This story is part of CNBC Make It’s The Moment series, in which highly successful people reveal the defining moments that changed the trajectory of their lives and careers, and tell us what inspired them to leap into unknown territory.
Before becoming the founder of a billion-dollar company, Steve Sonnenberg says he suffered a “traumatic experience” as a father of four young children, closing his business and filing for bankruptcy protection.
Mr. Sonnenberg, 44, is the co-founder and CEO of Awardco, an employee compensation platform based in Lyndon, Utah. Once a company signs up for access, employees can share reward points with each other on a quarterly basis and redeem them on millions of products on the Amazon Business marketplace.
Founded in 2011, Awardco serves 6 million users at companies like AT&T and Hertz. It raised a $165 million funding round in May and was most recently valued at $1 billion.
But 20 years ago, Mr. Sonnenberg led another company, WholesaleMatch, that sold e-commerce tools to online businesses. He started WholesaleMatch in 2003, when he was a college student, and built it into a “multimillion-dollar business” with about 200 employees, he says.
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The company was then named a co-defendant in a civil lawsuit brought by the Federal Trade Commission in 2011 over allegations of fraud against one of WholesaleMatch’s customers. Mr. Sonnenberg denied any knowledge of his client’s shady business strategies, and the case resulted in a $130 million settlement for the group two years later. Still, his assets were frozen in 2011 as part of legal proceedings.
He had good reason to step back from entrepreneurship, calling it “the most difficult period of my life.” Instead, he says, he came up with another business idea (a half-baked concept for trophies and awards) and put $5,000 he didn’t have on his credit card to buy the Awardco.com domain from its previous owner.
He built websites for other companies as a freelancer before taking a day job at business software company Qualtrics in 2014. I continued to refine the idea and worked with my cousin Mike Sonnenberg, a backend developer, and Tanner Runia, a technical consultant at Qualtrics, to create Awardco’s web platform.
By 2015, Awardco had about 40 corporate customers and drove more than $300,000 in business annually to Amazon, even though Sonnenberg’s wife manually ordered the rewards from Amazon herself. Amazon officially partnered with Awardco in 2015, and an angel investment from the family of a Qualtrics colleague the same year allowed Sonnenberg to quit his job and focus on the company full-time.
Here, Sonnenberg talks about losing almost everything, persevering with his entrepreneurial dreams, trying to convince Amazon to partner with an unknown brand, and his own entrepreneurial “superpowers.”
CNBC Make It: What went through your mind while facing this civil lawsuit? How difficult was it to shut down your first company?
Sonnenberg: I was thinking, “How in the world am I going to protect myself? My assets are frozen.” I had four children under the age of five.
Thousands of customers were using my product. Then suddenly it went offline. People got chargebacks for their monthly subscriptions. I owed millions of dollars and all my assets were taken.
As I was walking down this road (one day), a strong impression came to my mind: “If I try to fight this, I will eat away at myself and lose my family.” So I decided to walk away from a business I was very proud of, where over 200 employees created an amazing product, and start it up again. It’s settled. I filed for bankruptcy, but I had nothing left.
I think all I had left was an idea. That was the idea of Awardco.
Why didn’t you consider leaving entrepreneurship completely?
(Entrepreneurship) is exactly who I am. That’s what I’ve always done. My day job (at Qualtrics) was working from 7 a.m. to 5 p.m. Then I go home and do family stuff from 5pm to 8pm. From 8pm to midnight, we got back online and started building Awardco.
It was non-stop. I was in a big hole and needed to find a way to get out of it. When you are (an entrepreneur) you just figure it out, right?
Once you built the platform, how did you partner with Amazon?
I wanted to bring (list) their hundreds of millions of products within my platform. I had access because Amazon had an open API. We then created a way to interact with the HRIS system where all of our employee data resides (our client’s HR) and bring all that data into Awardco.
I didn’t know who to contact at Amazon. I called some random people I found on LinkedIn and they were like, “No, I don’t like this.” I just kept building. I have started registering as a company. (Employees) search for products within Awardco on Amazon. I received tickets for what the employees wanted, and my wife went to Amazon in the evening to buy items for the employees.
Every entrepreneur is a little crazy. I think that’s the hallmark of a successful entrepreneur. They get out of their own way.
steve sonnenberg
Awardco CEO and Co-Founder
We’ve been doing it for years, and they’re finally starting to notice. In 2015, they said, “Steve, why don’t you come to Seattle?” I gave a presentation about Awardco to various people in the boardroom. They said, “My wife doesn’t have to manually process orders anymore. We can develop additional technology that can automate the ordering process.”
From there it grew very quickly. (The important thing is) that I didn’t take “no” for an answer. I literally used duct tape to fake it until I made it, and my wife filled out the orders at night. (Also) get good luck. I didn’t know that Amazon Business would be founded (in 2015). After that, the full-fledged integration will take place. Shortly after, we began signing contracts with some of the world’s largest companies.
What is the most important skill or characteristic that you personally possess as an entrepreneur?
When it comes to entrepreneurship, my superpower is just getting started. It’s so easy to get started because that’s who I am.
Then I just keep going. (After a setback) I pivot because I know things will work out. I don’t know what it is, but everything I’ve ever done has been successful and unsuccessful (at first).
Every entrepreneur is a little crazy. I think that’s the hallmark of a successful entrepreneur. They get out of their own way. You just need to have that level of confidence. I was 100% sure I would be successful.
This interview has been condensed and edited for clarity.
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