#180 Tom Golisano – Transcript

Tom Golisano is the self made billionaire who started the payroll processing company Paychex. With just $3,000 and a credit card to start Tom grew Paychex to a $28 billion company with more than 600,000 employees. If you want to know what it takes to be an entrepreneur who makes dreams happen then this is the episode for you!

Sean DeLaney: So Tom, welcome to What Got You There. How are you doing today?

Tom Golisano: Doing very well today, how could you not do well in Sunny Florida in November?

Sean: Yeah, we’re fortunate enough to be here in your home. Just admiring the gorgeous landscaping, the unbelievable water scenes. 

And I’m fascinated by this because I really did enjoy the new book and it resonates so much because what comes out of you in this book is that entrepreneurial itch. So I have to know, where did that itch first come from? When did you first realize you had that entrepreneurial gene?

Tom: Well, I guess going back to even when I was a young boy, I had a paper route. I collected bottles, I collected newspapers. I did all kinds of things, ’cause my parents were having a tough time financially so there wasn’t a lot of money to spread around, so I went out and started doing those things. I got a level of satisfaction and enjoyment out of it, but then a serious thing happened to me one day when I was about 17 years old. My father was a salesman for a macaroni company, and he just delivered macaroni to small supermarkets around the city in a big truck, so I used to help him, he was 65-66 years old, but one day we were back at the distribution point and my father had a very degrading conversation with his boss, and I had to stand there and listen to it and it really affected me.

So I sort of made two commitments. I wanted to have my own business. And number two, I never would talk down to people, like I finally got talked down to that day. So went on to college at Alfred State Tech, thought about it all the time, I was in college, came out, looked for opportunities today I got out of school and it just continued from there.

Sean: It’s remarkable, a story like that. The impact and the lasting impression that can have on you.

I am interested though prior to that, did you have any idea what you might do when you’re older? 

Tom: Specifically? No, I knew I wanted to be in the business world, and I took business at Alfred Tech, which is the college I went to, it was a two-year college. I worked a year before I went to school because I didn’t have any money to pay for room and board, books, and all that type of thing. But I was pretty sure right from the beginning that I wanted to have my own business and control my own destiny.

Sean: So I’d love to hear the origin story of Paychex. Here you have this incredible circumstance where you view something your father is happening, and then you get that real itch… So then, how does Paychex come to be?

Tom: Well, I had worked for a company called Electronic Accounting Systems, we’ll call them EAS for short. And they were a payroll processor and they were typical of the payroll processes back in the 50s and 60s, they went after large companies, their thought was the larger the company, the more checks they will produce and the more revenue.

Well, I went to work for that company. They started me in sales, then made me sales manager and then one day I was just driving down the street. I said, “You know, we have an opportunity to sell a lot of small business, but our product doesn’t fit very well.” And I went to the library and found out 98% of all American businesses are less than 100 employees, and I said, “Why are we knocking our heads against all our competition at the high end of the market, why don’t we come up with a product for the low end of the market, especially one to 50 employees.?”

So, I dreamed up a product definition, very simply the way we get the information from the client, to process the payroll. Have them call in on the telephone instead of filling out a complicated computer input sheet, that has to be then picked up, processed, and of course sent back.

So why don’t we just have them call in on the telephone? We’ll read the employee names, and that’s just how they’ll verbalize what they want to accomplish.

Typical 20-person payroll takes about two or three minutes, and the client doesn’t have to learn how to do anything.

Okay, secondly, if you’re an employer in the United States of America, you are really an unpaid tax collector. You collect taxes from your employees, you remit them to the federal and state governments, and if you don’t do it correctly or on time, it’s heavy fines or penalties you have to pay… Well, why not accomplish that for the clients?

Pay their federal or state taxes form them so they never get behind, never get caught up or forget to make their payments. Okay, and saving those fines and penalties.

