The Exchanges

Q How bad was it when you had flatlined at a million and you looked at equity term sheets? What valuation cut were you looking at?

A Uh, I hadn't even tested the market. I was, uh, kind of concerned that this was a tweener, like not, not quite a failure, but not quite a series A type business. Um, and, uh, I just needed more, more runway. Uh, and so, uh, through a combination of, uh, you know, myself putting in, sorry, sorry, uh, going, going back with With FounderPath for, uh, when I was non-volitive, initially it was about a 400 K loan. You know, we had over a million in revenue, so that's, you know, 400 K is like, you know, less than 40% of, of, uh, a month's, um, of ARR. Um, and then I, I put an equal amount of, of, of capital in, uh, you know, just to, um, To, to gross that up a little bit, uh, and that provided, you know, almost a full year of, of, uh, of time to fully develop and show progress against this new ICP and new, new use case, uh, and, you know, growing the business to, you know, over two million in revenue and, you know, getting a lot of interest, uh, in, in, in the business, uh, from, from investors and, and eventually, uh, doing our, our series A.

AI assessment note: “Uh, I hadn't even tested the market.”

Q I'm going to force you to say something you didn't like. If you had to pick the thing that you like the least, maybe you didn't hate it, but the thing you like the least about the process or the model or whatever the terms, what would it be?

A Um, I mean, the rate was high. Like, I, um, it's like credit card rates kind of, uh, uh, things, but Now keep in mind, it's like unsecured debt. Like this is like, uh, uh, so, so I understand why it's that way. And in fact, interest rates are so high right now. Like, like, uh, you know, it's, it's, uh, it makes sense. And, um, look, I think if you think about where we were able to get on that, Runway and like, you know, what the alternative would have been. Uh, I, I think that, that this is a, a no brainer, uh, that, you know, this, you know, generated An incredible outcome, you know, probably tens of millions in enterprise valuation, uh, and, and, uh, you know, significantly a better outcome than, um, the call it tens of thousands of dollars of interest that I paid over a period of like under a year.

AI assessment note: “the rate was high. Like, I, um, it's like credit card rates”

Q And I feel like everyone is just sort of, sort of sticking AI on their companies these days for, for juice. So my question is, is there real AI happening here or is it just like a juiced up Excel file?

A Yeah, it's the, it's the biggest joke. Like, you know, these, These AI companies are just like invoking chat GPT API. I, I think we're significantly differentiated from, from that because we have our own LLM. Like we have, like we, we pull in all the, the scrape data from, from the customer website so that we can speak their language, if you will. Uh, and then we also have our own like proprietary data set of like, you know, consumer data. So like hundreds of thousands of data points on On individual, uh, us consumers, like, you know, marital status, children, uh, age, income, like, uh, and so using these large volumes of datasets, uh, you can, you know, leverage and, uh, these AI use cases.

AI assessment note: “we're significantly differentiated from, from that because we have our own LLM”

Q Um, how low did cash balance get in the bank? Are you comfortable sharing?

A Uh, so hundreds of thousands. Now keep in mind, like, I'm independently wealthy, so I can, you know, put in as much money into this as, as, as I want to. Um, the, the, the, the challenge is it's like, you really do want to have like a neutral person, uh, putting that in to, to price these rounds. Uh, and so it, it got down to, you know, a couple 100,000 dollars at, at one point. Um, we, but, but the story is that, uh, around At the two-year mark into this journey, we realized that this was not a great partnership with Facebook in terms of, like, all the changes that they were making, uh, and, and what our customers wanted to do, um, and we, we decided to kind of Uh, do the sales outreach automation, uh, kind of, uh, use case for B to C. So the same types of customers who are spending money on ads, you know, would they be interested in, in this new offering, um, of, of, of ID website visitors and providing that email and contact information to the website owners and Doing sales outreach to them. I mean, the technology is kind of similar to the automation that you would put into a chat bot. So it's still our same, you know, drag and drop, you know, uh, boxes and arrows kind of user interface for, for doing step one, step two, step through like a sequence of, of, of automations, but instead of sending out messages on Facebook messenger and Instagram messenger, it's, it's just emai…

AI assessment note: “it got down to, you know, a couple 100,000 dollars at, at one point.”

Q sort of how you, you know, what you, it takes a lot of courage to basically say, Hey, mobile monkey wasn't working. We need to sort of re pivot, rebrand, et cetera. How did you make sure you had like capital available to get through the pivot? And, you know, are you open to sharing sort of what revenue flatlined that before you decide to pivot that sort of stuff?

A Sure. Um, so we went from zero to a million in a very short period of time, like under a year, I thought we'd made it. Um, uh, this was like, so what, by 2019, we're a million dollar ARR company. Uh, you know, unfortunately, when you build in an ecosystem like a, like a Facebook partner, um, you know, you're not really, uh, master of your domain, if you will, uh, you're kind of at the whim of the, You know, some, some product manager at Facebook, like, decides to, you know, kill some functionality, and then, you know, I mean, it's a double-edged sword. Like, the neat thing is that you can build these products that go from zero to a million in no time at all, because you're, you're leveraging that audience, that enormous Facebook audience. The downside is you're, you're not, uh, uh, in charge of that. Um, uh, so, uh, they made some really difficult, uh, Uh, kind of policy changes, which made it difficult for me to operate that business line. Um, it, it, it got up to about a million and, and, um, kind of got stuck there for a while. And then the pandemic hit and we lost all our SMB customers. Like it was a kind of a, a challenging time.

AI assessment note: “got up to about a million and, and, um, kind of got stuck”

Q So what'd you do? Did you pay? Well, first off, I'm obviously I want to learn here because I'm obviously running founder path, but what did you, and you can be directly and blatantly honest here too. What are some things you may be disliked about the founder path model and what are things that you may be liked about it?

A Uh, okay. So it's easier to talk about the things that I'm excited about. Uh, so, uh, the, the founder path model, it's like you just connect your, your, your Stripe or your Recurly, your bank of America, you know, your cookbooks. Oh my God. They give you a score. Like, um, like I wish all VCs were like that. Like, like the, the, the, you know, you have to go on these, um, you know, all sorts of Uh, meetings and flying everywhere, and you don't know where things are going. Like, uh, so, so what a pressure for, for sure that is to, um, you know, just have a very quick and, um, just passionate, you know, view and score of, of your business. And I think the first time that we did, we did this, it was like, uh, you, you were able to get it done in like five business days or something like that, like from, from start to end. So that's, that's amazing. Um,

AI assessment note: “it's easier to talk about the things that I'm excited about.”

Q Before you came out of the valley, right? The trough, right after the pivot layer, if you had, if you had raised an equity round while you were up in the valley, how, how diluted do you think that probably would have been if you had to guess how much of the company would have given up?

A Well, his, you know, traditionally those are recaps, like what, what you're describing and, and, um, you know, it would be the, it's whatever the inside investors would be willing to, to, to pay for it. Like the idea that, uh, they, you just can't run out of gas in between, uh, you know, gas stations is, is basically the problem. Now it wouldn't, It's, it's kind of an unusual situation because like, like I said, I, I do have, I, I do have money. So, um, you know, probably I could have defended the, the, the common, um, you know, by, you know, Uh, by, you know, putting in, which I did, and, and I, I have done that at, at every round of, of, of investment, uh, you know, from, from, um, uh, since, since, since, since inception of the company.

AI assessment note: “probably I could have defended the, the, the common”