GRAND RAPIDS — Carl Erickson began thinking 12 years ago about how Atomic Object LLC would eventually carry on without him.
The company was just six years old at the time. Yet even with the software development firm still in its early years, Erickson wanted to prepare it for the time when he would eventually decide to step way.
What he wanted to avoid was getting to the end of his career “like I see some business colleagues doing (where they) have built something valuable, and in order to get some money out of that value creation, (they) have to sell to an outside firm.”
“In 2007, it came to me that for those of us who are going to be around Atomic for the long haul, I was going to be the first one to get to an age where I’d be likely to leave the company for that reason, and so I had to start thinking about ownership and where that ends up,” Erickson said. “I was also looking around and saying, ‘It’s amazing how these guys and other people literally act like they own the place. We have this culture of ownership.’ It occurred to me the right thing to do on my side was to make it possible to literally own the place.”
The long-term succession planning that Erickson began in 2007 led him two years later to begin selling equity shares to employees who had been with Atomic Object the longest. That was followed by a steady transition of duties and leadership and, finally, a decision last month to step away as CEO.
Erickson promoted as co-CEOs Shawn Crowley and Mike Marsiglia — both of whom started at Atomic Object as software developers more than 14 years ago. The 57-year-old Erickson, who left a tenured faculty position in computer science at Grand Valley State University to start Atomic Object, took on the role of executive chairman.
The transition came after Erickson took a three-month sabbatical. The period away from Atomic Object clarified that now was the time to pull back from his day-to-day involvement in the company, which publicly announced the promotions and transition in May.
“It feels like the right timing,” Erickson said. “It was the clarity I gained on sabbatical that made me realize ‘oh, now’s the time,’ and I have these two guys I’m 100-percent confident in and they’re anxious for a new challenge. I have all sorts of things I’m excited about working on.”
The move follows the succession plan Erickson carefully crafted more than a decade ago to “give the company the best chance it has of continuing to thrive without my daily involvement someday down the road.”
Erickson today retains a 40-percent stake in Atomic Object, half of what he held 10 years ago. Crowley and Marsiglia are “significant shareholders” and the rest of the company is held by 39 shareholders, all of whom are employees.
The transition to Crowley and Marsiglia’s leadership comes as Atomic Object continues on a strong growth trajectory. Since beginning in 2001, the firm has recorded a compound annual growth rate of 22.5 percent and is on track for $12 million in revenues for 2019.
Erickson’s decision to start succession planning years ago came in pursuit of a vision he holds that Atomic Object will someday celebrate its 100th birthday.
Having that kind of “very elegant” goal helps to maintain the emphasis on internal long-term thinking, both in strategy and in how staff serves clients, Marsiglia said, noting the process also positions the company to prepare for future leadership to take over.
“It puts a flag in the ground out into the future. It starts to govern and dictate how you think about problems,” Marsiglia said. “If you want to be a 100-year-old company, you’d better treat your employees really well. You’d better treat your clients really well. You’d better care a lot about marketing your services. You’d better care a lot about your community, and it really plays well into one of our value mantras, which is to think long term.”
Finding common purpose
In planning for his eventual departure, Erickson looked at a dozen different models, including forming an employee stock ownership plan. After deciding to sell equity shares to employees, he wrote a prospectus for Atomic Object that would provide people buying into the company “everything there is to know.”
He began executing the plan in May 2009 by offering seven individuals who worked at Atomic Object “from almost the very beginning of the company, or the first few years” a chance to buy equity stakes. They had two weeks to decide.
On the day of the deadline, Crowley told Erickson “in a somber, long voice” that they needed to talk to him in the conference room.
“Everybody was in there and he says, ‘We’re all in.’ I damn near burst into tears. It was such an emotional moment,” Erickson said. “Seven people had the confidence to put hundreds of thousands of dollars on the line to become owners in this company and to commit to each other and to me, and to all of the employees.
“It told me that my instincts were right about the people I had around me. It told me that they saw something special here, too, and that I was on to something when I’m thinking about this isn’t just a flash-in-the-pan sort of lifestyle business, or a nice way to pay a salary until I’m done. We’re growing something beyond Carl.”
Early on, Erickson identified Crowley and Marsiglia as potential successors. Marsiglia had worked for Atomic Object from the beginning, and “I remember thinking this guy has potential way beyond a software developer,” Erickson said.
He realized the same thing about Crowley, who joined the company in 2004 and had worked previously with Erickson at Priority Health.
Erickson recalls how the two had the “curiosity, integrity, loyalty and brains, obviously” to someday lead the company. They possessed the kind of passion for the business that he had, as well as the “art of putting people around a common purpose to create value and to solve problems for people,” Erickson said.
‘Learn by doing’
Crowley and Marsiglia have worked with Erickson since 2009 to lead the company as a team. Erickson looks at the period as a time in which “I was apprenticing them in my job,” and they “learned by doing.”
That’s not to say they had any formal outline or process to follow beyond the broader succession plan.
“It was like, ‘Guys, I need some help, and you’re willing to step up. Let’s figure this out. Let’s do this together,’” Erickson said. “It was learn by doing, learn by very close contact, me treating them like peers, and us operating the thing together. It was a really perfect fit.”
The two got involved in “all areas of the business,” from sales and HR to operations and finance, and in the process received a “marvelous education,” Marsiglia said.
“We kind of came into playing all roles. We were essentially mimicking the work (Erickson) was doing,” he said. “We were all wearing a lot of hats, but it was a tremendous training opportunity to learn about all these different aspects of the business.”
Since 2009, Atomic Object has more than doubled in size and nearly tripled annual revenues. The company today employs 69 people and has offices in Grand Rapids, which Marsiglia and Crowley have run since 2014, and Ann Arbor. The company may open a third office in the years ahead.
Leadership will identify and evaluate markets for a new office during 2020 and could decide by the end of next year or in early 2021 where to go next, Crowley said. In considering a third office, “all options are presently on the table,” he added.
“We really want to make sure we’re going through this transition well in 2019 and as we’re rounding the corner in 2020 to revisit that market evaluation work, but with a different strategic lens,” Crowley said. “The key decision to make is do we want to go and look at markets that we believe are underserved, or look at markets that are well-served and join in that marketplace.”