Archive for July, 2013
Bootstrapping to an A round isn’t all roses
There is a common adage amongst startup veterans that goes something like “bootstrap as long as possible before taking venture capital.” The thinking behind this approach is that the early days of developing a company are where you can build a ton of value, so that when you absolutely need the cash, it will not be nearly as dilutive as if you had raised money earlier. I think there’s a secondary current behind these words that suggests that early stage execution in the absence of investor meddling is somehow a recipe for greater efficiency.
The first reason makes sense. The second I don’t personally buy, but some founders have a chip on their shoulder I guess…and to each their own. Often bootstrapping is not an option…and for many early companies, a seed round or angel round is the only way to make an idea into anything more than an idea…
Early in our development of Coopkanics we made the decision that we would like to bootstrap until we had made enough progress to skip a seed round and go right to raising a Series A. We worked without pay or any resources for about 6 months, and then closed a $3 Million Series A round about two weeks ago. That financing, was, in fact more money at a higher price than we would have been able to get had we raised shortly after coming together back in January…the plan worked…BUT, it was not without sacrifice.
Fortunately, our core team was capable of engineering anything that we wanted to build, which allowed us to develop unique technology without hiring any employees, but our rate of development was what I’d call “slow and steady.” This is not a rate that we were used to. Eric will kill me for saying that, as he put up a herculean effort to get to where we are in the timeframe that we did, but objectively, having built deep technology with a team of 10 at Hyperpublic, as contrasted with a team of 3 at Coopkanics, as you might imagine, things moved slower…it was fine, we weren’t burning any cash, and our market is so far out that there is no saying that entering it a few months later as opposed to earlier is good or bad, but still…it took us longer to answer questions and assumptions than it would have had we raised a seed round in January. I expected that slower pace going in…well worth the tradeoff along this axis.
What I didn’t account for that we are just brushing off as a company, was the impact that sustained bootstrapping has on the mindset and culture of a startup…there is something to being tough and hunkering down…the Spartan culture created an insanely effective war machine after all…but being a Spartan probably wasn’t super enjoyable day to day…The week we closed our round, we went out for a team lunch and for the first time when that check came, it was “on the company.” I know that sounds trivial, but the lightness of that gesture in contrast to the Spartan battle we’d been fighting, really highlighted some of the more intangible implications of bootstrapping to an A round. The heaviness of being cash constrained, of skimping on office supplies, of going head down and suffering for the reward of a better round in some ways translated into this culture of mental toughness…it was almost as though in this period, we wouldn’t allow ourselves to smile…this period was not a time for comfort and joy, but rather a time to sweat it out…and although not explicitly, and although completely rational, this mindset wears on folks after a while…how can we have fun in this Spartan stage? The only thing that was going to get us out of it was hard work and discipline…and so we adopted a culture that lacked the lightness you might find in a more normal startup environment. Luckily for us, we were able to rest on our extremely tight bond and past experience managing the “hard days” at Hyperpublic…but we are still undoing some of that Spartan influence weeks after capital breathed new oxygen into the company. There is this feeling of “oh yea, I can go enjoy my softball game without impacting our army’s integrity…oh yea, I can joke around and laugh while we’re doing this…I can invest in culture without every minute going toward production…I can smile.”
The other day after reading Andy Dunn’s essay on the “hard days” at Bonobos I thought to myself: “So much of being a successful founder has to do with a person’s ability to execute when the smiles are few and far between…there is something to how effective you can be in your debilitated form…” I won’t say that bootstrap mode was debilitating, but smiles started to spread out…
So anyway, I am proud that we had the toughness and discipline to execute on this Spartan strategy, but if I could do it again, I would go in knowing that the corners you cut are felt, no matter how tough or capable you think you are. It’s not about dollars and cents, but about the mindset of conscious deprivation and what that does to the collective mindset of a small founding team…
Pretty happy to be out of bootstrap mode. Feels good to let a smile slip here and there.
