#65, Gregory Galant, Co-Founder and CEO of Muck Rack — Pros and cons of bootstrapping, building a...

Welcome back. This is From Startup to Grownup. My name is Alisa Cohn, and today I'm talking to Greg Gallant. Greg is the co-founder and CEO of Muck Rack, a platform that lets public relations teams connect to journalists. This is Greg's second time on the podcast, and I wanted him to come back to talk all about bootstrapping. With the current environment for startup funding, bootstrapping, which basically means just self-funding and not taking venture money, has become sexy again. A lot of startups are making the decision about whether or not they should take outside money or bootstrap. And Greg has a unique perspective on this, having gone through a startup journey without taking any outside money. Now, that said, they've built an incredible business and just recently they took $180 million from a private equity group. So we're going to talk a little bit about that and how he made the decision to do that. We also talk about the origin story of MuckRock and how Greg is a big fan of experimenting with new business ideas instead of doing a long elaborate business plan. We talked about the anxiety that Greg felt, especially in the early days of making sure the business had enough cash, and the surprising advice his new CFO gave Greg when he was first hired. We also talked about the dark side of taking venture funding, which nobody really talks about, and how important it is for founders to go into that with their eyes wide open. Now, even if this is not a decision that you're grappling with, you'll gain a lot from Greg's stories about he learned by doing, to become a CEO, and also by tapping into his network, which is an important element for all of us to have in our lives to build our careers. Greg also talks about hiring and how he built culture and how essential that is to the success of his startup. Greg is incredibly wise and entertaining, and you're gonna take a lot away from this discussion. So please enjoy this great conversation with Greg Gallant, co-founder and CEO of Muck Rack. Oh my God, I'm so excited. Greg Gallant, welcome to the show. I'm so excited for this conversation.

Thanks for having me on. Great to be here.

And this is your round 2 episode here on From Startup to Grownup. We had such a good time last time when we spoke and, you know, things are different in your life and things are different for Muck Rack. So I'm just excited to catch up and, you know, framing our conversation, um, on something that you did like 14 years ago, some number of that time years ago, but that everyone's thinking about now, which is bootstrapping because, you know, Bootstrapping is sexy again after the collapse of the VC market and getting funding, which was after the massive influx of everyone going, everyone and their brother who had an idea and like a beer can to go get venture money. So I'm just excited to talk to you about this, but I guess I would love to know, I don't know, what's up with you right now, Greg? What comes to mind? That's up with you? What little fun fact do you want to share with us at the top of this episode? Maybe tell us more about Muck Rack and about where you are right now. Sure.

So, Muck Rack, for anyone who— well, first of all, I'm honored to get invited back. I feel like that's even better than getting invited once because it means I didn't totally screw it up. But for anyone who didn't listen to the first episode, Muck Rack, it's a PR software platform so corporate communications teams and big companies to startups trying to get their name out there for the first time to public relations agencies. They all use our software to figure out who's the right journalist to pitch or podcaster or influencer, who's the right person to pitch to get your story out there. Then it also does all the monitoring so you can know, okay, where are we being mentioned in the news, online, in print, broadcast, anywhere? And finally, reports to show how effective your public relations efforts have been and see how much attention you're getting relative to competitors in your market and getting a sense of what's being talked about there in the news.

That's great. That's a great description. And Greg, again, for people who didn't listen to the first episode, just maybe remind us how you started it. Like, what was the founding insight for you and how and when you started it? Sure.

So I kind of got into the social media world really early because I'd started a podcast interviewing founders back in 2005. So it was really kind of the first of its kind and interviewed the founder of LinkedIn, Reid Hoffman, back when LinkedIn had 50 employees, the founder of Yelp, Vanguard Group, a whole bunch of other great, great founders. One of the people I had on the podcast was Ev Williams, who was working on a startup called Odeo, a podcasting startup. And for anyone who's never heard of Odeo, it's because it didn't work, but I watched them pivot to a little side project called Twitter. So that led me to sign up for Twitter very early. I got my first name on there, @Gregory, just because no one else had grabbed it yet. And first saw there was all this interesting stuff happening on Twitter, but no way to figure out who's worth following. So that led my co-founder and I to launch the first ever award show honoring best of social media. And it was the first website ever that let you vote with a tweet. Again, you know, now it's very common, like, oh, vote, share this on social. No one had done that before. So when we launched it, it quickly became the top trending term on Twitter. Off to the races. We call it the Shorty Awards because tweets are short. And that business is still going too, profitably, 15 15 years later now. And, but it was from that experience with the shorties, we realized that journalists were really using social media to figure out what to write about and what to cover. So that led us then to launch the first version of Muck Rack back in 2009. Originally it was just for journalists. It was a free site where journalists could have their profiles and their portfolios up there. Then anybody on the internet could go view it. It became very popular with journalists. We had over 10,000 journalists requests to get on there. But whenever I talked to a PR person, they'd always tell me like, oh, I love MockRack. I'm using it to figure out who to pitch. And so that made us realize like, hey, there's a big opportunity here that we could build specialized tools for the public relations community and then have also pivoted to be a SaaS model so that there'd be a subscription for the PR team, keep it free for the journalists. And then go after building a business that way. We didn't really have PR people in mind originally. We just wanted to give journalists a way to show all their work on social media and all their articles in one place. That actually wasn't the original idea for the site. When we noticed that use case, we thought, hey, we have this whole profession using our website to do their job. We have all the data they need and we're known by them. The only thing we're not doing is charging them or having a business model. I mean, we were this short, he was making money and we were pursuing other business models already. But we realized that like, hey, there's a profession that wants to use this. And they told him we had lots of ideas for specialized tools we could build for the PR side that weren't in MockRack. So we're like, all right, let's go after relaunching it, keeping it free for journalists, but launching a part of MockRack for the SaaS community or a SaaS part of MockRack for the PR community. So we did that in late 2011, and then it's just been off to the races ever since.

That's amazing. That's such a great story. And I love how it's like also that your customers really helped you figure out what it was supposed to be, your users did. But just to say, like, when you did this originally, when you launched the free site, you had your Shorty Awards going, you had other ideas you're working on. Did you think there's a business model here, or you thought, let's just put it up and see what happens?

Yeah, my philosophy at the time was if you could come up with a business idea and launch it in less than a month with very little expense, that it makes sense just to try it and throw it out there. And then if it works, you can figure out if there is a way to stick a business model on it. And if it doesn't, then you know worse for your wear. And my philosophy about that is that it's kind of like even, you know, nobody quite knows what's going to work with the market or with consumers. And we launched a whole bunch of other ideas that didn't work too, but we did them all so quickly. The cost was so low. I felt like we spent time really doing a whole business plan and thinking it through. We just spent 3 times as long on the business plan as it took to actually launch it and figure out if it works. And then I figured, hey, if it's zero marginal cost and we have a big audience, I'm pretty sure we can figure out a way to make money off it. Whereas if we had a great business plan but no users, then it's going to be really hard to make money on it. So that was my philosophy. And I wouldn't recommend it for anything that has lots of hard costs, like be an awful idea. I wouldn't sign a 10-year lease to open up a restaurant without doing a financial model and counting the foot traffic. Everything else you need to do to do business planning for something where you're going to commit to lots of hard costs. But I think for those, for any kind of business that doesn't have big costs, particularly internet businesses, it's worth just optimizing to be able to experiment and try as many things as possible.

