Bootstrapping vs Fundraising

Please welcome Eric Gunderson, CEO of Mapbox, and Noah Wintrub, Vice Chairman of JPMorgan. You're just like, is this real? Left or right?

I'll grab here.

All right. Hello everybody. Hello. All right, so on the background screen you're seeing some cool maps that I have no idea what they are, but they're cool. My name's Noah Wintrub, Vice Chairman over at JPMorgan. Looking forward to working with y'all as you scale they all go from bootstrap to fundraising, which is the title of this panel. So we're gonna hang out for the next half hour. I think I'm the least interesting person on this stage, which makes it that this is the most interesting person you're gonna hear from. Just by way of background, Eric Gunderson is one of those originals. Eric doesn't believe that there's a mold that you follow. He is who he is, and everybody wants to follow who he is and who he's becoming. So when I met Eric a few years ago, I had heard of the company. He's going to tell you exactly what they're doing, but, you know, when you guys get done with this 29 minutes and 7 seconds of fun here, you're going to realize what I realized, which is there's very few things that you have to know about an entrepreneur. Are they honest? Are they open? Are they transparent? And are they hungry? And if they're all 4 of those, they're going to kick ass from bootstrap. They're going to figure out how to raise money, whether no one wants to put money in, which 'Cause it happened many times for Eric, or what everybody does, which happens for Eric. So you're gonna hear about that, but before we go into some of those details, Eric, just tell us in a couple minutes, what is Mapbox? What are you doing? What problem are you solving? And why is Mapbox so kickass?

So whether you're literally looking for a gym on ClassPass, sharing photos on Snapchat, watching your groceries delivered on Instacart, getting something on DoorDash, We're looking at weather data coming in on the Weather Channel using Tableau maps. We make it easy for developers to add location and maps to their apps. Sometimes those are highly visual. You can see some of the— we basically took video game technology and can render out the map over 60 frames 60 frames a second. And it's not just the map of the world. It's your own data put into the map. So for example, if you open up Snapchat right now, you're going to see this crazy heat map snaking through San Francisco because Justin Trudeau's motorcade just rolled through. And you're seeing everybody post up there. So here it is. It's their Bitmoji world that they made. And it's their data that they designed into it. But it's all of our map functionality. And we scale it all around the world. So to give you a sense of scale, and it's interesting to look back at how that's changed. But we have over 1 million registered developers.

1 million?

Yeah. We actually announced that this morning.

That's about as large as any company I can think of, especially on the private side.

When Twilio did their S-1 file? 775,000. Yeah, I think it was close. Right? So it was— just for the record, I was stoked when we hit 1,000. I remember that moment. I was like, yes. The key part for us is the active developers. So almost 10% of those are active, been hitting our APIs in the last— 30 days. And what's important about that is that means it's not just— we're not just serving those developers. We're serving maps to all of the users of those developer apps. So we're touching over 300 million people a month right now, or better said, 300 million people a month are touching our maps. And every time you're using an app that has Mapbox inside, we're able to collect anonymous aggregated telemetry back— latitude, longitude, timestamp, elevation— things that help us not just map the world live, but show real-time traffic and also have a much more high-fidelity map. We can talk a little bit about how the map—

[Speaker:JASON M. LEMKIN] So let me just plain English this thing, because I think it's freaking insane. So you basically have 300 million-plus people out there. And every time they move, every time they do anything, as long as one of the apps on their phone touches something that's been developed by Mapbox, whether that's Snapchat, which a few people have on their phone, or Weather Channel, or Instacart, or any other app out there, they are feeding back data to you, and they— the developers actually pay you to use their soft— your, your APIs. And then not only that, but then you can build massive, massive amounts of data that you can visualize and license and allow people to really understand what corner should I put my store on, how fast should I be setting the car for automatic driving? You did a deal, I think, with one of the big car companies. It's insane. So just to think about what I got really excited about, and the reason we've gone from bootstrap to fundraising, I think, is that the number one most important horizontal technology in the world is where are you?

