Non-Obvious Fundraising Learnings

I’ve been a co-founder in three VC-backed startups:

  1. Qloud. We raised $3.5 million from Steve Case’s Revolution fund (sold for $8.5 to BuzzMedia)
  2. Kapost. We’ve raised $20m from Salesforce, Floodgate (SF), Cueball (Boston), LeadEdge Capital (NYC), Tango (CO local), Highway 12 (Idaho fund), Fraser/McCombs (CO), and Access (CO).
  3. Onward. We have just recently raised a $1.5m seed round from Matchstick Ventures, Royal Street Ventures and JPK Capital

From these experiences I have pitched (with Toby on the first two) to hundreds of VC firms and learned some non-obvious lessons. These only really apply to Pre-Seed, Seed and Series A.

Here we go: Continue reading “Non-Obvious Fundraising Learnings”

Kapost Funding and Video

Yesterday, Kapost announced that it closed another $10 million dollars, some of it from Salesforce.  Salesforce is the arguably the biggest and most badass B2B company on the planet so to get an investment and endorsement from them is huge.

This is a great accomplishment for the team.  It’s never easy raising money and this round took around 4 months to put together (maybe more)

Also, Megan over at Techstars shot a video of us in the office and just pushed it out.  Here it is: 

Inspiration Strikes: Pivoting (Qloud 6 of 14)

This is post #6 about the Qloud experience.  The previous post was about Developing our service in Romania.  

We had launched the world’s first music search service that searched on tags and usage.  It was revolutionary.  The problem was that nobody cared.  The amount of use we had was small.  Granted, we didn’t iterate on it much and maybe over time usage would have increased, but out of the gates it was DOA. 

The few thousand customers we had we talked to and grabbed feedback from.  They wanted more.  Just a list of songs wasn’t enough.   They wanted everything.  Specifically:

  1. On-demand music.  They see a track, they want to click and play it right then and right there (in the browser)
  2. Major label music – all the popular stuff for the 4 major music labels
  3. Indie label music – all the niche stuff from the dozens of indie labels
  4. Unlimited music – they wanted no limit to what they could do (unlike radio stations)
  5. Free.  They didn’t want to pay because the alternative at the time (Kazaa, Bit Torrent, etc.) were all free

So, we decided to focus on delivering a full-featured music streaming service instead of a music search service.  It was a bold move, but desperate times call for desperate measures. 

It turns out we were right.  This was the right direction as you’ll see in a later post.  However, it created different problems such as: 

  1. How do you build a business around free music?  (answer: you can’t)
  2. How do you make the record labels happy if you’re not charging?   (answer: you can’t)
  3. Technically, how do you get the music to serve to the users?  We’ll address in a later post.  

I learned a valuable lesson here in that you shouldn’t be afraid to drastically change your service if your usage is low.  Don’t hang on to past work just because of the sunk costs.  I’ll credit Toby for being super bold.  Toby is not one to do things half-assed.  He likes to pick a direction and go full steam in that direction. It’s tough to make a decision to throw away a year’s worth of work. 

This would come in handy later when we did something similar at Kapost. 


Qloud Fundraising: Striking out in Silicon Valley (Part 2 of 14)

This is post #2 about the Qloud experience.  The previous post was about jumping ship and starting the company

Once we started Qloud, we started building the product and also started fundraising.  From day one, looking at our finances, we knew that we had 6 months to get the company to a place where we could raise outside capital.  Not only did we need to get the product built and working but we needed to hone our pitch.  We came up with what we thought was a compelling vision and set out to talk to investors.

Our pitch was that what we learned at Ruckus was that music discovery was a huge problem.  Talking to students it was clear that all discovery was word-of-mouth.  Qloud was going to be a way to allow people to find new music without having to ask your friend down the hall.  We were going to do that in 2 ways:

  1. we would offer a music search engine where you could search by tags and by demographic.  For instance, i want all the music tagged “happy” that is being listened to the most by men age 18-20 who live in Los Angeles.  This would return a list of songs that you could then sample.
  2. we would allow people to tag music inside their iTunes.  By creating a tag cloud, we would enable on-demand playlists for “happy” or “summer” or “breakup” inside the player.  This tagging and information from the iTunes would power the search capability provided in step 1.