And the third part of it was doing the payroll tax returns and charging a price that people could afford to pay. Which we brought the price for payroll process down, minimum charges. But the interesting part is the unit revenue we got per payroll, per person was much higher. Here’s why: payroll processors charged by the number of people. The higher the number of people, the lower the revenue per person or per check produced. So, the fact is, if you have 10 10 person payrolls as opposed to one 100, the revenue is two and a half times more.

Okay, but the overhead is not two and a half times more, so it’s much more profitable and I think that reflects in our profitability ratio, a high percentage of return. So anyway, I went to the management of the company, I said, “Let’s do these three things and go after the low end of the market.”

They said, “No.”

They thought that us doing payroll tax returns for clients would not go well with the CPA community, Certified Public Accountants, and I disagreed. I said they want us to do payroll tax returns ’cause they can’t… It’s very tedious if you’re doing it manually especially, and they can’t build their time out at the rate that makes them happy.

So, they turned me down. So, I sat on that idea for about two or three months and went back into the president’s office, and said, “I still think it’s a good idea. What do you think?” And they said, “No.”

A week later I resigned and started Paychex.

Sean: You could only wait so long. I feel like anyone who listens to that they’re automatically gonna think of creative problem solving. And here you identify this issue, this problem, you found the solution.

Have you always been like that? Do you always see ways to fix things?

Tom: No, but I think your point’s well made. I think entrepreneurs are people that wanna create and fix problems.

Okay, and what I was trying to do is find a better way to fix a problem being a… Unpaid tax collector for the government is no easy job. Okay, so let’s find a better way to do it. Glad I found it.

Sean: I’m sure you are. Prior to the start of this we discussed a little bit around risk and I’m trying to think how you identify a risk first, being a younger employee in the organization and taking this to upper management, this new idea, and then once you bet on yourself, and decide to start the company, how do you identify a risk early on?

Tom: Well, I think one of the most important things about identifying risk is what I call industry knowledge. If I had just thought of payroll processing and never worked for a payroll processor, I never would have come up with the idea, I just didn’t have enough knowledge or understanding of the need or the problem, but because I worked for a company like that, and because I was out selling the product and had a good understanding how people felt about things, I totally reduced the element of risk.

Too often though, you find people go into businesses, they start companies in an industry, they do not have good industry knowledge, and that really reduces their odds of being successful. 

Sean: I know you work with a number of young entrepreneurs right now, is that the key thing you’re looking for when thinking of helping one of these entrepreneurs is their direct industry knowledge? 

Tom: Absolutely, I think it’s very, very important. 

Sometimes people refer to investing in small businesses, you either bet on the idea, or you bet on the Jockey, the person running it. Okay, I really look hard at the person running it first. And then the idea of the concept based on good industry knowledge, that makes for a winning commendation.

Sean: What are you looking for in the jockey? You… I mean, thousands and thousands of employees now have been under you, you must be very good at identifying little traits in people.

Tom: Not good, not perfect, but maybe pretty good… You’re never perfect when it comes to recruiting and hiring people. 

I think you look for people that like competition, whether it be just sports, or in business, that they will persevere, that they will work hard, that they will continue to learn and grow.

I want them to have a good knowledge of accounting. Now, they don’t have to be an accountant but they better be able to read their financial statements both their profit and loss and their balance sheet. Too many people go into business and do not have a good understanding of financial statements, and it really reduces their odds of being successful.

Sean: I know you’re a numbers guy. So when you’re thinking of a business plan idea, how into the weeds do you get? Are you mapping out a business plan over multiple pages or do you have a pretty good idea in your head?

Tom: I probably get three to four business plans a week and some of them are five pages and some of them are five pounds. The five pounders I rarely look at. I think enough of the story can be told in five pages as long as it’s written well and understood. This concept of business plans that get too blown up in our colleges and so forth, they don’t have to be as complete. Maybe some of it helps educate the entrepreneur by doing it, but somebody walks in and says, “We’re looking at a 20 billion industry.” I say, “What’s that got to do with anything? How are you gonna get a part of it?” That’s the important thing, but just because you’re involved in a big industry has no real impact and validity of whether you’re gonna be successful or not.

