We’re going to share a tale and some wisdom that angel investor and serial entrepreneur Stephen Messer shared with our attendees at one of our recent investor breakfasts:
“This is your community. It’s a lonely, lonely place, as you know. And everyone tells you how great it’s going. It’s not. When everyone says it’s so great – it’s going horribly. So I give you lots of kudos for making the effort – it’s not easy, but you’ll do great. It goes horribly, horribly, horribly for years, then it goes great. That’s sort of the thing about entrepreneurship, as you know.
Why do I say that? Because everyone feels like, ‘Why is everyone doing great and I’m doing horribly?’ That is the nature of the game: it’s called persistence.
My sister and I started a company back in 1996 called Linkshare. It was a disruptive model to the advertising model of the day. We did something called pay per performance, which was not a category. Today it is the category. We grew it here in NYC. We started with four people. Our headquarters was in the Meat Packing District. It wasn’t as nice and glitzy as it is today. There were hookers right outside of our front door. They were our security. It was fantastic. We loved it. Revenue grew slowly. Want to know what my first year revenue was?
Second year was going to be better. Our goal was over 100% growth. Year Two our revenues were three or four dollars.
We invested our entire life savings into Linkshare. Nobody would give us a dime. Year Three we might have broken a thousand dollars in revenue.
At this point you might say, what were you doing? Where’s the IQ in three years and losing your entire wealth? Which wasn’t a lot of wealth, I was young. But Year Four, things started taking off. Year Five, they started taking off even more. By Year Ten, the company was throwing off about $50 million in cash. When we sold it in 2006, GMV was about $10 billion in revenue going through the system – it was quite a lot of revenue. So we were doing rather well.
But we were ‘never a business.’ People fought the model – they hated it. I have been thrown out of more companies than I would like to say. And I did it with a smile – it was OK.
I’m saying all this because as you’re growing your business, as you’re going out raising capital, if you’re saying things are great, revenue’s going to come any minute – it usually doesn’t. Investors who are angels know. The ones who you shouldn’t take money from freak out. If someone’s going to get nervous because you don’t have revs yet, don’t make up a story. If it’s going to take three years, it’s going to take three years. People understand – they get it.
We sold the company in 2006 for about half a billion, all cash deal.”
We will also remind you that Linkshare and Steve and Heidi Messer also went through and survived the dot com bubble burst – and needed to lay off a large portion of their staff to survive – so there’s much more to the story than this. As he said, persistence. Relentless persistence and resilience.
We know that change happens fast in tech, and many founders go into entrepreneurship with stars in their eyes – and visions of vast wealth being showered upon them in mere moments. It’s a long slog. It’s tough going, with long hours, many doors slamming in your face, and no small amount of self-doubt. It’s not for everyone, and it’s good, every now and then, to hear and to be reminded of what it’s all about, from the ground level, from someone who has been there, done that.
Hope we brought you a bit of focus and clarity and hopefully you’ll now forget those long-standing industry mantras and platitudes. You know them. Verbatim: Fake it till you make it. Fail fast. And in this industry in particular, the check is in the male (sic).
But that’s a different column.
Onward and forward.