Yep.

Where are you?

Yeah.

And you know where people are at all times. And you know how to aggregate that at scale to drive commercial value out of every vertical.

And most importantly, I don't know who any of those people are.

You don't know who they are, but you know where they've been.

Which is the brilliance of it, right? Because designing a system that's private by default— so we don't even require any developers to give us data. You're only streaming data to us when that developer is touching the location antennas. So we have a totally battery-neutral footprint on the app. So it's— look, when you're working, when you're doing a true business-to-developer deal, you need to be giving somebody more than you're getting back. And in our case, the map literally is updating for the users where the users are. And to be able to stream that kind of live data back, developers frickin' love it.

[Speaker:JASON M. LEMKIN] So when I looked out there, we had Google, who will not give you the layers because They're Google Maps and they want to use it for their own purposes. Amazon doesn't have a mapping platform today. Most of the folks in your very large in China don't have mapping platforms. Facebook doesn't have a mapping platform. Snapchat didn't have a mapping platform.

I mean, you have the only independent mapping platform in the world, which makes a banker very excited. Right, there are—

I'm just saying, just saying.

There are 3 full global data sets. In the world. You mentioned Google, and Google's just gorgeous, gorgeous set of data, amazing team, good APIs. It's very easy to put a Google Map in your app. But like you said, it's Google's map. And Google is investing so much on the mapping side because— I think it was Morgan Stanley that did the report— Who? Yeah, right. 18 months ago, saying that Google's doing $1.5 billion in ad revenue on top of the map, and they're estimating it's gonna be $2.2 billion this year just for ads on the map. Here's what's crazy. The stats they share, 30% of searches on Google Maps, like the app, you go there to those physical brick-and-mortar locations in 24 hours. 30% of every search is, actually getting it. So the people that brought you click-through, like certified, somebody actually saw this ad, are now watching you get all the way up to the door. It's, um, and it just shows how fundamental. I want to now give that power to every other company out there and that level of flexibility.

So if you walk away with one thing, recognize that mapping as a horizontal force in the world is one of the most powerful forces. If you walk away with two things, from this panel walk away that Mapbox is really one of only 3 independent people, or 3 people in the world who have this information, and every second of the day you become more valuable with 300 million probes out there every second that you don't pay for because you give value to developers. If you walk away with 3 things, I think we should do bootstrapping versus fundraising, 'cause that's why people came.

Right.

So let's start with the bootstrapping. All right, thank you. Okay.

Hey, real quick, just get a show of hands. How many people are bootstrapping right now?

All right, awesome. Um, how many people are fundraising? Okay, do chai from Horsley Bridge is right here, so you talk to him, okay? He's great.

So, uh, first, yes, it, it really does feel, uh, this hard, and, um, it's, it's pretty, it's pretty crazy.

So can you walk through, can you start at the beginning, and I want you to tell your Afghanistan story, but I think You're in Washington, D.C., you're like a government contractor. Tell us how you bootstrap this thing. It's incredible.

So met my co-founder while protesting the Iraq War in front of Dick Cheney's house. As people often do. And we graduated from school in Washington, D.C., and we were just like super idealistic.

What did your sign say?

6,129-mile slant drill. and it had a giant face of Dick Cheney with a straw and a map on it, shocking, over to Iraq.

Were you like the kid who pulled out the atlas when you were a child, or like Rand McNally was like where you wanted to go visit on vacation, or?

There's some dorky pictures. There's like this circle. We pull those up? I'm just kidding. So we were just, we were total idealists. My background was international development and economics, And I got out of school and I just wanted to go work. And next thing you know, you're sitting across the table from folks, whether it's World Bank, UN, USAID, State, and—

This is before Mapbox?

Yeah, yeah.

So you were doing work?