Sean: Yeah, I think it was in the book you were talking about overall market share, and I think you mentioned the two other biggest competitors along with Paychex, I think, you guys or 20% of the total market. So you see these business plans now we’re gonna be 70% of the total market, just entirely unrealistic. You mentioned looking for people who are competitive, and I know you played sports growing up, how much of that, the baseball background, played into business for you?

Tom: Directly I can’t say that it did, but there is no question it created part of my personality.

I mean, I wanted to win. I wanted to do better than the next guy. And I was willing to pay the price to do that.

Sean: Willing to pay the price. I’m trying to think when you first set out with Paychex, what was the vision? How close to where you guys are now did you think you’d get?

Tom: Well, when I first started the day I started, first of all, I had very limited resources, I had $3,000 on a couple of credit cards, and the credit cards only lasted a few months until the companies took them back. Obviously, ’cause I couldn’t make the payment terms, but I had a vision to get 300 clients in Rochester, New York, okay.

And I was gonna work very hard and be the only sales person, ’cause that’s all I could afford was myself, and we just started with two people, me and another person in the office. Took me four years to sell those 300 clients and now Paychex sells 2,000 a week. 

That doesn’t reflect on my sales ability. It was just to get to 300 clients in Rochester, New York, and live happily ever after.

Sean: So talk to me about that. Was it four years you never collected a paycheck?

Tom: That’s correct, that’s correct.

Sean: You need to speak to that because there are so many people that are unwilling to sacrifice a week of not getting their Starbucks drink or something like that, and here you sacrifice for four years. So I just need to know what’s that mindset?

Tom: The mindset was I knew if I could get up to 30o clients or thereabouts, I was gonna be okay and I’m out selling maybe one or two a week, so it was just a matter of time, so I just had to put up with it.

Also, I had some good friends. They used to take us out to lunch and dinner all the time, and treat us to golf and stuff like that.

And I made a number of borrowings from banks, of course, I couldn’t tell them it was for a business loan, I had to tell them I was just consolidating some personal loans, ’cause they weren’t going to loan money to a new start-up business. So I remember times coming home and opening up the refrigerator and there wasn’t much in it.

But I knew it was there, because I had the industry knowledge, I knew the market was there and my sales results just proved to me that we can do this. It’s just a matter of time and effort.

Sean: Back to the numbers, right?

Tom: Yeah.

Sean: You identified it.

What I love so much about your story is how relatable it could be to anyone, $3,000 in your pocket. Some industry knowledge and here you build a business worth $28 billion. So, do you really believe… I know the book title Built Not Born, you truly believe that anyone can develop that entrepreneurial mindset?

Tom: I wouldn’t be as blanekting as that… But here’s what I will say, I think there’s a certain amount of entrepreneurial spirit, or knowledge and everybody… Now some might be on a scale of 10, 1 to 10, they may be a one, okay, but the great thing about the world of business, you can take a one and make them into a three or a four, or you can take a four make them into a seven, and maybe you can take a six and make them into a nine or a ten.

So with training and knowledge and understanding, people can expand their entrepreneurial skills, so that’s important not only to people who own the business, but people that work for a business. You want them to be entrepreneurial too, so… 

Sean: You mentioned in the book that you need to develop those people and look for those entrepreneurs that are part of your business, how do you develop those people, those people that really truly grow that business for you?

Tom: Well, I had a saying, I guess, or an expression, hire attitude and not skill. Hire attitude and not skill. You can train skill, you cannot train the attitude.

Yeah, in my opinion. Now sometimes you can help it, but you can’t take somebody that has a bad attitude, and generally speaking, turn them into a tiger. It just won’t happen. 

So with that kind of mentality we brought in a lot of people that were very ambitious, wanted to work hard, wanted to be successful.

Sean: How do you get that out of someone? I know in the interview process it might be 30 minutes an hour with someone. How do you identify those people that are ambitious that might have that tiger personality?

