A Founder’s Path From Napkin to NASDAQ
by Ellen Fishbein
Need a dose of optimism? Look no further than Sonny Mayugba, Spero Ventures’ Entrepreneur In Residence. On the road to success, Sonny started with a futon mattress, a rice cooker, and a few entrepreneurial scribbles on a cocktail napkin. Some years later, he had the surreal experience of ringing his company’s NASDAQ opening bell in Times Square. True story.
Sonny recently shared his story in a keynote called Founder Lessons: From Napkin to NASDAQ, in which he shone a light on what happened on his journey. Throughout the talk, Sonny pulled back the curtain to share the lessons he learned — especially the ones he learned the hard way.
For founders and entrepreneurs at every stage of growth, this was an uplifting talk with useful takeaways, which we’ve summarized here. We hope you enjoy it!
The Founder Flash
In 2012, Sonny envisioned Requested, an app that would match people with local restaurants and bars based on how much they wanted to pay. With the help of Requested, small businesses offering competitive prices could easily connect with deal-hunting customers; by the same token, customers looking for premium offerings could connect with their ideal merchants. Soon enough, Sonny recruited three engineers as co-founders, and Requested was born.
The Launch Incubator
After building their MVP, Sonny and his team applied to be in the first cohort of Jason Calacanis’ Launch Incubator (now called the Launch Accelerator). They didn’t think they’d get in, but they tried anyway.
That decision paid off. One night, while Sonny and his team were leaving their office (actually an attic), they got the call. Requested would be one of seven companies in the first cohort of the Launch Incubator.
From that point on, the learning kicked into gear. Thanks to the Launch Incubator, Sonny met people like Reddit Founder Steve Huffman, Hotel Tonight founder Sam Shank, Intercom Founder Des Traynor, and Josh Elman, former product lead at Twitter, Facebook and LinkedIn. They all gave detailed presentations on what they’d learned and experienced. At all of those talks, Sonny paid close attention, listening carefully. At the same time, he took a lot of photos and notes, documenting every learning experience he could. He knew he’d want to revisit that information later.
“This talk is really about founder lessons,” Sonny said, “and the first one I want to share with those of you who are in the early stage is to listen and learn. There are so many people out there who have done so much more than you, and they want to help. Listen and learn.”
In those early stages, Sonny explained, you might not understand everything you’re hearing and seeing. Some things are bound to go over your head. But in a few years, you’ll get it, and it’ll be useful to have something to remember those lessons by.
The Bombastic Launch
In March 2015, Requested launched. Based on what everyone was saying, it was going to be the next unicorn.
“People were telling us, this is going to be huge,” Sonny said. “We had this in our heads that we were going to be the next OpenTable, Airbnb, take your pick. Jason put us onstage in front of 10,000 people for a live demo launch at Launch Festival, and it went great.”
After that launch, VC firms started calling nonstop. Requested raised from funds including AngelList, The Launch Syndicate, and Social Capital.
The Anti-Dilution Trap
“Whatever stage you’re in, I’m going to tell you now, don’t stop taking meetings,” Sonny advised, speaking from direct experience. “Don’t fall into the idea of this anti-dilution trap. We did. We were like, well, we don’t need to raise any more. We got enough money. For every percentage we give away, we’re going to be giving up this much future money… don’t do that! It’s the silliest thing in the world. Keep taking meetings, because you’re going to need more money than you think.”
By January 2016, Sonny’s team ended up paying dearly for the mistake of falling into the anti-dilution trap: they were out pitching to VCs during one of the worst VC months in history. The capital that once seemed abundant had dried up.
That lesson hit home only in hindsight — but the next one came just in time.
Facing the Data
The next founder lesson Sonny learned was to face the data. In the months following the launch, Sonny kept his eyes on the metrics week over week. And it was a good thing he did that because the data told the painful truth.
Nearly every week, retention was falling. 36 weeks in, it was at just 7%. Seeing that much churn, Sonny started having serious doubts.
“Stick to it a little longer; hang in there,” people told Sonny. They loved the concept of Requested, and they didn’t want to see the team give up. But Sonny understood that the data wasn’t lying, and Requested was not on a sustainable path.
