Former Red Hat CEO Developed His Company in a Closet, now Sells it For $34 billion!
The rags to riches story is one that we all love to hear about, don’t we?
Knowing that someone came from an impoverished background and is now enjoying the finer things in life and dining at the most expensive hotels just gives us hope that we can make it no matter our past!
Indeed, one of the people that we put on high-esteem is Bob Young. Let’s dial it back a little to 1993.
At the time, Bob Young was an unemployed bloke and working in his wife’s sewing closet as he focused on the new company that he had just started. Last week, the company was recently sold to IBM for a jaw-dropping $34 billion! In fact, the sale goes on record as IBM’s largest purchase ever!
The Founder of Red Hat
Bob Young was the former CEO of Red Hat, an open-source software provider that IBM purchased in order to increase the size of its cloud computing financial holdings.
Age-wise, Bob is no Young Turk, clocking in at 64years. In fact, he stepped down from being the CEO of the company after it went public in 1999.
Additionally, he also vacated the company board after the launch of Lulu.com in 1999. Just a heads up, Lulu.com is an online company that deals with self-publishing.
It is important to note that Bob is still the CEO over there.
Beginning a Revolution
Nevertheless, it was Young who started the company 25 years ago that would morph into the popular Red Hat multi-billion dollar empire 25 years ago.
At the time, Young was jobless and was penniless after he had sold his previous business which was a computer leasing company.
That being said, Young believed in his entrepreneurial skills, and his mind was wired for success. Nevertheless, he believes he became an entrepreneur not because he was a risk-taker or a smart guy, but because he was a terrible student!
Not the Sharpest Academic Tool in the Shed
In fact, Young had a lackluster track record with his academics. After seeing how poorly he was performing, Young opted to go the entrepreneurial way because he was more confident he would have a better chance than sticking to academics.
Indeed, starting a business for him was a low-risk activity as compared to applying for jobs.
That being said, Young ventured into the business realm immediately after his college graduation in 1976. His first gig was renting typewriters to a certain factory farm that was growing fish worms.
On the other hand, most of his friends and colleagues were just starting out in their careers as lawyers and accountants.
He recalls how most of his friends were not impressed with their career choices. After this, he moved on to leasing computers via a company known as Vernon Computer Rentals in 1984.
Unfortunately, the 1989 recession hit and Bob struggled financially, opting to sell his company to Greyvest Capital for about $20 million.
From the sale, he managed to get a cut of about $4 million as a result of being the CEO.
Nevertheless, part of the deal was that Young had to work at Greyvest and use part of the proceeds, to get a stake as part of the acquirer.
Unfortunately, months in after the deal was sealed, Greyvest found itself in a heap of financial distress and the company’s stock fell dramatically, leaving Young with a stake that was essentially worthless.
As a result, Greyvest was forced to retrench Young.
At the time, Young recalls being unemployed with a wife, three little mouths to feed, a pending mortgage, and a net worth that was shamefully low than what he had after graduation.
Every Cloud Has a Silver Lining
That being said, if it wasn’t for the disaster, it’s safe to say that Young wouldn’t be living the way he is today.
Indeed, if it wasn’t for that disaster, Young would not have stumbled into the open-source opportunity that resulted in the founding, growth, and building of Red Hat.
Fortunately for Young, his massive experience with computers and its subsequent business gave Young the opportunity to capitalize on the software sales market that let to software customization and a business that suited the consumer’s needs.
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