My Best Mistake: Betting On Apple and Others—And Nearly Going Under

Back in 1995, my small startup was contracted by Apple to work on a special project within Apple's Advanced Technology Group. Mind you, this is pre-"Jobs' second coming" Apple. So, while still counting as working inside the holiest part of the church, we weren't working in the great Apple of the 21st century.

I moved myself and a team of seven engineers from Israel to Cupertino, Calif., and we started coding an educational platform. Within a year the project got canceled. Someone at Apple decided that our choice of underlying technology stood very little chance of significant market penetration by the end of the century. You may have heard of the technology my team recommended — it was called the Internet.

Sure enough, by the year 2000 every home in any market that mattered had an Internet connection. The market not only peaked by the year 2000, it actually managed to peak and bust. Oh, and the technology Apple picked instead — OpenDoc — let's just say that Jobs killed it pretty soon after he came back. I probably arrived at Apple one year too early.

I found myself with a bunch of renegades programmers outside of Apple's HQ. As the head of a services company, whose offices were a 24-hour flight away, and one that just lost its largest client, we knew something needed to happen quickly. We huddled and concluded that the lesson from this failure at Apple was to diversify our customer portfolio. Within three months we had signed five separate agreements, with five very different companies generating two years' worth of our cash needs — maximum diversification.

Two weeks later, on a random Wednesday morning, one of the five companies called to cancel our agreement. Their board decided that it was the wrong time to expand their business and they were forced to reverse course. That afternoon, a second call followed from another company: their IPO was being delayed and they had to conserve cash. They were apologetic: this had nothing to do with our competency, we were told. That trend continued, and by Friday morning we were down to one last agreement.

That's when the office phone rang. I didn't want to pick it up, somehow knowing what was waiting for me on the other side of that line. Indeed, the final contract got canceled too. Within 48 hours, our entire strategy of a diversified portfolio evaporated, and with it fizzled all the capital that was supposed to prop up our company for the next two years.

That was the turning point of my career. For the best!

My partner, who happened to also be my father, called to tell me we had two more weeks of cash in the bank. After six years of hard work financed by sweat equity, we came to the end of our line. It was time to pay severances to the employees and close shop. I asked for two more weeks, begging him to take my entire life savings — all $50,000 of it — just to buy me two weeks to come up with the money for a new plan. He refused to take my money, but gave me two weeks to find financial backers. He trusted me with his money, but was not willing to take mine. That's the benefit you get from partnering with someone who is 100% aligned with you.

I remember looking up at the night sky into a full moon. That moon became my marker. When it emptied, so will the money in the bank and with it ... my time.

Nothing focuses you more than a sharp stick in the back. We picked up our technology which Apple discarded. With the Internet's early days buzzing all around us, we quickly put together a great prototype for a product we could take to market within six months. A corporate portal — or as we called it: "Yahoo for Businesses." We decided to stop being a service shop, and make the leap into a real product company. We had the answer for visionary corporate CIOs trying to figure out how the Internet could be used inside their IT shops.

We had talented people, we had real working code that took years to build, all in the hottest market segment. We were just short on money, and experience in taking products to market. Simple, right?

I called a good friend from Apple, who called a few good friends he knew, and all of a sudden the mythological stories about funding a business in Silicon Valley became my reality. Within two weeks we had the capital lined up. We were looking for $500,000, but raised $800,000 from 14 individuals — angels, not just by their investment category. They were true angels, mentors and friends. That was not the best part of it. I was lucky enough to find an experienced software executive, David Blumstein, a 20-year veteran of the software industry, who successfully led four companies prior to our meeting that summer. David agreed to "retire from his retirement" and join us for 18 months. He became my new CEO, as I assumed the role of CTO.

I gained a friend for life, a true mentor, and we worked together for the next five years, side by side.

As for TopTier Software, the company that went through this near-death experience in the summer of 1996. Well, we sold it 18 months later, for the whopping sum of $110 million. I stayed on for three more years as CEO, and in 2001 sold the company again to SAP. This time for $400 million. I stayed at SAP, too. It became my next home.

And the lesson from my mistakes? Trust no one but yourself with the fate of your company. Don't tie yourself onto a troubled ship nor should you tie your fate to a bunch of small boats. Neither of these options will take you in the right direction. Unless you find a smart partner that shares your vision, avoid the temptation. You are better off setting your own course through life.

That and hard work will make you very lucky in life.

(Photo: Shutterstock.com)