The Life Cycle of a Startup

Cheryl Contee, CEO @ Do Big Things

Startup Grad School Stage
Ascent Conference 2020

[00:00:00] Hello, everyone. Good morning or afternoon, depending on where you’re tuning in from. I’m so excited to be here at the Ascent conference and thank you for joining me. I’m Cheryl Contee. I am the CEO of Do Big Things to Big Things is a digital agency that specializes in providing the world’s leading causes and campaigns and corporations with the new narrative and new tech that week for the new era in which we all sense that we’re living. And I’m here to talk to you about another company of mine. Attentively, attentively, as far as we know, is the first tech startup with a black female founder on board myself to be acquired by a Nasdaq company. Blackbaud And I want to tell you more about that story and also talk through the life cycle of a startup. I think that especially for those of you who are either new in your startup or you’re thinking about launching a startup, this isn’t always something that’s fully articulated. And I know it was helpful for me when someone spent that took the time to walk me through it. So I call it Riding the Mechanical Bull because I wrote a book based on my experiences called Mechanical Bull How You Can Achieve Startup Success. But more on that. All right. So attentively, what was it? Well, it was a tech startup is a tech startup, of course, that’s still alive over at Blackbutt. But many of you probably may use now marketing, automation or social listening tools and attentively was a tool that brought together social listening, influencer engagement and marketing automation very much geared towards non-profits. So here is our team. We never really got bigger than this. We were small but mighty. And because you might notice something a little different from us, it’s pretty it’s pretty chick to stick in there and diverse. We worked hard to have a startup that looked and felt a little different. And because we looked different, we had even though we were small as a team, we had a lot of visibility, particularly in our space. And here you can see we got a lot of coverage and a few awards which were delightful y attentively was acquired in twenty sixteen and I actually that was of July twenty sixteen and my son Collin was actually born in August twenty sixteen. And I like to joke that he’s my new startup. I don’t have an exit strategy yet and it seems like it’s like a twenty year runway or something like that. So what happened was. Yeah, you know, we saw my my business partner and I Rossland, she also goes by, you know, we saw some of our peers in the causes and campaign space who were also entrepreneurs launching their own startups. And they said, wow, you know, they don’t they’re not smarter than us. You know, they’re not more talented. They don’t have a better idea. You know, surely we can do this. And so that was our plans were like, how hard could it be? Bliss sometimes is ignorance. As you can see, for those of us, particularly those of you who are in a startup, I mean, it is rough. You know, in the book I talk about the fact that, sure, it sounds great, you know, being your own boss. Right. And working from home in your pajamas, setting your own hours. And the reality of the situation is that, look, you know, instead of one or two bosses, when you launch your own company, you have tens of thousands, millions of bosses, and those are your clients and customers. And if you’re working from home in your pajamas, I mean, before in the before times before the pandemic, if you were in your pajamas, it’s because you can’t afford an office and you haven’t stopped working in maybe twenty four to forty eight hours. You know, there’s no time to for, for removing pajama bottoms. So look, if that still appeals to you, please, by all means launch that startup. But yeah, it can be rough. I mean you see like where it’s raining at the end and I mean absolutely like going through due diligence and the figuring out an acquisition. It is it is really challenging. However, I learned a lot from this experience and I definitely want to share some of that with you. So let’s talk about the lifecycle. So we already talked about, you know, are you really an entrepreneur? Does this really appeal to you? And look, starting your own business, it can be a great path towards a work life balance. Once you are successful, it can be a great avenue for wealth generation and job creation. That’s real, where you helped to create jobs for for not just for yourself, but for other people. But first, you have to have to have an idea. So maybe you have an idea. And sometimes I see this especially with minority entrepreneurs where they will hold on to an idea. They want to keep it secret. They’re worried that someone will steal it. Relax, OK, most people are not as ambitious, OK? They are not as driven. You know, they are not interested in starting their own business fundamentally. And they might be easier than you. OK, so they don’t worry about anyone stealing your business idea. Instead, you want to talk to as many people as possible about it, because that way you can start to focus group. You can start to attract hopefully investors, clients, team members, partners. You know, the more you talk about it, the more you’re actually going to get also some feedback and input and ideas that you can synthesize to then start to build that team. Right. And team a lot of people, especially women, especially minorities, you’re so used to being a team of one. And I get that. I definitely have had that experience where you’ve had to propel yourself fairly independently through life. And yet no startup is successful without a diverse team and diverse in terms of backgrounds and genders. Certainly all of the studies that I’ve seen show that diverse companies are more productive and they are more profitable. And I don’t know about you. I like making money. So that sounds good, but also diverse in terms of specialties. You might be the visionary, maybe you are the idea person, but then you might need a tech lead. If you’re building something, you need someone who knows something about manufacturing, who is your product or UX person, you know, who is handling sales and marketing, who’s crunching the numbers, who is your white haired advisor who has had some experience? Any investor is going to look for that that diverse and make sure you have a way to move things around if someone isn’t able to perform at startup speed and then you’ve got to make a decision. Are you bootstrapping or are you self funding? Right. You know, we bootstrapped internally. We we sort of hothouse attentively inside our former digital agency vision. But at some point it became clear that in order to really take the product to the next level, we needed some capital and it needed its own team. So that’s when we started to look for funding these days. That was almost ten years ago. These days, there’s a lot more funding out there, whether it’s angel investors, whether it is accelerators and incubators, whether it’s just straight up. Loans from places like Kabbage, there’s so many different places where you can get funding now or even the PPP, you know, if you’re lucky and then you launch, right. You’ve got to get it out there at some point and see you’ve got to get post revenue. There are some advantages to being pre- revenue. It’s all theoretical and it can sound good. But ultimately, you’ve got to start to get it out there, which is when you’re going to start to experience burn. All of a sudden, as soon as you launch the company, you get your funding, you launch the company, and every minute you spend, you are burning down your capital and you’ve just got to make sure that you make decisions as quickly as possible. I mean, honestly, you know, not even three months every six weeks reevaluate all your decisions because time is money and eventually you’re going to start to run out of money, which is when you pivot at some point in the process. And this comes straight out of lean startup. At some point you’re going to see after you launch your company. And angel investors know this better than anyone else that they’re investing in you, the entrepreneur, not necessarily the product, because the product, you know, its audience, its orientation might shift gears. And that’s OK. Take in all the data and figure out what is it that people really want? What is it what are they responding to in your in your marketing and your messaging and give them more of that. Everything else, try to weed out all of the chaff, try to sift all of that and actually just provide that, you know, that thing that people are really glomming on to and start to enhance that. That’s how you get to success. And then you’re going to start if you’re really successful, you’re going to start to experience growth, scale, traction, all of those things. Look, 90 percent of American small businesses fail in their first year. And of those, 90 percent of those fail in their third year. And so, you know, you’ve got to keep your eye on the ball the whole time. And studies show that a business that has maybe just a couple of employees looks very and acts differently than a business that has 12 employees. And that’s true. When you hit the number, say, between twenty five and thirty. That’s true when you hit 50 and on and on. And so you as a leader, if you’re really experiencing growth and scale, you’re going to have to figure out, OK, how do I reinvent myself and how do I maintain healthy culture and real revenue generation even as we’re growing? Right. And that’s a really great time to ask for help. You probably at that point will need to shuffle your management team a little bit. And that’s OK. That that is a good thing. And then finally, exit.