Tom: You identify them… I think the best way is to talk to their previous employers. Now, what’s happened unfortunately in this day and age, employers are very nervous about giving references about previous employees. So you gotta dig as much as you can and there’s a little small thing, you wanna hear one small thing I always look at?

Sean: I would love it.

Tom: You come in and sit at my desk, in my office and sit in a chair across from me. Secretary comes in and says, “Sean, would you like a cup of coffee?” And you say, “Sure.” She brings in a cup of coffee, you take it, you put it down on the desk. Don’t say thank you, didn’t say please.

Okay, and then you walk away, you leave the empty cup on my desk. Don’t come back for another interview. 

Yeah, so… Those are kind of quirky things, but it does reflect on the person’s personality.

Sean: Yeah, no, I was talking with another CEO recently, and those little personality traits, those little things, it tells a lot about a person and you can truly pick up and I love how you believe that you can just develop these people and you can give them the proper training. Are there particular employees or other co-workers that you’ve really enjoyed working with throughout the years?

Tom: Oh yeah. 

Well first… So I had my 17 or 18 partners and franchisees, they were always a lot of fun because they were some strong willed people and they had their own ideas, particularly after we went public. 

Sean: Can you talk about that? Because I know there’s a lot of people, I get a lot of questions about dealing with those strong willed employees. And here you’ve got these 17 shareholders and the way you navigate that was just magnificent. 

Tom: Well, first of all, to get them to agree to form one company, I think I just deserve the salesman of the year award.

Okay, the way that happened, actually, I sent out the perspectives a month or so ahead of the time, and then we had a meeting at Nassau where the new Atlantis Hotel was, and we spent two days sitting around a table and at the end of the second day, I went around the room, I said, “Are you in or are you out?”

And I don’t think a lot of them made their decision until I called their name ’cause there was a lot of mixed emotions. I told them they gotta be entrepreneurs at their own business. And here I am,  somewhere between six months and four years telling them they should join in and become part of a bigger company.

Sean: I wanna know more about going public, but I’m also curious, it took you four years to get to the 300 clients. Was it that point that you knew that you’d really be very successful with this business?

Tom: No, it didn’t start to… Hit on me. One day, one of the persons I had hired at that company at the EAS came in and said, “Tom, it looks like you’re gonna make it.” He says, “How can I get involved?” And I said, “Well, we can do a partnership in Buffalo and Syracuse,” and he said, “Okay.” And then a few months later, employee of a client walked in the door and said, “Tom, this is a terrific service. I wanna go some place and start a Paychex.”

I said, “Well, I’ll partner with you and where do you wanna go?” And he said, “Miami.” I said, “Oh, I’ll partner with you.” He says, “No, no, I wanna be a franchise.” I said, “Well, you’ll pay me the initial fees, percentage of your revenue, I’ll train you, we’ll come down and help you the first few months.” It’s a deal. 

So we did that. Then after doing those two again, I started, I said wait a minute. Maybe this is a way to build a national company.

And then for the next three years, I went out and recruited people that I thought would be good entrepreneurs, and all but one of them moved from Rochester to another city in the country, and then I realized maybe we have a tiger by the tail here.

Sean: There must be that excitement, that momentum.

One thing I’m really interested about, as you were building this momentum, is Upstate New York, and you’re ties to Rochester. And just talk about… 

Tom: My lifetime conflict.

When I was in my early 20s, I wanted to move to either Florida or California. I didn’t ski, I didn’t like to ice skate, none of that. But that was my conflict, but I ended up staying in Rochester when you got family and friends, friends for a long time. It’s hard to leave. So we stayed in Rochester once or twice during our history. We thought about moving out of the state, mainly because of tax reasons, so forth and we decide it’s just too big of a move for too many people. So we stayed in Rochester. 

Sean: Interesting, interesting… There was a quote I remember reading about when you bought the Buffalo Sabres and that no one else was stepping up to the plate to support that community. So it seems like it’s entrenched in you to help that out. What was that like purchasing a professional sports team?

