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Investment Killed the Internet Star
"You're an island no matter what you do. I think it's very dangerous to use popularity as your identity in life. So you have to really know who you are inside, the core person, and follow what is true rather than follow what is hype." - Donny Osmond
Anyone who's ever started a business, or even thought about starting a business has been confronted with the question of where to get money. Do you get money from friends? Family? Angel investors? Then, as the company grows, you look for bigger sources of capital. Private equity firms, venture capitalists, or a merger or acquisition. Many people start companies for the purpose of selling out for a big chunk of cash.
So it's not surprising that I get that question asked of me as often as I do. How did GreenRope get the startup capital it took? Who are our investors? What is our exit strategy?
To really understand that, I need to talk about where we came from.
In 1998, my grandfather, the kindest, strongest man I've ever met, passed away. He left me $10,000 as an inheritance. At the time, I was serving in the Air Force, but I knew my future was not there. I knew I needed to start something of my own. I promised myself that that $10,000 would be used to form the basis of that future. I spent $7,000 on a brand new, state of the art Dell PC and bought a book titled "Teach Yourself CGI Programming in a Week."
When my business partner and I started the predecessor company to GreenRope, an email marketing company called CoolerEmail, we did it from two locations, Portland and San Diego. We both had tiny apartments and were working late hours trying to make ends meet while doing work on the side. It took a few years, but we were able to bootstrap CoolerEmail into a successful permission-based email marketing business. Over the years, we saw competitors like Constant Contact and MailChimp take on millions of dollars of seed funding, but we remained private so we could maintain control over the business.
In 2009, I started investing in developing GreenRope because the industry was moving away from simple "batch and blast" email. Email marketing was getting cheaper, so everyone was doing it, and read and click rates were dropping. Email was still a good medium for communication, but it had to be more relevant, and it had to help the business grow or else it was just more noise in a crowded universe of self-promotion.
I invested every dollar of profit I had ever made back into GreenRope to build something the world hadn't seen before. GreenRope had to be something both broad and deep. It had to be able to compete with the leaders in the spaces we needed (CRM, email marketing, web analytics, forms, calendaring, automation, etc), but also able to do it all in a single platform that didn't require any integration. More than one person told me it was impossible, but I'm one of those people who uses words like "impossible" as motivation.
Last year, in 2014, we made Inc Magazine's top 500 fastest growing companies. #247 to be exact. It's a little easier to grow fast when the business is small, but it still represented a monumental amount of effort from a lot of people. And we did it without any external financing.
When you make a list like the Inc 500, private equity and venture capital firms take notice. They see a growing company and their business is to put money behind growing companies so their investors can make more money. Every week, I get at least one call or email from someone interested in learning more about GreenRope and if we want to take their money. Every week, I tell them no.
There are all kinds of different styles of investing. Sometimes they want just a small share and to be silent. Sometimes they want to replace existing management with their own team of seasoned experts. Some are all about the money, some bring relationships with bigger companies. Some are already investing in our competitors. Some would shop us around to bigger companies for an acquisition. I've talked to a lot of really smart people, and people who I believe genuinely would want to see GreenRope grow faster.
All this attention could be good for the ego, to make me think they see the same vision that we do. And that may be possible. But I've seen how financing a company can tear it apart, change culture, and deviate from a founder's vision.
I can see how taking venture money can be tempting. Some weeks are 80+ hours of work (some over 100), and in the midst of managing software, people, and strategy it feels a little overwhelming. We're a small company, with just 20 of us to manage support, sales, marketing, development, network infrastructure, ISP relations for good deliverability, and all the HR/finance/operations work that needs to be done. With over 2,000 clients, there's a lot to do.
Of course, we rely on our own software to run it all. We can see our sales funnel in real time, along with everyone's CRM activities, support tickets, followups, etc. I spot check our client interactions, but fortunately we have such a solid sales and support team, I don't worry much about that. Our company is built around a network of trust, that each of us works as hard as we can to help our clients. We don't have the resources for micromanagement or corporate BS.
Killing the Star
After investing 15 years of my life into building what is GreenRope, I am beyond the mindset of flipping the business like a house. GreenRope's employees are like my family, and our vision to help business is too important to risk investors tampering with the foundation we've worked so hard to create.
The concept of "selling out" is usually seen with negative connotations. Pop stars, sports figures, and actors have an opportunity to make money by endorsing a product, and nowadays it's the rule not the exception. It seems that's the case with most technology companies, too. Almost everyone builds a business so they can sell it or get acquired for some big multiple of revenue.
The serial entrepreneur, pursuing one startup idea after another, isn't necessarily a bad thing. Sometimes those ideas work; sometimes they don't. But the entrepreneur isn't there to see it reach fruition. That personality type is idea-driven, not execution-driven, and it's good when people play to their strengths. Unfortunately, many times a company falters without the vision of its founder to drive it. Fifteen years of pouring my soul into this company, I simply couldn't allow that to happen.
A few weeks ago, I was at a conference in Silicon Valley. When I was there, I met a young man who had sold his startup (a lead generation tool for the real estate industry) to a very large company. Now, he was forced to travel around wearing a suit, selling various enterprise products to people who would listen to him. I could see the fire in his eyes was out. He carried a sense of resignation with him, as if he had become comfortable that his fate would be forever tied to the giant company he worked for. When I asked him about his experience, I'll never forget his simple words, "don't do it."
GreenRope's growth will be measured. We won't grow at some crazy, hyped-up meteoric pace because that's not who we are. When you provide long-term value for clients, you make sure there's no risk to the stability of that value.
Sometimes when companies grow too fast, they lose control of their resources. Too many clients, not enough support resources. Too many salespeople, with no quality control on sales methods. Too many marketing initiatives, no consistency. Fast growth requires a change in culture, and if it happens too quickly, it spins out of control.
We've seen it before. Companies get bought out or get a huge investment and then suddenly customer service goes away, or is so bad you never want to call. Some bean counter decides they can get their ROI faster by cutting support staff. Psychology and HR experts are hired to put banners of "We're making the world a better place" all over the office, as if those banners define culture. But if it quacks like a duck...
"Strategery" is one of my favorite George Bush-isms. At GreenRope, we talk about it a lot because we have to be conscious of how we compete in marketplace with billion-dollar competitors. We can never out-spend other CRM and marketing automation companies for advertising dollars. But we can do things they can't.
GreenRope will always have real people answering the phone and chats. GreenRope will always listen to our clients and drive our product development from user feedback. GreenRope will always seek to provide the most value to our clients and help however we can. We will always treat our clients with respect.
Our strategy for growth is measured. Referrals are one of the biggest drivers for us, and our clients are our greatest champions. We also bring in clients through recognition from independent studies, like those conducted by VentureBeat, Trust Radius, G2Crowd, and others. When our clients are happy with what we provide, we grow in the healthy, organic way the provides a sustainable environment, both for us and our clients.
I'm proud to have the team we have, and proud that we have built it ourselves, without external funding. I'm proud that we stand on our own and have built our company around our clients and the long-term value we provide.
Donny Osmond may not be known as a visionary leader, but his quote at the beginning of this blog resonates. Money and popularity don't make us who we are. Our actions make us who we are.