We started a company called Development Seed, which is doing literally partnering with these agencies to help them be more data-driven. So my frustration graduating was it was just a bunch of, It was really a bunch of old men sitting across a table just making decisions from their gut, not using any data. It's like, well, you want to deploy these clinics. How about we actually show these clinics aligned with population centers and be able to show where the spread of malaria is and actually put that in your hands? It's not like we were the only people doing geodata and making maps, but all the maps at the time, they were like big PDFs. You couldn't explore that. Bit by bit.

Did you have the same vision that drives you today back then? Did you think what—

No, I was just pissed off. I needed better tools to do my job. Yeah, like that was it. Like, so every project, I would take all the money from the project and funnel it back into the product. So literally, I bought Mapbox and the domain name in 2008, and we didn't take any outside funding until 2014, 2013. Uh, we just, we just methodically— So there are a couple huge wins now, obviously, that you Now it's a great story to tell, 'cause A, nobody out here does it, and B, the cap table's awesome. But it was horrible, right? 'Cause you're trying to do two things at once.

Did you not raise money 'cause no one wanted to give you money?

So being East Coast is fascinating. I really did not know how it worked. I happened to have a friend, George, who's out here in the Valley, George Hoyem, threw me in the back of his Prius and literally drove me up and down Sand Hill Road.

To get everybody to say no to you?

So we got lucky. Oh, by the way, so the most important thing is obviously timing, right? Team, product, culture, timing, timing, timing. The culture stuff gets sorted with team and timing. It's crazy. So we were heads down. We were actually against taking VC. We had seen money flow into smaller companies. On the East Coast that were doing open source projects, and we really thought it tainted their approach. They stopped being so pro-developer. You can imagine why we went with Foundry Group in Colorado, just having that technical background. Oh, also, being in Washington, D.C., San Francisco's really far away, and you actually think everybody out here knows technology. So when I first came out, I was like, holy shit, most of these VCs have no idea in regards to tech. So there was a bit of a learning curve. [Speaker:JASON M. LEMKIN] Right here, right?

Remember how this gets paid for?

So there's a bit of a learning curve on how we figured this out. So we took every dollar back in and just kept jamming on it. So we built this— it was like Photoshop for maps, because we needed to work with data internally. So if you're taking a big set of data and trying to make it efficient, you want people to be able to touch it, zoom in on it, have this level of interactivity. And there just weren't tools for that. So we built that for ourselves, then opened it up. And we had no idea how to make money.

What time frame are we talking about here?

This is 2010. The very first Mapbox map ever shown was from the Afghanistan elections. So my first time into Kabul in 2009 was for the presidential. And I landed, and on the map there's literally Ring Road and Jalalabad Road coming up from down south, and the city's an intersection.

Were you raising money there?

So the election had happened a couple days earlier, And there's this, you know, 2,500-page PDF, and there's starting to become rumors that there was some election fraud. And our job was to take that PDF and put it in context. And guess what? A map lets you do that. So I got to go into the archives early on, pull some of the very first half a census that was completed in '79, digitize a bunch of old Russian maps, Landsat and MODIS data from NASA. We actually showed— we estimated where the snow lines would be if there was a runoff. In November and who would be disenfranchised. Had these cool ethnic layers, basically, where you could overlay the votes on top. It was, I mean, in many ways, this was like Mapping 101, but Ambassador Eikenberry's looking at our maps. And best of all, they opened the application up at the end, like once the runoff was off. And there we are, the world's first time hearing about Mapbox was by Tim Berners-Lee. At TED in February 2010, where they actually showed the open data site. So that was lucky point number one. So many people started getting it that we got more contracts, and because we built the tools, we were more efficient. So I basically firm-fixed priced everything. And so one, I didn't like working hourly, because then people could tell me what to do. And two, I wanted to make higher margins. So I plowed all the margins back into the tech. Oh my God, this got unsustainable. One, we never missed payroll, but we came damn close a couple times. And I mean, within 2 hours once. And when you're only working, all your friends are the people you end up working with. And to visualize what it's like to not be able to pay the people and the families Yeah, it messes you up a little. But it—

Did your business model change? So you obviously changed your business model. You started working with developers. You started charging to license. And then you now do a bunch of other services. But how hard was it to shift your model and get paid? I guess the question is, do you think you get paid for the value you create? And how do you determine when to do that?