“That led to another lesson that I learned, which is you’ve got to be a CEO,” Sonny said. “Make hard decisions — even if the experts, or your co-founders, disagree. I knew Requested wasn’t going to work in the state it was in. I was telling that to people who were really smart. But when you, as the founder, know it’s time to take a left turn or right turn, you’ve got to do that, and it’s got to be the CEO making that decision.”
After facing the data, Sonny had to decide whether to quit or keep going. He decided, personally, that he was fully committed to his investors, his team, and his co-founders. He would do anything to find an open door. That meant it was time to get creative.
Here’s what Sonny and his co-founders did to survive this difficult time:
- Work to sell the company
- Build a new business model, based on licensing Requested’s software
- Make the existing product work
- Raise more money
In the end, no single effort on this list was “the solution” — but on the whole, all four worked out. None of it was a waste.
“When you’ll do anything to stay alive, what you’ll discover is each one of those things, if you put the effort in, actually gives a little bit of return. We did raise a little bit of money at that time; we did get some inquiries on selling the company. We did actually get a little traction.”
Around this point in the talk, Sonny put up a slide that read: They will laugh at you. Don’t give up.
That — never give up — is the ethos that kept Sonny and his team alive until, at last, they found a way to have a future.
A Way Forward
When the Requested team was outselling door-to-door in Baton Rouge, the door to a brighter future opened. Local restaurant owners were happy to sign up for Requested, and many of them also said, “You should check out this app called Waitr; they handle my to-go orders.”
Waitr was another early-stage startup focused on food delivery in secondary and tertiary markets. They had been canvassing the same market, and they’d embedded themselves with relationships and infrastructure that Requested didn’t have. At that point, it occurred to Sonny that the two teams might be able to work together.
After spotting the partnership potential, Sonny emailed Waitr’s founder and CEO Chris Meaux and got a call back immediately. They talked, swapped stories, and agreed that there was a partnership to be made. Before long, Requested had merged smoothly with Waitr, and Sonny became Waitr’s founding CMO.
“So, I took off my Requested shirt and put on a Waitr shirt,” Sonny said. “Never be too shy to hand out flyers in the street!”
Following the merge, the team was stronger than ever before, and that’s when magic started to happen. Even in the ultra-competitive food delivery market, Waitr began to thrive.
In charge of customer acquisition, brand identity, and revenue stewardship, Sonny helped grow Waitr from $5M to $800M annual revenue. From 3 cities, Waitr expanded to serve more than 700 cities. Within 3 years, Sonny’s marketing team grew from 4 members to 100.
Sonny attributes Waitr’s rapid growth and success at this stage to 10 key lessons and practices, which he distilled down as follows.
1. Provide value to your shareholders first, then your employees, then you.
Sonny used to say this out loud at least twice a week, to himself as much as to his co-founders.
“This is the counter-intuitive lesson founders should learn,” Sonny said. “We’re told ‘the customer always comes first,’ and people believe that. But along with Danny Meyer and others, I believe it’s important to create a company that creates a virtuous cycle through a hierarchy of core values. That when employees are happy and fulfilled, they hear and respond to customers, and that creates a business that outperforms for shareholders.”
“Shareholders want a company that’s worth 100x what they put in. Employees want the same, and they also want to be in a place they’re happy and productive and doing great work. But guess what? Neither of those things are possible without frothy, happy customers or users.”
“So, I learned that if I as the CEO had other people’s interests in mind above my own (my shareholders, my employees, my customers), then I could truly achieve service leadership, and when you do that, you create greatness. I finally learned that here.”
2. Have structured weekly meetings.
“This can seem like a chore you don’t want to do because you’d rather be building, but it’s very important,” said Sonny. “You need an executive management team that can host weekly meetings with a structured agenda, and it can’t be Friday night over beers. Do it Monday or Tuesday, in the morning.”
3. Mandate no-nonsense weekly reporting by every team member with accountability.
In the early stage, when you’re figuring things out, you probably know all the acronyms — CAC, AOV, ROI. But knowing the acronyms is not enough. You need to truly understand these ideas, know your numbers, and understand how they connect to the business, directly and formally.