Yeah, that totally makes sense. The idea that you can do something quick and easy and then see what happens. And that kind of brings us to this topic of bootstrapping because you just put it up there with your own money and it was like, you know, small dollars and you had no hard fixed costs. And so, was there a— like when you started doing this, you were like, "Let's just see what happens." And then, oh, well, something good was happening. And then you began to have a paid model for PR firms. Was it the moment that you decided we're going to bootstrap this, we're not going to get capital, or did it just kind of evolve from there? Like, how did you think about that? Especially in the beginning?

Yeah, it really evolved as we went along. You know, there are some people who are kind of, there's some people who are wired like, I've gotta raise money no matter what. And there are some people who are religiously wired against raising money. We were kind of weren't at either extreme, but the way that we looked at it was like, okay, let's try to get a sustainable business model. I mean, originally we were thinking like, hey, it'd be awesome if this thing just generated like, 20K a month or something so we could just pay ourselves while we figure out what will work. You know, it wasn't— didn't know immediately like it would go that big. But then as it did start to scale, there was this whole stretch of time. Well, on one hand, we could have definitely used more money. I'd say really until we got, you know, maybe to $5 or $10 million in annual revenue, it always felt like any time we needed at any moment it felt like we really need to hire 5 or 10 more people, but we can only afford one. So it'd always be this big battle, like, okay, you know, we increase the revenue a bit, which of these, you know, do we hire the salesperson or the engineer, or just increase our server space so we can have more data. And it almost felt like kind of impossible choices because you're comparing apples and oranges, but you only have so many dollars. So it was, you know, so I don't want to downplay, like it did make it tougher in the early days not having lots of cash in the bank to invest and then having to do lots of things like not having an HR person for a long time and not having a finance leader for a long time. So I was wearing probably many more hats for a longer amount of time than I would have had we raised money. But on the flip side, every time we'd think about it, you know, it was growing and showing more potential. And it got to the point where like we realized like, hey, this thing's a real business. And, you know, it could even have venture scale upside. We'd think about, well, should we go raise money? And the thought process was always similar where first we'd think, okay, well, if you go to raise money, particularly as a tiny business back then, and it's a Got a bit different during frothy times that happened since, but now we're probably back to where it was that you pretty much have to spend like 3 months doing nothing but going out and fundraising and this grueling process where everyone tells you your baby's ugly and, you know, why it's not going to work or why it won't be a big business and all that. So one part of us was like, well, if instead of spending 3 months going out and raising money, What if we spent those 3 months just working harder at getting more customers? And we do that, A, we'll have money from customers, B, we'll have increased the value of the company more, and C, we wouldn't have diluted our equity. And also we felt like it de-risked it because another problem with raising money, especially early on, I think it changes when you get bigger, but early on is you you have these misaligned incentives where the investors will only accept an outcome where you swing for the fences and become the next Google or whatnot. And from the investor's mindset, because they're placing 10 bets, their whole business is based on one of those bets being big, they didn't have a problem with every single— if every single bet had a 20% chance of becoming Google, they'd take that all day and an 80% chance of going out of business. You get 10 bets where you get 2 Googles, you're a legend, you know, and you're going to be super rich. But if you're an entrepreneur, that means you have an 80% chance of, you know, wasting 5 years of your life and ending up with no, getting underpaid and then ending up with, you know, worthless equity. So there's that kind of misalignment on the bets. Another is I talked to a lot of friends where like they've bootstrapped the business to like $5 or $10 million of revenue and then it stops growing. And then if you think about if you have a $10 million revenue business, life should be awesome, right? You should be able to operate that at least in software at a 20% margin. Some people operate them at 40% margins, but even conservatively, that can mean you're making $2 million a year. So like your failure is you're just going to make $2 million a year for the next whatever, 10 years, like a lot of people, you know, for an entrepreneur, that's awesome. You have your obscure entrepreneur and that's your outcome. But to the investor, they'll never let you divvy the money because that's a bad outcome for them. So, you know, it turned out we've grown far bigger than that. But had we, you know, we wanted to have that optionality because we didn't know what if the business just started slowing down. We didn't want to kind of create this optionality where we had to make a billion-dollar business or it'd be a disaster for everybody. We wanted to know like, hey, we got something going. Hopefully we can make it a billion-dollar business, but if not, we'll still all do great. So we wanted to have that optionality with it also. And then just finally too, we were having fun running the business and we're like, if you add more people in the mix and you have the board meeting, if you don't like them, then your life's going to be hell. So you have to control for that too.

That was so coherent, Greg. I loved it. But I want to just really, as we say, call you out on one thing. You said, if we were going to raise money, we'd be out there for 3 months raising money. What, are you crazy? That would definitely be 6 months. For you, like first-time founders, you would definitely be 6 to 9 months raising money. So even worse, right? Like in terms of the time away from the end of distraction and all those things. But when you talked about trade-offs, you know, I guess I would ask the question, you have money coming in from this business. It's a tiny, tiny business. It's adding, you know, whether it's exponential or linear every month, you can't really count on it because it's a brand new business. But meanwhile, you're going out to hire people. And so my first question is like, isn't that kind of scary? Because you don't have money in the bank and then you're going to hire somebody and then like what if all that money dries up? Like what if that business that is so nascent dries up? I just would think that's very scary.

Yeah, it was scary. Like I would put together this, I remember I dreaded this day every month where I had this financial model that I made showing basically projecting out cash flow. I never even looked at like GAAP revenue. All I cared about was cash flow. And, you know, in and out. And I had my projection going out, you know, I think it was like 2 years. So it'd show every month, you know, adding up all the cash in, all the cash out, and then adding and subtracting that to our bank balance. So I could see what our bank balance would be every month going forward. And I always try to model it. So, well, in my head, I always wanted to have 3 months of expenses in the bank. So if that means, you know, if it costs $10K a month to operate the business, I wanted $30K in the bank. I almost never actually had that much. You know, it was more like 1 to 2x. And I took a little comfort that like my co-founder and I, we were always thinking like, okay, well, shit hit the fan, we could delay our own salaries. Maybe there's a few vendor payments we could stretch out. But yeah, and then the scary moment every month is that I'd have my bookkeeper. I did all the bookkeeping up till like, I think like $800K in revenues. I used to do this and my bookkeeper would do this, reconcile all the books and then paste in the actuals from the last month to see where we were over or under. And I had this differences chart to see where anything, if anything differed by more than 10%. To see where we came out ahead or behind. And so having to redo those projections, it was always kind of this terrifying thing. I was always just scared of running out of cash. And in a way, when the business is growing more quickly, it makes it harder ironically because there's more pressure to reinvest and hire more people. To get ahead of things. But I found doing the, at least doing the projections that, one hand, I would even go to a coffee shop every time. Somehow I felt better doing it in like a coffee shop than in my apartment and doing it in our, back then we had an office, doing it in the office was way too distracting. So, at least let me know what was going on and I built in different different kind of optionality to like where it could go. And I would even try scenarios where I'd be like, well, what if, you know, if we did, if the revenue didn't grow as much as we were predicting, what if we cut this and that, then could we right-size it? But yeah, it was a really tough game of like playing it really close to the wire because while we grew everything profitably, or even more important, cash flow positively, we did reinvest heavily in growth. So, uh, which I think is something few people do. Like, I think most people, they, they either raise money and they try to grow like crazy, or they bootstrap, but they don't really try to grow. They get comfortable early on, then they just take everything out in cash. So we, we did the middle road, and it worked, but it was very stressful.

