- Moderator: Howard Bornstein (BCV)
- Panelists: Joris Poort (Rescale), Brent Grinna (Evertrue), Phil Kim (Bundle, Capital One), Louis Beryl (Earnest)
Panelists by the Numbers
- 100% of panelists started a company directly out of HBS
- 75% of panelists started a company while at HBS
- 50% of panelists raised their first capital pre-revenue
- 75% of panelists raised non-institutional capital for the first round
- 100% of panelists have cofounders now; 50% had that cofounder at the time of idea generation
Fundraising by the Numbers
How much time did you spend raising your first round? How many conversations did you have? How much did you raise?
- Louis: Spent a few months, 50-60 pitches in ~2013
- Joris: Spent 2 weeks (via Y Combinator) Raised $3M in the first round, >100 pitches
- The more you commit your time to fundraising 100%, you can condense your time spent fundraising and reduce the amount of time you're not making progress on the business via distraction
- Brent: Spent 18 months, $1.3M in a seed in 2010-2011
- Phil: Spent 2 years raising money from strategic partners in 2009
The decision to start
- Louis: We spend more time trying to talk ourselves out of ideas than into it - when I woke up in the morning and realized that was all I wanted to do was work on my idea, that's when I knew it was time to officially transition.
- Phil: I've always been an entrepreneur in that I loved building things, especially technology. I came to HBS to "reset" after I realized that I wasn't doing what I wanted to be doing as a consultant.
- Brent: Didn't spend time on entrepreneurship while at HBS, and "accidentally" founded my company. Didn't realize it was a good plan until a judge at a business plan competition offered to invest.
- Joris: If you can be rejected by 100+ investors and you still think it's obvious that the company needs to get built, it's a good sign.
Customer development plans
- Brent: We frequently get focused on our ideas and it's usually linked to the problem space you've experienced. I wish in hindsight we'd spent more time trying to understand our problem, interviewing more customers in the space.
- Joris: Being your own customer is great in that you can understand your problem best and really dig into it. The best example is how Optimizely started -- selling the product to a customer and validating the market before even building it.
- Louis: I tried to solve the problem for myself when we were smaller; now that we're bigger, we're able to spend more time on the customer development side. You've got to be testing a hypothesis that's actually relevant. You have to really make sure you're not just running tests to validate your own opinions or what you believe to be true.
- Phil: I've made so many mistakes where we haven't exercised enough judgment. There are lots of ways to do customer development, but building something exclusively for yourself will only work if you want yourself to be the only customer. You have to exercise great judgement continually while trusting your own gut and that of the people you've hired.
- Louis: The first sales process was less about selling customers than it was about recruiting employees. The relationship that you have with those employees (specifically your cofounder) is important; you'll see them more than your loved ones.
- Phil: I think of my cofounder like my brother; there are things that drive us crazy about each other, but we're really complimentary.
- Brent: I was looking constantly for a CTO; I was going to every developer meetup in Boston, but it finally worked. Statistically, that is not what most people would recommend you do. But if you don't have the long-term relationship with a cofounder, it's still doable.
- Joris: Trust and alignment of values is really important, as is a passion for the product itself. I ended up hiring my brother as my cofounder.
- Phil: About 2 years into Bundle, I realized that we weren't on the right path. We did more research and evaluated another path, and when we presented it to the board, they didn't agree with the path.
- Brent: My low point was probably when I was meeting with an investor who looked me in the eye and told me "This isn't fundable."
- Joris: I had about an 8-month low point where I couldn't raise money, and had to live on ramen and watch my classmates take high-paying jobs. The true lowest point was when I had to fire an employee, someone who was a classmate at HBS. We often simplify at HBS the complexity that's required in personnel decisions. It's the hardest thing you'll do.
- Louis: The psychology of founding a business is intense in terms of the ups and downs. One of the strongest qualities that an entrepreneur needs to have is perseverance. You have to be ready for a lot of "No"s relative to the "Yes"s.
High points of being a Founder/CEO
- Louis: I love sitting in product development meetings when you realize that you're going to birth a product that people want
- Joris: Seeing customers use your product in ways that you couldn't necessarily have imagined is a great feeling.
Fundraising: The benefits of outside money
- Louis: VCs were useful outside just sources of capital.
- Joris: VCs are the most expensive source of capital that you can get, so alternatives are always desirable if you simplify it down to the cost of money. There are specific VCs who can be helpful, though. The most useful resource for me was other founders who were a little bit beyond where I was.
- Brent: We spent the first few years with angel funding and bootstrapping, and bringing on BCV has been very helpful.
- Phil: In finding the right partners in my next venture, I would bring on the best people with capital. Even if you have all the capital in the world, you may not have the resources, connections, etc. that you need.