LivePerson’s Robert LoCascio got in mental shape to build a $3.5 billion business

The LivePerson founder and CEO talks owning your disruption, navigating the anxieties of entrepreneurship and mining wisdom from dark days.

Born into a family of entrepreneurs, LivePerson founder and CEO Robert LoCascio always had the entrepreneurial spirit, going back to his teens when he and a friend started an auto detailing business. After graduating college, he had a brief stint in a “real” job, but that experience — he ended up getting fired via fax — convinced him that he never wanted to work for someone else again. Determined to control his own destiny, he took out $50,000 on credit cards to fund his first business, IKON. When a customer asked them to build a website, he made a bold decision to shift the business and, in the process, get himself in the mental shape necessary to be the entrepreneur he wanted to be.

In this candid conversation, Robert reveals not just the business side but also the psychological and emotional journey involved with being an entrepreneur. His story is one of many ups and downs — from being hounded by credit card companies to taking his company public just before the dot com bubble burst to narrowly avoiding stock delisting and then ultimately steering his company to its current $3.5 billion value. In some uniquely disruptive times, Robert also hasn’t been afraid to disrupt his own businesses. He believes the doubts and the dark days have something important to teach us, and that’s why he says the biggest lesson all entrepreneurs should take away from his story is this: Never quit when you’re down. Listen now on Apple Podcasts, Overcast and Spotify. If you love it, please help more people find it by leaving a review!

“When you think about the entrepreneurial personality, it’s probably a pretty high control personality.”

After getting laid off six months into his first and only “real” job, Robert LoCascio was determined never to work for someone else again. And he hasn’t. He launched his first venture, IKON, in late 1990/early 1991, a time in which, he says, “the internet was a joke, from my perspective.” Interactive TV and touchscreen kiosks were just starting to take off, and something clicked in Robert’s brain: Why not put these kiosks into college campuses and build an interactive TV network on college campuses? 

Robert funded IKON (which stood for Interactive Kiosk On-Campus Network) with $50,000 spread across five credit cards. By 1995, the business was humming along when he got a call from an advertiser, Northwest Airlines, asking if they could build their website. That’s when Robert realized the future wasn’t going to be about bringing the internet to students via a kiosk in the student union building; it was about bringing the internet to students’ rooms. And so he began “the next journey of my entrepreneurial life,” he says.

It wasn’t easy to make that pivot, but it would be good practice for what was to come later.

“When I started this company, I was just not mentally prepared to do what I needed to do.”

With credit card companies chasing him down and his credit rating plummeting to around zero, Robert moved to New York City with about $10,000 in the bank. He was living in office space that he sublet from a friend (“I had to get a health club membership to have a shower,” he told me), and he was feeling pretty down in the dumps. That’s when a friend recommended he see a psychologist. 

In this episode, Robert opens up about how he spent the next two years on a journey with the psychologist to deal with the anxiety of being an entrepreneur and to learn skills that, he says, prepared him “to be the entrepreneur I wanted to be.” Slowly but surely, he started to see progress. And as the company grew, he noticed one thing was missing from the digital stores he was building for his customers’ websites: the people. That gave him his next big idea.

“I kind of felt like it was a sign.”

In 1997, Robert filed the patent for the first online chat technology. Customers liked the feature, the business was growing and everything seemed to be going well. And then it happened, the thing that every small business fears: Their largest customer, worth 60-70% of their revenue, lost its funding. And the customer was already three months behind in payments.

Robert knew they couldn’t continue along with both the website business and the chat business. A choice had to be made. After absorbing the shock of the news, he went back to his team and put it to a vote. Although they only had two or three customers on chat at the time, the team was unanimous that the future was in the chat business. They all agreed to cutting their salaries in half, and Robert went out to raise money. By January of 1999, “pretty much on the edge of running out of money,” he secured $3 million in funding from a Silicon Valley venture capital firm, and “we were off to the races after that.”

“I opened NASDAQ, and it was a wonderful feeling. But it was...I had a pit in my stomach.”

Within 12 months, Robert’s chat business, LivePerson, would grow from a team of about five to 180 people. On April 7, 2000, the company went public on $2 million in revenue, $20 million in losses and a $300 million market cap. It would be one of the last internet IPOs of the era. As Robert points out, “the Internet was imploding, and the ability to go public was done.”

Going public gave LivePerson about a year and a half of cash. They were able to buy a competitor that had less expensive technology to maintain. But the unavoidable fact was that a majority of their customers were dot com businesses. Once funding to those companies was cut off, LivePerson’s business evaporated. In October of 2000, the head of sales told Robert, “You gotta shut us down...we’re done.”

“I’ve been through a fair amount of weird things building this company.”

Instead of shutting down, Robert went to the board with a restructuring plan in January of 2001, one that would slash the headcount from 180 to 40. That would be the beginning of what he calls the largest crisis in the company’s history. They made it through, only to face another unimaginable crisis just a few months later: 9/11.

Robert describes the emotional and financial roller coaster of navigating through that time. LivePerson stock dropped to around 11 cents a share. Because so many companies had dropped below $1 a share, NASDAQ suspended delistings temporarily. Ultimately, LivePerson beat getting delisted by two days.

Around 2004, things started to pick up again. And that’s when Robert had another big idea. “I started to think about messaging and all the things we’re doing with Facebook Messenger and iMessage and WhatsApp, and I thought, why can’t we do these with businesses?” The company disrupted itself again, cutting earnings in half to build a new platform around conversational AI and automation.

That kind of big pivot is risky. Shareholders and some longtime customers weren’t too happy about it. But Robert wanted to “pivot in strength.” And it worked. Since the platform launched four years ago, LivePerson has grown from a $600 million company to a $3.5 billion company with 1,300 employees.

“All these stories I’m telling are trades: What trade are you willing to make as an entrepreneur for your future? If you’re scared, you’ll end up staying where you are.”

In this episode, Robert offers an unvarnished look at both the anxieties and the thrills of being an entrepreneur. He also shares some of the many tips and tools he’s picked up along the way. He’s a big advocate for listening to what your inner voice is telling you. If there’s doubt or uncertainty, there’s a reason for it. But don’t quit in the middle of it. “In my darkest days,” Robert says, “is where I found my greatest wisdom.”

Even in the best days, Robert is always looking for ways to disrupt himself to be the entrepreneur he wants to be. LivePerson just launched its new conversational AI called Bella, part of a broader vision of conversational commerce. He acknowledges that these big dreams create some level of stress and uncertainty, but they also give him hope and excitement for what’s to come.

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