This story is part of CNBC Make It’s The Moment series, where highly successful people reveal the critical moment that changed the trajectory of their lives and careers, discussing what drove them to make the leap into the unknown.
Before Steve Sonnenberg was the founder of a billion-dollar company, he suffered the “traumatic experience” of shutting down a business and filing for bankruptcy protection as a father of four young kids, he says.
Sonnenberg, 44, is the co-founder and CEO of Awardco, a Lindon, Utah-based employee rewards platform. Companies register for access, and then their employees can dish out rewards points to each other every quarter — redeemable for millions of items on Amazon Business’ marketplace.
Founded in 2011, Awardco serves six million users at companies including AT&T and Hertz. It was most recently valued at $1 billion following a $165 million funding round in May.
But two decades ago, Sonnenberg led a different company — WholesaleMatch, which sold e-commerce tools to online businesses. He launched WholesaleMatch as a college student in 2003 and bootstrapped it into a “multimillion-dollar business” with roughly 200 employees, he says.
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Then, the company was named a co-defendant in a 2011 civil lawsuit brought by the Federal Trade Commission against one of WholesaleMatch’s clients, over fraud claims. Sonnenberg denies any knowledge of his client’s allegedly shady business tactics, and the lawsuit resulted in a $130 million group settlement two years later. Still, his assets were frozen in 2011 as part of the legal proceedings.
Calling it “the most difficult time in my life,” he had every reason to walk away from entrepreneurship. Instead, he had an idea for another business — a half-baked concept around trophies or awards — and put $5,000 he didn’t have on a credit card to buy the Awardco.com domain from its previous owner, he says.
He built websites for other businesses as a freelancer before taking a day job at business software company Qualtrics in 2014. All along, he honed his idea and partnered with his cousin Mike Sonnenberg, a back-end developer, and Tanner Runia, a tech consultant at Qualtrics, to create Awardco’s web platform.
By 2015, Awardco had roughly 40 corporate clients and steered more than $300,000 worth of business to Amazon annually, even as Sonnenberg’s wife manually ordered reward items from Amazon herself. Amazon officially partnered with Awardco in 2015, and an angel investment from the family of a colleague at Qualtrics that year allowed Sonnenberg to quit his job and focus on his company full-time.
Here, Sonnenberg discusses the experience of nearly losing everything and still refusing to give up on his entrepreneurial dream, trying to convince Amazon to partner with an unknown brand, and his own entrepreneurial “superpower.”
CNBC Make It: What went through your head while facing this civil lawsuit? How difficult of a choice was it to shut your first company down?
Sonnenberg: I was thinking: “How the hell am I going to defend myself? My assets are frozen.” I had four kids under the age of 5.
I had thousands of customers using my products. Then, all of a sudden, they were taken offline. People charged back [for the cost of their] monthly subscriptions. I had millions of dollars that I owed, but all my assets were taken from me.
[One day] I was walking on this trail and a strong impression came into my mind: “If you try to fight this, it will consume you, and you’ll lose your family.” So, I decided to walk away from that business that I was very proud of — 200-plus employees, created incredible products — and build again. I settled. I filed for bankruptcy, and I had nothing left.
The only thing I had left, I guess, was an idea. And that was the idea of Awardco.
Why didn’t you ever consider walking away from entrepreneurship altogether?
[Entrepreneurship is] just who I am. It’s what I’ve always done. [At Qualtrics], I would work from 7 a.m. to 5 p.m. at my day job. Then, I’d go home and from 5 p.m. to 8 p.m., I’d do family stuff. From 8 p.m. to midnight, I got back online and started building Awardco.
It was non-stop. I was in a massive hole, and I needed to figure out how to dig myself out of it. When you [are an entrepreneur], you just figure it out, right?
Once you built the platform, you how did you get Amazon to partner with you?
I wanted to take their hundreds of millions of products and [list them] inside of my platform. I got access, [because] Amazon had an open API. Then I created a way to interact with [clients’ human resources] HRIS systems, where all the employee data lives, and bring all that data into Awardco.
I didn’t know who at Amazon I should talk to. I called this random person I found on LinkedIn, and they were like, “No, we don’t like this.” I just kept building. I started signing up companies. [Their employees] would find things within Awardco on Amazon. I would capture a ticket of what they wanted, and my wife would go to Amazon at night and go buy the product for the employee.
Every entrepreneur is a little bit crazy. I think that’s a trait of successful entrepreneurs. They don’t get in the way of themselves.
Steve Sonnenberg
CEO and co-founder, Awardco
We did that for years, and they finally took notice. In 2015, they said, “Steve, why don’t you come out to Seattle?” I presented Awardco in a boardroom setting, to a lot of different people. They said, “No longer does your wife have to go manually fulfill the orders. We can create additional technology where we can automate the ordering process.”
From there, it grew very fast. [The key] was me not taking “no” for an answer. Faking it until you make it — literally, with duct tape and my wife fulfilling orders at night. [Also], getting lucky. I didn’t know Amazon Business was going to get created [in 2015]. Then having this full-fledged integration. Shortly after that, we started signing up some of the biggest companies in the world.
What’s the most important skill or trait you possess, personally, as an entrepreneur?
When it comes to entrepreneurship, my superpower is all about just beginning. It’s very easy for me to start, because that’s just who I am.
Then I just keep going. [After a setback] I pivot, because I know it’s going to work. I don’t know what it is, but anything I’ve ever done, it’s been successful, but it’s failed [first].
Every entrepreneur is a little bit crazy. I think that’s a trait of successful entrepreneurs. They don’t get in the way of themselves. You just have to have that level of confidence. I was 100% confident that we were going to find success.
This interview has been condensed and edited for clarity.
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