Yeah, I can imagine it being very stressful. Was there ever a moment where you thought, uh-oh, actually, this is This is cutting it too close to the bone for me.

Yeah, there were a couple of times, like I remember there was one time I was on a, I still remember I was on this flight and I realized, like, you know, in Excel sometimes when you add a column, but it doesn't increase where you're summing. So that column's not added up at the total part. I realized that like a couple months ago I'd added a row, but it wasn't getting summed into our total expenses. And when I fixed that mistake, we were still okay, but we had a little less runway than we thought. And I almost had a panic attack over that, just thinking like, shit. And then I had to recheck the entire rest of this spreadsheet because I'm like, I really hope I didn't make any more mistakes like that. But it showed how precarious it all is. We also had another summer where I didn't appreciate The great thing about SaaS is it's very predictable revenue, whereas like with the Shorty Awards there, the cash flow is very seasonal with the award seasons. The thing I always loved about SaaS is that it's much more evened out. But as we started to grow and we started to go more upmarket, it did become more seasonal because of, you know, bigger companies' buyer cycles. But I hadn't yet accounted for that in the model. I kind of modeled out that we'd take in the cash relative to our ARR, annual recurring revenue, evenly throughout the year. So as the summer was coming, I realized like a couple months out, like, oh shit, we're not going to have as much cash as we thought coming in for this summer. Even though, you know, long over the course of the year, we'd pull in the amount of cash that we thought. There was this one summer where we had to, my co-founder and I deferred our salaries for a couple months and we had this line of credit. That I'd set up with the bank, but it was personally guaranteed. So we drew down a bit of the line of credit, but that summer I didn't sleep so well just because even though I was like super confident because we had these customer contracts and everything, the business was growing. Like I knew we'd be able to pay it back, but yeah, I've always just kind of been anti, very like not wanting to have debt and knowing that that was like a personally guaranteed loan wasn't a great experience. But sure enough, come the fall, the cash flow picked up and we paid down the line of credit and then paid back the deferred salary.

Yeah. I so appreciate you saying the truth behind it because I think there's so much like, ta-da, everyone's always up into the right and then the story is happy and everyone's like, ta-da, and they forget really, or they don't really talk about, you know, those moments of panic, like, oh, and also the things, the mistakes we make, we all make so many mistakes. And that's such a funny mistake, like on your Excel spreadsheet, or even just like not thinking through seasonality. You can think and you can know all you want, this is gonna be okay. But in those moments where you're confronted by a kind of a surprise or maybe something that's like not up and to the right, I just think they're very challenging emotional moments. Emotional moments. Like, did you have any strategies to either comfort yourself, or what did you say to yourself during those times where it felt kind of precarious?

Yeah, it's a great question. Uh, a lot of it was part of what got me into cycling. I found, uh, just getting, getting on a bike and going for a ride was a great way to, uh, great way to deal with it. And, uh, both, both time away from the, uh, the screen. And I like kind of the, um, analogy with like, uh, endurance sports and cycling. And because I think so much of business, but especially bootstrapping, it's all about the endurance. So I found that was a really great escape. I joined EO and later YPO, you know, Entrepreneurs Organization, where you meet every month with a group of peers and talk about what's going well and badly in the company and life in general. And having that outlet. And it was even one of those things where I would feel like, as you're going through this with cash, I'd feel like, ah, it's so a shame you don't have, you know, I haven't perfectly modeled out the cash flow or having these challenges. And then when someone else in the group's like, oh, so you're having cash flow challenges. I'm like, oh, wait a minute. There's a word for it. Because it's a super common thing in business that I'm definitely not the only person struggling with it. But that was definitely a powerful outlet. I also happened to be a— in college, I was a philosophy major, so kind of rediscovered philosophy and kind of got into before it was cool, like rereading a lot of the Stoic philosophy and others like that. So kind of combination of all those pieces helped a lot.

Yeah, I'm sure. I'm sure. That's so funny that you turn to philosophy. By the way, everyone's like, my undergraduate degree was so useless. And here you have a philosophy degree, which everybody would say was so useless, but actually used it. I think that's so helpful.

Yeah, I'm a big fan, actually. I advise this to other entrepreneurs too. I feel like in philosophy, like, the big thing you learn is to kind of how to look at at the abstract and make a narrative out of it and have your own ideas and explain those ideas and defend them. And that's really what an entrepreneur does is you look at a very messy market or a very messy company and then kind of try to have a coherent idea about where you want to go and explain that to people. So I found it to be surprisingly useful, especially as the business has gotten bigger.

You heard it here first, major in philosophy, people, for aspiring entrepreneurs. I love it. But now, Greg, something else you said was the idea of you needed to make 5 new hires, but you only had money for 1 new hire. And so picking between like a salesperson and engineer, which are literally such different things and you literally need both of them. I am interested in how you made those trade-offs. Like, what was your decision framework or how did you think about making those important trade-offs?

Yeah, I didn't, I never had a full-on algorithm for it. A lot of it was just kind of gut feel at the time who, who, which department was complaining the most. I'd always try to push back on everybody to see if there's any other way they could accomplish what they wanted or to do it less expensively. Another thing that I started doing, we only started building the sales team initially. We didn't have a sales team and then we decided that we needed to add a sales team to reach the market. And one kind of tip I got was, like instead of modeling each salesperson for 12 months of expense, I would think like, well, if they're good, they'll pay for themselves in 3 to 6 months. And we had a relatively short sales cycle, especially for the market we were going after at the time. So either they'll pay for themselves in 3 to 6 months, or, you know, we'll have to part ways with them because they won't be selling. And, you know, a good salesperson wouldn't even want to stick around if they're not selling and making their quota. In getting their commission. So just knowing so that I would budget the salespeople for like 5 to 6 months of cash expense rather than the full year. So that helped a bit. But it was funny though, because I would, I gave everyone such pushback that when we finally got to the size we could hire a CFO, He was saying he expected to come in. Usually when CFOs come into companies, they're like, let's cut costs. I'm going to discover all this wasted money. Let me clean this up. And then he was reflecting to me after he came on, he was kind of shocked nobody was coming asking him for money. And I think it's because I trained people like never to ask for money or they'd get it from me. I'm like, you really need that money? Why are you spending it? And by then it was actually the right thing to start spending more money and investing. And he was like, he actually had to do the opposite of what he expected and go to each department to be like, hey, if you had more money, could you invest it well for a good ROI on the company? So it was, you know, I guess a trauma that it affected the entire company. But I think it was, it did create really great rigor. And one thing I always liked about bootstrapping is you have all these companies where it seems like they're successful, but then you find out their unique economics are off or they were doing something artificial and they had all this extra money. So even though it seems successful, there's no way the business can work even at scale. Yeah, and there are lots of great TV shows about those companies now, or there's just a huge paper to pay later with having to do lots of layoffs to right size. So one thing I always loved about bootstrapping was just knowing like, hey, well, we know that business, we know is we're not fooling ourselves here that the business works because at the end of the year we made more money than we spent and that's what a business is supposed to do. And we're not like getting lots of people to buy us just because we're throwing artificially high amounts of money at sales and marketing. Or overly catering to customers with custom features because we have lots of money to burn on engineering. It's like it just had to work. So, as challenging as it was, I think it just created a great discipline for myself and the company.

