Tom Golisano, at age 17, had an epiphany that would serve the future Paychex founder well later.X
As a teenager, he watched a tyrannical boss verbally abuse his father. The verbal lashing made a tremendous impression on the teen.
"It was a total bawling out, embarrassing my father in my presence about the job he was doing or not doing," Golisano, 78, told Investor's Business Daily. "I don't remember any of the details about whether the guy was right or wrong. All I remember is how he treated my father."
And that day imprinted Golisano and his plans.
"I came to a conclusion that day on two things: I wanted to own my own business and I would never treat people that way," he said. "And it's something I carried through my entire career at Paychex."
Forge Your Own Future Like The Paychex Founder
Seeing how life as an employee could be, Golisano founded Paychex (PAYX) in 1971. Headquartered in Rochester, N.Y. Paychex is a top provider of payroll, human resource and benefits outsourcing services. Golisano is still chairman after stepping down as founding CEO in 2004.
And true to his word, Paychex strives for high marks for employee attitude and comfort level.
"I'm very proud of that," Golisano told IBD. "Nothing makes me happier than to run into a current or retired Paychex employee and have them tell me how great it was to work at Paychex. To me, that's the ultimate."
With $3,000 and a credit card, Golisano founded Paychex. Today Paychex has some 670,000 payroll clients, roughly 15,000 employees and 100 offices nationwide. Analysts see revenue this fiscal year topping $4 billion, up 60% from five years ago. Paychex pays one out of every 12 American private-sector employees.
It all started with Golisano. Paychex shares jumped more than 17,000% from their first day of trading in the early 1980s though October 2004. That's when Golisano traded the CEO post for chairman, which he still holds.
"Tom approaches business in a humble manner, ready to listen, challenge the facts, and give people credit where credit is due," said Martin Mucci, the current president and CEO of Paychex. "He also likes to have some fun in the midst of the work."
"Tom is a visionary, said Bob Sebo, a former executive of Paychex who has known Golisano for 46 years. "Tom has great respect for employees that are trustworthy and loyal. He doesn't hesitate to recognize that trait (and) give credit to employees when credit is due."
Give Back Some Of Your Gains
Golisano didn't just strive to improve employees' lives. He's also given back to the community, donating more than $250 million to educational institutions, children's hospitals, and organizations working with people facing developmental and intellectual disabilities.
He's also looking to inspire the next generation of entrepreneurs, as shown in his book, "Built Not Born: A Self-Made Billionaire's No-Nonsense Guide For Entrepreneurs," released this year.
Golisano wanted to convey to entrepreneurs his accumulated experience and knowledge. "I want people to be successful. I've learned so many lessons and had so many experiences that I'd feel guilty if I wasn't going to transfer them to whoever wanted to learn."
Follow The Paychex Founder's Top Advice
A chapter in the book is titled with one of Golisano's best pieces of advice for business success: "It's Not A Cash-Flow Problem — It's a Sales Problem."
He finds many new businesses suffer from "the biggest mistake entrepreneurs make." And that is, "they always overestimate their ability to sell their product or service," Golisano said.
"Just because entrepreneurs hang up their shingle, they think the world's going to come to them," Golisano said. "The real realization is it doesn't, you've got to go out and get it."
Find Opportunity Where It Is
Born in Rochester, Golisano attended Alfred State College in New York. He graduated with a two-year technical degree.
Out in the working world, Golisano became a salesman. He eventually landed at EAS, Electronic Accounting Systems. They were a competitor of payroll giant, Automatic Data Processing (ADP). Both companies targeted businesses with 50 or more employees. Back then the industry believed only large companies were viable for using outside payroll services.
The opportunity — selling payroll services to smaller companies — was in plain view.
"No one had ever thought to challenge that principle, and I love a good challenge, especially if it tests commonly held beliefs that don't stand up to scrutiny," Golisano said. "I started to question the reasoning behind why small businesses with fewer than 50 employees wouldn't need our services even more than large companies did."
Do Your Homework Like The Paychex Founder
Golisano hit the library to research the opportunity. He learned 95% of businesses in the U.S. had less than 50 employees.
Astounded by the size of a market that was being ignored, Golisano did further research and proof of concept. Over a period of months he spoke to small business owners and their accountants about their needs. He then created a system for providing payroll services at a price the market he wanted to serve could afford.
And he presented his research to his superiors at EAS. He thought he was creating an opportunity for himself and the company. But instead, they rejected his premise and research. His managers still insisted businesses with less than 50 employees couldn't afford payroll services.
Bet On Yourself
But Golisano pushed on. Rather than accept the managers' opinions, he saw his opportunity, resigned and founded Paychex.
"I had no idea it would become the industry giant and industry leader that Paychex is today," Golisano said. "All I wanted to do was make enough money to support my family and ensure my developmentally disabled son would never have to live in a state-run facility."
Paychex grew to have 18 franchises and partnerships. In 1979, Golisano consolidated the partnerships into one private company. He took Paychex public in 1983.
Strive To Focus And Be First
Golisano attributes the fast success of Paychex to having identified a huge, wide-open market with very little competition.
He also kept Paychex laser-focused on the payroll processing product initially. "We had a lot of opportunities to release other HR products, but I wanted to build a national branch network first," he said.
"And I think with the benefit of hindsight, that was a wise move," he said. "When we came along with some of the HR products, like 401(k) administration, Cafeteria Plans, employee handbooks, all those types of things, we had a natural market already existing for us."
Today those HR products are equivalent to almost half of Paychex' revenue.
"Tom is a constant learner and inquisitive," Mucci said. "He's interested in learning about new ideas and opportunities — but he will challenge you to know your stuff."
Take Care In Building Your Team
In building a management circle, Golisano says he looked for people with larger ambition. He hired people willing to try to solve company issues outside of their departments.
"I wanted the goals of the company to be very specific and understood by as many people in the company as we could," he said.
"Tom's ability to keep things simple and straightforward has contributed to him being such a successful leader," Mucci said. "He doesn't like multipage documents and long-winded presentations. His approach is cut to the chase, identify the opportunity, and make your decision."
Golisano engraved a favorite motto on a plaque for his desk. It reads: "Lead, follow or get out of the way."
Golisano saw the motto on Ted Turner's desk when "60 Minutes" interviewed the CNN founder. It resonated with Golisano. "I said, boy, if there's a reality in life, that's one of them."
Paychex Founder Golisano's Keys
- Founded Paychex in 1971. Took company public in 1983, setting off massive wealth creation with Golisano as CEO through October 2004. Paychex is now worth more than $26 billion.
- Overcame: Serious doubt from an early employer about the viability of what would become the Paychex business model.
- Lesson: Don't let others dissuade you from a well thought-out vision. "Defying the status quo is what entrepreneurs do. I had spotted an opportunity and challenged an industry norm."
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