July 11th, 2011
I had the opportunity to sit down with Steve Mock (@steve_mock), Executive or Co-Founder of five venture backed companies. I thought the Bootstrappers Breakfast community might benefit from Steve’s lessons learned. In addition to this Q&A blog post, Steve will be joining the round table discussion as a featured guest speaker on Friday, July 15 at the San Francisco Bootstrappers Breakfast, held at Sandbox Suites. Come join us and ask Steve your own questions.
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Date/Time: July 15th, 2011, 8-9:30 am
Venue: Sandbox Suites, 567 Sutter Street, San Francisco, CA |
Q: Can you share a little bit about the start ups you’ve worked for? Maybe touch on the industry each company was in, the problem each company was solving, and whether or not it returned for the investors?
A: Two of the companies were in enterprise software (IP routing software and network control solutions) and the others were in consumer web and services (mobile email, children’s adventure games, online math games). Two were sold at a profit; one is profitable and growing; one failed fabulously; and the other is TBD.
Q: What are your thoughts about having co-founders compared to going at it alone? If so, how do you find the right person?
A: If someone measured the data, I bet most successful start ups have more than one founder. You want to have people with complimentary skill sets. If you are a sales person, grabbing your buddy who is also in sales may not be the best person. Get someone who can bring a different skill set and perspective to the table. The founding team will do most of the work and have to make the tough decisions, especially early on. Ask yourself with each person you consider whether you want to be locked in a room with them if you have to make the most gut wrenching decision in your life, because that is exactly what will happen.
Q: In terms of getting started, how do you reduce the investors’ perception of risk?
A: Instead of phrasing it as reducing risk, I like to think of it as eliminating reasons for investors not to move forward with your deal. In particular, I think you should make as much progress on the non-capital intensive items as you can before you try to raise outside capital. Get all the little stuff out to the way and make the financing the only thing standing between you and moving forward. Build a non-production prototype. Know the competitive landscape like the back of your hand.
Another type of progress:if your business relies on a distribution channel, talk to people in that channel and get their feedback on your idea. Maybe even make a key person like an advisor. Talking with them isn’t capital intensive, so do it. Don’t be in an investor meeting pitching a business that relies on a distribution channel you haven’t spoken to. It gives the investor an easy out not to move forward: “Why don’t you go talk to them and come back…”
Do everything you can do before you meet the investor, so they only missing piece is the capital required to get your business to the next stage.
Q: Of your company that “failed fabulously,” did the team do a postmortem? If so, do you mind sharing what you believed were the reasons why the team did not hit their growth expectations
A: I learned an interesting lesson about partnering on this one. We started as a B2C model. The product sold for $19.95. Our customer acquisition cost ended up between $100-150. It was completely upside down. We involved many SEO, PR, SEM, and social media marketing experts, but couldn’t get the math to work. We then pivoted into a B2B model, in which we managed to do deals with over ten major media and e-commerce companies to distribute our product, thereby completely eliminating our customer acquisition costs.
It looked really good at that point. The problem is Fortune500 companies move really slow.
So, we spent another year or so waiting for the Fortune500 companies to integrate the product into their respective offerings. When they ultimately came back and said the offering didn’t work for them, I was like, wow, I just spent a year of my life waiting for that feedback. Owning your own customer base is much better than being dependent on someone else to get there.
Q: If you could’ve done things differently, what would they be?
A: I think raising much more money would’ve helped. We could’ve done a lot more awareness building for the product category which would have helped both the B2C and B2B models. The timing was really bad. I was actually able to close my financing for that company in December, 2008, right in middle of the financial crisis. I barely raised the money I did. Raising more wasn’t an option for that business at that point in time.
Q: What are the things that worked?
A: The product iteration process was quite good. We spoke to our trial users intensively, got their feedback, baked it into the product and iterated a lot at the beginning. We really built something that people enjoyed and saw value.
Q: What are you up to now?
A: I’m looking for a great team with a great idea, in which I can jump on board and add value. I’m also consulting for two start ups on their fundraising and go-to-market strategy.
April 4th, 2011
On Tuesday, April 19 we have a special quest K.V. Rao, Founder and Chief Strategist of Zuora, a leader in subscription billing and payment solutions — will answer questions and give us insight on how he has made his company successful.
Today, I had the opportunity to sit down with K. V. Rao, Chief Strategist and Founder of Zuora. Before founding Zuora, K. V. joined Webex Communications while it was still a startup and played a significant role in helping the company IPO. I thought the Bootstrappers Breakfast community might benefit from K. V.’s lessons learned. In addition to this Q&A blog post, K. V. will be joining the round table discussion as a featured guest speaker on Tuesday, April 19 at the Sunnyvale Bootstrappers Breakfast. Come join us and ask K. V. your own questions.
BB: Hi K. V. – Thanks for taking the time to share your entrepreneurial insight with the Bootstrappers Breakfast community.