That makes sense, which is, by the way, another benefit to bootstrapping. There's no question when the tide goes out, like that you have a business or not. Building sustainable business is like essential when you're bootstrapping. You can't fake it.

Yeah, well said. And I mean, over the past, you know, we're coming up on 15 years and over that time, like we've never done layoffs. And, you know, so when times were good, we weren't growing. I mean, we were growing fast. There are many, you know, at scale we were growing, you know, 50, 60, 70% year over year, but we weren't growing 300% year over year or some of these numbers. You could only achieve. But at times we're good, we're growing, but also in times we're bad, we're still growing and we didn't have to lay people off because we never hired ahead of revenue. So you think of all those distractions and the morale hit that you get when you do layoffs. It's one thing you're doing a layoff because maybe you said to everyone, hey, we're taking a bet on this thing that didn't work out. But if you're doing a layoff simply because Oh, we just overhired assuming that we'll raise a round in 15 months and everyone did great, but now we can't raise a round, so we gotta lay half of you off. Like, that's crushing to morale. And the fact that we avoided that, it's like we kind of avoided all this brain damage we would have otherwise had. Even at the outset of the pandemic, when just about every tech company did do a layoff, expecting the end of the world. And then when it turned out business went well again for SaaS companies, like they were scrambling to hire and morale was down and employees didn't feel a lot of loyalty. At the outset of the pandemic, we did not do any layoffs because we modeled it out very conservatively and we said, hey, we still feel good about this plan. So then when it turned out that, you know, business was still going well after all that. We didn't have to backfill all these good people that we just let go.

Right. That's a— that's such a good point. That's such a good point. I want to talk more about hiring because, first of all, I want to talk about the notion that I appreciate that. So you're a bootstrap entrepreneur and you're also an entrepreneur and you're also, you know, an owner of this business. And so you hire people And I hear you that they would come to you and say, "We need more of this. We need more of this. We need to hire more." And that you would say, "Really? Can't you do it without them?" I mean, I hear that and I believe you. But I also know employees. And very often employees will be like, "Yeah, Greg, we need that. No, we can't do it on fewer resources." And also, "How come he doesn't understand?" that we need this thing that I keep saying we need. And I know that, you know, everyone is on the one hand kind of rational, but on the other hand, people do often look at the CEO and they, I guess they forget that there's no magic money tree where all these things are going to come from. And I'm just curious if it was really as simple as that, like just telling people no and pushing back, and then they learned to push back and be so economical or whatever.

Yeah, that's a great, great point. I think there was definitely in-depth conversations a lot of times. Some of it was just walking people through the numbers so they knew that the cash wasn't there. I mean, I was also riding my $200 used bike to work, so I was trying to set a good example for young— Yeah, exactly. Versus, you know, I think when people, you see the CEO drive up in a sports car and then tell you there is no money, it makes it a little bit harder. But yeah, some of it was walking people through the economics. Some of it was letting people know it's not there. I think a big part of it too early on was that we hired a lot of very inexperienced people, but because we didn't have the money to hire experienced people. And a lot of them are homegrown. Many of them are now VPs and leading very large departments. But I think it's one of those things where, like, if you don't know it, you don't know, you're okay with it. So we ask people to do really extraordinary things with no resources. But if it's their first job, they don't know anything else. Whereas I think we hired someone who'd spent their whole career at venture-backed startups where it's throw money at problems or people who came from a Google or Facebook or some company that had seemingly limitless resources, they would have been like, oh, you want me to do that? I can do it, but where's my team of 10 people? What do you mean I have to do it myself? So I think a lot of it is who you hire. And if you hire people who are scrappy and willing to roll up their sleeves and get things done and kind of not know the typical limitations of business, then you can go very far. Yeah. Versus hiring people who are used to having the resources.

Yeah, that's a very— I think it's a very good point. But on the topic of hiring, I think another question is that you started in 2011 and, you know, people knew about startups, they knew about getting rich, and they knew about like stock options and all that. And, you know, that's really one thing that the venture-backed startups have with valuation and they have equity. How did you handle that as a bootstrapped company when you hired people in terms of making sure they saw the upside for themselves?

Yeah, well, there were a few things. One was we were growing and we biased towards promoting people internally. So, I think a lot of people saw they could really grow their career here and have a big impact in a way that that they probably couldn't at a definitely an established company and maybe even a venture-backed company where they're not going to take as big of bets on people and keep top-leveling at every turn as a lot of VCs want to do. The other though, we did set up kind of the equivalent to a stock options plan and it ended up being that people did well on that. And in a big way, I argued to people that you're actually better with our kind of employee incentive plan than with stock options. Because the problem with stock options, there's two big problems with stock options. One is that you're now pegged to this huge valuation that the VC just gave the entrepreneur. So, you know, for anyone who is not familiar, like if some, you have some dinky little startup and times are frothy and they get a billion dollar valuation from a venture capitalist and then you get issued your stock options, that means your strike price, kind of your base price for the option might not be quite a billion. It can be discounted a bit with 409A. So even let's say they just, they cut it in half. Still means that unless you make that business worth more than $500 million, you get nothing. Nothing. And even if you make it a little bit bigger, you're not going to get all that much. Which is to me the big irony that a lot of people think like, oh, this company got a huge valuation, so I want to join it. It's like, no, if the company got big valuation, now is the worst time to join it. You should have joined them before they got that valuation. And maybe you should join it, but only if you believe they're going to have an even bigger valuation in 3 to 5 years. You don't think the valuation is going to get bigger, be no different than buying high and selling low, buying the hot stock today and then selling it when it comes out of favor in a couple of years. So versus with us, we didn't have this artificially high valuation. So you could give people incentives with a much lower strike price, make it much more likely that they would get money out of it. And then the other piece of it too was that it didn't have money layered on top of it. So the other problem with stock options in a venture-backed company is that all the, basically the venture capital, venture capitalists who put the money in, they all have a preference. So let's say a company raises $100 million, means the first $100 million, at a minimum, the first $100 million out is going to go back to those VCs. And a lot of times it's even more than that because they'll put it, they'll say we want a 2x preference, meaning the first $200 million out goes out. And that got very popular in the last year because we got so hard to raise money and everyone to keep their valuations. So they would say, oh, you can keep your billion-dollar valuation. You just have to guarantee us a 3x return, meaning it's not really worth a billion dollars, but they're playing the optics. And then what sucks again for the employees is that they usually don't even get told what the structure is of all these VCs. So my pitch was always like, hey, we're going to give you— we got a bit of a chip on our shoulder in that like, Everyone was always like, oh, you're just a lifestyle business. And we were like, no, we're just as ambitious as the venture capital-backed business. We're just as professional. We're just as buttoned up. Just so we haven't taken the outside money. So we were trying to make sure that we had an equity, you know, a program for our employees that had all the upside of a stock options program. And, you know, as it worked out, and I think because of those mechanisms, actually was better.