Continue reading “Qloud Fundraising: Striking out in Silicon Valley (Part 2 of 14)”

Kapost Culture & The Alliance

Kapost is still expanding rapidly.  A year ago we were ~20 people and now we’re ~60.  That’s a lot of new faces and we’ve done a lot of hiring. (Blog post about Kapost expansion)  Thinking about our our expansion brought me to how we view culture.  Some thoughts on that…

Culture is Important

We have a culture doc that is on the web (below). It gets a lot of views (over 2k).  It’s also important as it’s how we describe working at Kapost. We actually thought a lot about it. 

I’ve been asking a lot of people who have scaled companies what they would do differently and what’s worked for them.  They repeatedly talk about culture. This is what keeps it all together for them. As David Cummings (Founder of Pardot) says,

Yes, the people are the most important part, but culture is reflected in the core values, processes, and the way the company chooses to act.

Basically, it’s super important.  I’ve also been thinking about what culture actually means.  More and more to me it means just how stuff gets done.  How do conversations go, how fast are decisions made, how honest should people be?  That is all defined by the culture.  It takes a while for people to realize.  I’d say that at Kapost, people have described our culture as super transparent, high accountability, and very fast.  I think that’s true. I think it’ll change over time but that’s how it’s been for the past few years. 

Vibe vs. Values

Brad Feld had a post that described the difference between Vibe and Values.  It says how the music in your office, the dress code, the food in the office is all “vibe” and the vibe can change in a company and are defined by employees.  The values are “the guiding principles or a code-of-conduct upon which a company was founded and which it operates on a daily basis” and are defined by the company.  Things like “don’t be evil” at Google.   They are two different things and we should differentiate between the two. 

The Alliance

This is a business book I read this summer when it came out. It’s by Reid Hoffman, founder of LinkedIn.  It’s very interesting and something we talk about a lot at Kapost.  The idea is that employees are no longer hired for their entire career and because of that you should treat them as though they will someday leave your company.   Each employee is coming aboard for a “tour of duty” and you should actively define that tour, being explicit about what the employee will do for the company and what the company will do for the employee.  It more accurate reflects how people treat a job.  It also allows for honest conversations about what employees and employers want.  It’s a great framework and I recommend you check it out. 


What Would It Take to Get You Fired?

What if you walked around the company you worked at and went to someone and asked, “What would it take tomorrow to get you fired?”

I just saw that question asked in this awesome video by Jerry Colonna:

Chances are people don’t really know what it takes to get fired. What he argues is that if people don’t really know what it takes to get fired, then they don’t really know if they are actually doing a good job.  Putting some transparency around what defines success and failure can take a lot of stress out of people’s time at work. 

Hupspot IPO Thoughts

This past Monday Hupspot released their official S-1 which is the information released for a company when they are about to IPO.  

I’ve read a lot about this information and wanted to jot down some of the more interesting pieces: 

  • Founded in June 2006 in Cambridge MA, they coined the term “inbound marketing.” They did more than coin it, they lived. They wrote the books, built an influential blog and practiced what they preach.  Nowadays you hear “inbound marketing” all the time.  Here’s to them for coining a term that an entire industry adopts.  (ChiefMartec talks about this more here
  • In their S-1, they list as one major risk factor as is the inability of customers to create content to make blogging, social media, and inbound marketing in general worthwhile.  This is true for our customers as well.  If nobody is creating content, then many of your marketing efforts fail (email marketing, social, inbound, etc.)  
  • Continue reading “Hupspot IPO Thoughts”

SaaS is going into battle together every day

I read a good post by Jason Lemkin (former CEO of EchoSign, now partner at Storm Ventures) about hiring VP’s in your company and he had the following passage which totally resonated with me: 

SaaS is going into battle together every day.  Wining that next customer.  Saving that big deal.  Building that crazy feature.  Every day, there’s a new drama.

It’s truly a team effort.  The VP of Sales opens and closes.  The VP Marketing feeds the machine. The VP of Customer Success keeps it running and adds fuel to the fire.  The VP Product makes sure the 1,000+ customers get what they need, as impossible as that is.  And the VP Engineering’s job is to make a business process 10x better than it ever was before, just using computers.  This is teamwork.  And it’s really not that silo’d at all.  You’re all working on different parts of the same puzzle — Customers.

