Two of Tampa Bay’s best-known business leaders open up on success, failure and growing their companies

It’s easy to look at big companies and forget that at one time they were startups.

Both Steve Raymund and Steve MacDonald — who led two major companies in Tampa Bay from their earliest days — talked about how they grew their firms into tech powerhouses at TiEcon Florida on Saturday.

TiEcon Florida is the signature event for TiE Tampa Bay, an organization focused on fostering entrepreneurship. The entrepreneurs and startup founders in the crowd got a chance to hear Raymund, former chairman and CEO of Tech Data Corp. (Nasdaq: TECD), and MacDonald, founder and former chairman and CEO of myMatrixx, talk candidly about what they did right and what they did wrong.

Humility and curiosity

Tech Data, a Clearwater-based IT distributor, was selling a handful of computer-related products, had about $1 million in revenue and was losing money when Raymund started working at the company his father had founded.

It was the early 1980s, the dawn of the digital world, and Raymund realized the model had to change.

Under his leadership, Tech Data repositioned itself, moving away from selling to end users and instead selling to resellers, the businesses that sold to the end user.

Tech Data accepted lower margins for higher volume, expanded geographically and added products, Raymund said. By 1986, when the company went public, sales had grown to $37 million. Thirty-two years later, in fiscal 2018, Tech Data’s sales were $36.8 billion, and it’s the largest company based on revenue in Florida.

There were challenges along the way, including getting the right people, the right products and figuring out the right business model.

“The key was to identify smart subject matter specialists I could lean on,” Raymund said. “I could sit in the room with them and hear their perspectives and try to piece together a broader picture of how we needed to unite and collaborate to get the job done … There’s countless opportunities to learn about how to run a business from people you work with every day, from customers, from suppliers and other partners. My advice is be curious, ask questions and never stop learning.”

Pricing is also a challenge for distributors.

“I have spent my career in businesses with little pricing power,” said Raymund, who also serves on the board of directors of Jabil (NYSE: JBL), an electronic services company in St. Petersburg, and Wesco Distribution (NYSE: WCC) in Pittsburgh. “It’s all about execution and costs, making sure that repeated processes are automated as fully as possible, and bringing lots of analytical tools to the business.”

In the days before private equity and venture capital were prevalent, Tech Data was a bootstrapped operation, eventually developing a credit relationship with Bank of America that the company maintains to this day.

Still, the odds were stacked against Tech Data, Raymund said.

“One of the reasons we were successful was because we tried to embed an idea of humility and curiosity in our company,” he said. “We were always out learning, constantly asking questions and tinkering with the model on the edges and if necessary making big changes based on patterns. That’s a big part of business, being able to recognize trends and then have a bias toward action.”

After stepping down from Tech Data’s board of directors, Raymund joined the board of ConnectWise, a Tampa software company. He also serves on several nonprofit boards. He talked about companies’ roles in their communities.

“Some say companies exist to generate value for shareholders and have no other responsibility. Others say the entire community should have a say in what a company should do,” Raymund said. “I’m somewhere in the middle. I believe companies need to acknowledge they live in a broader community and they have multiple stakeholders. They need to be responsive to their employees, their prospective employees and the  broader community.”

He cited Jabil’s involvement with the Lighting Foundation’s Community Heroes program, the signature philanthropic effort of Tampa Bay Lightning owner Jeff Vinik.

Philanthropy also is part of Raymund’s life.

“My plan is to leave everything I have to philanthropy,” Raymund said.

No excuses

Steve MacDonald saw the potential of the internet well before others.

He was working at PMSI, a publicly traded pharmacy services company, in the late 1990s, when he developed the idea of web-enabling the company. He presented the plan to the board of directors, who said no one was going to use the internet. He left PMSI within about six months.

He started his own company, a website for people with disabilities, and burned through $5 million before pivoting to a transaction processing system. He raised additional funds— but the new money diluted MacDonald’s equity position and was contingent on MacDonald leaving the firm.

“When I first thought about starting a company, I met a CEO who said the main piece of advice I can give you is protect your equity. As an early entrepreneur, I didn’t understand what that meant,” MacDonald said.

Rich Heruska (left), accelerator program director, Tampa Bay Wave, interviewed Steve MacDonald, founder and former chairman and CEO, myMatrixx

In 2001, MacDonald founded myMatrixx, a Tampa-based web-enabled pharmacy benefits manager. It was acquired by Express Scripts in 2017 for $250 million.

His first partner at myMatrixx came from an environment where everything was bootstrapped, and businesses were built without raising outside capital.

Initially, every dollar the company made was reinvested in the firm. “When you are not taking a paycheck and paying other people to do the work, it teaches great lessons of about responsibility, abut leadership and delegation,” he said.

MacDonald did almost everything in the early days at myMatrixx, especially handling all the sales.

“My motivation was to build a self-sustainable organization. I told myself that the day that I don’t have to show up to close a deal was the day that I knew I had built a sustainable company. That took almost 10 years before I didn’t have to show up to close a sale,” he said.

Company culture was vital at myMatrixx.

“My personal philosophy is that the people I want need to love to learn and are coachable,” MacDonald said. “Working at a large publicly traded company, I would see people who were so excited about their jobs and them they would get beat down and lose motivation … [At myMatrixx] I would try to find the things people did that were good and try to exploit that. It maximizes their strengths and keeps them motivated. Building a culture around that was a starting point.”

After selling myMatrixx, MacDonald has become a partner and board member at Florida Funders, and has about 100 investments. He looks for entrepreneurs and founders who are coachable and people who want to develop relationships, not just do a deal.

“The best entrepreneurs are the ones with a clear vision, tenacity and willingness to never give up. And also they never have any excuses. They just get it done,” McDonald said.