Founder First PE Playbook

please help in welcoming perum Shada from onboard to the stage hello everybody uh yeah I'm gonna actually walk you through uh you know what I would say probably the most unusual story here we are all about uh bootstrapping and I saw how many hands went up I'm going to walk you through going from bootstrapping to really getting to you know exits along the way multiple bites of

the Apple if you will and still accurately sort of maintaining uh you know the chance to make the dent that you're after so Peru Chara Peru rhymes with maroon you'll remember my name now we are in the board meeting business so board meeting management business over the next 20 minutes I'm going to actually walk you through uh you know how we got started you know first product really good success with that and then you know went on to really

kind of just monetize that through uh you know first actually really took on debt to continue to bootstrap till we got to 15 million dollars in ARR uh along the way I had to clean up the cap table there were some non-performing uh you know uh co-founders if you will uh that had to be you know managed and that took a while but at that point I was able to you know take on some private Equity money to accelerate the

growth and that proved the growth model and then last year we took a bigger check from uh a second private Equity uh transaction since then we've actually gone on to do inorganic transactions and Acquisitions is a big Focus as well um so I'm going to walk you through this and trust me you know uh I am a bootstrapper at heart I do want to accurately can I just salute each one of you guys who's doing this it's extremely

hard to show the discipline but one of the things that I realized that you could be a bootstrap of a fair amount of time and then still get to be Venture back so you can actually see the acceleration that your product or your space truly deserves so this is a brief uh background of the company the trajectory I'll walk you through this first off I should say you know we started back in 2003 I've run you know the same company throughout if you run into a problem that you can solve for the rest of your career my advice would

be to actually play The Long ball and stay in it investors and Founders will come and go you could still accurately run this you could still act really take some chips off along the way that's one way to think about it so our first product was an employee collaboration product Ensemble off to a fast start it was bootstrapped got onto the Inc 500 list and we were making money we were actually you know be able to you know take some distributions at the end of

the year this was you know me and my co-founder um but there was one problem with it in 2009 when the financial crisis happened eight nine time frame every single one of my customers was either a bank or a credit union which meant we came to a screeching heart when it uh you know uh came down to the sales Cycles so we had to think about what are we going to do at that point we went from an employee collaboration product to a board meeting management solution which is now the

only product I offer uh meanwhile we continued down the path of taking the original product Ensemble and making into a cash cow which funded the business two three million dollars every year that money was plowed back into growing the onboard business along the way my Founders lost interest stuff happens and we had to find a way to really kind of just you know come to terms with how will I actually bring that cap table to

be unlocked so I use that and I used some of the you know crude Capital to come up with a schedule to pay him off pay the second uh investor off uh and then actually went on to you know really kind of grow the product through the two rounds that I've done since so I'm going to walk you through that here uh so first you know um first part of the presentation is about bootstrapping uh the number one thing you have to think

about is actually the product itself everything else won't matter Financial engineering comes later optimization comes later you can think about everything else later and you can hire all of those pieces out until you actually nail the product you won't really get too far with it so if you're an early stage you know that's sort of you know what you focus on the slide here is showing that we took a while to get to the revenue numbers at this time you know we are growing you know 50 and we are actually

fast growing I would attribute most of that to the early stages when we were truly focused on the product um I think not just the product itself and making sure the product is adding value you also have to make sure that you're getting customers of the same kind because if you get seven customers all each one of them is using it differently you don't really have a business yet right so to stay close to your ideal

customer profiler to continuously evolve and fire the customers that don't belong there this is the discipline that you have to be sure about in early stages definitely feel like you know um the only thing that I did very well was to stay every single one of those customers was a financial institution I just told you when when the crisis hit us right well we should have Diversified but frankly it helped us build a product that was really good in a compliance

heavy industry and eventually came handy to diversify elsewhere uh I'll also talk about you know you know I I often talk about being able to explore and exploit at the same time as a Founder CEO you have to be ambidextrous but once you find your Niche you gotta exploit it and don't get distracted at that time to explore new things right you still have to do some exploration because you have to think about what's next but that's a pretty key part to