Yeah, that's well said. I love it. I love the— I just appreciate all the things you're saying, Greg. And I think it's also important that you're kind of debunking a lot of the myths of venture and funding. Like, as you talk about this, like, you know, on the one hand, all these things seem very sexy, but on the other hand, when you scratch the surface, some of them are actually really challenging for founders, but also for employees. Well said.

Yeah, I think it's, um, a lot of optics. And, you know, if you just read the news, you don't really have a good sense of it. And same if you haven't kind of been through the wringer with it. A lot of stuff sounds great, you know, stock options and companies raising money and investing. Like, it all seems great until it's not. And a lot of it is, you know, it's kind of like adding leverage to something where, like, As long as times are good, it's even more awesome because you got more money and you're hiring more people and the valuation goes up faster. But the second you hit a little pebble in the road, it can all come crashing down really quickly. Whereas I think the bootstrapping model, you know, you're not able to accelerate as quickly and it takes longer and, you know, maybe it's scary in its own ways in the first, in the early years, but as it starts to work, it creates a much more stable foundation to keep growing a business.

Yeah, that's so true. One thing that we have been talking about is the problems with bootstrapping, but also investors come with some benefits. And obviously they come with money, but they come with other benefits. Did you ever think about the fact that maybe you were missing out on some of the benefits that investors come with, or did you think about filling in those other or, you know, maybe things that they, they add value to in different ways.

Yeah, one of the biggest tricks I learned was I'd still go to meals with investors and they always pick up the tab. That's another good bootstrapping tip where you can actually get funding from venture capitalists without giving up any equity.

One lunch at a time, people. One lunch at a time.

That's right. But if you add it up, definitely thousands of dollars at a time when I couldn't have afforded to order those appetizers on my own. But yeah, I would try to, I'd say the biggest, you know, I felt like one area I had to push extra hard though, I think it's a fair point. What you do get with investors is like they're out there networking, they know the market and they can share a lot of best practices. Like, oh, we saw this thing in another portfolio company, now's the time you should hire the head of HR. Now you should change your collections process to work this way, et cetera, et cetera. If they're good, there's a lot of investors I hear about that are just totally in their own world and destructive, but there are good investors out there. We have to acknowledge that and they can add value in that way. So I was just extra deliberate about making sure I went out there and just talked to a lot of people about what they were doing. So I would both talk to investors. I also would always try to network with other entrepreneurs in the same field that were like a stage or two ahead of me. And then I just always ask them, they're just all like so many tactical questions like, hey, at what point should we hire a CFO? Are there things we're missing in our collections best practices? Back then, you know, it was, there were lots of there was no guidance on even how you calculate ARR. So it was, you know, figuring out some of the formulas there. How do you set up a sales comp plan? Like all these things. So I really went out of my way to build that network. Whereas had I had a good investor who had a portfolio of similar companies, maybe I would've gotten that built in. So there was a bit of DIY. The other thing that I found was that prior to, and we finally did raise a growth round, you know, it was very different circumstances because we were already at scale when we did that. But prior to that, I found I always had to do a lot more work when I did want to hire experienced executives because they would, the way executives look at things is like, hey, is this a serious company? They're, you know, they index more on the equities, like, will my equity ever be worth anything? Will this be good for my career when someone looks at it? Is this a serious thing? So I think at first glance, people would look at us and be like, hey, is this a real company? Is it just this lifestyle business? Will this be good for my career? Is this thing going to grow? A lot of it is if you're an executive, if you're at a company that doubles or triples while you're there, it looks great for you. If the company doesn't grow, it could sideline your career. So I was always able to hire really good people, but I had to work extra hard to do it. Whereas once we finally did do a deal, like, it was amazing. Like, nobody asked me any of those questions anymore. Like, is this business for real, et cetera, et cetera. So you do have to work harder there, but it's still possible, you know, and we did hire great people. So I don't think it's, yeah, I think some people believe like, oh, I have to have an investor to hire good people. That's not true. You're gonna have to work harder to get the good people. Yeah.

And, and I think to your point also, you have to work harder to build the network to like gain expertise around you. So like investors have plenty of expertise and I'll put that in quotes because sometimes they're generals fighting the last war, let's face it. And sometimes they have expertise, which actually isn't that good, but like, so is true of, of anybody around you. So like you have probably to be much more proactive in surrounding yourself with people who had an informed point of view about the market, about the stage you were at and when to do this and when to do that. So that didn't just come embedded with your investors. You had to do the work to pull that network together.

Yeah. Well said. And I think being deliberate about pulling that network together matters a lot. I imagine, as you point out, even if you did have a great investor early stage, at some point you're going to outgrow them, or maybe most of their portfolio is in a different sector than you, or they're going to over-apply a lesson from another company. So I think even if you did have investors, you still want to be deliberate about building a network and a group of people around you to show what's out there. But I find it's like, I found like I still made so many mistakes the hard way, but I'm like, can I at least save making one or two, learning one or two lessons the hard way by finding someone who's been there before. And then the other thing I found too is like there were just a lot of things like I didn't know what I didn't know in terms of like, you know, there were job functions and processes that like I just didn't know existed, but that do exist at a bigger company. And then when you talk and you're only going to find out they exist when you talk to other people, you're like, Oh yeah, this thing where this little problem I'm starting to see now, it's only going to get bigger as we scale, is something that like just about every company's already figured out. And if I just hire the right person, they can figure it all out for us rather than me hanging my, you know, banging my head against the wall to figure it out.

Right. Is there one example of that that comes to mind?

Yeah, let's see. Gosh, it's probably a whole bunch, you know, like, like one was like adding the CFO function where prior to looking into it, I always thought the CFO CFO just like balances the books at the end of the month and does the forecast. I didn't realize like, oh wait, a CFO can go out and like get you a better deal on debt so you don't have to personally guarantee it and figure out how to like allocate the resources between departments and just kind of seeing like the breadth of functions within that role. You know, same with marketing, seeing like, oh, not only does marketing, like how I used to always think, oh, marketing's just to like get people to come to our website and fill out the lead form. I didn't realize like, oh, a lot of it's actually like developing materials for the sales team to better arm them in the process and all these pieces like that. So, you know, but a million more examples like that, you know, in esoteric roles in pretty much every function of the business.

Right, right. So funny because you're saying like, well, you know, I didn't know that. Fine. And also, you were a bootstrap founder. Fine. Not clear to me that venture-backed founders necessarily know that stuff either. I mean, they learn it the same way you do by being like, "Wait, what do you have over there? You have a CFO that's doing so? Oh, I should have a CFO." I mean, maybe not the CFO per se, but definitely just learning the functions like marketing, like actually customer success. Is something that kind of founders, I think, have to rediscover in some ways themselves. Yeah.

