What I Learned From Selling Two Startups In 12 Months
Entrepreneurs succeed by figuring out what they’re doing wrong and making the right adjustments. But a lot of entrepreneurs don’t realize they can learn just as much from their successes as from their failures.
A couple years ago, in a perfect storm of circumstances, I wound up selling two companies nearly back-to-back. Here’s my story and, now that I have the proper amount of hindsight, what I learned.
Eight years ago, almost to the day, I walked into my friend Robbie’s new office in a horrible mood. I had been consulting for his new sports data startup, meeting with him regularly at various Starbucks, and talking strategy and execution. Today we were meeting at his new, modest office space, as he had just transitioned to his startup full time.
Our strategy sessions had recently shifted to discussing whether or not it was possible to take a bunch of sports data he had and automate content and build websites from that data. I loved these meetings. They were about automation, artificial intelligence, technology, writing, and sports — basically those topics cover how I built my career plus how I spend my free time.
But on this particular day, I wasn’t showing much enthusiasm. Robbie noticed my mood immediately, so I explained, with much animation, that I had just come from probably the worst meeting of my life –- a meeting that was supposed to have been about finalizing the funding of a project that I had been working on for close to a year. What actually happened was an unbelievably bizarre rejection. Months of free work, planning, and negotiation had just vaporized in an hour.
Needless to say, I was now in shock and without funding. It wasn’t the first time something like this had happened, but this time I was maximum furious, mostly at myself. A lot of trust went into that deal, and I got burned. Badly. In fact, I had turned down a lucrative contract so I could personally work on this project, which was one I truly believed in.
Robbie listened patiently to all my rage and then told me that he had been thinking more and more about the automated content solution I had proposed, and he thought we should get started.
My mood shifted instantly. “Give me the weekend to come up with a design,” I said.
That’s how quickly windows can open when doors get slammed.
By Monday, we were underway, building what would become the StatSheet network, which would then become Automated Insights, a company that would offer the world’s first commercially available Natural Language Generation platform.
However, in our working agreement, I negotiated the right to keep working on the project that just got unfunded — because I believed in it that much.
Things happened quickly after that. I started hiring, we closed our Series A raise and crushed the accelerator. The rest is a blur. In 2012, we landed Yahoo Fantasy Football, and suddenly our content was reaching millions of people every week. Then came dozens of others, including the NFL and the Associated Press. We raised a strategic B round in 2014, the same year our automated content churned out over one billion articles for dozens of customers.
But then there was that other project.
Which was ExitEvent.
ExitEvent, a startup data network and information source, had gone from an altruistic hobby to full-fledged second startup by late 2011, with just the three to five hours a week I could spend on it. It was making a ton of money. There was acquisition and funding interest in ExitEvent almost from the beginning, and by mid-2013, I knew that the path that we were about to embark upon at Automated Insights was going to eat up the scant amount of spare time I could put into ExitEvent.
I also knew that ExitEvent was starting to suffer from the limitations of my time. I knew it could be a lot bigger, and I knew, even though every instinct I had as an entrepreneur told me not to, that it was time to hand it off.
So I sold ExitEvent to American Underground, a regional incubator and media company. And less than 12 months after the ExitEvent acquisition was finalized, Automated Insights got snapped up by Vista Equity Partners.
ExitEvent was my ninth startup and Automated was my 10th. It was the first time I bounced back and forth between two startups, and it’s something I wouldn’t do again, but I took away a bunch of success lessons that I’m carrying with me today, at my 11th startup.
Don’t Follow the Playbook
This is the most important thing I can tell you. Don’t worry that your startup doesn’t look, act, talk, or feel like other startups. Don’t build the next Facebook or SnapChat or Coinbase.
And for the love of all that is holy, don’t mold your startup to work like other startups. No startup succeeded because it subscribed to the same management principles, developer methodologies, sales techniques, hiring practices, or funding schedules as the one that came before it.
Don’t Hire Until You Have To
I’m continually amazed by how much more can be done these days with fewer resources. On top of that, the gig economy has spawned an entire industry of part-timers to fill most non-critical needs. Yes, you should lock in your leaders, your makers, and your sellers, but beyond that, anything related to operations, legal, financial, human resources, payroll, all of this can be outsourced.
