After the exit: CEOs share stories of transition

Feb. 3, 2020

In many ways, it’s a predictable story line.

Grow a tech company big enough to catch the eye of someone bigger, and watch as powerful, prosperous change occurs.

Sometimes it’s in the form of an acquisition. Sometimes it involves going public. The company begins to look significantly different. And while the founder and CEO reaps rewards for the work, the path to growth often also means the leader moves on.

Such was the case in the past year or so for three highly successful Sioux Falls CEOs. They ranged in age from 35 to 55 as they left the companies they had grown often beyond even their own expectations.

But then came the consistent question: What happens next?

As their candid insight and varied paths show, the answers can take a lot of forms and often are still evolving.

Bucket-list time

Tyler Haahr has gone from leading a $1.5 billion company to trying to raise $3 million.

In between the numbers, though, is a greater goal.

When the CEO of Meta Financial Group left the company about one year ago at age 55, there were things he wanted to do that corporate life at the top didn’t necessarily support. One of them was community service.

“It just seemed like the right time,” he said. “There were things I wanted to do to give back to the community. I said I wanted to change the world, and my world is in Sioux Falls.”

Enter the $3 million fundraising campaign, which will support the newly formed Community Youth Center at the former downtown YMCA building. Haahr estimates he’s spending 20 to 30 hours a week, along with other business leaders, making the case for supporting the project.

It will bring multiple nonprofits, including the Boys & Girls Clubs of the Sioux Empire, to offer a range of programming and life-skills lessons for kids.

“We’re 75 percent of our way to the goal, and we’re going to work on it until we get there,” he said. “It is very rewarding. It’s a lot of fun, and it’s something to keep the competitive juices flowing a little bit too.”

Haahr grew up in banking. His grandfather founded Storm Lake Savings & Loan in northwest Iowa, and his father led the bank after that.

His own career took him first to Arizona, where he practiced health care and sports law in the mid-1990s. But life in Phoenix meant leaving home at 6:30 a.m. to get to work and left little time for family. He and his wife, Michelle, moved back to northwest Iowa with their two kids in 1997. They came to Sioux Falls a few years later, as Meta entered a big growth mode.

The last five years of Haahr’s career there were by far the most meteoric. The company in nearly constant merger-and-acquisition mode went from a market capitalization of $90 million to $1.5 billion.

He rang the bell at the opening of the Nasdaq stock exchange in July 2018.

“I liked the challenges. I liked helping people succeed. I liked solving problems,” he said. “I liked thinking about things a different way that hopefully helped the employees and the company and the shareholders and the customers do better. I loved the people I was working with. I miss that the most.”

Those first few days after CEO life weren’t too jarring because Haahr transitioned gradually over several months. Mentally, he was preparing himself longer than that.

“Have a plan for things you want to do,” he advised. “I knew some of the travel and some of the family stuff and some of the charitable things. I had a lot of that lined up. I had a general plan of how I would spend my days until I decided what I wanted to do next.”

That included spending six weeks in Arizona, giving him time to see his parents, visiting his children in the Twin Cities and taking a three-week trip to Europe.

An avid NBA fan, he’s also working through his goal of seeing a game in every team’s arena. He has done 23 and has seven left, with a couple more planned. In his 31st year of playing fantasy basketball, the extra time to research has left him generally “hanging in first or second,” he said.

Then came a big part of his post-CEO plan, which took the form of a miniature Schnauzer/Jack Russell terrier rescue dog.

“I wanted to get a dog. I’d never had one,” he said.

Now, his days start with walking Stevie around the neighborhood, which has helped him log from 5 to 11 miles a day, at least in the nice weather.

“It seems like I find things to do every day,” he said. “There were a couple people that were CEOs of publicly traded companies I know and that was a consistent message – don’t rush into the next thing. Make sure it’s the right thing and a fit for what you want to do from a professional and personal life.”

In addition to the Community Youth Center campaign, he’s vice chair of the board of LifeScape and will help with the fundraising necessary for its newly announced campus at the USD Discovery District.

