William Erbey is a serial entrepreneur who founded six multi-billion dollar public companies traded on the NYSE and NASDAQ. In 2013, two of those companies were the 12th and 20th fastest growing companies according to Fortune Magazine. In 2014, Fortune Magazine listed the same two companies as the 8th and 26th fastest growing companies. In early 2015, Mr. Erbey retired and switched his attention to angel investing in the tech space including internet streaming, electric motors and medical devices. He graduated from Harvard Business School with Distinction.
Considering the rather impressive resume of Mr. Erbey, we can safely assume that he can impart valuable business leadership lessons to young entrepreneurs, and the entire startup community.
Q: Education is a cornerstone of your values, yet you say the education system accessible to segments of the population, people are starting to fall out of the middle class. How do we fix this trajectory and secure the educated middle class?
A: Correct, a large portion of the population is being priced out of receiving a college education. The cost of a college education is rising faster than wages making student debt unsustainable. And, it will only get worse. The population of college aged individuals will begin to decline in the next several years placing even greater strain on the high fixed cost budgets of colleges and universities. I can think of a number of potential solutions.
That is why I invested in Scholarly.
First, American institutions of higher learning are a national treasure and sought after around the world. Scholarly has developed outreach programs to match international students with colleges and universities. International students can fill empty classroom seats and pay full tuition generating much needed revenue to defray the cost of a college education for the entire student body. (US colleges and universities on average collect less than 50% of their tuition.) I invested in System73, which allows us to create live, virtual classrooms where students can interact in real time with their professors and fellow students from around the world (this is far different from on-line pre-recorded classes which have shown to have very low completion rates). Not only will this enhance revenue, but, in certain circumstances enable colleges and universities to deliver education at a lower cost.
Q: You mentioned your particular interest enhancing education in statistics, data analytics and the emergence of Artificial Intelligence - but can AI be seen as a threat to learning?
A: AI is a form of statistics which is gaining rapid adoption. I do not subscribe to the notion that AI is a threat – at least not in its current incarnation. There is an excellent book by the Nobel Laureate Daniel Kahneman, Thinking, Fast and Slow where he points out that most of our actions are the result of “thinking fast”, i.e., learned responses to our environment. In essence, correlations which are the basis of AI. These are actions which are almost instinctual.
It does not require a lot of deep thought to identify a cat or to drive a car. To date, this is the primary area of “thinking” associated with unsupervised AI. To solve really complex problems involves “thinking slow.” It is really hard work. In one instance, I used AI to forecast internet congestion. However, the AI was highly supervised and used simply as a tool to perform correlations.
Q: You have 5 successful companies in the financial services sectors, do you expect to repeat this roll out in technology sector?
A: Absolutely. I believe that one has to be an optimist and believe in what one is doing to be a successful entrepreneur. There are too many set backs in building a company and too many reasons to give up. When I grew up in Pittsburgh, Pennsylvania, there was a saying “It does not matter how many times you get knocked down. What matters is how many times you get back up." That was a great lesson for a career in business as well.
Q: You describe yourself as a workaholic, regularly working 80-100 hour weeks, how do you sustain this, and, what advice would you give to aspiring entrepreneurs who are struggling to balance their work and health?
A: I do not work 75 weeks any longer. I am 70 years old and work about 60 hours per week. Going to work is my hobby. I enjoy the mental challenge of solving problems. I really enjoy what I do. I’ve also learned over the years that it’s good to take time out to recharge the batteries. I exercise more now than ever, and the dividends are amazing in terms of energy, focus and stamina.
Q: You are known for having a modest lifestyle despite your business success, turning down extravagant experiences or opulent possessions in favor of simplicity and work, why is this?
A: It is always difficult to self-assess why one behaves the way one does. Frequently we hear that an individual behaves in a certain manner because of their environment or certain life experiences. Yet, there are many other people with similar backgrounds that behave differently. Fundamentally, I enjoy the mental challenge of my work.
I enjoy solving problems and have zero hobbies to spend money on. I get seasick so I do not own a boat, and I would truly much rather go to the office than play golf. Plus, I do not feel rich. Being an entrepreneur has been in my case a roller coaster ride. The universe is bigger than all of us. No matter how much you are worth, it can all be taken away from you.
Q: Is there a 'Bill Erbey' model of running a company? Do your companies run the same way you live your life: With a focus on numerical data, education, modest spending?
A: I love to apply mathematics and statistics to business problems. I remember sitting in my first microeconomics class in college and learning statistics and optimization and thinking that these are two of the most powerful concepts that I have ever been exposed to.
For the next half century, I have applied those concepts to my businesses wherever possible. My goal is to devise products that provide greater value to the customer that can be produced at a lower cost so that I can compete on price if need be. In my case, this almost always involved a technology solution grounded in mathematics/statistics. As for modest spending, why spend money unless it creates value. However, if I can spend 20 cents to generate 100 cents in margin, I will try to spend as much money in this areas as possible.