The Dream: How I Learned the Risks and Rewards of Entrepreneurship and Made Millions

by Gurbaksh Chahal

  I made a few calls, exploring the possibilities, and the next thing I knew I heard from a reporter at VentureWire. VentureWire is part of the Dow Jones financial information service, and it is read by just about everyone in the investor community, and usually it gets things right—but not this time. “I hear you’re about to finalize a $10 million round of funding,” the reporter said. No, I said, correcting him. I was in the process of raising $10 million, and things were moving in that direction, but nothing had been finalized.

  As soon as this nonnews hit the wires, my phone started ringing, and every single venture capital guy was asking me the same question: “Can we jump in?” There was a tremendous sense of urgency—they all wanted a piece of BlueLithium—and all because they thought they had competition.

  As a result, I was able to take my pick from a number of viable investors, and I narrowed it down to two candidates: Walden VC and 3i.

  Another lesson learned: People want what they can’t have.

  Generally, you have a lead investor and a co-lead, because few of these VC guys want to go it alone. It’s all about spreading the risk. After careful consideration, I decided on Walden as my lead, and I told them to take a close look at 3i. “I like them because they have experience in Europe, and I’m looking to expand overseas,” I said. “Let me know if you think it’ll be a good fit.”

  It turned out to be a perfect fit. In February 2005, we closed a deal for $11.5 million in funding. The next step was to put a board together. When you raise money, you have to create a governing board that the investors approve of. In this case, in order to secure the funding, I let the investors handpick two of the board members. The third one came from within the industry, and we picked him together, and the fourth was an outsider, a guy I picked myself. I was the fifth and final board member as well as the company chairman.

  I liked all the guys except one, who turned out to be the self-appointed bulldog. If I told you we had a tumultuous relationship from the start, I’d be understating the case. Almost from the very first day, he made no secret of the fact that he thought I was too young to be running such a large company, and he was determined to remove me as CEO. He never stopped to consider that this wasn’t my first company or that BlueLithium existed only because I had created it.

  For the next year, he kept trying to replace me, despite the fact that the company was humming along, growing by leaps and bounds, under my leadership and direction. I remember one night in particular: The board met at my place, in Santana Row, with a view toward going to dinner together right after the meeting. When everyone was settled in, I started my PowerPoint presentation, and the first slide came up: “Presented by Gurbaksh Chahal / CEO and Chairman.”

  Suddenly the bulldog stopped me, wanting to know when I’d become chairman. I looked over at him, incredulous. The guy had been on the board since almost the beginning, and just about every packet that got sent out listed me as CEO and chairman. Then I realized he had done this deliberately, that he was engaging in a form of psychological warfare.

  I suspect he wanted me to behave erratically in front of the other board members because he was still determined to find some way of replacing me. I took a deep breath and smiled tightly. “Let’s get this show on the road, okay?” I said. “I’m hungry.”

  He sat through the presentation without saying another word, and he said nothing to me during dinner, but on our way out of the restaurant he couldn’t resist a little dig: “You know, G, BlueLithium is growing faster than you are. You’re going to need some help. Maybe you should think about hiring some senior people.”

  I didn’t respond immediately. I knew what he was after. He was looking for me to hire someone who might eventually replace me. The other guys on the board didn’t seem as eager to push me aside, and I liked them well enough. They were smart, accomplished men, slow to make decisions at times, and certainly a little old-fashioned about business, but otherwise I couldn’t complain. And the fact is, if you looked at it from their point of view, maybe I was the problem. I was impatient. I liked getting my way. And I was quick to show my displeasure. I began to long for the old days, when I ran the show as I saw fit. I missed being a dictator.

  Still, I can handle criticism. In fact, I welcome it. I think criticism is the best form of discipline because it makes you look at yourself. At the end of the day, it tests your maturity, your wisdom, and your ability to make the right decisions. But none of this felt like criticism; it felt more like an attack—and there’s nothing constructive about attacks. This wasn’t about my management skills or about helping me become a better version of myself but about pushing my buttons.

  By this time, mid-2005, BlueLithium had moved twice, and each office was bigger than the preceding one. Nothing too fancy, though; nothing too expensive. We moved because we were growing and because we needed the space, not because we were trying to impress anyone.

  We were also busy opening offices across the country. At that point, we had branches in San Francisco, Los Angeles, Chicago, Atlanta, New York, and Boston, and I had my heart set on opening an office in London. I began to look into the possibility, and I found two or three promising candidates overseas, all of them high-priced rock stars, but that part of it didn’t bother me at all. As I had learned long ago, you can be cheap about furnishings, but you can never be cheap about people.

  In late December, as I was narrowing my search for the right rock star, I heard from ValueClick again. It had filed another lawsuit, this time in the state of New York, claiming that I had hired one of its former salespeople to steal information that would benefit my company. Again, nothing could be further from the truth, but—as I knew from experience—the truth is often the least of it.

