition and expenses. He excelled at GM, learning from real-world experience and receiving a fully paid MBA from Harvard. While he did not plan to remain at GM forever, he was able to use the experience for the learning and development that it provided. His mentors at GM provided what Krach describes as the most important learning experience during his journey to founding Ariba. Who you work for directly and what they can teach you is more important than the company or industry you work in.
This lesson was extremely helpful to me because it allowed me to see that one of the most successful entrepreneurs in the world began in a corporate job just like many of us will. It is not only okay, but also encouraged to gain some experience and learn while another company pays for it. At the same time, I should be focused on opportunities that provide me with the best mentors; people whose values and vision will shape the way I approach business. Rather than focus on a specific industry, I will begin focusing on companies that inspire and teach.
Lesson #2: Strong Values
Krach mentioned that one of the most important reasons for his repeated success was holding the strong values that every company he founded relies on. He spoke of four in specific: “Integrity, Respect, Courage, and High Ambition.” These values came from his experience in the Sigma Chi Fraternity at Purdue, where he learned that strong convictions are necessary for success. This became a part of the ‘playbook’ that he uses at every company he becomes involved with; you could say that this ‘playbook’ is the foundation for success.
This comment really put into perspective the need for a strong, values-based approach to business. It is easy to wonder how ethics correlate to success in the current business climate, learning that many companies have become very successful while using business practices that are far from ‘the right thing to do.’ However, I think at the end of the day, the only way you can build a sustainable business is to inspire trust: from your employees, customers, and business partners. If your values are clear, then people know that you will do the right thing and make the best decisions, even when times are tough. While I possess a strong sense of values, I should be constantly reaffirming them in all my interactions. All of my future ventures will be founded in the values I’ve developed throughout my life.
Lesson #3: The Need for a Clear Path
Krach mentioned that one of the most important parts of starting a business involves possessing a clear direction of where you want the company to go. When the opportunity to found Ariba came before him, it was with the knowledge of the potential of the business-to-business market. After seeing the potential for success, he had to map out how the company was going to develop and expand.
The need for a clear vision resonated with me because it points to careful planning and preparation before starting a business. A strong foundation is necessary for a company to become a viable, long-term entity. This will help me define my approach when starting my own business some day. It will not be without an incredible amount of forethought and research. I am interested in pursuing business opportunities in the tech industry and Krach’s experience has shed light on the specifics of starting a business in such a volatile/risky industry. Forming a company in Silicon Valley requires extra attention to remaining on top of the next potential opportunity.
Lesson #4: Inspire a Shared Vision
After you develop a values-based approach to business, the next part is inspiring a shared vision among your employees. You have to bring in employees that will be 110% behind your mission and approach. The company ‘playbook’ is not only in the hands of the top execs, it’s given to every employee and embraced by all. Part of this involves empowering everybody in the company, giving them a sense of ownership of what they accomplish. Ariba made every employee a shareholder and when the company went public, all 500 or so employees were instant millionaires, even the secretaries. All employees of Ariba were directly aware that their performance brought value to the company and increased their personal return.
Inspiring a shared vision requires the company to have a firm set of values that will resonate with everyone involved. When it comes time for me to start my own company, I will form a vision that can be applied not only when looking long-term, but in the day-to-day activities of business.
Lesson #5: Continually Raise the Standards
Another factor for success that Krach points to is a focus on continually raising the standards for his company. Krach and Ariba knew that the Internet was suddenly becoming a powerful form of business communication and they could create a marketplace for businesses to interact more efficiently, saving money. They had to focus on their customers needs and adapt to the different types of buyer/manufacturer interactions that occur. By going out and speaking with many different companies they were able to see what the customers needed and were able to make quarterly updates to their software and approach.
My main takeaway from this point is that customer satisfaction is important to a company’s success and part of that satisfaction involves continual improvement of the service you are providing. You must always be looking for the next thing you can do to add value and differentiate yourself from the competition. I know that whatever industry I enter—and I mentioned tech as a strong possibility—will have a lot of growth potential and as such, will always be changing. I will need to enter the market with a strong initial offering but always be looking to improve and stay one step ahead of others.
Lesson #6: The Challenge of Building a “High Performance Team”
When I asked Krach about some of the main challenges he faced when starting Ariba, he mentioned the importance of building a high-powered team. This means getting the ‘best-of-the-best’ and creating a team with many different skills sets.
While it can be challenging to attract the best people to a new company, I think having a strong vision of the future and foundational values will ultimately bring the top team members to you. When I start a business of my own, I will want to bring in many different talents, temperaments and convictions while maintaining a common set of principles that everyone relies on.
High Ambition, Good Morals, and a Deep Sense of Personal Responsibility
Oftentimes you look at the most financially successful people and cannot help but wonder what kind of moral sense they possess. With Krach, you can tell his success is comes from his approach to life and leadership. Every company that he built was founded with strong principles and an ambitious approach of providing the best service possible. Krach’s compass points to ‘true north,’ a direction I hope to maintain in all actions myself.
Written by guest author: Adam Whitaker
In addition to founding Ariba, Keith Krach is also:
- CEO of 3Points, Inc., an investment holding company
- CEO in Residence at Benchmark Capital
- Member of Covario’s Executive Advisory Board
- Chairman of the Board of Trustees at Purdue University
- Chairman of the Board at DocuSign
- Strategic Partner at Voyager Capital