Yeah, so no, we don't get paid for the value we create. It's much more like— So when a developer goes out and is going to build something, they're going to go get a cloud provider like Amazon, or if you're going to use payments, you might use Stripe, or if you're going to use notifications, Twilio. But if you're going to use locations, you're going to pick us. And the nice part is you can pick any kind of piece. Maybe you want a visual map. Maybe you only want these layers. Maybe you want to be able to upload your own drone data or upload your own imagery into it. Maybe you just want the satellite map, or maybe you just want search happening. Maybe you only want place search. You want directions, you want directions with traffic, and then you want to be able to store those routes. So it's, you know, we talk about internally like Lego. Well, the cool part, the way we were able to bootstrap, because we needed the stuff for ourselves, I needed one of those Lego blocks on different projects. And then over time, we just always had this philosophy as a team, solve root problems. And that just, you go lower and lower and lower down in the stack and you end up building a product. And the product came out from consulting. And the good news about consulting is you stay close enough to your customer So you really know what's needed. And as the only salesperson at the company for a while, you're basically doing product development and sales at the same time.

[Speaker:JASON M. LEMKIN] So you decide to raise money. You move out here. You have a couple children in between. Walk us through that period. When did you decide to take money?

[Speaker:BRYAN FITZPATRICK] So we grew it to 35 people profitably. We'd already had Foursquare, USA Today, Just a ton of other, we had like the NASCAR slide.

I love the best logos USA Today, that's awesome.

Hey, we did 20 million views on election night. New York Times was down for 15 minutes and Wall Street Journal, half the map didn't load and our stuff stayed up. But it was little wins like that. I mean, you look back on it and you're just like, oh my God, I can't believe that I just put enough of these little things together to finally create that. It was 2014, and the team was so spread thin. It was like, "There is no way we can continue to do this." Basically, you get to this "you can't go back" mode, where the team's so big you can't go back to consulting. You've built this thing out, and you're running such tight, often known as, I was either 2 or 3 weeks up on the bank account, or 2 months down on the bank account, depending on where the line of credit. Was standing at the time.

Did banks help you at all?

Oh, don't even get me started on this one.

I'm not going to actually, because I work at one and I don't want to get started, but—

2009. So the very first repository, code repository for Mapbox, has a timestamp on November 22nd, 2008, which means that was 7 weeks after Lehman, right?

Yes.

And it's just like, guess what happened 6 months later? All of our lines of credit were pulled. I was like, well, shit, I was just going to use them now, right? So no, it was— there were just every year we got— it was hard. Here's where we started getting super lucky. Waze got bought in July 2013, and all the chatter of Waze going from like quarter billion to half billion, and the rumors of like a price war happening were happening all that spring. That was a really good time to go raise, because one thing is for sure, people do, on one hand, investors love the idea that you could go up against a giant. Nobody wants to invest in you if you're competing against Google. It's just like, now it was kind of like, all right, look, you're—

Is that Google, isn't that Amazon today, or is that still Google?

Google? It's a good question. I mean, I think you were talking about this a couple weeks ago, just consolidation in the space. I mean, complexity is the new moat. And I think it's very hard to look at an early stage company and believe they can stay independent now, given how— are you an actual company or are you a feature? And our approach was we're a platform. We're going after the entire thing, not just the software component, but we own the underlying data. And we had enough logos, and it was also one of those things, well, hey, worst case, I think that year Apple bought, of their 13 acquisitions, 9 of them were geo-related. It was kind of an investment that was hard to mess up.

They may have brought the 9 wrong ones driving into the other one on the map.

Why Apple?

So, okay, that's a perfect example. So Apple is a freaking, they make great products, You build a better map than Apple. I'm guessing they spent a few shekels more than you to build their maps. Like, why did you win, and why are they losing?