  Two days later, having given myself time to calm down, I parked myself in front of my computer and wrote an e-mail to everyone on the board, explaining the ValueClick situation. Typically, a board drifts in and out of meetings throughout the year, playing a semi-passive role, but when the shit hits the fan, they’re expected to be there to support their CEO. The lawsuit wasn’t going to make anyone happy, of course, but I had some news that I felt would soften the blow, and I included it in my e-mail: We had had a record month, I wrote. In the space of thirty days, BlueLithium had tripled its revenues. This was truly unheard of. If you are part of a company that registers that kind of growth, in that short a time, you have every right to be ecstatic. Amazingly, I didn’t hear back from any of the guys on the board. Not about the lawsuit, and not about our unparalleled growth. It was as if they were punishing me with their silence.

  Finally, shortly after the New Year, I heard from one of the board members and I just exploded. “What is going on with you guys? The one time I need you, you’re not there!”

  “G—”

  “At the very least, this B.S. lawsuit notwithstanding, you can say you appreciate what I’m doing for this company. You invested in it. Every dollar I bring in puts money into the pockets of our investors and shareholders.”

  “G, hear me out for a minute!”

  “I’m listening!”

  “At a time like this, the board has to take a step back to try to figure out exactly what is going on. As soon as the attorneys tell us that you haven’t done anything wrong, we’ll all breathe a little easier.”

  “So you won’t even give me the benefit of the doubt?”

  “That’s not the point.”

  “Yes, it is,” I shot back. “I’m innocent until proven guilty. Last time I looked, that’s the way it works in this country.”

  Over the course of the next couple of weeks, the attorneys analyzed everything on my computers and interviewed everyone involved. This internal investigation didn’t worry me, however, because there was nothing to discover—and nothing was discovered. But I was still angry with my board, and a huge wall went up between us. I was on one side, they were on the other.

  Still, if I looked at it objectively, I saw their point. They needed to be sure that I’d d
one nothing wrong, and if this is what it took, I would live with it. That was the process. There was nothing to prove. And once it was over, they would realize they should have had my back from the start. When all was said and done, I knew I would come out of this looking better than ever.

  Good lesson here: If you’ve got nothing to hide—and you should never have anything to hide—don’t sweat the process.

  Instead of obsessing, however, I tended to business, and later that same month I opened an office in London, hiring one of the top guys in the country. He didn’t come cheap, and the board immediately attacked me for it, so I had to take the time to explain why it was critical to have a rock star on the team. They weren’t convinced, but I refused to back down, and within a year we had become the second largest ad network in the United Kingdom. Not counting the bulldog, everyone on the board was very pleased—and they actually went out of their way to tell me so. I began to feel that the wall had finally come down and that we were again operating as a team. I was young, and I was impatient, and I had made my share of mistakes, but everything I did was designed to take the company into the stratosphere and I thought they were beginning to see that.

  Meanwhile, as the battle with ValueClick continued to rage, I went out and hired a chief financial officer, Bill Lonergan, with whom I connected immediately. We had immense trust and respect for one another. What’s more, despite the fact that he reported to me I genuinely looked up to him as my true right-hand man. And it truly is a small world because he actually knew Sam Paisley, who was part of the brass at ValueClick. I was relying on his knowledge and insight to get us through the mess. “G,” he said, “these guys hate you because you sued them for securities fraud.”

  “I thought that was old news,” I said. “I thought that was behind us.”

  “No. They want blood. They’ve got you spending serious money in legal fees on a case that has no merit, and at the rate we’re going it’ll be at least a year before we go to trial.”

  “We’ll win,” I said.

  “At what price?” he said.

  I did the math. He had just told me that I was going to waste valuable time, and potentially millions of dollars, just to get to court. “What do you suggest?” I asked.

  “Let me go down there and see if I can make a deal with these guys. That’s what they really want. They know the case has no merit, and I know it has no merit: I did my due diligence before I took this job.”

  I went to the board and told them what Bill had suggested, and for once we all actually agreed on something. We settled for a large sum, which I am not at liberty to disclose. In the end, however, it was the right move. I had read Sun Tzu’s Art of War: “He who knows when he can fight, and when he cannot, will be victorious.”

  In July, eager to get away from all the madness, I decided to take my whole family on a short vacation. We went to Puerto Vallarta, Mexico, hung out on the beach, ate well, and drank too many margaritas. Most important, however, I got to spend time with my nephews and my niece. I wanted them to know me as an uncle, not only as a type A businessman. I tried really hard not to reach for my ever-buzzing BlackBerry, and there were times when I almost succeeded.

  A couple of months later, back in San Jose, we launched the new behavioral technology. We hadn’t invented it, and we weren’t the only people who had it, but I knew we were going to make it work better than anyone else. And I was right. As soon as we were up and running, this key element changed everything. BlueLithium went from an intermediary working with performance-based advertising—the consumer clicks, you pay—to a company that was able to use people’s history to target them more effectively. Hence our pitch: Data is the difference.