Tom: Well first of all I had only seen three NHL hockey games in my life. So I knew nothing about the game. 

I wasn’t really excited about it and I never watched it on TV, or anything like that, but the city of Buffalo was in trouble and this hockey team was an important part of their culture, and people demonstrated that to me and I became interested. 

The same time I was also running for governor and that brought about quite a bit of conflict ’cause everybody thought I was interested by in the Sabres because I was doing it for political reasons, which was not the case but the end result was, we ended up buying the team and I became much more of a hockey fan. I wanted the team to run at least at break even, didn’t necessarily have to make a profit, but I didn’t want it to lose money.

And after our first tough year, we really turned it around. When we bought the team, we had 5,500 season ticket holders, by the end of the second year, we had 15,000 and that obviously turned the financial picture around.

Sean: That competitive nature in you, you tell… 

Tom: Exactly, exactly.

Sean: One thing I’m so intrigued by though is here you’re running Paychex, you mentioned the running for governor and then the hockey team, how are you possibly able to manage that?

Tom: I’m a good delegator. 

Sean: Is that the key to it all? 

Tom: I think it is the key to it all. 

I always thought it was my responsibility to be a good delegator in order to accomplish more, because if you put it all on your own shoulders, you can limit yourself but being a good delegator and bringing in the right people to execute it, then you can get a lot more done.

Sean: How early on did you identify this? 

Tom: Pretty early. 

Sean: Really?

Tom: Pretty early, yeah.

Sean: I’m so intrigued by that because you see so many people who are just so stuck to controlling their entire business and they can’t grow. So that’s just incredibly aware of you to be able to do that early on. 

Tom: You know, it’s funny you ask that question because I’ll tell you a story. Several years ago I was asked to do a presentation to a group of entrepreneurs right here in Naples. It was about 300 people in the audience, and at the end of the presentation, and at the end of the Q&A, a woman stood up and said, “Mr. Golisano,” she said, “how many people did you have to stomp down on while you were growing the corporate ladder?”

And my immediate response was, “Ma’am, the key is not the trample down on people. The key is to bring them with you.”

And that’s what I felt I did with my 18 or 19 partners and franchises and then all the rest of the shareholders. Didn’t do it just for myself. I brought everybody along. To me that’s the key.

Sean: It’s so funny, just reading the book and then you mentioned all of those original partners. If they kept all their stock, I think it’d be worth… I think it was $250 million. And what’s that like being able to just step back for a minute and see the value you created, not just for the employees, the shareholders, but the number of people that you’ve truly impacted over the years, what’s that like?

Tom: It’s two things.

First of all, it’s extremely gratifying.

It also creates a lot of pressure on yourself to continue ’cause you brought up people along to a certain point, you want the new ones that you just brought in to be as successful as the early ones. So it creates a new responsibility which I think is great. This is what makes the world go round.

Sean: It seems like a reoccurring theme that keeps coming up is that growth mindset you have, you mentioned continue to evolve and develop and I’m really intrigued about the growth mindset. When you took the company public, until you take a company public, you’ve never done it before. So then, how do you learn quickly enough to navigate all of the new things that come with a public company?

Tom: Well, first of all, you need a really good support person in a chief financial officer, because they are responsible for the day-to-day contact with the banks and Wall Street.

So you gotta have a person that really knows their way around in that arena. A second, you gotta keep an open mind, you gotta learn. A stock analyst, some people revere them, some people dislike them. I happen to revere them maybe because I thought it was important that they understand the Paychex story, that they understand where we’re going and how we’re gonna get there, and that will drive the stock price to a more positive rate. 

When I hear people talk about being a public company, everybody depends on quarterly results… We didn’t fear that at all, because I created discipline and structure for us We wanted to continue to grow, but we wanted to do it as a discipline structured way so that Wall Street understood it, and would support it. So it was more of a marketing challenge, if you will, because if you don’t find a way to promote your stock in a positive way, nobody’s gonna buy it.