So to be fair, it's really hard. Apple, with all the money in the world, bought some of the best data in the world from TomTom, in this case. And it just gives you a sense of how hard it is to do the level of data conflation and get the details right, and honestly, get the feedback. Like, the world needs— the world's changing constantly. And what burned Apple the most on launch was being able to correct what users saw because the stack was rigid. And we had transformed into a world where you have to update the map live. That's the expectation. And that's a different world.

And that's what they missed.

Yeah, they just— they didn't own the data. If you don't own the data, you don't have control to update it. The story goes that after launch, they sit down with their data provider. They're like, OK, cool. Here's all the feedback. And they're like, great. We'll get working on this and give you the update in 6 months. What? I mean, that's what gets Tim Cook to write a letter of apology. So it's hard.

So let me ask a question there, because I still don't think we've answered the promise on number 3 on the bootstrapping piece. But do you think in the early stages, if I think I get you right, having someone that sort of gets it from a technical perspective and an industry perspective is the better investor than someone who has lots of relationships and financial acumen?

If you're building a technical product, yes. If you need somebody more on the marketing side or you need somebody that knows the consumer space, I mean, this notion that investor brings you value can be very true. But you have to be intentional about what you're looking for.

We went out last year to raise some money, and some of these folks that we talked to, I mean, I like these people, don't get me wrong, but what's gonna happen when HERE and TomTom and all these companies, and they're fighting, they're building the Maginot Line of driving freaking cars around while you have 300 million people moving around building your maps for free, and no one got that except for Deep Nishar at SoftBank and a few other folks who lost out, but Why did you choose to take money from deep?

Yeah, so the—

Now we're getting into the fundraising part of things, 'cause that's not bootstrapping.

Right, right. It was, yeah, this last round was amazing. So just to give everybody context, Founder Group in October 2013, Series A, $10 million. Did you spend it all? We were able to triple the company before meeting Randy Gline, DFJ Growth, and that was a point where, that was a magical moment. We basically spent a year and a half redoing our platform, truly getting ready to run at mobile because we weren't collecting data yet. We didn't get that data pipeline going until Series B, and so Randy took a hell of a bet on us because if we didn't get the live updating data, we just weren't going to have the data asset that you ultimately need to have the valuation, and we raised $52.5 million. From DFJ Growth, that was like, that's a tractor-trailer load.

Yeah, that's a lot.

And what I always did was I optimized to have cash on hand. I didn't try to optimize valuation.

Let's talk about that, 'cause this is like the bane of my existence. So you optimized for getting the cash, not for valuation.

First for people. I actually took a lesser term sheet from Foundry Group because I liked their team so much.

Did you do that in the later stage when you were raising $52.5 million?

Yeah, no, this is where it gets weird. So I'm not emotional about cash. I am very emotional about who I work with. And I was lucky enough to get— I would not have— we would not— with a more traditional investor, non-technical investor, there's no way they would have let me do some of the shit that I did. For those first early years to get to the point where then somebody like Randy with the CFO acumen would actually support. And you hop forward, what you saw while we were raising Series C was really two different worlds. When I sat down with Masa in Tokyo in the summer, in the end of the summer, he's up here at like 50,000 feet dropping down to 5,000 feet, back up, talking about like how cities are, the future of how cities are gonna be designed, the proliferation of sensors, the need for connectivity and data everywhere on the edge in those sensors. It was surreal. And there was a time horizon of looking at how the world was changing that I just, I left in awe with.

[Speaker] So let's talk about SoftBank. So Vikas led the team, he's on the board. And then you've got Masa who's at 50,000, 5,000, 50,000 feet. You got the whole soft bank.