  And let me repeat: This was not Big Brother territory. We only had data related to an individual’s viewing history in the form of “cookies.” If you clicked on Porsches, for example, we could, conceivably, put that Porsche ad in front of your eyes regardless of where you were on the Internet. And while some people might see this as a negative—ads following you around the Internet!—I had another take entirely: I felt, and still feel, that the technology had the potential to make the Web a more pleasant and personal experience. We were focusing only on the ads you might respond to, determined to remove all that random clutter from your screen. Look at it this way: If you don’t need a mortgage, and you haven’t been looking for a loan, why should you be subjected to that tiny dancing fool that keeps promising you better-than-ever rates?

  At the end of the day, and in the parlance of the industry, BlueLithium was at the forefront of audience targeting based on consumer interest. In basic English, we were looking for ways to sell you stuff we knew you kinda, sorta wanted. Or, if you didn’t want it, it was definitely of interest.

  That was key. That’s what made us more sophisticated than the next guy. Click Agents was basically a recording system. It tracked clicks. But BlueLithium was into custom segmentation, a benign form of profiling based on a person’s Internet habits. Everything about the technology was more sophisticated, more robust, way cooler, and way more accurate. And it worked like a dream: People were responding to the targeted ads at ever-greater numbers. And the advertisers were thrilled, of course. In essence, advertising is about getting the right message to the right person in the right way at the right moment, and that’s exactly what BlueLithium was doing.

  A few months later, we were named Top Innovator of the Year by AlwaysOn, a technology publication. And that same year a leading business magazine placed us among the top 100 private companies in America.

  In late February 2007, there was a lot of consolidation in the marketplace, and we began to see a slate of industry mergers. DoubleClick was bought by Google for $3.1 billion. aQuantive got bought out by Microsoft for $6 billion. 24/7 Real Media was bought by the WPP Group for $650 million.

  It felt a little like a game of musical chairs, with one less chair on the floor every time the song ended. And the songs were playing fast. I went to my board and told them that we needed to hire a banker and start a market check. This is a fancy way of saying that I wanted to explore the possibility of selling BlueLithium. They didn’t agree. They thought we should focus on the company’s strategic plans.

  In 2006, BlueLithium was named Innovator of the Year by AlwaysOn.

  “Guys, look at what’s going on!” I said. “At the very least, we need to test the waters.”

  In all honesty, I wasn’t sure whether I should be thinking about selling the company. We were more than viable—we were hugely profitable, in fact—but it made good sense to test the rapidly consolidating marketplace. If and when the music ended, I wanted to make sure there’d be a chair at the table for BlueLithium.

  In April 2007, a month after we had become the second largest ad network in the United Kingdom, we opened an office in Paris. At that point, we had close to 150 employees worldwide, and we were looking more attractive every day. The board knew this, and they finally decided that I was right to at least think about selling. We still weren’t for sale, but if someone made inquiries about buying the company, we had to be ready for them, so we prepared for a SOX compliance. (“SOX” is short for the Sarbanes-Oxley Act, which was passed in 2002 following several major accounting scandals in the corporate world—Enron, Tyco International, Peregrine Systems, Adelphia—and it is designed to oversee a public company’s accounting and auditing practices.) This would help ensure that we had all the necessary controls in place to become a public company, and it would pave the way for a possible IPO—if it actually came to that.

  At that point, with things moving pretty quickly, the board thought it would be a good idea to hire a vice president of corporate development. In a larger company, that person’s job is to evaluate other companies, to determine whether they’re worth buying, but in a smaller company—one like BlueLithium—he or she is there to help map out a strategy for going public. The roles are slightly different, based on the size of the company, but the title is universal.


  I hired a corporate recruiter to help me with the search, and he put together a list of possible candidates. Some of them worked for small, local companies, and others were employed by some of the biggest players in the Internet business. I reviewed the list, we narrowed it down to ten candidates, and I sent the recruiter off to do his job. Very early in the process he called with some interesting news: One of the potential candidates had heard very good things about BlueLithium, and—while he wasn’t interested in leaving his current job—he wondered if he might meet with the CEO to discuss other possibilities. I had a feeling this guy was going to broach the idea of buying BlueLithium, and I wasn’t wrong. As soon as we sat down together, he asked if we were for sale, and I told him the truth: “No. But if you’re genuinely interested, send me an email to that effect, and I’ll take it to my board.”

  The e-mail arrived the next day, and I immediately took it to the board. “Hey,” I said. “We’re getting interest. Obviously this is the right time to start a process.”

  Within a week, we hired an investment bank to help us with the market check, and things got very crazy very fast. The bank contacted other potential buyers, and a number of parties expressed serious interest. Finally, on September 4, 2007, after weighing our options, we decided that Yahoo! was the best fit, both from a financial point of view and from the perspective of the company’s almost 200 employees. Yahoo! agreed to buy BlueLithium for $300 million in cash.

  As soon as I got the news, I sat down and wrote an e-mail to everyone on our staff:

  From:

  Chahal, Gurbaksh

  Sent:

  Tuesday, September 04, 2007 4:02 PM

  To:

  Everyone

  Subject: