Matt Wensing started bootstrapping Stormpulse with a co-founder in 2006, building on an app Wensing developed from a personal interest in tracking tropical cyclones. He has a thought provoking blog where posted this video on “Bootstrapping Survival Lessons”
The sound quality is not great and he has slow start but stick with it, it’s a very compelling presentation about the joys and challenges of bootstrapping a technology startup. His dawning realization that major corporations, CNN, and the White House situation room are using his service was very funny. Here are some notes I took from the presentation and Q&A session
“The goal of any startup should be to help the greatest number of people find the deepest resolution to a high stakes problem.”
Matt Wensing “Achieving a Profitable Product / Market Fit“
“A startup has to bring a product to market that punches through the status quo by being 10x better.”
Marc Andreessen
Empower your customers.
Need to go panning for gold in your user base. Find the ones for whom your offering is critical to their business or their job. Understand the “forcing functions” at work that will trigger their purchase.
Q: How did South Florida help you build Stormpulse
A: Silicon Valley is like ROTC, you are in college and earning a salary.
South Florida is the marines. You are hacking your way through the jungles of Cambodia. You never have a problem with failing too late in South Florida
Q: How did you manage building a family and bootstrapping a startup?
A: I have no hobbies. I have business and family. It’s not your kids fault that you decided to build a company. Take responsibility and don’t take it out on your kids. Take it out on yourself.
Q: How did you get started bootstrapping?
A: My co-founder and I started by cashing out our retirement savings.
Q: what’s your success point?
A: I have been successful not having a day job. Success would be financial stability, all of what the corporate world offers you without having to work in it.
Disha Bheda is our coordinator for the San Francisco Breakfasts. She interviewed Carl Ludewig, CEO of Ludewig Multimedia and a frequent moderator at the San Francisco Breakfasts.
Carl Ludewig is CEO of Ludewig Multimedia. Carl wants to change the way applications are developed by empowering designers and business users. In a world where the cloud, mobile and desktop need to fit together, Ludewig Multimedia looks to take a holistic approach with the next generation of software design tools. Carl’s prior venture was the mobile advertising company Ad Infuse, which was sold to Velti in 2009. Carl is a software engineer and musician who believes
that creative talent is the key to success.
Q: Can you talk a little bit about your background?
I’m a UC Berkeley computer science graduate whose first job was with the company that invented index funds and evangelized computer-driven passive investment strategies. I watched it grow incredibly fast and saw first hand how technology could create a whole new market. Since then, I have worked with a number of early stage startups, including a mobile advertising company I co-founded called Ad Infuse, which we sold in 2009.
Q: Can you talk a little bit about what led you to found your company, what was the problem that motivated you?
My entire career, it has bothered me that many applications that seem simple are surprisingly hard to build. I believe that there’s a certain class of application that should be as easy to create as using Microsoft Word or Excel, and it should work across platforms and devices.
Q: How did you get started?
Rather than seek angel or VC funding, I decided to leverage consulting opportunities to bootstrap the business. I look for projects that teach me something I need to know and provide experience with the technology we’re using in our products.
Q: Can you give me a brief overview of where the company is today?
We have 3 employees and a technical advisor. Revenue has grown around 50% year over year. Although consulting still accounts for the bulk of the revenue, about half of our customers are subscribers to services rather than consulting clients.
Q: What are the two or three things that you have been able to accomplish that you take the most pride in or satisfaction from?
The number one is team building. The talent and enthusiasm of those who have joined so far is impressive and gives me hope for our future prospects. The other is that bootstrapping and customer development has allowed us to get started without taking on outside investment.
Q: What has been the biggest surprise?
Even after years of experience, I am still surprised at how difficult it is to develop software, which, ironically, is the problem we are trying to solve.
Q: What development, event, or new understanding since you started has had the most impact on your original plan? How has your plan changed in response?
I have needed to learn patience. Given that product development can take time, we’ve adopted a “sell what you have” attitude and offered hosting and related services in order to engage with potential customers sooner rather than later.
Q: Any other remarks or suggestions for entrepreneurs?
Know yourself and why you want to be an entrepreneur. Do you want to start and flip your company quickly? Are you building a business for the long haul? Your goals will guide you to the path you might take to get there.
Francis Adanza interviewed Geva Solomonovich, an early employee at Fraud Sciences which was acquired by Paypal for 170M.
Francis noted:
Geva joined the company while it was still a startup and played a significant role in helping the company grow. I thought the Bootstrappers Breakfast community might benefit from Geva’s lessons learned. In addition to this Q&A blog post, Geva will be joining the round table discussion as a featured guest speaker on Friday, November 4 at the Palo Alto Bootstrappers Breakfast. Come join us and ask Geva your own questions.
BB: Hi Geva – Thanks for taking the time to share your entrepreneurial insight with the Bootstrappers Breakfast community.
Geva: Hi Francis, glad to be here.
BB: Prior to Fraud Sciences, what were you doing?
Geva: Before Fraud Sciences I worked in several other startups. One was SofaWare which built small office Firewall and VPN appliances. SofaWare was partnered with CheckPoint and the initial code base was derived from CheckPoint’s Firewall code. Another company was Savantis – a pioneer in Database Virtualization systems. Savantis closed down after 2.5 years. I learned a valuable lesson there – it’s almost impossible to sell datacenter critical solutions to large enterprises when you are a small startup. Duh. Even though the startup didn’t succeed, it was a great experience, and I was even able to get an algorithm I built filed for patent.
BB: What did Fraud Sciences do?
Geva: Fraud Sciences did e-commerce credit card fraud analysis. E-commerce merchants would send us the details buyers provided in the checkout page (name, address, credit card number, etc.), we would analyze the transaction information, and reply to the merchant with a green or red light. The interesting part of course was how we were able to make good decisions… this was a combination of outstanding technology and outstanding fraud analysts who understood and defined legitimate and fraud behavioral patterns. Let me give an example of what I mean by outstanding technology: in a typical e-commerce situation, an American credit card is presented at a checkout page of an American commerce site like amazon.com. A quick geo location checkup shows that the buyer’s IP address is actually in Romania. Most fraud systems would automatically decline such a transaction as the IP geo mismatch here is severe. Our technology enabled us to automatically analyze the buyer to see (and confirm) he works in an international corporation which has a branch in Romania. All of a sudden, the story looks completely different and some of the red lights dim.
Overall, our technology was so great we offered 100% fraud chargeback guarantee. If we “approved” a transaction and it was later chargedback, we covered 100% of the item cost. It was that simple. The value prop for merchants was outstanding – they could now sell to new risky markets they were avoiding before. Think about the ability to ship a $10k diamond ring to Russia without having to worry.
BB: How big was the company when you joined?
Geva: I joined the company when we were still sharing half a floor of a small building with 3 other startups. I was the fifth employee at the time with one other developer, an analyst and the two founders. Seeing the company grew from this early stage to being acquired has been really inspirational.
BB: What were some the early sales/marketing challenges you faced during the first couple of years in business?
Geva: The biggest challenge is getting through the first door. Online merchants are pretty busy people and they get a lot of offers from startups to fix/change/improve/solve/expand their business. Then comes the question of trust: who is this small startup that wants us to share our checkout information? How can I trust their recommendations to approve/decline a transaction? “I have my own fraud management system…”
BB: What did the company do to overcome these challenges?
Geva: To overcome these challenges we started selling to very eccentric and non-mainstream merchants – people who really have high-fraud and funky businesses. Some of our initial merchants were selling anonymous web-browsing services. As you can image that attracts a lot of fraudsters who want to be anonymous on the web. We actually saw that fraudsters are using the anonymizer services to fraudulently buy more subscriptions from them! Another genre of merchants we integrated with were e-gold brokers. E-gold is like a virtual currency – where there is money there is always fraud. After we had a proven record with these types of merchants we continuously worked to revisit and improve our offering. We simplified the integration process to a 10 minute exercise. We simplified the feedback to the merchants to a simple Yes/No. We slowly grew to the 100% fraud chargeback guarantee. In parallel, the sales force continued improving their sales pitch, and we worked very hard to get supportive feedback from top-notch merchants (like www.ice.com) that we used in order to reduce new merchants objections.
BB: As the company grew, what were some of the operational challenges you faced as you gained traction?
Geva: One of the biggest challenges we had was scale. For a long time our analysis process was 100% manual human review. Technology played a big role by scanning through 1000s of data sources, scraping the web, running sophisticated algorithms and aggregating data to make the decision process easier for the human analysts. But it was still a human analyst who made the final decision. Hiring these human analysts wasn’t scalable either – these were top notch, super intelligent, high SAT, highly analytical kind of people. There is no standard job posting nor school education that you can look for.
By far, my biggest contribution to the company was in building the automated decision platform. My team and I spent hours interviewing our human analysts to try to quantify and frame their thought process into something we can let a computer do. We studied machine learning algorithms, data mining processes, statistics etc. and then started implementing. In 3 months we had the first version out. This version outperformed most of our human analysts, and of course worked much faster. It was a great success…
BB: How long was the company in business before you raised venture capital?
Geva: The founders worked 3-4 years by themselves without raising venture capital. They then raised a small series A funding before they started recruiting employees.
BB: What risk reducing milestones did the company achieve that merited risk capital investment?
Geva: On the business side, we worked very hard to have a repeatable and predictable sales cycle. That was of uttermost importance. New merchant acquisition had to be streamlined and efficient, while trying to reduce the paperwork as much as possible. On the technology side, we needed to show that we can grow our maximum transaction processing volume by x10, and then by another x10, and then to a point where to scale would only mean buying more servers.
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. 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.
On February 11, 2010 Isaac Garcia, co-founder and CEO of Central Desktop will join Bootstrappers Breakfast® as our featured guest. Central Desktop, founded in 2005, delivers a cloud-based social collaboration platform. Their online collaboration solution helps businesses manage projects and documents in the cloud with colleagues, customers and partners.
