Amy Pressman, co-founder of Medallia, on why she bootstrapped at first then raised venture capital in 2011. High Silicon Valley costs forced discipline early on. When social media and the iPhone exploded the market, she took term sheets to accelerate product and sales. Post-funding, the company lost some financial rigor and had to rebuild controls.
Right. So I think is truly also remarkable about this story is when you hear about a lot of companies that are bootstrapped today. Lots of them are not based in Silicon Valley. You know, you hear about companies, you know, we get pitches about, you know, cover. My company that. That's based in Chicago, we've had no. We don't even know what a venture capitalist is.
Right.
You know, aren't we fascinating? I'm just curious if the geography was, you know, a player here. I mean, obviously you, you probably knew VCs. It's not like you didn't know where to find them. And, you know, your company was in Palo Alto. Right. So it's not like you didn't know where to find them. Right. To what extent do you think that it was harder to not raise venture capital? Just being in this community, it was really expensive.
But one of the things that it forced us to do is get really creative about, you know, real estate. We have our first direct lease with a landlord, two today in our entire history. It forces you to get really creative about furnishing your spaces, how to find people, how to identify untapped pools of talent. Because it is expensive here. But the other thing is, early on, we were really. It really makes you focus when it's an expensive area, it makes you focus on products that your customers love. And that is a great way to get really successful because, I mean, it is so clearly your lifeline. I think when you have more resources, it's easier to get somewhat disconnected from that because you have a Runway. Right. But it's like whether you're going to make payroll depends on whether you're delivering great products and services. So it made us. So it's so clear in our focus.
Right.
Yeah.
So tell me about. So then, you know, you're 2001, 2011. You have a decade of being bootstrapped. What changed in 2011 was the. By that point, you'd been, you know, you'd existed for 10 years. Was the process easier because, you know, you weren't, you weren't, you know, just out of Y Combinator and looking at.
Yeah, we got something like five term sheets from some of the top investors in different categories of investors. I mean, it is if you're out there and you're constantly pitching and it's really hard. I mean, it was not difficult. I mean, we put up our slide of customers, we put up our retention rate, we put our expansion rate, and we really had a lot of choices. So that's another reason that it's A really great thing.
And what caused you to change your mind? I mean, it had been 10 years.
We felt at that moment that if we didn't grow faster, if we grew organically, the market was going to grow much faster and we wouldn't be able to seize that market because social media was driving up the demand for our product.
Right. And that wasn't true in 2006, 2008.
I mean, you have the iPhone coming in what, 2008. I mean, all this stuff really started to come into being in 2010, 2011. So that was perfect timing for us.
And so you felt like there was an opportunity cost to not taking cash.
Absolutely.
That there would be some other company that would take those transactions.
And nature hates a vacuum. If we didn't go for it, then somebody else would.
Right. Did the money change your business at all? Obviously you now have. You were wired some money one day that you didn't have the previous day. I understand. And I hear a lot of founders talk about the discipline that is instilled by not taking venture early on. I guess I'm asking, is it accurate that money does affect your discipline in our case, or do you think because you had 10 years of really not being lazy about financial decisions that it made it easier to take the money?
I think it was both. I think if it's ingrained in you, I mean, we just moved into a brand new office space and I'm still scouring consignment stores for furniture for parts that are driving the designers crazy. That's part of that sort of bootstrap background. But one of the things I look back on that I might have done differently, I think we would have built out maybe our finance team a little bit faster and put in place controls that I think map better with our really quick growth. Because when you have the money in the bank and you're growing like that, I think there was some erosion of some of that early discipline.
There was some.
There was some. And not entirely, but there was some. Yeah.
And that's. And that's just. Is there anything you regret you'd done, you wish you'd done differently, or is.
That just kind of spent less money on travel?
Is that just the nature of having money? I mean, the fact that when there's something in the bank, you know, it's just. It's a human kind of impulse to want to.
I think it's a combination of that and this and the pace of our growth. And what we took the money to do was to build out, to accelerate our product roadmap and to build out our, you know, a real sort of enterprise grade sales team. And then you've just got a lot of people out there traveling, whatever. I mean, there's just a lot of. So we just needed, at the same time that we were doing that, it would have behooved us to put more, you know, finance one place at the same time to make sure we were. Our financial controls, excuse me, were keeping pace with the growth and.
Yeah, got it.