Sean: You mentioned having that vision, that long-term vision, does that get down to the culture that you create within that company?

Tom: I hope so. The one thing about growth as you brought up is when you have growth in the company, people are excited, they try harder, there’s very less politicking and backstabbing. Everybody’s on upbeat.

So, as your company’s growth starts to level off, then the spirit starts to diminish, politics begin to creep in and so on, so forth. So it’s a very important reason, to have growth just to keep people’s attitude and spirit in the right direction.

Sean: So let’s talk about that. I know Paychex for the majority of the time, I think it was 70% increase over the years, many years. How do you develop that positive mindset, and that belief when things aren’t going necessarily great at the time?

Tom: Well, you gotta have basics. We have a strong market place. I mean, the number of small businesses in this country compared to how many of them are using a payroll service, it’s a wide open market, so if you have that situation that’s very, very important. 

Secondly, if you run the business well and you can show profits without being over demanding but you can be a profitable company and profits can grow, and people can benefit from that. We have a lot of people that have stock options in the company, and of course that drives a lot of their efforts, too. 

Sean: You mentioned delegation a few minutes ago and I’m wondering what your role looks like as CEO of a public company, how much time are you able to dedicate to thinking about the future of the business?

Tom: You never stop thinking about it, you just never stop thinking about it.

And I was a little unique, I guess, running for governor three times while I was still CEO, that was a very unusual situation. I was able to do it, I obviously had a strong support staff, everybody knew our objectives and our goals, so it was fairly easy for me from that point. But it takes good quality people, and they have to understand the goals and objectives of the company.

Sean: You have to have some unique skills as well. I’m even thinking about just being able to compartmentalize, as you might be leading a board meeting and then all of a sudden you’re on a political campaign, how are you able to just get in that mindset in each different circumstance?

Tom: You better do it quick. 

Sean: Yeah.

Tom: You better do it quick, because I’ll tell you it’s two different worlds. In fact, people ask me what’s it like being in politics versus running the business?

The interesting thing is, in an industry like payroll processing, you can have multiple companies all be successful. And our national competitor, Automatic Data Processing, very successful company, we’re a fairly successful company, but in politics, there’s only one winner. And consequently, they do things that I considered to be absurd and not necessarily always ethical or legal, that’s the difference.

I mean, people in our industry, I’m friends with them.

I don’t think too many politicians, especially today, are friends with the other side. 

Sean: You continue to bring that up in the book, building up the people both in your organization, not talking down on what could be called a competitor. How early on did you identify that that was important for the overall success of the business?

Tom: Actually early on. Even when I was working for EAS selling, I realized it’s a far better approach by making a sales presentation not to degrade your competition. 

First of all, it usually irritates the potential customer. Secondly, you end up saying things that probably are not true or totally correct.

I just thought it was a much better sales approach. I used to start with “Automatic Data Processing, they were the leader in our industry, they started that 25 years ago,” and compliment them… But then I say, “But our product has evolved to this,” and that’s how I would make the sales from and that’s how I tried to train our salespeople to sell.

Sean: I’m just thinking about your abilities and something I feel like you’ve done a lot over the years, are difficult conversations, how do you approach a difficult conversation?

Tom: *makes cutting hand gesture*

Sean: Yeah.

Tom: It’s the only way to do it. I’ll tell you, when you gotta terminate somebody, you can think about it and think about it and plan your speech, and so on, and so forth. Don’t do that, just bring him in, sit them down and say, “I have to terminate you.” 

Sean: Straight to the point. 

Tom: Straight to the point. 

Sean: Saves time, headaches over the… 

Tom: As far as I’m concerned those are the most difficult conversations the CEO has to have. 

Sean: Can you discuss more about that, about what it’s truly like being a CEO? That’s the most difficult element firing people. What else are you experiencing a lot of? 