K. V. – Hi Francis, glad to be here.
BB: You began your career at NASA, GM and SGI – all very big companies. What was attractive about Webex that lead you to join a startup company?
K. V. – The founders! The destiny of a startup is defined by its founders. You want to know if you want to invest/bet on the vision and capabilities of the founders. In the case of WebEx, it was an easy decision to join them, as they had two remarkable founders who had a big vision for changing the world and the drive to build a really valuable business around their vision.
BB: Next to founding the company, you have essentially lived the Silicon Valley dream of joining a company on the ground floor and helping it IPO. Could you share a little bit about your experiences at Webex. Maybe some things that you planned for that worked perfectly or some things that caught you by surprise.
K. V. – First, I would say that nothing works perfectly in any company. From inside any organization, WebEx or others, you are exposed to and confront all the challenges of building and growing a business – from hiring, to funding, to competition. What surprised me a bit was learning to deal with all these challenges by having the right focus and having the right priorities, i.e. don’t try to solve all the issues all at once. The CEO of WebEx used to say, he could only address three issues at any time effectively, and his skill and judgement in picking the right issues was key to WebEx’s success. At the same time, don’t shoot for perfection – make a decision and correct it later if you need to…The one thing that did catch me by surprise was how quickly we became a verb! Today webconferencing is synonymous with WebEx, much like photocopying is with Xerox!
BB: I have heard some entrepreneurs say do not quit your day job until you are generating enough revenue to survive. I have also heard some entrepreneurs say, unless you can work on your startup full time, you will never move it along. What are your thoughts on these comments and which approach did you take in starting Zuora?
K. V. – The short answer is there is no one formula for success of a start-up. Having said that, I do have strong views about ‘my’ way – which is by no means original. Startups are successful if there is passion, vision, and commitment by the leadership team to its success. If founders are not willing to commit to their vision by devoting their energy, time, and passion to it, who else will? Would you expect to be married to someone, and have a committed relationship with someone else? This speaks to character and integrity of the founders. Needless to say, I started Zuora after I had left WebEx and was not working for anyone. When I left WebEx, I knew I wanted to start a business, but did not know what that was going to be – but I planned in advance to give myself up to 12 months to figure out what that would be. Like all the best laid plans, in my case, it took 24 months to come up with the idea for Zuora, but I was very fortunate that I was able to go that long both financially and emotionally – and importantly that my family was very supportive as well.
BB: Now as founder of Zuora what are three things from your Webex experiences that you are incorporating into Zuora’s marketing strategy?
K. V. – First is translate a vision into a message that resonates with your target audience. Second is to communicate that message through a variety of appropriate media. Third is to keep your message fresh all the time. This sounds simple, but what it requires is intense effort and investment in building a team that can execute on this strategy well.
BB: A common question that comes up a lot at our breakfasts is finding a co-founder. How did you find your co-founders and do you have any recommendations for those trying to figure this out? Maybe some considerations or requirements.
K. V. – Finding a co-founder is like finding a spouse. You should have a shared vision, and complementary skills, and you have to like each other! In the case of Zuora, I had a technical co-founder initially, and then a rockstar executive who brought much needed leadership skills and management experience to the table. We made sure we were aligned both on vision and values before making the commitment to each other to do our part for the success of the startup. If you have not worked with your co-founder before, then make sure to invest the time and effort to really know your co-founder: I recommend long dinners, breakfasts, lunches, drinks on a regular and frequent basis to ensure you stay aligned on vision as well as on working style.
BB: Well K.V., it was great learning about your entrepreneurial experiences. Do you have any last words of wisdom?
K. V. – My advice for entrepreneurs is to view their startup much like investors do – is the vision big enough, do you have the right leadership/team, both in skills, and in passion, and do you have the resources to commit to its success? Make the effort to have clarity on your own role, both in the beginning as well, but more importantly the role in the future as the company grows and you bring more people along. While personal and business success go hand in hand, roles and responsibilities can change and you are better off driving that change rather than have someone else drive it for you. After all this is your startup, and personal/founder satisfaction is one of the reasons for doing it, while at the same time, realizing that satisfaction can be derived from being in different roles. This may also include stepping aside at the right time – but drive this, rather than let it happen to you.
K. V. Rao Bio
Founder and Chief Strategist, Zuora
K. V. founded Zuora after five years at WebEx Communications where he reported directly to the founder and President with strategic marketing and business development responsibilities and played a key role in the growth of this successful start-up. Prior to WebEx, K. V. worked in sales and customer support at SGI. He started his career as the proverbial rocket scientist (Associate Scientist) at NASA and then spent several years developing products at General Motors. K. V. obtained his Ph. D. in Engineering from Iowa State University, an M. S. from the University of Missouri-Rolla, and a B. Tech from IIT, Bombay. K. V. is a US patent-holder in computing technology.