Leonidas might not approve, but I was always more of an Achilles anyway J
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$3 Million Buckaroos
So Dan Primack of Fortune Magazine sent me a nice note this morning that he observed a Form D filing related to our new company Coopkanics, Inc. While I wasn’t planning to disclose it this way, it is true that we just closed a $3 Million Series A round led by General Catalyst Partners. As many of you who have been reading this blog for a while know, I used to work at General Catalyst and have had a close relationship with them for a long time. Eric, Doug and I bootstrapped for as long as we could without harming the business (we actually probably waited a little to long to exit bootstrap mode, which I’ll write about later), but it’s time to grow, and I am excited to grow with some of the smartest investors, engineers, and designers on the planet. Here’s Dan’s article. I don’t have a lot to add to it just now, but I’m looking forward to telling you who else is involved, what we’re building, etc… real soon
http://finance.fortune.cnn.com/2013/07/15/hyperpublic-founders-new/
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Thoughts on youth from a train
This is the first time in my life where I don’t consider myself part
of “the youth.” I walk down the beach and see groups of twenty
something’s and rather than peers I view them as what I once was. I
feel sadness that the future is not as expansive as it once was. I
feel sad that I will never again learn for the first time what
accomplishment feels like. I feel sad that my body now takes two days
to recover from a basketball game. I feel sad that I don’t have the
concerns and wants and feelings of one who is just embarking upon
their “adult life.” I feel sad that my future is more known than
it once was. I feel sad that things aren’t changing as much as they
used to…dust is settling to some extent. My early bets have for the
most part come in or crapped out…I sort of know how my idealistic
guesses and predictions panned out…and while I’m happy with my
decisions to date, I am sort of staring the next 10 years of my life
in the face and they don’t make my heart beat the same way that they
would have when I was 22. I no longer want to be master of the
universe..it’s wisdom not defeat that’s quieted this need. I no longer
play with the fabric of power…pushing and prodding to see where I
fall in relative to my peers and superiors. I don’t ask myself “who
are you going to be when you grow up?” Rather, I sit, somewhat calmly,
having seen enough flavors of human being to know who I am and what of
me is here to stay for the next 60 or so years…I have too deep a
glimpse into what I become to wonder and muse and dream and get lost
in a see of whimsical ambitions and dreams. I may, in fact, turn into
what I once dreamed to be, but if I do it won’t be with this huge
delta from who I am today. I now know that even large changes in
context don’t birth a man into something other than he is. The myth of
“if I just get to” or “when I achieve x” I will enter a new life…a
different life. The life I saw on the screen or that I once observed
from afar at the party that time…I now know that you never become
something other than you are…and life has moved from trying to
evolve out of who I am into trying to maximize who I am. In this
subtle change in mindset the leaps seem less large…the reach less
far…I thank god I am blessed with what I have and am, and I wonder
if what I am turns into something more exciting than this…life
breaks in all directions…we make our own destiny…until dad gets lung
cancer…and than that intrepid pioneerdom that drove us through our
twenties proves as naive as everyone told us we were back then. I wouldn’t
change the way I approached those years, but I can’t help but
live more measured than before. You might call this wisdom…days are
less exciting…less romantic…but certainly comfortable…I keep
waiting for the day when what I lost with youth is visibly replaced
with something new and shiny and better…I keep waiting to revel or
rejoice in my early wisdom…but I guess I am not yet
wise…perhaps rather I am in transition…not young…not full of
life and boundless opportunity…but not yet satisfied with where I
am…not yet capable of this bizarre happiness that comes from
“satisfaction”….I was never good at satisfaction…I would smile for a
moment and then ask “what’s next?” Satisfaction has never been
happiness for me. My happiness was always closer to “excitement” than
“satisfaction.” It’s a very strange time…31 years old…not yet
capable of satisfaction and seemingly less capable of irrational
excitement…I’m not totally sure if I need to double down on
excitement…cast wisdom aside…and “rip it and grip it” as though I
don’t know how the future likely turns out…or if this period of life
is about finding peace in how things are unfolding…and replacing my
obsession with excitement and the unknown with some other, more mature
fixation…but a lease on a BMW and a house in the hamptons just don’t
make my heart beat like the dream of changing millions of lives…of
being special…one of one…here for a reason…destined to do
something here that Nobody else could do…the wise man in me still
believes in that dream…but knows that if it happens it will be by
subtle breaks of fate and seemingly unheroic actions on a day to day
basis…he knows that many days will not be exciting…that maybe two
or three times in the next 20 years will come a pivotal moment…that
life is about being prepared for when those moments come as opposed to
brute forcing your way to make the moment emerge…so what of effort?
What of reaching? What of making your heart beat hard every day or
going crazy when in the calm? In this transition I don’t know how much
of that spirit to bring with me…into adulthood…and how much to
leave it behind in the name of the wise….Some days I want to beat
the “old” out of me…to deny what is becoming apparent and hold onto
my youthful mind. The crazy part is I don’t have a choice. I know more
than I did. I believe I can get to the same place through true
understanding as I could through delusion…I must learn how to leap
in this new body…in this new mind…I am sure that this form is
capable of what “youth” was not. I am sure my “youthful” self did not
understand that part of the journey would be to evolve into this
form…that we have to become this to get there…strangely…in this
“wisdom”…for the first time in a long time…I find myself
unsure…searching…full of angst…as I was when I was first a
conscious youth.
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