Lessons from a First Time Founder

The last 16 months have been some of the most exciting and emotional months in my professional career. I am so proud of the Stride team, our investors for believing in the company and our community of users. We built a product that hundreds of people used every week and we did everything we could to help our users be more productive at work. We also built a pipeline of potential customers that wanted to integrate Stride into the core of their company. Finally, we got great media coverage for such an early stage company. Unfortunately, despite hitting these milestones it was not enough and we decided to shut down the company. As I look back on my experiences from the last 16 months, I want to share some of the key takeaways we learned in trying to build Stride.

Rightsize your Milestones

The most important takeaway we learned is that every start up needs to set goals that are in line with their current bank account balance. Well-funded start ups can focus on user adoption, virality, a pipeline of prospects and a product for a broad market. However, bootstrapped start-ups like Stride need to focus on revenue and profitability from day one. For enterprise SaaS companies, this will likely mean that you will start with a single customer and build them a solution that you believe is relevant to many other customers down the road. At Stride, we set two goals: (1) 100+ active users and (2) 5+ qualified customers in the pipeline, great goals, but better suited for a traditionally well-funded start up. We achieved both of these goals, but we needed goals that would give us firm control of our destiny. In hindsight, focusing on product-market fit by generating revenue from our first customer and delaying any hiring until we had cash coming in the door would have been a better approach. Additionally, it is critical as you receive advice that you put it in the right context. The best advice we got was from other founders who had bootstrapped their companies.

Cash Flow and the Momentum of Fundraising

As a general rule, CEO’s want to secure a 18+ month runway so that they will have time to build a business, fundraise and hopefully respond to M&A interest in the company. Clearly, there are many start-ups that raise this amount of money simply based on an idea, a team or the past success of an entrepreneur. First time founders are not so lucky even if they have been key employees of other successful start-ups. First time founders should expect that their company will be measured by core metrics like revenue, users and growth. Given that, if you are a bootstrapped, first time founder, it is essential that you focus on revenue and take every action to build a great product and extend your runway. A long runway gives you more time and it gives potential investors the comfort of knowing that the company will have the time it needs to build a business and explore all options.

Momentum is another key component of fundraising and there are several ways to influence it beyond hitting business milestones. The two most effective ways to build funding momentum are: (1) begin by raising small checks from influential Angels and (2) price a round realistically at the start.YC companies leverage both of these principles well and are disciplined at building momentum and fundraising. The bigger checks (>$500k) are more like a lottery ticket and you should focus your energy on building relationships with key influencers and Angels who can help build momentum both with customers and future investors. Additionally, your earliest investors will want to be a part of creating your vision and you should welcome their help. They can play a critical role in providing references for future investors.

Never Stop Pushing Forward

It is a common belief that being an entrepreneur is one of the loneliest and most unpredictable experiences you have in your life. This is true not only for founders, but it is also felt by many of your earliest team members. At Stride, rather than being overwhelmed by these feelings, we leveraged them to focus on moving forward and controlling what we could. We made communication and transparency a core part of our culture and the team always responded with positive energy, new ideas and hard work.

One of my favorite places in the world is Hawk Hill in the Marin headlands. To bike to the top, I have to climb continuously for more than two miles. Some days, I conquer the hill with ease. Other days, I battle it the whole way up. Regardless, it is a great feeling when you get to the top. As I move on to my next challenge, I’ll remember this lesson most of all: good days or bad, always keep my eyes on the road ahead and keep on pushing forward.

-jr

ps - the photo above is from the bottom of Hawk Hill