The Pragmatist: How Chris Hill Leveraged His Private Equity Experience to Launch PerkSpot

Technori Staff

November 15, 2010 · 10 minutes read

Uncategorized

It appears like the typical Midwestern story of a successful 31 year old man. Oldest child grows up in loving household in the Chicago suburbs.  Gets good grades, plays sports, has friends, etc…  Eventually heads off to college and sets out on career path.

Only this particular story ends with Chris Hill launching PerkSpot which has doubled its revenue every year since 2006 and boasts a client list that includes Starbucks, Chevron, Abbott Labs, DIRECTV, and Altria Group. Not to mention a side project called crowdclick, which has turned out to be a very fast growing business of its own. The more I learn, the more it’s apparent this is no typical Midwestern guy.

Sitting in the back of his new loft office in the River North, the buzz from his 20 employees working the phones makes it tough to hold our interview. The sound of business is in the air and the smile on Chris’s face tells you everything you need to know about how things are going.

PerkSpot delivers rewards and loyalty programs to large corporations so they can use them as incentives to lure in top new employees and retain existing ones. How he arrived at such an interesting niche business was through a long and very pragmatic approach to entrepreneurism.

Chris would learn early on about the fundamental differences between being an employee and being a business owner. It started with an experience his father went through in the construction industry.

“He was at a company and it was doing really well and it had been his long term goal to eventually take over the company. While that was occurring, he was handed an opportunity to run another different company. He turned down that offer…  Well, fast forward several years and the owners ran the business into the ground and only wanted their children to take over the company. So, my Dad ended up leaving and joining the same company that had made him the offer to run it before. At that point, someone else had already taken the position and my Dad came in as the #2 man. “

“As a result of not having the equity control he would have had if he took the role originally, that showed me the dichotomy and the financial benefits he missed out on.  The seed that was planted was that equity brings wealth.”

Chris is a true Type A personality in every sense of the word as he talks about his early motivation. That sense of controlling one’s own destiny is at the core of many of the most successful entrepreneurs we all know.

“I always wanted to control what was going on. I always wanted to be in charge. If I saw the way something should be done, I could be in control of doing it right.”

Like so many others in the Midwest, college wasn’t optional; it was assumed in the Hill family that Chris would attend. In deciding where to go to college, he wanted a unique experience and he wanted to break free of his own personal “normal”.

“I wanted to go to college. I wanted to get exposed to things I hadn’t been exposed to growing up in the suburbs. You are kind of in a little bubble.”

There was one catch. Chris was a natural born athlete and loved playing lacrosse. Staying true to his word of seeing something that needs to happen and being in control of making it happen, he attended a college with no lacrosse program. He figured he would just create his own.

“Coming out of high school, I had to decide whether I would play lacrosse competitively or play for a club team at a college. I really wanted to get the most out of my college experience, so I choose the club route. However, the school I chose didn’t have a club team. So, as a freshman I started a lacrosse team, which was pretty difficult to do in the middle of Indiana when most people hadn’t even heard of the sport. We had to create something from scratch. I found a couple other guys who had played lacrosse in high school and we were able to put together a strong program. The club is still going strong more than ten years later, and it is fun to know that I was part of creating it.”

Looking at the evolution he went through from teens to starting PerkSpot, Chris’s approach to entrepreneurship was very planned out.  In 2001, having a degree in hand to fall back on, he could have jumped head first into a startup as soon as graduating.

“Coming out of college I knew I wanted to start a business. But, I just didn’t feel that I was ready. I saw the investment banking career track as a way to gain that knowledge. Through those experiences I got a ton of insight into how companies run and how their management teams operate.”

As he describes it, it’s hard to tell if this was something he did intentionally or if the opportunity at Arthur Anderson was there and he just took it. It’s quite impressive to think that a 22 year old would have the foresight to know the investment world would teach him infinite lessons about startup businesses.

“After two to three years investment banking, I initially thought I would take what I learned and move on and start my own company. But as I became more familiar with the investment world, I saw an opportunity to continue my ‘education’ by working for a private equity firm. In the two years I spent working in private equity, I was able to gain exposure to the business models of hundreds of successful businesses, interact with management teams and entrepreneurs, participate in board meetings, and perform due diligence on businesses in various industries.”

When it came time to leave, he knew he was ready. However, moving away from the investment world shocked many of his coworkers. They couldn’t understand how anyone could walk away from an industry that almost seems to manufacture cash out of thin air.

“I had a career track going through investment banking and into private equity. It just wasn’t what I wanted to do with my life. I was just continuing in the rat race and everything was planned out. Here is where you start, here is where you end. I wanted more control over my outcome.”

How do you move from the private equity world to helping companies retain employees with discounts at Applebee’s? Chris would find one of the best types of business opportunities you can stumble upon; he found a pain point that he could solve.

“When I started at Arthur Anderson, we had cool discounts available to us. Because I was an employee I knew I had access to discounts at Brooks Brothers and Sprint. However, information to those discounts was lost somewhere on the company’s intranet. I eventually found it somewhere, but all the links were broken and the contact info was outdated.  PerkSpot was launched around solving this pain point of many large businesses and their employees.”

As I’m sure many of you reading this would assume, rewards programs are not a new concept. However, Chris found the companies currently providing them were failing on multiple levels that he could exploit to gain market share.