bootstrapping well um and also talk a little bit about you know when we went into Financial Services industry there were other verticals other sectors that came open Healthcare non-profits these are compliance driven Industries so we eventually went there and certainly used some of the equity that we built in the financial services industry uh you know public publicly listed companies all of these are customers at this point but that going back to how we started in the

financial services I have 600 Banks as customers today and that actually really kind of just you know gives you a lot of credibility I'll talk a little bit about that finally you know the product uh the best growth hack will always be an amazing product a product that actually Wows every single user and that's still the goal uh for a big part of the organization this is uh you know sort of our board product if you run a board and you want to be excellent uh

you know in your boardroom delivery it's an inexpect an inexpensive product it'll force you to think about you know your board meetings and what you get out of your board uh intentionally most organizations today actually really are dealing with what you see here on this slide you know a bunch of different uh digital duct tape helping you get your board decks out and uh if you want to get intentional get really good in the Board Room which by the way has huge returns right your investors gain in

confidence you are deal ready all the time then you'll accurately look at a product like this that was the goal there are two things that drive us at onboard and this is sort of you know you have to be that clear with your team the first one is we want to make sure that we build everything within the platform everything that a board needs to do not just the board book delivery the board assessment the dno questionnaire you know CEO review um you know all approvals everything

should be right there minutes routing should be within within the platform so that's the first big heuristic that we are clear about the second heuristic is you want to make sure that the first we could call this F talks first time user experience is an absolute uh amazing one which means when a new director gets your product they should be valve we can Implement our product within the same day so if you had a board meeting uh this evening and you called us in the morning we'll be able to implement that and your

director should be able to run with it and your first meeting itself uh will go off seamlessly that focus is extremely important when you're building uh you know the product in the early stages once you do that and that comes only that comes about only if you built amazing relationship with customers other speakers have talked about this in my case my first customer uh was also somebody who gave us infrastructure we used their office

they also advise a lot on operation side how do you get compliance certifications and such and eventually they became my debt partner when I talked about buying back my co-founder my first customer since this was a financial institution they helped me figure out a loan which allowed me to buy back my partner so you can get a lot out of your early customers they are emotionally invested just like early employees the question really comes down to what are you going to solve for with them uh

they're your early board if you will in our case lots of things came out came out of this so for example all our early customers became advocates for us to go sign up these Partnerships so what you're seeing here is Partnerships we signed up in different sectors there's one in credit union industry there's one in the banking industry there's one in the University space and so on so we've used a lot of customer credibility to sign up Partnerships which actually then give

you more credibility in the market and that's how you go about doing this cycle so nail the product gets the the Partnerships at least in our case it's a very vertical sales cycle that we have so we are you know focused on lining up the partners for it so I'm going to switch gears here and talk a little bit about the you know where you need institutional Capital so once you build good Partnerships you have a good product you start to get into and in my case there was debt to be paid off right you

know there was debt because I bought back my co-founder in the business and the other partner as well taking on debt if you're married and there's whole family in the greater family everybody's going to be like you are crazy you should do something about this right there's all kinds of other pressure that comes at you so I wanted to clean slayed this if I could that was the first reason why I thought I should take institutional capital secondly I think you know taking on some Capital allows you to really truly think

about how high you could fly like in my case opening up an office in UK in Australia in Canada by just test Marketing in a single sales person to see if those markets grow which they have all grown by the way we have hundreds of customers overseas now without institutional Capital would have taken me that longer uh getting to really invest in the team the talent density goes up astronomically after you've raised money

you know with some big valuation numbers or big checks because people want to come and work uh at your form and you are inviting your friends as well so I think you know you really get a chance to think about the organization that'll truly scale I talk about building a championship team uh and that's what it comes down to you know it's it is actually uh important for you to have a top class Revenue team you know a real solid data team and all the other teams that you're thinking

