Aprimo and Recession and Entrepreneurship and Small Business

Wealthy local entrepreneurs hew to conservatism

April 23, 2011

Bill Godfrey raked in more than $30 million from the recent $525 million sale of his Carmel software firm, but don’t expect to see him zipping around in a super luxe car or moving into a mansion.

Bill Godfrey Godfrey

Godfrey stands squarely amid a quiet class of Indianapolis-area entrepreneurs opting for modest, unassuming lifestyles—values that, if anything, turned more conservative during the Great Recession.

Godfrey declined a request to talk about post-recession lifestyles of top local entrepreneurs, preferring to dwell on Aprimo Inc.’s success.

But people who know him say they’d be shocked if he suddenly veered from mores considered modest by affluent Carmel standards. He wasn’t a lavish spender before the recession or the Aprimo sale, and he isn’t now.

“He could afford any of the toys a rich guy wants, but that’s not his demeanor,” said Bill Johnson, a Godfrey friend, Aprimo investor and early sales vice president at the company. “It’s not something he cares about.”

Flashy displays of wealth seldom erupt in Indianapolis after an entrepreneur makes good, and they’re even more unusual now that the recession sobered even the most successful among them. Local entrepreneurs are driving cars longer, taking less risk with investment portfolios, and balking at luxuries like ski trips—quite the opposite of parking Masaratis conspicuously in driveways.

There are exceptions, to be sure. Among the highest-fliers was entrepreneur Tim Durham—now under indictment as the alleged architect of a massive securities fraud—who lived lavishly in a Geist Reservoir mansion and drove exotic cars. But he turned heads in part because he was so unusual.

“Most entrepreneurs live extremely conservatively whether the economy is booming or in a recession,” said Christopher Day, who started and sold broadband and meter-reading businesses to Fortune 100 companies before co-founding local investment banking firm Navidar Group LLC. “They’re not necessarily people that are asking for a lot of attention.”

Added Mark Hill, an investor who in 2005 sold Carmel banking software firm Baker Hill for tens of millions of dollars: “The thing about Indianapolis, the thing about Midwestern culture is, that’s not who we are.”

Big payday

Aprimo’s January sale to Dayton, Ohio-based Teradata Corp. was the largest for a locally bred company since publicly traded Adesa Inc., an auto auction headquartered in Carmel, was acquired by four private equity firms in 2007 for $3.7 billion and taken private. The renamed KAR Auction Services Inc. went public again two years later.

The last available public document on Aprimo, an initial public offering statement the company filed in September 2007 but withdrew months later, showed Godfrey owning 6.8 million shares, or 8.6 percent of the company.

Insiders won’t discuss whether Godfrey’s stake was diluted by an additional capital infusion before the sale. If his share stayed the same, and considering the sale price of $4.97 per share, he would have received nearly $34 million. Viewed another way, 8.6 percent of the $525 million sale price comes to $45.2 million.

Godfrey, Aprimo’s CEO, wasn’t the only one who fared well. Godfrey disclosed to IBJ in February that 23 Indiana employees and investors each received at least $1 million in returns.

The odds of the largess showing up in lavish lifestyles, though, are remote, said Bob Compton, a former venture capitalist who also invested in Aprimo. It simply isn’t in the DNA of Hoosier entrepreneurs; those preferring opulent lives start businesses elsewhere, particularly in Silicon Valley.

“Money and success among the entrepreneurs I know in Indiana doesn’t change them as people,” Compton said. “Indiana’s entrepreneurs are much more well-grounded, much more family-oriented.”

Back to roots

Some Hoosier entrepreneurs, like Steve Hilbert, a co-founder of Conseco, now known as CNO Financial Inc., are more ostentatious. He was renowned—and sometimes castigated—for building a Carmel mansion complete with a ceiling painting that included him in a toga.

And Scott Jones, a neighbor of Hilbert’s until Hilbert was driven from the ailing Conseco and eventually his mansion, keeps a higher public profile than many entrepreneurs are comfortable with.

Yet, if many other Indianapolis-area entrepreneurs had been tempted to flaunt their wealth, the recession brought them back. A spot check of some of the most successful suggests the recession reinforced their values and in some cases drove those values deeper.

Brent Tilson, who owns a human resources firm and completed successful real estate projects in the Greenwood area, said he’s hard-wired to live conservatively, and as a result drives a 7-year-old car.

Tilson recently traded up to a larger house to take advantage of a spectacular buying opportunity and not, he said, to make a statement. He and his wife and four daughters had no intention of leaving what he described as their modest executive home until the real estate market collapsed and brought values crashing down.

Anticipating paying for four weddings, Tilson joked that he will continue living conservatively. Ultimately, he added, the recession brought a necessary cleansing of the economy.

“We’re all going to be a stronger nation,” he said. “Businesses are making good decisions.”

Tech entrepreneur Mike Simmons is in the same Zionsville house he and his wife built seven years ago, and they have no plans to move.

Simmons’ T2 Systems Inc. survived the recession because the parking garage software it sells helped companies protect revenue streams.

Still, the recession presented a dilemma. Simmons harbors painful memories of a grandfather who was killed in a farming accident just six months after he retired at age 60. A high school student at the time, Simmons got a crash course in realizing life can be fleeting, so he has tried to balance work while enjoying his hard-earned money.

The recession tweaked that philosophy, if ever so slightly. This winter, his family opted against a ski trip to Big Sky, Mont., when the cost and complications to his children’s schedule mounted. A few years ago, they would have pushed ahead with the trip.

“We have been a little more conservative in the past couple of years because of the recession,” he said.

Dyed in the wool

Professionals who work closely with top-notch entrepreneurs say they notice the recession dying their values in wool.

“I’ve noticed that today’s entrepreneurs are more frugal than their predecessors,” said Barnes & Thornburg attorney David Millard. “They have had to do it to survive, and now I see them doing it in their personal lives, too.”

Instead of snapping up second homes and airplanes, they’re socking away extra money for retirement or investing it in other people’s startup companies.

Most, however, have retained a guilty pleasure, Millard said. One of the most common: the iPad.

Venture capitalist Don Aquilano sees entrepreneurs recalibrating both businesses and lifestyles to operate with significantly less debt. Too many entrepreneurs came close to losing companies and were distressed by having to lay off valued employees.

Now they seem content to live in existing homes and drive older cars.

The chastening will linger, Aquilano predicted.

“Folks will wait until their situation allows them to sort of spend on that personal luxury. They’ll wait until the kids’ college funds are funded and their retirement is put in place. I don’t think they’ll live beyond their means.”

Not all, though, Aquilano hastened to add: “History is littered with examples of people who don’t remember history.”

Godfrey isn’t likely to be one of them.

Johnson, an admitted car buff, said the car Godfrey drove to a golf course last summer was so bland that he couldn’t recall the model. It was an “everyday car” like a Ford or Toyota, he said.

Moreover, Godfrey told Johnson an initial public offering or other exit for Aprimo investors wouldn’t change how he lived.

Johnson noted Godfrey, who early on donated Aprimo stock to Guerin Catholic High School in Noblesville, remains a “phenomenal family man.”

“He’s about a man who likes to follow his passion. His passion is about creating a business. It’s not about being ostentatious.”•

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