“We discovered that there was a very large company that had been doing this for years. They raised millions in venture capital. So our plan was to enter the middle market and go where they weren’t. But the more we asked around we realized these large companies still had a big need. This other company was a less of a solution and more of a ‘cool thing’ to offer your employees. They weren’t addressing the needs of the company such as managing numerous discount providers and handling all the employee customer service around these offers.”

Unlike his competitors, he had no interest in getting funded. One of the keys to PerkSpot thriving was they had to focus on total customer satisfaction since there would be no money to fall back on. As a bootstrap entrepreneur “preacher” myself, I loved these words as they came out.

“I bootstrapped it from the beginning. I wanted to use all my capital to execute the idea. Coming from the investment world, I saw what institutional investors required from the entrepreneur in exchange for their money. With all the strings attached, I knew I wanted to avoid that for as long as possible.”

Maybe the glory of landing a large funding round in your pre-revenue days is that you will be able to pay yourself a salary and not work off of folding tables.  For the rest of us there is something innately appealing about roughing it for a while.

“We had a duct taped business for several years. We started working out of my house. Eventually my wife and I had our first baby, and she kicked us out of the home office. We hired our third employee and we started subletting spaces.  I’m still not the highest paid guy here. I didn’t take a salary for the first two years.  Definitely depleted the savings and put everything into the business because I truly believed in it….We lived off ramen noodles for a little while.”

It’s those stories that strike right at the core of what it means to be an entrepreneur for so many of us. Though Chris’s self-funded plan had a major hiccup at the very beginning that could have derailed things.

“Had the perfect plan in place. My wife was in law school and was graduating at the same time as I would be dropping the cushy private equity salary and plowing our savings into this new venture. The idea was that she would be my sugar-momma with her new attorney salary while I built the company without taking a salary. Well, she graduated in a terrible time in 2006 for lawyers. There were so many lawyers graduating and she couldn’t find a job right away. Going from thinking we would have this salary to having nothing and eating into our savings was a trying time. But, she believed in me and the business and there was never a point where she said go get a 9-5 job.”

PerkSpot has done quite well since their early days, being cash-flow positive within a few months of launching. It’s the growth that allowed them to branch out and try some new experiments. For most of us a side project is lucky if it can a shred of traction. For Chris, his ended up front page on Techcrunch.

CouponTweet was just a really cool new idea. We got a ton of press without doing any PR. We were covered on Techcrunch and others. We really were a first mover in the space.  We talked to investors, but it just wasn’t our core product. It was just a fun hobby thing to do. We weren’t willing to put the resources behind it that an investor would want. However, the funds from CouponTweet allowed us to grow our core business and launch sites like crowdclick. “

With crowdclick Chris was venturing into the over saturated and cut throat business of group buying sites. At last count I think there are now over 200 different brands in the space. Unlike most of the clones out there, crowdclick actually had a very clear and genius approach to finding traffic. Perkspot would simply tap into the captive market of the 2 million people they already served.

“We have 2 million employees across the country and they all love discounts. So we built out a platform that would allow us to deliver the same local discounts in a more effective manner. Instead of the employee having to show their ID at a local shop, now they can pay for it ahead of time and just walk in.”

“We look for good merchants around our customers. For example, one of our clients is Northwestern Hospital. We use employee suggestions as well as Yelp, Yellow Pages, Google Maps, etc…  find local merchants directly around the hospital and negotiate discounts for our users.”

From one idea to the next, Chris displays the characteristics of your typical serial entrepreneur. While he has been behind the launch of various companies, he is quick to point out that they are merely just one more extension of the PerkSpot service. All the various businesses share the same office space side-by-side and are run by the same team.

The eventual next moves for Chris will take him into a completely different direction. PerkSpot solved a pain point for businesses, now he wants to move into solving pain points that have much loftier goals in mind.

“A huge thing for me is getting involved in the city with people who are less fortunate. Tutoring at-risk kids and trying to help put people in a position to succeed. Did you know that only 6% of the students who start high school as a freshman in the Chicago Public Schools graduate college by the age of 25?”

When he starts talking about the school system and social injustices, his face really begins to light up. Earlier in the interview I think I briefly offended him when I called him “reserved” and quiet. When he starts talking about his working in the school system, a very different man emerges.

“I sit on the board of Griffith Tutoring. It’s a nonprofit tutoring group that connects corporations with public and charter schools where the kids can’t afford a Kaplan type preparation test.  We discovered a lot of times that kids couldn’t get into school unless they could meet the minimum ACT scores. We are able to take kids that were at a 14 or lower and get them up to 18 or 20 and they ended getting into college because of our tutoring program. “

The more he talks the more it expands outside education into the entire concept of what businesses roles are in the world. Should a for-profit business be focused on promoting the greater good? In Chris’s eyes they should be fundamentally tied together.

“I love it. The Tom’s Shoes of the word, it’s fantastic. I wish private enterprise and social responsibility could be more closely connected. Someday I would like to start a business that could be more directly connected to helping less fortunate folks get a job or into school. “

You may wonder how someone can balance family life (2 kids with one on the way), PerkSpot, crowdclick, CouponTweet, a tutoring non-profit, and teaching a course at Columbia College about entrepreneurship. It almost seems like Chris can’t have enough projects on his plate. As for balancing all of these projects, with a big smile on his face he says, “I certainly enjoy it.”

www.PerkSpot.com

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