Where I don’t see true teamwork, I almost always see eventual failure.  Or at least, underperformance.

I’m running the product ship and I feel really thankful that we have a great team lined up right now of Toby, Patrick, Riley and Nader.  

It’s a battle out there but with these folks, I like our chances….

Kapost Team Growing

We took a group photo on Friday here at Kapost: 

Looking at this photo and seeing how far we’ve come makes me think back on what’s different now: 

More Great People: We’ve grown from 12 people a year ago to over 50, and have added some amazing people to our team.  From Riley to Jace to Patrick, the number of quality folks roaming our office is incredible.  Our engineering and product team is full of A-players.  Our marketing team is full of innovators.  Our sales team is full of killers. This has been the biggest and best change. 

Great Leadership: My co-founder Toby has really become a great leader and has a real knack at being able to point the ship and get all groups working towards a common goal.  Similarly, my other partner, Nader, is a joy to work with as well. Having someone who can ensure that the Kapost technology is top notch and moving in the right direction and do it in such an effortless way is awesome.  They both aren’t afraid to challenge the team, to hold true to their convictions, and to do what’s right. 

Good Discussions: We also had a board meeting last week where we went through all the areas of our business and how they’re doing.  We’ve recently expanded our board to include Paul Bell and Alex Shootman and as a result these sessions generate some great discussions about how we attack the market and grow faster. 

More Specialized:  18 months ago we were only 12 people.  At that time people wore lots of hats.  At the time, I ran the product group, ran HR, ran account management and participated in sales. Now that we have more people, we can afford to have specialists who are top in their field.  As a result, all of us are going deeper in our areas.  It’s nice to be able to focus, but it’s quite a difference from when I was able to see and hear and participate in many other parts of the business. 

More of more and more.  There are lots of new things. More dogs. More bikes. More GIF’s. More biking rides up Sunshine. More meetings and more meetings.  There are challenges, but that’s why we do it and why it’s fun.  We’ve grown a lot and I’m enjoying it immensely.  

Product Stuff at Kapost

As Kapost grows, I really aspire for us to continually get better and better at what we do.  I ran the product group by myself for so long that i’m really excited to have more kickass folks on the team now (Anthony, Niraj, Eric, Jace).  With this extra firepower, we are able to do some really cool things and we’ve done some recently.  

First, customer development.  We’re taking this to another level. We’re talking to customers more and more. We need to. As we get more customers, it’s harder to know if your roadmap is what they want.  Also, our product is getting more complex so the feedback has more breadth.  We’re off to a great start in 2014.  We had a Kapost conference in SF a few weeks ago and Anthony and I flew out there to talk to over 20 customers.  We talked about new features coming out and our upcoming redesign.  We got some great feedback. 

In fact, it worked out so well that we even had one of our customers write an article on about how much she loved talking to us.  You know you’re doing something right when a customer starts thanking you for listening. 

Inc Mag article about Kapost

Second, we’re finally putting goals and metrics on product releases.  I’ve been thinking about this for a long time, but we’re actually doing it now.  Here’s the deal: when you’re planning a feature or new product, we (the PM’s) attach what success means for that product 8 weeks after release.  For one feature it means usage by 50% of customers 8 weeks after release.  For another, we had 10 customers asking for it, so we considered it a success if 7 of them using it regularly 8 weeks after release.  There’s lots of talk about customer development, prototyping, MVP, and agile methods, but much less about the followup that happens once a product is released. 

Our engineering team is evaluated by shipping code, but we’re evaluating our product team by whether or not they are hitting the success metric.   This has resulted in some interesting behavior in the product team such as: 

  • when a product is released they are much more inclined to explain it to the sales and customer success team so customers will know about the feature and use it
  • if a customer asked for a feature, they then make sure that the feature is adopted before moving on and if it’s not adopted, figure out why and fix it. 

After a product release, a feature should be adopted and hitting its goals.  If it’s not it’s either because the requirements were bad or the implementation is bad.  Either way, tracking the adoption is necessary.  This rigor is new to Kapost and already is paying dividends.  I have another post coming soon about why Mixpanel and Totango are great for tracking.

As Kapost grows (we’re now over 50 people), the teams get bigger and more sophisticated.  Lots of founders dread the growth because they no longer can have their hands on everything.  For me, i’m loving the growth of the company, the team, and our ability to do more.