about being able to build that you know Capital helps certainly I think you know you'll realize when you bootstrap you're growing your your goal is to break even at a higher and higher number every year that's essentially what you're doing by taking institutional Capital when you look at that business which is fundamentally very solid and you pour in some fuel on it you'll just see the acceleration happen and I want to see that happen so the first check was actually only five million dollars on the balance sheet I did take

some uh you know secondary off just to really kind of just ease the pain and I'll talk about that a little bit uh because it's been a long journey and there were a lot of employees and myself we were actually doing this for a fair amount of time it allowed us to invest in the product Innovation cycle so ideas that were actually truly risky and out there they often don't get funded in a bootstrap mode being able to take some of those bits those bets who have the which which actually naturally have the

best returns that was a key part of it so for me actually doing all of that the first round of you know uh Capital came from five amps uh kansas-based group amazing group to work with it allowed us to get to this stage what you see here is uh you know focused on different verticals getting a bunch of customers different clusters of customers in different verticals really allows you to be thinking about world-class delivery

being the best platform and once you've proven this model by taking on some Capital it gives you a chance to really kind of just do other things for example analytics on all these you know sectors benchmarking applying AI to all of this these things are just not possible in bootstrap mode the goal of being bootstrapped should be to accurately make sure that you have a model really well but you should also keep an eye on

when you've outlived that cycle because that happened we wanted to do not just board meeting but also other board related uh workflows the annual cycle assessments and such you know skills Matrix you know ESG Matrix and things like that that required us to raise money so when we did actually get to raise money uh we raised 100 million last year

uh that's a significant check I heard somebody say hmm here that's exactly right uh everybody you know around you will certainly actually call you right what the hell just happened right but that is actually fundamentally a moment of truth in your life because you realize you can pretty much do most things you've wanted to do now right so I want to talk a little bit about you know how you prep for that cycle and then you

know uh why a secondary was important so taking some money off was extremely important I just having this conversation with you back there the team had stayed with me for a very long time I want to take some real money off as well when you really find lots of folks around you in your team have made their first six figure seven figure checks and they work with you it will completely change the culture you don't have to worry that there's a proven culture of

financial rewards extraordinary rewards outside rewards that can happen just by being in that company so people don't have to go work elsewhere I think for me it was actually also about getting to you know swing with a heavier bat right you can really swing for the fences so when you take some money off personally you'll feel I will actually really change you know the way board meetings are run what's the board

meeting of 2030. let me go after that uh construct so those are some of the things to think about as you think about uh you know taking on some money I will say you know uh fundamental thing before you raise money is to make sure that you hear you nail the unit economics it's just not going to scale if the unit economics are bad whether they are you know your CAC or you know um your payback period you know retention rate all of those so for me

uh the fundraising cycle is a very short one it was just a week and a half but all the work went in prior to that where you know the business was fundamentally solid we knew that there was lots of Market opportunity with proven The Tam was well developed in fact I spent you know no less than two three weeks just working on the Tam analysis The Tam analysis should be done extremely well simply because big Investments only come

in big markets so unless you have a huge potential nobody's going to write a big check so think about that and spend a disproportionate amount of time just figuring out your Tam I also you know prepped really hard as to what would be my growth thesis and the one that my then current board shared with me so when I went out I turned the question around to every one of the firms I was talking to this was a self run process what would you do with this firm if you were actually you know partnering with

me on the same side of the table in the boardroom and I sat and I listened to what they had and I got the chance to think about you know five six difference really awesome takes and then I could accurately figure out which ones would be the best group to work with where the culture of it would be so to build your growth thesis and to test it out that is a golden option to do that these are the slides that are available on the key fob this was literally just that's the deck

