The highs and lows of startup life
December 28th, 2012 starting up
I was recently back in the UK for two weeks and had the chance to speak at an event in London about the incredible journey with my startup in the last two years.
When I speak, I try my best to share useful information and this generally consists of mistakes I’ve made along the way and some of the greatest lessons I’ve come away with from the experience. At the same time, I also aim for my talks to be a little inspirational too, by sharing how I’ve been lucky enough to achieve some astonishing milestones despite the fact that I’m certainly no smarter than anyone else.
At the end of this particular talk, someone asked me a really fantastic question, which was “you’ve shared great lessons, tips and some amazing achievements, but what has been the lowest point in this journey so far?”. It is a great question and there’s certainly one moment that stands out amongst others as one of the hardest times I’ve had with Buffer.
A choice to raise funding
When Leo and I jumped on a plane to San Francisco around one and a half years ago, what we didn’t realise at the time is that in hindsight this was a clear turning point for us personally, and for Buffer as a startup.
When we first arrived, we quickly set up a number of different meetings. Notable people we met were Hiten Shah and Daniel Brusilovsky amongst a number of other founders at different stages of their startup career, including a few YCombinator founders.
What we quickly realised through conversations with people was that we could keep growing slowly and solidly without funding, but we were at a point with good traction and a clear bottleneck in terms of me being the only person working on the whole product and all technical aspects, where if we had some funding we could grow the team more quickly and get much faster growth.
Leo and I always have a very positive outlook which helps us a lot, so we quickly decided it made sense to raise investment and whilst we had no idea how to do that, we agreed that it was simply another thing we would figure out.
Switching our focus to fundraising
Of course, since we had literally no idea how raising funding worked, we asked many many people for advice, and we started to take action right away to attempt to make progress. One thing we were sure of was that we should try our best to reach out to investors and have meetings. We were scared to talk to investors since we didn’t know how to pitch or how the process works, but we knew that was exactly what we needed to do.
Due to our lack of experience and knowledge, we worked jointly on fundraising. We sat down together in various coffee shops and sent out dozens of emails to investors, to other founders and to people who had become casual advisors. We learned many things, including that you should always get an introduction to an investor, and that you should be very specific with a call to action in emails.
One of the important things we discovered, was that there should always be a clear focus of any pitch. Most pitches have similar content sections such as the market, a problem, your solution, current traction and the team. However, each individual startup will have a single aspect which is the strongest part of the pitch. For us, this was definitely our traction; Buffer already had 25,000 users, monthly revenues around $1,500 and we were growing 10% week over week.
The great thing was: it is often said that when pitching, traction trumps everything. Certainly looking back, since we were first time founders with no track record, traction was even more important. The problem was, whilst traction was the key part of our pitch and the traction was good, as soon as we switched our focus to fundraising our traction slowed.
A difficult few weeks of learning
The traction which we were proud of was largely driven by a lot of hard work. For the six months previous, the only focus Leo and I had was to build a great product which solved a real need, and to market it so that people who would find it useful knew that it existed.
We learned that fundraising is a full-time task, so what happened next was that around three weeks into fundraising, around three weeks after we had almost stopped working on the product and marketing altogether, our traction started to slow dramatically. We had some long-tail traffic, but a large portion of the traction was driven by articles about Buffer which we were triggering on an almost daily basis.
We essentially started to lose our most valuable asset in pitching Buffer. To add to the struggles, we were almost one month into our allowed three months in San Francisco on the visa waiver program, and we were also quickly running out of money because we didn’t realise how expensive the Bay Area is. With only two months left before we would have to move on from San Francisco, we were eager to raise the funding we had decided would be so valuable for building the startup further.
However, one of the things we learned while figuring out how fundraising works is that two months is a very fast amount of time to close a seed round, even for the most experienced founders.
A tough Saturday morning conversation
One Saturday morning around three weeks after we started our attempt to raise a seed round for Buffer, at the apartment where we were sharing a single room (alternating between one sleeping on a bed and the other on the floor on an airbed), Leo and I talked about what we were going to do to try and turn things around.
We had been trying for three weeks, and we had learned a lot about how to raise funding, but we now knew that a joint effort from both of us in order to try to quickly close a seed round was not going to be successful. We needed our traction to continue, since the fundraising was going to be a longer task. We had very little cash left, in fact I was actually borrowing money from Leo, who was well into his savings.
So we needed a new strategy. Since I was the coder, we decided that I would be the one to work towards keeping our traction going, which I would do by building the product but also by doing all the marketing tasks which I was much less experienced with. Leo, on the other hand, would focus entirely on fundraising and learning more, and trying to figure it out. I would be pulled into meetings only when we reached a point where we were discussing terms.
We knew it was going to be extremely difficult, with many highs and lows for both of us, which we would need to shield each other from and remain positive and optimistic. I think we both believed we could pull it off, but we knew there was a good chance that we might end up back home on a plane to the UK without closing the funding we sought.
An amazing high: Being accepted into AngelPad
The next few hours taught us how crazy life as a startup founder can be. We were both truly at a very low point, and we often look back with fond memories of that moment since it was a great example of the struggles founders have to go through.
Around 2 weeks into our attempt to raise funding, we had noticed that AngelPad had a class coming up, and that even though the deadline had passed, they were accepting late applications. Since we were struggling, we applied. We didn’t take too long over it, though, and we quickly moved back to focusing on our fundraising efforts. We had a number of emails back and forth with Thomas, Gokul and others in the AngelPad team, and even had a Skype interview with Thomas. Still, we weren’t too confident we would get in.
After our memorable Saturday morning discussion, Leo got a call from Thomas. We had got into AngelPad and would receive $120,000 in funding for Buffer. We’d go through the 10 week program with 14 other startups and have a demo day at the end, and we would be taught about how to raise funding. It was simply one of the most incredible moments of my life and I remember a real feeling of elation, compounded by the fact we had just had to make a very difficult decision a few hours prior, which no longer mattered.
AngelPad proved to be a significant part of the Buffer journey, and enabled us to get some amazing advisors and investors on board when we did our fundraising after demo day. Although it was not easy, after the struggles and learning we had gone through we were fortunate to be able to raise a $400,000 seed round for Buffer.
I have realised that when I have low points, they are the times where the most growth and learning occurs. I would therefore not change a thing about those tough weeks.
Have you had some truly low points during your startup journey so far? Have you found that these moments have taught you some valuable lessons?
Photo credit: TexasEagle