Tom: Like I said that the environment is positive and you’re growing, it’s pretty easy, but when you have difficulty, either in sales or profitability areas, you gotta figure out why. And you got to do something and you gotta do it fast.

And the other thing that is a major part of your responsibility, if the company is here, you gotta think about what’s gonna take it there, okay.

It could be product development, could be increased in sales, increase in the size of the sales organization, could be change in geography, could be many things.

The CEO has to create the vision, where the company is going, then he has to sell that vision to the people that work there. And then after you get started, then you gotta measure the results to make sure it’s getting done. So that’s kind of a three-step process to… 

Sean: Luckily, you’re a great sales guy, able to sell that vision. 

So you mentioned two things there, speed and then where you’re taking the business, and something I really enjoyed hearing about were some of the speedy and quick decisions in terms of acquisitions.

I would just love even hearing a story about that.

Tom: You’re probably talking about the acquisition of a company called Advantage. It was about to go public, it was a payroll processing company, the product was very much like ours, and they were gonna go public. And they created their K1, that’s the document that explains their operation. And I read it, it looks like they were serious. And they had 40 or 50 offices and we’re growing, I said “They’re gonna be a third player in our industry if we let this continue.” 

So I was gonna be in Chicago for an investment conference and I knew they were headquartered in Chicago, so I called up the head equity guy that owned the company and they said, “We’d like to meet you for half an hour.” I said, “Okay.” We walked into his office, at 4 o’clock in the afternoon, me and the chief financial officer, we walked out a quarter to five with a handshake deal.

I paid a lot of money for it, but it was the best move I ever made. 

Sean: Calculated risk there. What’s the narrative like in your head… How exciting is that? The thrill of that?

Tom: I’m not so sure I’d use the word exciting. I would say it’s very intense because you’re making quick decisions, and you’re talking about a lot of money. I think the acquisition was over $400 million, and to have a 45-minute conversation about it, even though you had the support of your chief financial officer, intense. 

Sean: So I have to assume you’ve done a lot of thinking about that deal prior in your head or is that how you’re able to assess it first? 

Tom: I had thought about it in my head, but I had no idea I was gonna consummate it in one 45-minute visit. 

Sean: Really? No idea…  

Tom: No idea going in that was gonna happen.

Sean: Wow.

Tom: Well, first of all, I’d never met the people, so I didn’t know how strong their intention to sell the company was, but it was pretty strong.

Sean: I have to imagine. 

So, I’m thinking about even just the overall growth, you experience these new things like that. It’s almost like you put another notch on your belt after you deal with something like that. How much more advanced do you think you became towards the end of your career, as opposed to the beginning?

Tom: Well, I think in many ways, yeah, and because of experience and thinking situations out… One of the things that had, and I’m going to sound like a jerk here, but one of the things I’ve been told many, many times, it’s so unusual for a person that starts a company with one employee to still be running it when it’s got 10,000 employees. And I guess I stayed with it.

Sean: It’s nice… 

Tom: At least they never threw me out. 

Sean: I mean, that’s a unique circumstance, it really is.

Are there other things that being able to look back and reflect that you think we’re just vitally important for that sustained excellence?

Tom: No, I think I’ve already mentioned it. The size of the market. The fact that we had a really good management team that wanted to be successful, that’s what drove us. 

Sean: We were fortunate, I was able to talk with you a few minutes prior to this and one of the things we were discussing is the book writing process and that you have so many of these ideas in the head and one thing you wish you had done is journal throughout your career, so you could just look back and reflect.

Tom: Exactly, right. I really wish I had kept some sort of a journal or diary, just a few words every day would have been great, and then to be able to go back and I’ll talk to one of the ex-partners on the phone and it’ll bring back memories and we have a big kick out of talking about them and enjoying them, would have meant a lot more if I had done that. I was she had done it.

Sean: Is that what it comes down to looking at massive success, is it about the journey and those little experiences with colleagues and friends throughout the time?