Isaac oversees business strategy and sales for the company. Isaac has a proven record in both early-stage technology companies and enterprise sales & marketing. He was a founding partner at Upgradebase, where he oversaw all business development and sales for the company. Isaac served as a Director of North America Enterprise Sales for CNET Channel. He was responsible for the acquisition, sales and management of global partnerships with Microsoft, Google, eBay, Yahoo and Best Buy. Isaac led and managed CNET’s global partnership with Microsoft to launch the Windows Marketplace campaign in 14 countries. He received a BA in English from Ambassador University and a Master s degree in English Literature from the University of Northern Colorado.
Today Isaac will discuss “Lesson’s Learned in Bootstrapping Central Desktop.” Some key points he will cover include:
1. Be patient. It takes longer than you’d expect to start generating “meaningful” revenue so you need to be personally and financially ready for this.
2. Outsourcing is overrated. Key functions like product design, engineering and sales need to initially come from the founders because the voice and purpose of your company and its products cannot be fully understood by a third party.
3. Tenacity and dedication are what will most likely determine whether or not you are successful.
Join us at the Minneapolis Bootstrappers Breakfast this Thursday, September 28 at 7:30AM when Jeff Pesek will give us some insights on his experiences as a technical space entrepreneur. He will compare the practices of bootstrapping
lean startups versus startups that have needed–or taken–venture capital money for their success.
Jeff Pesek is a co-founder of TECHdotMN, a Minnesota High Tech site that focuses on startup culture. He will be chatting with Bootstrappers Breakfast attendees about the Minnesota startup community. Jeff has been an early supporter of the Minneapolis breakfasts and we are delighted that he has agreed to speak. More on TECHdotMN from their about page:
TECHdotMN is a passionate group of technology enthusiasts on a mission to serve Minnesota’s high tech ecosystem and the early stage ventures within it. Through a mix of unique audio/video features and written word, we create original Minnesota high tech news and curate relevant local news from outside sources. When combined with Minnesota’s most comprehensive calendar of high tech/entrepreneur events and the deepest directory of Minnesota high tech companies (including 150 +/- startups) the result is an exhaustive resources for those who care about what’s happening in Minnesota’s high tech market.
Francis Adanza e-mailed this interview in today. Ryan Gilbert will be joining us at a future Bootstrapper Breakfast to talk about his experiences in more detail.
Today, I was able to sit down with Ryan Gilbert, a serial entrepreneur who is most recently recognized for taking his company PropertyBridge from idea to exit. PropertyBridge is the leading provider of electronic payments for property managers and real estate owners in the multifamily housing industry. PropertyBridge was founded in 2003 and acquired by MoneyGram International in 2007.
As a entrepreneur and member of the Bootstrappers Breakfast, I thought the group might benefit from Ryan’s lessons learned. In addition to this blog, Ryan will be joining the round table discussion as a featured guest speaker on Friday, May 22nd at the Bootstrappers Breakfast in Mountain View. Come join us, engage in serious conversation, and ask Ryan your own questions.
Below is a short Q&A conversation where Ryan’s shared his PropertyBridge experience with me.
Q: Was PropertyBridge your first entrepreneurial endeavor?
No, my first startup was Orange Technologies, which I founded in South Africa. We acquired licenses from US software companies to resell their products in South Africa. It was through these vendor relationships that helped me develop a track record of success with US based corporations. Eventually, Orange Technologies was acquired by our largest vendor, allowing me to relocate to the United States. In total, I have been through five startups.
Q: How did you come up with the idea of PropertyBridge?
At the time, I was working for Wells Fargo in a business development role. I noticed that banks only offered horizontal solutions to vertical problems. Each vertical market had its own specific needs and feature sets. For example, integration with accounting systems, special reporting for enforcing legal rules/policies, and banking requirements. The need was clear, and it was a question of which vertical market to attack. The property management industry collects over $147 billion in residential rent payment every year, and most payments are made by check–the market was ripe for electronic payments.
Q: How many co-founders did you have? How did you find your partners?
We had a five person founding team. Each founder contributed a mix of capital; money, time, expertise, and resources. The partners knew each other from previous start-ups or socially. I fundamentally believe that the success of a company depends on how well the founding team can communicate, compromise, and work together. It can be very challenging to start a business with folks you are working with for the first time.
Q: What advice would you give to others, so that they can avoid any of the challenges you encountered in your experiences? Any words of wisdom, tips, gotchas?
PropertyBridge’s biggest challenge was speed and revenue. Since our revenue was generated by taking a fraction of a percent per transaction, it was critical that we acquired thousands of customers quickly. We focused on marketing and end-user adoption programs to ensure that as many potential renters as possible chose to pay their rent through PropertyBridge.
My top five tips include:
Truly understand the problem and the market. Make sure you know who your customers are and how they buy.
Don’t wait until the product is perfect. Get out there and sell.
Find, motivate, and compensate good people. The power of good ideas is nothing without people who can actually execute them.
Take VC funding when you get the chance. Unless you can truly afford to go without it, when someone makes you an offer, take it.