4. Build a strategy.
Everyone has a different understanding of strategy. Sonny adopted a definition he first heard from Shannon Susko:
Strategy describes how a company creates a unique and valuable position through a set of differentiating actions.
When building your strategy, don’t compete to be the best; compete to be unique and valuable. If you think about the best companies in the world, you’ll see that’s what they did. Google didn’t invent the search engine, and Facebook didn’t invent the social network. Rather, they created a unique and valuable position through a set of differentiating actions.
5. Always stay focused on the product.
You start out focused on the product, and you need to sustain that focus no matter what. Yes, with time, you’ll start to focus on growth, but you need to do that while staying vigilant about the quality of your product. Otherwise, you’ll get lapped by competitors.
6. Find the wells and drill them dry.
This is the essence of Sonny’s customer acquisition philosophy, and it was a mantra for him as Waitr’s founding CMO. To acquire new customers, you might start with Facebook, for example, and that might work. But at some point, that channel will stop giving you high-volume users, or the cost per user will start skyrocketing.
When the CAC goes way up, or you can no longer acquire customers cost-effectively via that channel, that’s when Sonny declares the well “dry.” At that point, it’s time to find other wells.
Waitr started acquiring users through Facebook, which was cheap and awesome. Then, they added Google. Gradually, through those channels, cost rose and volume fell. So, they sought out other wells: AppleSearch, Snap, and other platforms that competitors in the same vertical and geographic region weren’t using. That approach brought in an abundant flow of users.
7. Have disciplined board meetings.
Board meetings are an opportunity to get real value out of experienced people who have your best interest in mind — your board members. Make sure you get that value. The board should be holding the CEO accountable, the CEO should be holding the executive team accountable, and the meetings should get a little fiery at times. This board is there for you, and those 4, 6, or 8 meetings throughout the year are your chances to set yourself up for success and avoid mistakes.
8. Invest in data.
It’s so much easier to run your business with data that connects the dots. This is not a cliché, big-data Silicon Valley thing — it’s essential for everyone. Building this out takes time, but it is absolutely crucial to focus on it and get it right early on. Waitr used Tableau, Kibana, Second Measure, and Periscope.
9. Hire a good investment bank.
“At some point, you’ll hire an investment bank, and you’ll learn the bank always wins,” Sonny explained. “So, make sure you hire a great one with a team that gets you, is willing to put in the work, responds rapidly, and has a great strategy that aligns with your company goals.”
10. Prepare for a clean bill of health.
ASAP, get your finances into top form. You’ll thank yourself later. That’s because when you do get big, auditors will go after you. You will need three years of audited financials, and the more you prepare for that in advance, the better off you’ll be. If you’re not the founding CFO, make sure somebody at the company is charged with thinking about this.
Selling for $308M, Then Going Public
In 2018, billionaire restaurateur and NBA team owner Tilman Fertitta and Rich Handler, the chairman, and chief executive officer of Jefferies Group, acquired Waitr for $308M. For Sonny and his team, that number was simply mind-blowing.
From there, it took about seven months to IPO.
“We got to have one of the most amazing experiences,” Sonny recalled. “You walk in, you look up, and they put your logo up, and they say, ‘NASDAQ opening bell, November 28th: Waitr Holdings.’ You look up, and you see Cisco, Intel, Amazon, Apple, Tesla, all these companies we admire, and you’re like, ‘What? That isn’t us!’ It was just a phenomenal experience.
“We were jumping up and down in the streets. It was an amazing outcome for a very very long, and very very hard journey.”
“Looking around at the people who were going to ring the bell, it was the same people we started with. We didn’t plug in different people. We stayed together through hard times, and we stuck it out.”
The Most Important Founder Lesson
“The most important lesson of all is to remember the people behind you. Your family members are the ones who make the biggest sacrifices, when you’re on the road, outbuilding the company, working late nights, making no paycheck or some paycheck. These are the folks who make the biggest sacrifices.”
Thanks for reading. Hopefully, you found this story as captivating as we did. Watch the full keynote below and learn more about Spero Ventures here.