Well said. And in a way, one of the nice things about bootstrapping too, you're more likely to come in confident the faster you grow. So, if you're growing it, the way I look at it, it's like if you start out having never grown, unless you're a second-time founder who's already grown a business, it's like, I've got lots of experience managing a business the size we are, but even now, if and when the business grows this year, I'll be managing the biggest business I ever had. And to some degree, I'm pushed out of all the things I've become confident in and to new things I'll be incompetent in until I learn it. So the nice thing about bootstrapping over a longer amount of time is that you have a bit more time to learn at each stage of the game. So if you're growing, you know, like let's say 50% year over year, still hard, you know, it's really hard going from, you know, a 50-person company to a 75-person company, but it's not as hard as going from 50 to 200 people all in one year. You know, less stuff's going to break. You're going to have to learn less new functions and learn how to operate in fewer management levels. So there's like, in venture, there's this kind of forcing function where they try to force you to grow super fast. And, you know, sometimes it's the right thing to do, right? Like, I think Google did all the right stuff. I don't— I wouldn't go back and tell them to grow slower, but we've all seen a lot of companies that shouldn't have grown that fast that did. And, you know, it's evidence now and seeing all the layoffs the past year. So But that's because like the, you know, most venture capital investors, like they want their return in like 4 to 5 years. So you really have to grow fast while they're invested. But for the entrepreneur, you could, if you can say, hey, this is a business I'm going to do for a decade, for 2 decades, and you know, just do an easy spreadsheet. What happens, you take any decent base and compound grow it for 50%, you know, year over year for a decade or 2, you're, you know, you're going to be fabulously successful. Um, but no, no institu— you know, or just about no VC would ever have the patience. If you said to them when they signed the check, like, hey, thanks for signing this check, I'm not going to raise another round of funding for 10 years, so you're not going to be able to mark up your investment and you're not going to get liquidity, they'd be like, wait, wait, don't give me that check back, don't cash it. Uh, but, you know, for the entrepreneur, it's actually, I think, a great way to, uh, to build, build wealth and be successful and have a good time. And, and for employees too, I think it's a way to give a lot of people a very, um, stable career with growth opportunities. And, and like I said, it's still possible to give them equity incentives so they can share in the upside too.

Yeah, you know, I was going to ask you who should not bootstrap, and I'm going to ask you that, but what I'm just reflecting on is that— maybe I'd like to hear your response to this— you know, one element of I want to bootstrap is the notion of longevity. Like knowing, hey, I'm in this game for 10 years. By the way, 10 years is short, right? 10 years, 20 years really. And I'm kind of in for the long term. You kind of maybe need to have that to be successful at bootstrapping. I'd love to hear just your reflections on that and other thoughts about who should not bootstrap.

Yeah, it's a great point. I think in terms of who should not bootstrap, and there are some business opportunities that have big fixed costs to start. And if you've identified that, then you might, I mean, still I'd push everyone to think like, well, do you really need to, you know, do you need to do this big a capital outlay? Could you start by renting it? You know, are there clever ways you can get around it? Because you're going to get terribly diluted if you have to raise lots of money to get in in the early days before you prove it out. But there are some businesses like that, like if you're doing SpaceX, you're like, we're going to build rockets. Like, well, that's going to take a good amount of capital to get going. You can't do that in 2 weeks, at least not yet. But then, and then maybe the other 2 is if it's like there are some businesses where it's clear like you need to build this huge audience and then make money. And if you're growing at it, you know, like you look at like Google, for example, it's like it was clear like, okay, if you could become the number one search engine with everybody, you can then figure out how to make money, but you probably got to become the number one search engine first. Yeah, I think it can make money and, or, you know, it can make sense to bootstrap. Or sorry, to raise venture, you know, or Facebook's another example where it's like, okay, if they just get as many people on this thing as possible, then it'll be really valuable when you turn on the ads, but probably not worth it to try to sell ads when you're still at a smaller user base. Maybe it makes sense to push that off another couple of years. So I think that there are some very unique circumstances where it makes sense to raise money. I think the problem is that it's become, it should be the default to bootstrap. And then, hey, in these special situations, you want to raise venture money because you've got these very unique market dynamics and you're very sure you're going to have this like multi-billion dollar business if things go right. And in the narrative, I think it flipped where the narrative now is like, oh, it's default, you go out and raise venture money. And then it's weird if you keep bootstrapping even after you have something that works. So that's, that's, I think, the big flip. And then I think what gets hidden a lot of times is that you see all these announcements when companies sell, and it looks like a success until you realize like, oh wait, they raised more money than they sold for. So actually the founder and employees get nothing. Or they, you know, maybe they sold for a bit more than they raised, but they had to agree to all these preferences. So the founders and employees got nothing and maybe even the early investors got washed out. So it's another problem with it where no one wants to broadcast that because they want to, you know, hype their reputations and no one wants to be seen as the person, you know, as the angry investor or whatnot. But that a lot of these stories that seem like successes are actually failures in terms of the equity value for the founders, employees, and early investors, but it just gets covered up. So I think that, you know, it's one of these things where it's this mirage where it seems like the whole ecosystem of venture is more successful than it is. It's successful in some very specific cases, but, you know, most VC firms, the vast majority of VC firms don't outperform the market. It's only a very small handful that do on a repeated basis. So just do the math. You know, it's an even worse situation for all those entrepreneurs and employees in their portfolios.

Yeah. Yeah, that's really— yeah, I think that it's so important to, as we said before, like to sort of scratch beneath the surface, you know. But I also think that a lot of we've been talking about is like, how do you get the right information and how do you build your network? We haven't really talked much about your co-founder. Did you and your co-founder, like, discuss this initially at all as you were going together, as you were growing together? I mean, did you ever kind of look at each other and say, maybe we should, like, raise capital, especially during those times where you were growing fast from the revenue perspective, but, like, it was hard to hire as fast enough? How did the two of you talk about, and what agreements did you make around bootstrapping?

Yeah, so we kind of started knowing that we both had a bias towards bootstrapping and not wanting to feel like we had someone to answer to or a boss. So we'd always talk about together, we'd always look at that. Every month I'd send him that financial forecast spreadsheet with my notes, which was also just a good way to have to write it out to someone else just to make sure I wasn't crazy or missing anything. You know, I don't know how much he ever actually opened it up and went through it. I think he did maybe only now and then. But we'd have those conversations together. And he's the lead, he's the CTO. So he would lead all the tech side, which also had a lot of the trade-offs in terms of having to, a lot of times him personally or him in a very small team coding stuff versus having a team or having to work extra hard to figure out, hey, how do we make this work on very limited server space because we don't want our AWS cloud hosting bill to explode. So we'd have those conversations together, but we were always pretty aligned in like, at the end of those conversations, realizing like, yeah, we're— feels like we're going to create a lot more value for ourselves and the company not taking venture money than taking venture money. So Yeah.

So it sounds like that's probably part of the formula, like to be aligned with your partner, partner partners.

Yeah. And I think we were both comfortable bootstrapping and with the sacrifice. But it's a great point because if either of us were like, you know what, even though the company's— back when the company was tiny, we want to pay ourselves big salaries and fly first class and get invited to all the fancy parties and hire a big team and have a nice office. We would have had to go raise venture money. And, you know, I've heard a lot of companies for that. That's created a bunch of tension.

