Why go it alone?

Urban Airship co-founders: Michael Richardson, Steven Osborn, Scott Kveton & Adam Lowry.

tl;dr: Startups are hard. Why on earth would you go it alone? This post reflects on the start of Urban Airship before we raised our first round of funding.

It was just after Thanksgiving 2009 when I got the call. It was from a potential investor and our last chance for raising funding that year.

Earlier that May, my three co-founders and I started Urban Airship. We launched the first commercial push notifications platform the following month. We were in a ridiculously hot space that was just starting to explode. In just eight months, we had marque customers paying us real money and wanting more and more features. 

The team had delivered on our product. My role as CEO was to close funding. We were all running on empty financially. Earlier that year, the company we had been working at folded. Two of my co-founders were on a program that allowed you to take six months of unemployment while working on a startup. That window was closing fast. I was going through a divorce and had two young kids to provide for. On top of all of that, we had everyone telling us we were crazy for trying to start a company during an economic downturn. 

The call was another “no,” from an investor. At least the 30th rejection I got that Winter. What the hell? Why couldn't I raise this first round of funding?

I called my only real trusted advisor, Pete Grillo, and he just said to me, "Look Scott. Remember; it's never as bad as it seems and it's never as good as it seems. Buck up and get to 2010. You'll make something happen." I thanked him and hung up, feeling alone and afraid of facing my co-founders. 

Rejection is an inevitable part of starting a business. Being a first time CEO comes with an additional set of challenges. It forces you to rethink how you work and what you prioritize. I needed to unlearn a lot of what I picked up in college and at early jobs as an employee at bigger, more established companies. 

For some reason, I thought I had to take on this journey alone. As if there was some sort of shamanistic vision quest I had to take to find our path, our vision, our mission. The real "vision quest" is far, far more simple. It's when you realize that the job of the CEO isn't to do everything; it's to make sure everything gets done. That means leveraging your network, your advisors, your friends, your co-founders and your team to build your company.

Our situation wasn’t as bad as it seemed. But it wasn’t great. We were low on cash with unemployment benefits running out. I sat down with the team and just said, “What do you all want to do here? We can fold this up, we can try to build an iPhone agency and get paid now,  or we can keep pushing on this and beg-borrow-and-steal our way to make it happen.” Without batting an eye, all three of my co-founders said, “Let’s make this happen.”

Now, we did have paying customers. Not a bunch, but enough. After months of negotiations, we finally closed ESPN (via Disney attorneys - that’s a story for another post!). With ESPN and the other enterprise customers, we were close to $15k per month in recurring revenue. A check would come in from a customer and I’d look up at my co-founders and just say, “Okay, we got paid. Who needs what this week to get by?” And that is how we closed out 2009; working completely hand-to-mouth, but continually closing customers and building momentum. 

I went back to the drawing board on the investment front. We knew we had something.  The willingness of my co-founders to make sacrifices for us to succeed just spurred me on that much more.

Through a lucky introduction (thanks Luke), I met with True Ventures the second week in January. I didn’t realize it at the time, but it was a full partner meeting. I was crammed in a room with just me and my laptop and 8 or 9 partners. I pitched for about 30 minutes and then Phil Black stopped me and said, “Can you excuse us for a second?”

The partners all got up and left. Huh? Did I say something wrong? Moments later, Phil and Puneet came into the room with a single sheet of paper and said, “You know when you know.” He slid our very first term sheet across the table to me. We accepted it, and were off to the races.

I was officially 1 for 31 at fundraising.

After calling my co-founders and telling them the good news, I rang up Pete to let him know as well. He was congratulatory and then struck a bit of a somber tone with me. “You remember what I said just a month ago? Well, it’s never as good as it seems and it’s never as bad as it seems, but relish this moment for now and save it for one of those rainy days.” I’ll never forget that.

There is no shame in leveraging others to build your company. You’re not asking for a handout or giving up ownership. Applying your personal filter to advice helps you get to a stronger decision.  You still own the decision, but you're filling in a gap in your experience. Your filter will evolve as you gain knowledge and your company grows.  

I wanted to start Fractionalist in part because I want to pay-it-forward for all of the people who helped me get to where I am now. I’ve been informally advising companies for years and see a gap in the products and services out there to accelerate companies in their early stages and increase their odds of success. Not only that, I’ve found a bunch of similar minded CxOs that are wanting to do the same that are part of the Fractionalist network our customers can draw from.

Since starting Urban Airship, I’ve been on both sides of the phone for those good times and bad times. It warms my heart to help every single entrepreneur I can when they are in those dark times. Fractionalist is nascent, but we are starting to shape a vision that I think can really transform startup companies all over the world.

I’d love to hear what you’re working on. Drop us a line. First meetings are always free.