He also recently joined the board at Lloyd Cos., which he described as “an amazing company that continues to grow and prosper and has been a big part of Sioux Falls’ development and success.”

And for about the past 18 months, Haahr has served on the board of the Sanford Health Foundation, which he said is a good tie back to his legal experience.

“I’ve still got interest in it and was involved a lot when I was practicing,” he said.

As for returning to the legal profession, that elicits a quick “no.” As for other professional opportunities, it’s more like a “maybe.”

“I’ve been approached about a couple other boards and a couple other full-time jobs but not something I thought was a good fit either geographically or professionally, and frankly I kind of like what I’m doing,” he said. “Never say never. If the perfect opportunity came and it was a place I liked, I would consider. I love Sioux Falls and love being here. It would take the perfect opportunity to leave.”

Back to basics

Eric McDonald imagines most people in his post-startup situation probably would have spent a few months celebrating, “going on some sweet vacations and living a bit of the posh life,” he said.

“I went the other way. I spent the next 81 days living in a tent.”

The founder of a quintessential entrepreneurial success story, DocuTap, McDonald knew as his company grew, it eventually would be getting bigger without him.

“The transaction took two years, and I knew on the very first day that I would be part of the deal terms,” said McDonald, who began his health care tech company writing code in his basement two decades ago.

Sioux Falls-based DocuTap and Illinois-based Practice Velocity were brought together by global private equity firm Warburg Pincus last year, creating an organization operating under the name Experity.

“The size of the transaction was such that I would never let my ego get in the way for a deal that just made financial and economic sense. As a leader, as an entrepreneur, I knew I’m not going to be part of the deal. That’s fine.”

That doesn’t mean leaving the business eight months ago at age 42 was easy, he acknowledged.

“It’s hard when you have to lead an organization knowing your time is coming up soon, but by the time it was, I was ready to move on.”

In this case, moving on meant moving to the backyard of the home he was building in south-central Sioux Falls.

“Literally, my first thought every day was what am I going to do for fresh water today,” he said. “And it was really good for my soul. It was humbling. It was so different from what I think a typical CEO leaving a company would do. I had this little oasis smack in the middle of Sioux Falls, living in the woods, and it was therapeutic. I stayed busy.”

He documented the experience on social media, made bets with friends about whether he could stick it out – which he won – and brought his five children into the adventure with two tents of their own.

“I look at things a little bit different than probably most people do,” he said. “I’m single. I have don’t have a spouse to worry about. My kids are with me half the time. So it was probably a little easier than having kids there 100 percent of the time, but they camped with me. I knew it would be memories. I didn’t know if they would be good or bad, but I knew we’d have a memorable summer.”

He acknowledges he could have just rented a house while waiting for his to be done, but improvising everything from a shower system to a supply of drinking water was soul-cleansing too.

“There were days it was really hard,” he added. “The kids are like, ‘Dad, you’re crazy.’ And there were times it was an absolute riot. We had so much fun. We just laugh about it. You get up and start a fire and make coffee and take in the morning, and it was so different than running a health care tech company jumping on airplanes every week. For me, it was a really good start.”

He did do some traveling, including a trip to India with his kids, who range in age from 7 to 18. He reconnected with employees he had contracted with at DocuTap to work in India and was able to introduce his kids.

“And more specifically, go into the families of the employees and see how we’re impacting families in India,” he said. “For every employee making good wages, they’re often supporting eight to 10 family members in their home, and we have a couple hundred people in India, so you have a lot of lives you’re impacting.”

They also spent a week at an orphanage McDonald has supported since 2012.

“That was great for the kids, doing bucket showers, and it was hot as heck that time of year,” he said. “And then after that we were able … to spend three or four days on the beach enjoying true R&R, and that’s the way I want to bring up my kids on family trips.”

While he still serves on the board of Experity, he’s intentionally quiet while doing so.

