We all come to the Valley for pretty much the same thing…we have a huge idea that can change the world (or at least, disrupt an industry). Yeah! Welcome to the Shark Tank!
However, to create your company, you need two main things: money and talent.
So back in February of 2015, we had successfully developed an idea, created an MVP, convinced a small fund to lead our angel round, tested our concept in the comfort of a controlled environment with encouraging results…life was good. Now it’s time to talk to the big boys…here we go!
Fundraising in the Valley is a little like dating, you usually get too little attention or too much, there’s not much of a middle ground. You look for someone who knows “that” person you want to meet and ask for an introduction. You meet, you flirt, you have your cards, you play your game, until somebody wants to get serious and then the fun really begins…or so I thought.
So in April of 2015, we were getting some traction on the fundraising, lots of reactions like “man, this is incredible!” But nobody stepped up, until…it happened!! We got a term sheet from the most amazing investor! It was exactly the same sensation of when that hot girl/guy agrees to go to the prom with you… and even better, she/he brings friends! In no time, we had an amazing syndicate, the hottest investors, lots of people calling trying to get into our round…a true Silicon Valley dream. All until…well, please keep reading, this far from a bragging post. It’s not even a humblebrag.
So with a bunch of money in the bank, we go off to try our concept in the real world. What could go wrong? We have great investors and momentum. We were literally “flying on our self-made cloud.” Until we fell.
For the next three months — as I watched with despair — our customers rejected our product (I’ve avoided writing about what we do, but to give you a little context, we offer a financial service to underserved customers). Instead of seeing my company grow, I saw people asking difficult questions like “do you work for the IRS?” or “do you work for Homeland Security?” Very soon, I came to the conclusion that what we were doing was not working…and even worse, it was never going to work. We completely underestimated some crucial factors. It was time for a pivot…and this is where everything fell apart.
According to Eric Ries, a pivot is a structural course correction to test a new fundamental hypothesis about a product, strategy or engine of growth, so I got together with my team to determine a new course for the company. I also started getting ready for the first board meeting with our new investors.
Since it was our initial board meeting, I wanted to show my board how mature I was and how I had the capacity to acknowledge that our current iteration was not working. Next, I began to pitch new ideas for where we could take the company. The meeting lasted for about two hours and our investors left the boardroom in silence. After a few minutes, my cofounder and I stared at each other. We each took a deep breath and felt relieved, as if a very big weight had just been lifted from our shoulders. We left the room without even turning the lights off.
Every industry has its hidden signals and emblematic places and there are probably less iconic places in the Valley than Bucks of Woodside. Whenever an investor asks you to meet him at Bucks, it’s normally good news. A few days after the board meeting, I got an email from our lead investor to have breakfast at Bucks. I was very excited to discuss our pivot with him, but sadly my excitement didn’t last long. After a few minutes into the conversation, it was clear we were not here to discuss my pivot and this time, Bucks did not represent a new beginning, but rather the beginning of the end…
(to be continued…)