ExitEvent was, for the most part, me, outside of some excellent content creators. But I led the thing, coded the site and the features, marketed, sold, even hauled and poured kegs of beer at our events.
Now, not everyone can code, market, sell, and find time to pour beer. But even in filling those critical roles, relationships are always going to be more important than contracts and promises. If you find the right people, meet their motivations, and treat them like gold, they’ll wait for the payoff. That seems like a free pass, but the tradeoff is a lot of work. If you’re not maintaining your relationships with your closest people, that can get expensive quickly.
For That Matter, Don’t Spend Money Unless You Absolutely Have To
You’d be shocked at how little money was actually spent at Automated Insights. We all took reduced salaries to be there, we started out at a cramped, smelly little hole-in-the-wall office in a less-desirable part of town, with thirdhand furniture and a broken ping-pong table as our reception desk. But when we did spend, we spent wisely. Talent, tools, R&D, and sales and marketing, in that order.
As for ExitEvent, that was mostly credit cards.
Another common element between Automated Insights, ExitEvent, and every other startup I’ve created or been a part of is that, at some point, I’ve coded. I’ll be the first to admit that I code with an undisciplined rage until things break, but those skills, for what they are, have been more than necessary.
Learn to code, but don’t just learn to code. Code. Get in there and build. If you’ve got vision, you have to be able to express it in something other than Powerpoint. If you’re not building a technical startup, learn and participate in the technical side of whatever it is you are building. No industry has gone without advancement. Make those advancements your secret weapon.
Don’t Raise Money Until You Can See a Massive Return
I don’t mean hockey sticks, TAMs, and ARR (you went back to the playbook again, didn’t you?). I’m talking about making sure you believe the home run ball has been lobbed right down the middle to you.
Too many times I see entrepreneurs seek out VC for startups that won’t get VC because VC isn’t right for them. Yet, or maybe ever. Venture, or any other type of funding save for that which came out of my own pocket, was never right for ExitEvent. ExitEvent was always going to be a double — not a home run. In the end, it wound up working out much better for me owning 100% of the company.
At Automated Insights, we went out to raise only when we needed to get to the next level and could point to the customers and the revenue that would get us there.
Raising money is not free money. Raising money is always time-consuming, mentally draining, difficult, and comes with more catches than actual dollars. It’s never not that way, no matter how many times you do it. Keep that in mind.
Don’t Overthink What You’re Building
At ExitEvent, the mantra was to be different and better than everything that came before it. Full stop. It was easy to live by that mantra because it was just me. I didn’t have a committee of any kind.
We spend a lot of time talking about what Automated Insights should be, both externally and internally. Many management meetings were dedicated to product and company positioning. Internally, we dedicated time to the company mission, the culture, and the well-being of those people who sacrifice so much to work for us.
The answer is in the middle of those two.
Slow Down the Experimentation Curve
In the beginning of a startup’s lifecycle, everything is an experiment. You’re constantly reassessing what you’re building, how you’re building it, even why you’re building it. As a startup matures, this experimentation narrows — you’re building a product and focusing on the feature set.
As you get into the growth cycle, the experimentation needs to slow to a crawl. This happens quickly for most startups, and usually reactively, when they realize all of this change and disruption is actually causing more problems than providing windfalls. Before you hit the accelerator, you have to choose a direction.
There are so many things I wanted to do at both Automated and ExitEvent that I never got to do, and not just small things, big things, things I was 100% sure would have worked. I told myself I was putting them on the back burner, but I never got to the back burner. It occurs to me that this is why most serial entrepreneurs rarely stray too far from their foundation from one company to the next. They just never got time to finish what they started.
There’s No Such Thing as Luck
When the funding for the first iteration of ExitEvent fell through, I saw that as the worst bad break in my career. When it indirectly led to me building Automated Insights, I thought that was one hell of a lucky move. I went though major highs and lows at both startups, I have amazing memories and regrets from both. And I could tell you that I was lucky enough to have both work out extremely well for me.
But after doing this ten times, I’d tell you there is no luck involved. There’s commitment, risk, sacrifice, wins, losses, recovery, and passion. That’s it. Things work out the way they were meant to. If that’s not good enough for you, you might be in the wrong field. But if you can live with that, you’ll eventually find success. And learn from it.