The day I knew our startup could make it
Bumps can help you or kill you, it’s your choice
It was 11:58am as me and my co-founder sat in the lobby of a top-tier Valley VC, waiting to meet with a partner and pitch our start-up. We had been reaching to this VC for some time, and they had recently called up saying they’d love to hear what we were up to. We were on a multiday pitch-fest, and had reached the conclusion that we just weren’t fundable. We had gained traction, we had some F500 firms working with our technology, and had our first enterprise sales coming in at over $100K, yet the VC’s kept telling us that our product was wrong, our model was wrong, we were solving a problem that didn’t exist, that we were too late as problem had been solved, that the product couldn’t sell, that we were selling it for too much, that we were selling it for too little, that we should have an enterprise sales-model, that we should have an inside-sales model, that we shouldn’t have an enterprise sales model …. while we kept watching the “google for women’s fashion” and “facebook for nerds” and other stupid ideas get funded. We were feeling very down, as our vision was not being accepted by the folks that could help us go after it.
On this day, as we sat in the lobby, trying to ignore the sick feeling in our stomach from too much coffee, too little sleep and too much to do, we got the call that no SAAS vendor wants to get. One of our team members had fumble-fingered a command on the server and WIPED all of our customer’s data. No-one could get in or out. Our largest reference customer was going live that night. FAWK!!!! Talk about the worst case scenario …
We looked at each other, and I could see the exhaustion I felt mirrored in my co-founders face. With an unspoken agreement we immediately went into recovery mode .. I would handle the upcoming meeting and customers while he scrambled the jets to recover the data, and put in some emergency checks/balances to ensure that we had learned our lesson. In that lobby, as the partner’s assistant offered us lunch we had reached the crucible of our startup : “Were we in the game, or were we ready to cave?”.
I wanted to cry, I wanted to just give up for only one second, but it was a very long second. …. and I’ve never felt more alive than at that truly horrible moment. All of my savings was in the company, we were paying salaries for some great engineers, while my kid’s college fund and all my savings over the last 48 years was disappearing at the rate of a new Toyota Camry a month. I had a limited number of Camry’s I could buy before I would need to come up with another plan. This was the bump in the road that could kill the company….. I began speed-dialing customers. I talked to our lead F500 customers in the lobby of that VC , sounding chirpy and upbeat hoping against hope that the partner would not hear what I was actually saying on the phone. I closed my last call as we began walking down hall to a conference room, my co-founder opened up his computer and started typing away. We had skype going so I could check in as I began the process of figuring out how to talk with the VC during this crisis.
This moment crystalized for both of us that we were doing the right thing. It was clear that we were solving a problem that everyone would have, and our lead customers were already having. It was also clear that our approach had resulted in some key large customers already depending on an unfunded early-stage startup. We were in the right space, and even though we might have killed all our customers, we could make it right and keep going. WE also knew that we would do whatever it took to make our customers successful and to live up to our commitments to them.
As we walked down the hall, a new bit of information flowed in as well, a press-release came out stating that this firm had just invested in one of our competitors. As we sat down, externally appearing very calm (if not a bit tired), I changed the entire pitch. We were in the game, I knew we were going to be here with or without this VC’s money, and I was not going to fall into the trap of sharing my hard-won market knowledge with a competitor. My first statement was not about our value proposition, or the pitch that I could recite in my sleep, it was the question : “Why are you meeting with us?”…
While my partner typed away furiously, and made a miracle occur, I watched this VC partner stammer a bit … my next question was about investments his firm had made in this space, it became clear that he would never invest in us. I closed my computer, and thanked him for the very nice lunch, talked for a few minutes more … I did not present a single slide during that meeting. I don’t know if that partner will ever talk with me again, but I do know that we out-maneuvered his investment, and we did not place him in a position of knowing things that we didn’t want our competitors to know.
We never again pitched our company to a VC in the same way. The bumps in the road that we had hit clarified several things for me :
- I had the right team around me. We knew how to play team ball and had implicit trust amongst all of us. No matter what came at us, we knew how to play team ball and trust each other.
- Our assets (and I mean our ONLY assets) were our knowledge of the problem space we were solving, and our time. I would never again spend either item without knowing what I was buying with that currency.
- Bumps in the road are inevitable in the start-up world. Sometimes they are little bumps, sometimes they will cause you to re-think your entire hypothesis. Embrace the bumps, as they are the same bumps that create opportunity for you.
- Know whether you are in the game … with or without funding. VC money may (and I mean MAY!) help smooth over some bumps, but creates a whole new set of hurdles that may become insurmountable.
As I look back on the early days of Nukona, it is this meeting which truly helped me know that we were ready for the bumpy road of startup life.
