This column by Michael Mink was originally published on investors.com on July 27, 2018 and in Investor’s Business Daily Weekly on July 30, 2018
Keith Krach made his mark with new technologies but built his foundation on old-fashioned values.
And he was willing to risk his future to stay true to them.
Krach, 61, was one of the co-founders of Ariba in 1996. The company is the world’s first and today largest e-commerce network. Krach served as its chairman and CEO from 1996-2003. Ariba, which at one time under Krach achieved a $40 billion market cap, was sold in 2012 for $4.3 billion to SAP SE (SAP). Ariba’s software revolutionized business-to-business e-commerce. Currently some $1 trillion of it goes through the Ariba network annually.
Among his numerous honors, Ernst & Young named Krach the National Entrepreneur of the Year in 2000 and 2015.
Before all of that, Krach was General Motors‘ (GM) youngest-ever vice president at 26, but “I wanted to leave the nest to build something of my own,” Krach told IBD. “Silicon Valley was becoming a mecca for innovation, and I just knew I had to see what I could accomplish there.”
So he left General Motors in his rearview mirror. “When I let folks at GM know my plans, they all thought I was crazy,” Krach said. He took a job with a small Silicon Valley software company in 1987 as their No. 2 executive. Not a week into his new gig, he came face to face with a crisis.
That’s when the CEO gave Krach a directive of what to specifically say at a board meeting. “And I said ‘I will not!’ ” Krach recalled. ” ‘That would be lying!’ ”
Krach felt he’d made the biggest mistake of his life, joining a company “where my values were not the same as the CEO’s,” he said. “I knew if I stayed there I wasn’t living my values.” His nine months there before leaving “was the worst period of my life,” he said.
“Growing up in a small town in Ohio, going to Purdue, working at good old General Motors, the values were just always there,” Krach said. “I just couldn’t even imagine someone not having them. I missed it. That was a huge defining moment in my life. It taught me to never take values for granted. I’d never start a company without defining values clearly.”
After leaving the computer company, Krach became one of the founders of Rasna Corp. in 1988. Rasna put mainframe computer power on a workstation. It was sold to Parametric Technology (now PTC (PTC)) in 1995 for $500 million.
After Ariba, Krach became the chairman of DocuSign (DOCU) in 2009, a position he will be leaving Jan. 1, 2019. The company provides secure electronic signature technology to facilitate contracts and other documents. From 2011-17 Krach served as DocuSign’s CEO. In 2016 DocuSign was No. 3 on Forbes’ list of the World’s Best 100 Cloud Companies and earned a Best Places to Work Award from Glassdoor.
From 2011-14 Krach served as board chairman of Angie’s List (ANGI), and it was under his leadership that the company went public.
He says what’s built Silicon Valley is “companies taking advantage of a paradigm shift” in technology. “Most important is to invest in technologies, and commit to policies that drive innovation and productivity. This is what digital transformation is all about. And speed is the ultimate currency,” he said.
Taking a global view, he said: “It’s absolutely essential that we pick up the pace of innovation. We can’t be shy about digital transformation. We’ve got to embrace it.”
The playbook that he’s used for leading four companies and serving on the boards of several others is to build a high-performance team.
“There are three ingredients,” he said. “One, is hire the best people. Companies with the best teams win. Two, is get them to work as a team, get them to focus on a mission that is a noble cause. And the third one is to set a crystal-clear direction.
“I also believe in setting big ambitious goals, because small goals don’t stir the heart of women and men.”
“Keith can make a team feel like they can do anything,” said Edward Kinsey, Ariba’s former CFO. “He knows how to make people stretch. He’s evaluated them, he knows what makes them tick, he looks at them based on what he believes they can do, and then he drives them to that performance.”
Krach has learned “when you delegate responsibility you’ve got to delegate the authority that goes with it. And the key thing is people help support what they help create.”
Marc Carlson, who has worked with Krach at seven companies including General Motors, Ariba and DocuSign, says three attributes stand out about Krach. “Character, as in, do the right thing; global vision; and then the third thing is joy. Keith is just a joyful, happy person who truly enjoys what he’s doing and helping others. It’s so authentic it’s contagious.”
“What matters most in life is what you do when nobody is looking,” Krach said.
Parents Know Best
Krach was born in Lakewood, Ohio. His first and most valuable mentors were his parents, Elda and John.
His positive-thinking mother gave him a foundational principle. “She says: ‘People can deny your logic, but they cannot deny your enthusiasm or your passion,’ ” Krach said. “So I’m a very passionate person.”
Krach’s machine-shop-owner father mixed humility with a great sense of humor. He was beloved by his employees. He set an example that Krach adopted: “Ego is your enemy; humility is your friend.” Krach says his father preached to always be yourself and never lose your integrity.
Krach earned a B.S. in industrial engineering from Purdue University in 1979 and an MBA from Harvard University in 1981.
Assembling a team of different temperaments, talents and convictions is the secret sauce for building a high performance organization, Krach says. “Diversity of thought is the catalyst for genius.”
When putting together teams, Krach feels that while IQ is important, AQ (a designation he’s given for the adversity quotient) is even more so.
“When the going gets tough, that’s when you see what you’re made of,” Krach said. “Can you handle stuff under pressure and stay cool?”
To determine AQ, Krach asks potential executive team members what’s the toughest situation they’ve faced?
To help them open up about tough situations, Krach relates his own. “I’ll tell them about times that I’ve really gotten smacked and really show my vulnerability.”
He feels that perhaps the most important skill in business is building trusting relationships early on. “And I think that formula for vulnerability is a key one,” he said.
Today And Tomorrow
Krach is passionate about mentoring. He’s proud that Ariba spawned several CEOs of public companies.
“Keith uses a Biblical phrase that he lives every day,” Kinsey said. ” ‘Just as steel sharpens steel, so does one man sharpen another.’ He uses that when he’s building leaders and when he needs help.”
“You can always learn something from everyone,” Krach said. “And I’m an extremely curious person. I think as much with my heart as with my head. That’s kind of my leadership style.”
Krach’s upcoming project will be his nonprofit Virtual Mentor Network.
“My legacy is defined not by the companies that I’ve built,” Krach said. “My legacy is defined by the leaders whom I’ve mentored.”
Ariba co-founder, CEO; DocuSign chairman, CEO
Overcame: Leaving the security of General Motors after becoming its youngest VP ever to take his chances in the emerging Silicon Valley technology space.
Lesson: See and evaluate new opportunities with an eye on the future.
“You’re not going to get anywhere in life without taking risks. When you’re taking a big risk there’s usually a big upside, but there also is a (possibility) of failure. But either way it’s a win, because when you have a failure, it’s when you learn the most.”