I intentionally kept it very very you know um to the point you know the overall business The Tam and the market sizing exercise how we get our customers what's the go to market motion proof points and why it's going to be hugely creative and then certainly uh you know details about competition how we can accurately outsmart and outflank everybody slide on the team

and then a slide that talks about what change we are after in this world right and how would we accurately change the way uh boards operate and finally our unique uh you know selling proposition why us and not anybody else has the best shot in going after this so once you do that you uh in at least in my case I should say we got several term sheets in fact I should go two slides back real quick

here um you know we ran a process ourselves you know the process piece is on the far right there number one we were transparently talking about you know internally hey we're gonna raise money we're going to do this internally everybody knew about this even the board you know helped in in you know working to that moment once we decided we're going to go to the market the deck was actually nothing the story gonna sold itself you know the

use of funds was the easiest thing ever actually it's not there on the slide because I want to ask them how would you spend the money that was a big part of it we did have a real you know supporting slides slides uh I only quoted firms that showed a lot of interest they were all using our product in their portfolio so it made it a little easier for me but in the meanwhile uh investors that show True interest in you I remember CVC they're they're a big

uh PE form they helped me with the damn analysis I asked them hey I can't actually figure out how many boards are there in every part of the world they literally actually gave me their analyst to work with them you know for next two three do this firms will do that they're interested in you so that's a good way to test things out but eventually you know I focused on the fit and partnership but I also actually had you know we are going to close this round by next week these are the terms on which you should actually uh you know give me the term

sheet so I only wanted down the Fairway kind of terms terms are just as important as the valuation in fact if not more so everybody had to give me their valuation based on our terms and that was a key part of shortening this cycle because we don't have the time to really kind of run a three-month process to raise money right the shorter the cycle the easier it is for you to accurately live up to the promises you're making so when you do all of this you actually get to do a lot of fun stuff Downstream since we've raised money these are some of the things that we have done added a

lot of talent thought of you know what what the product should look like in the next you know four five six years certainly we've done in a lot more on building and supporting the exact team uh running a board meeting solidly as you imagine you know we have to we've had an audit committee a compensation committee and certainly you know recently we just had an m a committee we've started to do these acquisition conversations much more rigorously internally every two weeks we are meeting

um this is the first acquisition we did uh essentially paid you know a multiple which was certainly you know how at what multiple you raise your money it's going to play into where you can acquire others because you want to make sure that you're instantly accurately accretive in these transactions think about that there are other companies that you want to acquire Downstream what multiple would they trade at that would give you the multiple that you should shoot for and what you could be comfortable with

I do believe uh you know working through the covert cycle what an interesting one just because you couldn't meet them that was a tough part of doing an acquisition last year you really had to do this remotely most of the times and then while we're deploying Capital into onboard business we also had to think about now integrating a team 60 people team out of Toronto that really tested us as well uh so think about some of those pieces uh the key lessons here

when you do an acquisition which is more than 20 percent of your ARR it's gonna test you you almost need to hire execs ahead of that transaction when you go from a founder-led organization and you try to digest that company you'll have to change the incentive structure very quickly the founders will likely make you know good money their way of thinking will adjust they need a little time to adjust to the new context but think about this every single employee in that company all their

customers all their Partners they all need to be really thought about ahead of the transaction all of that has to happen in a very short 30 45 day time period so we've realized that for the next acquisition we've started to run this m a committee really well uh it's one of the most rigorous parts of my business now because we do want to grow inorganically that was the whole point of taking on this capital so yeah over in the last 20 minutes

I've uh 20-25 minutes I've spent uh sharing my story these are the three important things to take away first of all stick with the niche niches will bring riches certainly you know I can uh you know test to that if you have 200 customers in the same vertical you're going to be more uh investable than have actually being spread over lots of different verticals number two when you want to accurately explode you know you want to actually first make

sure your unit economics are right once you nail it it's easy to scale it and lastly you know if you stay in the game long enough and I certainly feel like I I am doing my part on that end you will find the best in your field we want to go become part of your journey you'll be able to acquire a lot of these companies a lot of these Founders have looked at you for a while so the goal here is to play long ball uh and if you do that and add that uh you know an ad

being excellent in the boardroom which we can be good partners for would love to actually help you get there I think this could be a lot of fun thank you that's uh how we did it at onboard [Applause] [Music]