“I really have to stay in the shadows,” he said. “It’s hard to have the old CEO be very verbal about anything. It can create more division than be helpful. I’m a resource for the team and for clients. And the company is doing awesome. It’s doing really, really well.”

While he said he misses some of the structure of his CEO role and people he used to meet with, “I don’t miss the grind in knowing it’s all on your shoulders,” he said.

His time in the tent left plenty of room for contemplation as he looked toward what he calls the second half of his career.

He plans to remain involved in business, likely the startup world.

“I think it would be a waste of talent if I didn’t,” he said. “My faith is that God gave me these talents and abilities, so are you going to spend the next 20 years not teaching other entrepreneurs how to grow their businesses? I don’t know that I’ll be CEO of another health care tech company or even another tech company unless there’s something local. My skills lay best in fast-growing tech companies, and there aren’t a lot in Sioux Falls, and ideally they’re backed by venture capital guys.”

He sees himself as a potentially valuable board member, he added, “and not just one who shows up once a quarter, but one who will dive into the trenches and spend two days once a month working with the executive team on sales, marketing, product, engineering and teaching how to scale and grow quickly. I believe I can be helpful to a number of companies in high-growth mode.”

McDonald recently joined the board of Sioux Falls-based CoinLion, a trading and portfolio management platform for cryptocurrencies. It’s a world that intrigues him, as he sees parallels to health care technology two decades ago.

“I wasn’t the first one in the space, but I was able to find a niche within health care, and there are great niches in the cryptocurrency space as people find ways to consumerize it,” he said. “They’re really early on. Are they high growth today? No. Do they have the capacity to get there? I think they can, but they’re a startup.”

He’s also interested in working with companies further down the road.

“SAB Biotherapeutics is one that I’d love to sit on the board and help out,” he said.

As for starting up a company again himself? It gives him pause, at least for now.

“That is something I wrestled with. Am I a one-trick pony? Is this the only thing I know how to do or could do?” he said. “There are a lot of people who are like, ‘Wow, if you did that with DocuTap and had that kind of success in your first company, just wait until your second because that will be four times bigger.’ ”

Statistically, that’s not the case, he knows.

“Statistically, I think I’m going to have at least eight failures before I have another success. At some level, I can allow that pressure to create anxiety and stress if I want to,” he said.

Instead, he spends a lot of time in the morning sitting at home in front of a fire, journaling and mulling over a core question: “Who are you?”

“For men, I can’t speak for women, but our identity is very much tied to what we do versus who we are. So it’s been a little bit of a wrestling match. I wouldn’t say I’m uncomfortable, it’s just a different spot than I’ve been in,” he said. “Not everybody has the ability to do this, but it’s really good for us as humans to take a break. Take a deep breath, and be uncomfortable with the unknown. It’s been good for me. It’s been really good.”

Back in the saddle

Other than working as a lifeguard, Michael Zuercher had held only one job – the result of an entrepreneurial journey that started in his Iowa State University dorm room and wound through his parents’ basement in Pierre before leading the founder of Zuercher Technologies to Sioux Falls in 2008.

From then until 2015, “we bootstrapped,” he said. “We had no significant money.”

That changed when venture capital investors came on board and combined Zuercher, which specialized in software for public safety agencies the size of Sioux Falls and smaller, with TriTech Software Systems, a company that offered similar services in larger markets.

Zuercher continued to run his part of the operation, growing revenue fivefold in three years thanks to acquisitions and organic sales.

“We did four significant acquisitions of competitors in our space in three years. I was busy,” he said. “And we really did cement our place as not just the fast-growing disrupter … but we were taking a significant amount of market share and continuing to grow into a real market leader.”

The company rebranded as CentralSquare Technologies in 2018 as part of a sale to global investment firm Bain Capital.

Zuercher was offered what he called a significant role in the new entity, but the time felt right to leave.

At 35, “I had been doing the same thing since I was 19. That’s a long time to do anything,” he said. “There was really no drama to it. I wasn’t burned out. I was ready to think about doing something else. It just felt like a time that it could happen without there being much disruption, and I think that’s exactly what happened.”

