I Stepped Out of Day-to-Dayand Launched a subsidiaryThat made Millions

Scott Richards at the Apple Store

It was called Lemonade, and it only happened because I wasn’t buried in operations. Most founders never get that chance because they’re too busy running everything.

Years ago, after we sold Web Comet and distributed millions of dollars to our shareholders, the chairman of the company asked me a simple question:

“Do you want to build another company, or do you want to do deals?”

I told him, “I’d like to build a company, but I don’t know how.”

I had been an entrepreneur, but I had never really learned how to build a company that could operate without me.

My accountant introduced me to a consultant who he thought could help. After talking with him, rather than paying him a large consulting fee to tell me how to run the company, I essentially said, “Why don't you come in and run it?”

That decision changed everything. I gave up the day-to-day operational responsibility for Dial800. And suddenly, I had something most founders don't have: Time to think.

I had my own office—complete with a bathroom and refrigerator. I could close the door, put on some music and think.

I jokingly called it my “Skunk Works.” Instead of spending my days dealing with employees, customers, operational problems and all the other things that consume a founder's time, I could think about new opportunities.

I wasn't disconnected from the business. I would meet with the person running the company about once a week, often over breakfast.

But I wasn't running the operation every day. And that's when I came up with an idea.

What if we could make money from wrong numbers?

Dial800 was in the telephone business. We had access to enormous amounts of telephone traffic, and inevitably people dialed numbers that weren't working or dialed the wrong number. Normally, those calls were worthless. I started thinking: What if they weren't worthless?

What if, instead of simply telling callers that the number wasn't working, we could play them a short advertisement?

We developed the concept and called it Lemonade—because we were literally taking lemons and turning them into lemonade. Those misdialed calls had no value, until we found a way to give them value.

We found advertisers willing to pay to reach those callers. One of them was in the cruise industry. A person could dial a wrong number and, rather than the call simply going nowhere, hear an advertising message.

That little idea turned into a business that generated millions of dollars.

And here's the point: I don't think Lemonade ever would have happened if I had still been running Dial800's day-to-day operations.

I would have been too busy.

Too many meetings.

Too many employee issues.

Too many customer issues.

Too many fires to put out.

I needed the space to think.

Lemonade wasn't the only thing that came out of that freedom. I also spent years developing Reconnect Research, an entirely new approach to telephone-based survey research. It became a seven-year project and received national attention, including coverage in The Wall Street Journal and The Huffington Post.

We ultimately conducted COVID and vaccine research for state health departments, working through a multibillion-dollar company. I was particularly proud that our methodology could reach people—especially lower-income and older Americans—who were often difficult to reach using newer survey methods.

Reconnect didn't ultimately become the business I hoped it would. Getting a large organization like the CDC to adopt a new methodology moved far too slowly, even with experts helping us. But I had the opportunity to pursue it because I had something I didn't have when I was buried in operations: Freedom.

Looking back, would I do everything exactly the same way? No.

Today, I would still get myself out of day-to-day operations, but I would put a much better system around it.

I'd have clear 90-day goals. I'd have KPIs and a scorecard that told me exactly how the business was performing. I'd have clear accountability throughout the organization.

And I'd make sure the nine core competencies of the business were strong enough that I could step away from the operations without stepping away from the business.

That's an important distinction. A founder shouldn't have to choose between being buried in the business and losing control of it.

The goal is to build a business that gives you leverage.

Your team runs the operation. Your systems give you visibility. And you get to spend more of your time doing the things that only you can do.

For me, getting out of operations gave me the freedom to create Lemonade.

And one idea generated millions of dollars. That's what can happen when a founder finally has the time to think.