Yeah. You know, I have my co-founder prenup in my book From Startup to Grownup, and that's one thing that I think is so important to talk about for, you know, for the partners, for the co-founders, like what's your vision of how we're going to grow this business and what it looks like when it's sort of final? And to your point, like, For some people, and this is totally fine with me, it looks like having a nice office, it looks like having a big team, it looks like it is sort of in a rush, let us say. But if you are not in alignment about that part of what success is going to look like, beginning, middle, and end, I think it can really cause tension.

Yeah, well said. I mean, it is funny for us because the first thing we worked together on was the Shorty Awards. But when we had the idea, we didn't think it was going to be a business. Like, we were like, hey, we could build this thing in 2 weekends and it'll be a fun project to get attention. But, you know, who knew an award show could be a business? I mean, it's still a profitable business with a 5-person team since spun out. But at the time, you know, it's like an award show for Twitter, which, you know, in 2008, Twitter itself seemed like it could have just been a fad. So, originally we were like, hey, we're pretty sure we can build this thing in 2 weeks. So we're like, let's just do it. We didn't even have an agreement, which seems insane in retrospect, but we didn't think it'd be worth anything. So why would we need an agreement? We just did it and we liked working together and it was a great test case of working with someone because it was like this high pressure thing because when it did take off, I mean, we had to figure out how to put on a 400-person event in 2 months and get sponsors and fly people in and manage the press. They were both working like mad. And then the end of it, we were like, oh, we worked together well under stress. So now let's go do an agreement. And it took a little while to negotiate the agreement and all that. But it was great because we already had the chance to work together. Whereas I've seen a lot of people go wrong because like they have coffee with someone once, like, oh, let's go start this business together. Seems like on paper, good co-founders, but like you don't know what that person's like under pressure. You don't know what their work ethic is and all that. So that was one really positive piece of it. And then another, I think, was that we had very complementary skill sets. He really likes the development and the design. I was very much into kind of how to do the marketing, the sales, get attention for things. And then we'd collaborate on the product piece. Whereas I've seen a lot of friends of mine, like they'll start business with someone who's like the carbon copy of themselves, like two MBAs who go start a business. And like, I saw this one friend of mine who's two MBAs starting the business. So like both of them were creating beautiful pitch decks and going out and meeting with everyone, but they never built a product because neither of them knew how to build a product or wanted to build a product that was willing to be the person who'd stay at the office all day and actually build the damn thing. So they ended up like shutting it down 6 months later because they had this great deck, but they didn't have a product. So that's another thing I always tell people is like, yeah, don't go with your carbon copy. Get someone with complementary skill sets so that you can each do what you like and everything will get done.

Totally. That is such important advice. I hope everyone heard that. That is like really important. You know, for the reasons you said, the sort of the carbon copy, because everyone wants to do the same thing in that case, but also, you know, just for the reasons of You need to make sure that this is the person that you can actually make progress with, not that you like or that you both have— like, "I love your PowerPoint." No, I love your PowerPoint. You really have to make sure you can make progress with this person. That's so essential.

Yeah, well said. I think it's always good kind of creative tension and a good way to push each other to keep doing better.

Right. That's great. So Greg, yes, you bootstrapped. Good job. But you recently sold a part of your company. What drove that decision?

Yeah, we decided to raise a growth round. This was a year and a half ago. And basically we saw—

One year, just to clarify, when exactly was it?

Oh yeah. Yeah. So this is all publicly announced August 2022. August 2022, we did $180 million growth round, first institutional we ever took. So we called it our Series A, a little tongue in cheek, but you know, the definition of Series A is just, it's your first deal. It doesn't refer to how big it is. I was almost like, can we just call it a seed round? Because now the seed rounds are pretty big, but that felt a little too far. So we did that deal and basically like I was looking at it and we've gotten to a pretty big scale by then, you know, tens of millions in recurring revenue, cash, you know, very cash flow positive. I wasn't having to sweat the spreadsheets anymore. But looking ahead, I was thinking, you know, there's kind of two ways this could go. We could either kind of start resting on our laurels where we are and just, you know, take out cash flow and, you know, have good lives, or we could really go for it and build like a really industry-changing tool and still feel like there's an opportunity to 10x from where we are. We've already grown a lot since we did that deal. So I thought, hey, on one hand, you know, this could really set us up to keep going for broke rather than playing it safe. Not to say like we're still operating profitably. So it's not like we got irresponsible with it, but just to, you know, make sure that we keep our foot on the gas and keep reinvesting in the long term rather than wanting to, you know, wanting to just get some cash flow out of it. And then another two was seeing that at that scale that we could work with partners who'd seen the next level of scale already. Because kind of like I was saying with surrounding yourself with the right people, the irony is I find is the business gets bigger, it's a lot harder to get information because two reasons, fewer people have been there and there's less incentive to share about it. So if you look up on the internet, like how to hire your first salespeople or how to raise your Series A, there's a million articles because lots of scrappy entrepreneurs have done it and they're all desperate for attention. So they all want to write about it to get attention. But if you try to look up like how do you hire a CRO for a scale SaaS company, I mean, there's only a couple hundred people that have done it. None of them are writing blog posts about it because they don't need the attention. They've already got super valuable business. And then, so, you know, it's both fewer people who know how to do it and there's less information out there. And the bigger you get, the fewer other people have done it. So it's kind of harder to get the intel there. So that's also where I felt like, okay, finally, like having the right investing partner could give us some guidance there and put us in with a portfolio and expand the network. Even more. And finally, too, I realized that like the dynamics that change versus like a lot of the downsides that I was wary of, of having investors at the early scale really change a lot when you get bigger. Because early on, it's like you're always trying to— well, first of all, you don't have experienced management teams. So the VCs or, you know, the investors are trying to tell you how to run the business versus like for us, we already had a well-seasoned management team by then. So we, you know, there was this element to where like these later stage investors, they're more like, okay, they find a company they like, they want to give a little bit of it, you know, help them grow, but they're not looking to tell them how to run the business because they recognize the business must be running pretty well to get to where it was. In other words, we were at a scale where we knew we could keep board control, which is very important to us. So we felt like we weren't giving up being a founder-controlled company and, you know, getting— and then also, like I said, it kind of made it easier to recruit executives to get, you know, to the extent we don't— that means we don't have to personally guarantee debt anymore, all that jazz. So it had its benefits at a scale, but I think I always advise people like you know, don't be close to the idea of raising money, but wait as long as you can to do it.

Yeah. So of all those benefits, especially sort of bringing in partners with, you know, fresh eyes, maybe a network, a portfolio, whatever, have you received those benefits? Do you like— what are some examples of what you've tangibly gotten since you took this growth round in?