His more than 200-person team figured highly in his decision, he added.

“At the end of the day, you’re the one leaving,” he said. “They’re there the next morning, and you’re not. And you hired them and convinced them it was the right thing to do. And it was super important to me to make sure they were able to do what they wanted to do and that my departure didn’t force decisions on them. And because of the people we had, from an investor perspective, it felt good that the organization would keep growing and they could stay in Sioux Falls and get the opportunities they deserve. I feel so fortunate with the way it turned out, and a lot of it was the way the cards fell. It’s not like I did anything great, but I’m grateful for everyone who was involved.”

In mid-2018, Zuercher went from traveling four days a week with every minute of his day scheduled to having a lot more available time.

“The reality is the last thing I wanted to do was get on an airplane,” he said. “I spent a bunch of time at home. I did random things around the house that had been put off four or five years and spent time with my kids I hadn’t had before.”

He “went to war” against the thistles on the 6 acres he had bought in south-central Sioux Falls.

“We’d built a new house, and to some extent, I hadn’t been there since we built it,” he said. “It was very nice not to have every minute of the day scheduled.”

He also used his break from the CEO chair to become more connected with the Sioux Falls community, including serving as the lead donor with his wife, Kendra, for the planned expansion of the Butterfly House & Aquarium. They were connected with the cause after their kids enjoyed spending time there.

“When I was in the thick of it, I didn’t have a lot of involvement in the community,” Zuercher said. “I didn’t know many people. I was doing what I was doing,” he said. “I’ve never done anything in the nonprofit space, and I’m so impressed with the organization, and there are so many things they can do for Sioux Falls. It’s been awesome getting involved.”

He’s now helping lead the fundraising effort.

“It’s going really well. We are on track with where we want to be,” he said. “We have a gala in June and hope to make that a big event to celebrate where we are at with the campaign. I’ve been able to learn from a lot of people in the community who have been doing this longer than I’ve been alive.”

But after about six months away from work, he was ready to return.

“By the time we got into the beginning of spring, I was starting to think about what I wanted to do next and had a little fork in the road,” he said.

One path would have been private equity, a world he had grown to learn through years of experience and where he had relationships.

The other would have led him to start a business.

“And I decided that’s where my passion was,” he said.

But becoming a tech company founder in his mid-30s is “very different,” he said. “It’s so different.”

He joined up with two of his earliest employees from Zuercher, who had since left the company – Beth Harwood and Justin Hipple – and together they formed Prismatic.

“It’s very, very early stage,” Zuercher said. “We spend a bunch of time really understanding the market we’re in and trying to hone in on what we’re doing. The last few months is when we’ve actually started building.”

The problem his software in development is tackling “is the least sexy problem in the whole world but a very real one,” he said.

Essentially, it’s a software platform to help companies’ software integrate with other software – “a problem we experienced super acutely at Zuercher so was very much in our minds,” he said. “For a lot of reasons, integrating those pieces of software is a lot hard than it should be due to technical and non-technical reasons.”

His company has leased an office in the Hegg building at 1300 W. 57th St. and has six employees. The product “is still being developed,” Zuercher said. “We’re working with some software providers as early potential partners and using them for feedback. I think later this year we’ll have something that’s probably deployable.”

While he acknowledges some pressure, he said he’s mostly just glad to be back in business.

“The pressure I feel is mostly from myself … to make sure I don’t end up being the guy that got lucky once,” he said. “But I just love doing this. I always loved doing it when I was doing it. I was interested to see if taking a break and doing the cold-turkey thing would change my perception, and it didn’t at all. I was almost ready to go back to work the next morning. I didn’t. I made myself take time. But it feels really good to be back in it.”

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After the exit: CEOs share stories of transition

They grew their businesses to impressive levels and then exited. What happened next is a candid look at the paths of three Sioux Falls CEOs focused on their next career stage.

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