I'm an entrepreneur, and I take big risks. But this company is funded entirely out of its own cash flow. It doesn't have any debt. It didn't use venture capital. As we were growing the company, I always kept enough cash in the bank to cover everyone's salary for six months.
"That cushion came in handy. In the early days, we had one big client, a major commercial bank, that bought into our idea and helped us to fund product development. Something like 80% of our revenue came from this bank. But I kept our head count low enough to ensure that if this client dropped dead, we could survive for another six months, using that time to find new clients.
"One day, this bank changed its mind about what it wanted to do with us. It insisted that we make major revisions in our business model. Its executives figured that because they represented 80% of our revenue, we would do as they asked. But because we had managed our risk, we didn't need them as badly as they thought we did. So we parted ways with them.
"They predicted that Algorithmics would go under. Today we're probably the world's largest risk-management software company. It all comes back to regret. I manage regret to make sure that if something big goes wrong, I'm still covered. That's what all good entrepreneurs do. You think they're out there in the middle of the desert, guns blazing, with nothing protecting them. With the smart ones, that's not the case. They always have a Plan B."