The whole bench is amazing, just to be clear. So I got introduced to Vikas. So on my iPhone, the third picture on my iPhone is in the back of an armored Land Cruiser in Afghanistan, and there are two people in the back, somebody I was working with in the humanitarian space and this other guy who I don't remember his name, but he introduced me to Vikas. What, this summer, and it was like, it's wild how part of it's just showing up, part of it is why you choose to show up in certain environments, and the kind of creed that we had in 2009, 2010 to come full circle to a kind of thinking that I was in awe with watching the Vision Fund come together was magical. So Vikas dove in and just immediately started asking specific questions, and I really like people that have a very fast throughput, being like, wait, wait, why, why, why? And it's like, you're trying to, truly understand this. I really value that. Um, I met Deep, uh, right off the get-go. I mean, he's, he's, he's an operational baller, right? He took LinkedIn as head of product from 30 million to, uh, 300 million, redid their entire server architecture. Before then, uh, grew Google across Southeast Asia and, and knew the mapping part. So he knew the technical part.

I'm going to get him a t-shirt that says baller. I like that.

Uh, he's amazing. So having that kind of operational experience Then you sit across the table from Rajiv, it's magical. It's like the whole bench coming together here. Look, what you were really helpful with was those conversations where I'm like, "Hold on a sec, there's a ridiculous amount of money, and then a lot of ridiculous amount of money." That was the soft bank round. Having that conversation, do we go to partner with somebody that we truly see more aligned with and how the world's changing. And that, I mean, that, I mean, how many times we sat and watched, we had a couple beers.

Eric loves drinking beer like me. He likes the macro brews. Good Coors Light. Yeah.

And it was, but it was those kind of, it's like, that's where it gets really personal, right? 'Cause you are scared shitless. I mean, it's a lot of money, but you're making a relationship with somebody.

And do you think, has raising that much money changed you?

Does it change you? It definitely changes what we can do now. I sound less crazy.

Your plane is a little bigger.

I'm just kidding. I sound less crazy when I'm talking in front of my team. One of the hardest parts in the early days, it wasn't just that investors thought you were full of shit. You hire smart people, and at a certain point, they're just like, how are you ever going to pull this all off? And now— Now you have the confidence to do it. Now there's that arc. There's enough of a runway to do it.

So as the most strategic company, I think, out there, why do you stay independent?

Oh, this is—

Why?

Yeah, I mean— It's the early days of the space. It's fundamentally changing. I'm not sure how many people are messing around with ARKit or ARCore. Just the developer ecosystem that went from a couple high-end tech folks to now anybody with an iPhone 6s and above. I mean, there's over 200 million devices. That now are AR-enabled directly on the sensor piece, and location is a massive part of that. I personally think the AR and VR space is going to be bigger than the browser and bigger than—

And you think that the winner has to be platform agnostic? Like, could, if you were to join one of the big platforms, could you still do what you were doing? Amazon obviously has done it with AWS.

Yeah, yeah. To be able to collect the kind of, to map the world live, you have to have a horizontal play. The reality is we power better turn-by-turn directions for car companies because of Snapchat, and that is not a logical bridge that many people have believed in in the past, but how sensors are changing and the level of connectivity happening and the high fidelity of data. I mean, here's what's changing. Let's be clear. The map up to now has been designed for you. You're the interface with the world. You need a level of accuracy for you to understand where you are. When the person starts being removed, the level of accuracy, the level of detail, the level of real-time— this is going to get insanely hard.

[Speaker:JASON M. LEMKIN] So mapping's the future. In the last few seconds here, any final advice on your journey, what you learned? And what you would do the same or differently and advice?

It's hard and there's nobody to talk to, so try to find other people going through hard stuff. I happened to meet other founders in the open source space. But there's literally nobody— for all those hands that went up on the bootstrapping side, it sucks. And, you know—

That's really comforting.

Yeah, just keep at it because the most important thing was not getting to the fundraising standpoint. The most important thing was really me finally getting to know myself through that process, and that's been the most transformative. I grew up as a— and I learned so much about myself over these last, you know, 7+ years. It's crazy to realize that I might not have known myself if I took easier options out. Mm-hmm.

What an amazing journey you've been on, but what an amazing journey ahead. Eric, thank you very much.

Thank you.

Awesome.

Thank you.