Yeah, it has been very valuable. Like this group, Susquehanna Growth Equity, they put on an annual CEO summit. So that's been great, both, you know, the peer networking of meeting a lot of other entrepreneurs who both had companies bigger and smaller, but there are some in there that are where their companies since grown to be, you know, 5 times the size that we are and some that have gone public and getting, getting like that perspective has been super useful. Another thing that's been nice about it is that getting benchmarks from them. So like going through all these little details in our book, you know, our percent spend on R&D, our growth, our CAC, our time to collect revenue, all those things and getting the benchmarks. And, you know, they've all been, you haven't discovered anything where we're like fine, but at the same time, I used to kind of not know 100%, like, hey, are we doing everything buttoned up? So it's just nice as a shareholder to know like there's some outside group looking at everything that we're doing and all that. And, you know, I kind of, as the business gets bigger, realize that like actually my, you know, my role as a shareholder is kind of more important to me than my role as an executive being the CEO. Because if you're the founder and you have a big chunk, like you'll probably make a lot more money from your equity than you will as your whatever your salary is as CEO, even if you get a good salary. So it's kind of like, hey, you know, it's actually kind of good that there's someone else looking at those numbers. And then finally, too, it's— we haven't— sometimes when people raise money like this, they have a mandate to go out and acquire other companies and be like a platform company. Our deal's not set up that way. So, you know, we could just grow organically. There's no mandate to go acquire companies, but now we have more wherewithal if we did want to do that. And before we did this deal, a lot of people just didn't— we probably, we could have afforded to acquire companies, but people just wouldn't— we weren't on anyone's radar. Now we get to look at all the companies up for sale, and then our investment partners kind of help us do the diligence on all that because they have a whole team that can due diligence and work through that, whereas we have a great internal finance team, but we don't, we don't have enough people in it to like scale up to look at every opportunity that comes by. So that's been a nice benefit to just be able to look at, look at what's out there and know if we wanted to opportunistically acquire a company, we could.

Yeah, that's really interesting. And Greg, you know, you got a big $180 million. That's pretty good. So presumably you then did something, you hired people, maybe you, I don't know, increased servers. May I, I don't know what you did actually. What did you do with that? Um, what did you do with not all, every single dollar, obviously, but chunks of that money? Where did you apply that to that you wouldn't have done if you were still just growing the way you'd been growing?

Well, we, we just kept reinvesting in the business. So we, we kept bringing on, uh, new executives who brought on a, uh, a CRO and a CMO. Who'd each seen companies scale to kind of the next level already. So it was a great way to kind of deepen our talent bench. We kept growing and increasing the headcount. We also did our first ever in-person offsite. So—

Oh, exciting.

I guess we didn't talk too much about this, but ever since we used to be half remote, half in-person, and then during the pandemic we went fully remote and committed to it. No one wanted to come back to the office. So we closed it down and then we figured, okay, let's redeploy some of those resources to getting people together in person. And this part of our mantra is like, just because we're remote doesn't mean we can't ever see each other in person. So we, last December, we flew everyone at the company to Cancún and took them to an all-inclusive resort and spent a week together, did some meetings, gave people a lot of downtime just to hang out with each other. But it made for like a really powerful moment where we'd never gotten, you know, by that point over, well over 200 people together in person to actually spend time with each other. So it was a really kind of nice moment in the company because it's hard to appreciate the growth when it's just like little boxes on a Zoom window or, you know, how many people you see in the count on the payroll system versus actually seeing everyone in one room was a really special moment. Coming.

Right. That's great. So I mean, honestly, that capital allowed you the kind of the luxury and maybe the space to be able to do that.

Yeah, I think it gave us some more breathing room to commit to things like that.

Yeah.

I mean, I mean, you know, we probably could have done that anyhow, but it would have been a lot harder to make those commitments without knowing that we'd taken the capital and had more breathing room.

Yeah. Just a couple more questions, Greg. What, um, given all we've talked about, I guess I would ask you, what are your 2 or 3, like, top pieces of advice for founders on their bootstrapping journey?

I would say obsess over cash flow. I think Like to me, EBITDA is like a really destructive idea in that like it's taught in business school, like kind of like looking at GAAP profits and, you know, when you recognize revenue, like that's, that all is great at our scale now and matters a lot. You know, if you're analyzing public companies, but in the early days, like it's irrelevant if you have revenue because some customers signed a contract if you don't have the cash. So, you know, getting really laser-focused on stuff that people usually don't talk about, like, do you have a really good tight collection system? Are you invoicing on time? Are you acknowledging receipt of the invoices? Are you trying to structure to get cash up front? You know, same with your vendors. You're trying to, you know, negotiate things so you have more flexibility when you pay things down. Really converting your whole worldview to cash flow until you're at least at a few million in revenue is super powerful. Another is just knowing that like it compounds. Like I remember early on, we'd see a lot of our friends who'd raise venture money. And we, yeah, I got to admit, we would be a little envious. You know, we'd see like, hey, this person has this dinky little idea with almost no revenue, but everyone's congratulating them on social media because they did their $5 million Series A and they have a real office unlike us when we had these crappy sublets. Yeah, and the people who raise the money, they get celebrated a lot until they run out of money and then everyone forgets them. But there is that moment where you can have that, but just knowing that like, hey, you're creating, you're they're kind of taking almost a loan with that Series A. They're selling a chunk of this business. They're getting diluted. They're losing optionality. Even though they're getting celebrated, that's what they're doing. And you meanwhile, even if you're only adding $5,000 in revenue more that month than the month before, you are slowly but surely building a lot of equity value and you'll have a lot of optionality. And statistically, you'll actually probably end up getting a lot more value from your equity than they will. But you don't get the same amount of glamor for that, but just have to kind of have the faith and believe that you're playing the long game and going after it.

You can't eat glamor, people. Don't forget that. Greg, last question. What do you wish you had known earlier on your journey?

That's a great question. I think I wish I knew it would all just work out so I could have slept a lot better in the early days. But I think, you know, some of the things early on, I think just the value of hiring really great people and that like, maybe if I had to sum it up, like knowing that a lot of problems that I used to think I'd have to figure out myself one day that like, you know, some problem that I'd have to solve, it turned out that the way all those problems got solved was like I just hired the right person. They went and figured it out and they were much more experienced at it. So there is, so I guess it's like there are a lot of things that I thought were kind of like what problems that were really who problems. And so it was just having to wait till you could afford to hire the right who to figure it out. And, you know, some things you have to kind of just deal with. How do you kind of make do with what you have for just long enough until you can get the right person? But I kind of really value getting the right person because it's kind of a hard thing as a bootstrapper. I think you have to have two things in your head at once. You have to have like, Okay, I'm going to do without all the right people today to keep costs down, but I know eventually I'm going to need them and that they're eventually going to be what solves my problem. And keeping those two things and juggling them in your head at once is a challenge, but if you can do it, I think it's going to have a really great outcome.

Amazing. Greg, what can I tell you? This is such a valuable conversation. And I just want to— I think it's like a masterclass in bootstrapping and and also just being sensible as a founder and being like a business-oriented founder. So I just wanna say, I really appreciate you joining me today, and I know people are really gonna benefit from this discussion.

My pleasure. Thanks so much for having me on again. It's an honor to be back. So great.

Thanks for listening to From Startup to Grownup. If you like what you heard, give it a review on Apple Podcasts so other people can find it. And if you know of a founder or someone else who is meant to be on this podcast, drop me a line through my website, alisacohn.com.