Tom: I believe it is. The journey is what’s fun. And being able to look back on a series of experiences that brought you to where you are. It’s very much fun.

Sean: I would love to talk to you for a little bit about philanthropy, and I know you’ve given over a quarter of a billion dollars and just the impact that amount of money can have. Talk to me about philanthropy for a minute.

Tom: It’s almost as hard to give it away as it is to make it.

And here’s what I mean by that. In philanthropy, particularly when you’re dealing with a kind of dollars… Most of our grants are in excess of $5 million. You have a big responsibility. 

First of all, the organization that’s presenting to you, do they have the wherewithal to create whatever project they’re asking money for? Do they have the ability to pull it off? Will the money be spent wisely? Will the management team be there for a while? You know, nothing like giving several million dollars to an organization and all of a sudden the top three people leave.

In fact, we have that experience that we’ve had with about four or five colleges. I’ve given them money to build a building or something. Soon as we make the announcement, the CEO announces retirement, but can’t do anything about it, anyway. 

It’s difficult, it takes time and it takes energy. Fortunately, I have a head of our foundation, a woman by the name Ann Costello, she’s been working with me over 15 years, and she does a phenomenal job of investigating and inspecting and understanding their grant needs and whether or not they can make it happen.

Sean: It’s almost like you need to provide a copy of the new book, Built Not Born to anyone you’re donating money to so they can better… 

Tom: And I tell you… Understanding the quality of the ask is more difficult and not as much fun as investigating an acquisition. Fortunately I have Ann Costello and she accomplishes a lot.

Sean: It’s always nice that someone by your side, in terms of those circumstances, it seems like that’s a reoccurring theme. Now you’re helping develop the next set of entrepreneurs. This book is large part in doing that, I know you work with a handful of entrepreneurs now, businesses. Any parting advice, any big takeaways you think they’ll get by reading this book, or even the entrepreneurs you work with, what’s it like working with you?

Tom: Well, I would say as far as takeaways in this book I think there’s a couple that are extremely important.

And you may snicker at the first one, but I’m afraid in today’s day and age, if you’re starting a business, you should have a prenuptial agreement with your spouse. Nothing worse comes, nothing can happen that’s worse than run a successful business, for whatever reason you split up with from your spouse, and that business has to be sold to pay off, whoever. Okay, that could be horrible.

Secondly, once you’re successful, don’t bet the farm. You’re gonna get approached by all kinds of people. They want you to invest in their business. Or maybe even you wanna create a new idea, a new business, don’t bet the whole thing on whether it is gonna make it ot not. 

Sean: Sound takeaways there. It even just ties back into that reoccurring theme of that long-term vision and that’s something you were able to do year after year is understand potential long-term games. Is that something you’re always thinking about? And if so, how far out are you looking?

Tom: Well, don’t forget today, I don’t run the business. 

Sean: Yeah I know. 

Tom: Okay, I’m chairman on the board and I have some responsibility for direction, but not a lot, but fortunately we have a CEO Martin Mucci, who is very good. We have some conflicts, we always will have but he is doing a fantastic job and he’s got his eye on the ball, he knows where to take it. 

For example, when I left Paychex in 2004 as CEO, payroll was about 85% of our revenue. Okay, during the last 10 or 12 years, Marty has created a product mix which now human resource services are almost half the company, things like 401K administration, cafeteria plans, unemployment representation, all these new products that he’s evolved that have really made a difference. So now, Paychex is viewed not only as a payroll processor, which is becoming a little bit of a commodity, payroll processing, but now this whole range of Human Resource Services are gonna continue the growth of the company.

Sean: I really did enjoy this conversation, Tom, from $3,000 to a multi-time billionaire. It’s fascinating to hear the journey.

What I appreciate most about your story in the book is how it’s in action. It’s a playbook for those young entrepreneurs now. So I really do appreciate that. I cannot thank you enough. The book is out, now Built Not Born. Tom Golisano, thank you for joining us on What Got You There. 

Tom: It was a pleasure telling the story.