The Arbit Story Pt 2: How raising $55K from two NBA players changed our lives
Part 1 of the Arbit Story involves everything that happened up until the Summer of 2016: We bootstrapped our way to an MVP over 6 months, we started pitching around, came in contact with NBA player Steve Blake, and finally landed Steve as an investor at the end of Spring 2016. If you haven’t read Part 1, check it out now.
Summer 2016 — Drinking from the fire hose
After landing Steve as an investor, we started moving fast. We began to revamp our development from a basic minimum viable product into a full-fledged social network, complete with an extensive, scalable backend to help us grow quickly. We had two full time developers and a designer at that point. The whole team was based out of Montevideo, Uruguay, as outsourcing kept us lean and our team was top of the line. We had to learn a lot about managing the project and how to spend resourcefully. On paper, Steve’s investment would last us until we got the product to market but we needed more runway. When we first approached Steve, the number we wanted to raise in total was $55,000.
And I know what you’re thinking: “How did you come up with $55K as your goal?” To be fair, we stayed so lean through those first 6 months that Greg and I weren’t sure what we needed to raise. Figuring in our monthly burn, we came up with that number because it could last us a while at that point, and we also recognized that we were still so new. We needed money but didn’t have any real traction (remember, we hadn’t even launched), so we felt we couldn’t really ask for the kitchen sink back then. This was our first attempt at raising capital and we had so much to learn about:
- what amount to raise
- choosing a convertible note or equity
- how much equity to give up
- terms of the raise (valuation; common stock vs preferred; anti-dilution rights for subsequent rounds)
- offering additional shares for “ambassadorship”
It was a lot to tackle in such a short time. Luckily, we had (and still have) a brilliant Austin-based lawyer, Brett Cenkus, from whom we learned a lot in those days. Steve ended up putting up half of the total raise, but we needed to find another investor to go in with him.
As previously mentioned, at the time he was playing with the Detroit Pistons. NBA veterans at a certain point in their careers grow accustomed to the daily process, they have a routine, and most have wives and children at that point. When they have down time, they aren’t hitting the club; they’re hitting their phones, making calls, and responding to emails. They are preparing for the next stage of their lives: as entrepreneurs. As a result, most NBA veterans stick together on teams.
Steve reached out to me in early August with a potential partner: Anthony Tolliver. Anthony is a 10-year NBA veteran who the previous season played for the Pistons with Steve and they would talk business on the reg. Anthony had just signed with the Sacramento Kings and he was out west at this point. Steve showed Anthony the beta version of Arbit and I prepared an email to Anthony. Just like we did with Steve (in which we sent him a proposal with a mockup comparing him against another popular Maryland Terps guard), I decided to create a poll that pit Anthony Tolliver against All-Star DeMarcus Cousins, with Anthony being the clear favorite in the votes column. I sent him an email with the following mockup:
We proved to be 2-for-2 with these mockups for potential investors because Anthony responded the same day…
Ironically enough, if you read his last line, as of this week Instagram officially copied a similar polling feature in their stories. We figured polling was becoming such a hot thing to do that eventually that might happen. Fortunately, Greg and I have been in “stealth mode” pivoting away from just a polling app and focusing more on a polling business, which is what we pitched to win in Japan. But more on that later. Back to the story.
I mentioned Anthony was on the west coast at this point. I shot him an email back and he said he would call me later. I was staring at my phone that night. Time was passing. No call. Another hour. No call. Waiting…
Finally at midnight, my phone rings. I’m living with my parents and I sprint downstairs so as to not disturb them in the middle of the night. Taking calls at midnight is something Greg and I would become all too familiar with, given that most of our team over time would be based in the Pacific Time Zone.
“Hey Anthony this is Alex, it’s great to hear from you.”
“Yo, sorry this is so late. Had to put the kids down and was spending time with my wife.”
“No worries, so let me give you a little information on how we got here, why we believe in this, and I’ll answer any questions you have.”
The why is important here. Why do you do what you do? Who cares? Why should I care what you do? These are questions brimming in the back of investors minds always. People invest in people. Not products.
“I do X because it makes me a lot of money.”
Ok but that’s not why you do it.
We created Arbit because no other polling platform adequately gives people the opportunity to be empowered and to have a voice with their favorite celebs, athletes, and brands. We created Arbit because we were sick and tired of getting shown monotonous online surveys that usually mean A LOT to companies but mean NOTHING to people taking them because they aren’t engaging enough. And it pissed us off. So we built Arbit. That’s why.
What’s your why?
Okay, back to the story.
I’m on the phone with Anthony and we spoke for an hour, going over an array of applications to which Arbit could be applied: not just sports, but brands, TV, movies, politics, anything and everything. But we always honed in on the fact that we were giving people a voice through polling and we could drive a serious business out of this over time, creating jobs and growing the tech scene in Baltimore. This is important for us. I had him on speaker. Pacing back and forth across my basement floor, I was passionate, my arms were flailing left and right like a conductor of an orchestra, speaking as if he was in the room with me and I was pitching. There was no way I was getting off that call without him convinced he was going to get behind Arbit.
Anthony emailed me the next day:
And so we waited, and waited, and waited…
After 10 long days of waiting and uncertainty, we finally received an email from Anthony. The kind of email that makes you want to run outside and hug the next person you see. The kind of email that quite literally changes your life…
I sent it to Greg and we went NUTS. Absolute pandemonium. I was sprinting around the house again. Not only did we land crucial investment to get us off the ground, we landed two incredibly well connected and savvy entrepreneurs who also happen to be NBA players. Another blessing for Team Arbit.
So we continued along with the project, going through multiple Beta Tests, painstakingly dealing with project issues, bugs, and the like. A few weeks before launch, I had a chance to drive to DC to see Anthony play the Wizards.
I met him after the game and told him that Greg and I were lucky to have him on our team and that we would go to the ends of the earth to be successful. It wouldn’t be easy but damnit we’ll find a way.
October 2015 — I quit my job, gave up a salary, left my life in Fells Point, moved back home with my parents, faced constant questioning as to why I did that. All Greg and I had was nothing but an idea that we were so passionate about.
October 2016 — And here I stood with one of our investors, a product that was about to launch, and a bank account that was more than full by our standards.
There is no such thing as an overnight success.
Did we believe we were going to have NBA players as investors? Absolutely not. Did we believe with every bone in our body that we would find a way to be successful: A resounding YES. But for one year we still faced constant uncertainty, scrutiny, and extreme frugality.
Even as we are on the heals of one of the most momentous occasions for our company to date (we just won an international startup summit in Tokyo), all of our success has been two years of hard work in the making (with many more to go). What we learned quickly was that no matter what product we had at our disposal, we needed to execute.
And so we launched Arbit in the iOS Store December 2016 with two big investors at our side. We had a plan of attack and lofty milestones to accomplish. But did we follow the plan? No. Because over the next 6 months of being live, our concrete “plan” turned into an agile process of relentless growth, learning, iteration, and innovation that culminated in over 100,000 downloads of Arbit, companies paying to use our product, and raising capital from three more angel investors, two of whom were even bigger NBA players.
Welcome to our journey, it’s just beginning.
(Part 3 coming soon).