[00:10:46] Have you thought about your exit?

[00:10:49] And I tell I counsel entrepreneurs today to think as you’re launching the company about your exit strategy and you might think, oh, well, but this is my new life. This is my new career in this volatile world that we’re living in, the average startup tends to last or at least shift gears majorly within seven to ten years. OK, so that’s your horizon. That’s your window. Sometimes it’s five to ten, but usually in that five, seven, 10 year mark, you’re going to start to and there are only a few ways to exit. Right? There is failing, which again, is likely. We’ll talk about that in a second. How to handle that? There are there’s acquisition and acquisition comes in four flavors. There is. Maintain your dignity. And look, there’s no price on your dignity. That’s often called at a higher rate. You’re really just brought in because you’re you’re smart. There is. And then there’s new car. New house. Don’t have to work again for the rest of your life. And look, most acquisitions fall in those first three, and that’s fine. And then finally, the a sliver, maybe one to three percent of those who make it after their third year. So this is a very tiny amount. Might IPO, right. And maybe maybe that’s you and good on you. But that’s not necessarily going to be most people’s experience. Now, if you exit, if exiting for you looks like we’re going to have to shut this company down, it’s OK. It’s fine, because, look, you might think, oh, you know, and this often holds a lot of people back, especially women, especially minority founders, from going forward because they say, oh, what if I fail? I’ll be I will be l’chaim. My entire family and everyone who knows me. And that’s just not the case at all. In fact, in what most employers are going to see, someone who dare to dream. Who is ambitious, who performed at an executive level, you are now qualified for a much higher level of authority and executive action than you were before you launched your startup. So there is no failure here. There is only a trajectory up, even if you have to exit. So a few more points and then I’d love to start to take some questions. A few things I know for sure in terms of your startup boy, you have got to pick people who are ready to ride or die. I mean, you need to figure out your policy. My business partner and I look I mean, there are things she knows about me that my own mother doesn’t know. I mean, it is a very intense, very intimate relationship. And look, if it’s not working right away, you know, you should you should figure out, a, you should make changes, know don’t don’t don’t think that it’s going to work out because it might not. It’s different when you look different, the experience of the guy on the right and he seems like a nice guy is but is going to look really different from the woman on the left. You know, and I know that from from my own experience, that if you are you know, if you look different than your typical entrepreneur in any way, it’s going to take you much longer to raise money. It each fund around or even an acquisition round. You know, it takes six to 12 months minimum. And if you are a black woman looking for funding, not only are you likely to raise much like a fraction of the guy on the right, but it’s going to take you longer. And look, don’t let that hold you back. I didn’t let it hold me back. But you have to build that into your into your estimates. You have to build that. If it’s going to take you 12 months rather than six months to reach your next to complete your next funding round, that has real implications on your your roadmap for your product, for your payroll, for all of those things. And look, more people clearly need more resources. We can’t solve the problems of the future if we’re only tapping into a small group of people for the best ideas. Know if we want the amazing apps, if we want cool new products, you know, groundbreaking new services, that means we need to expand access to capital and knowledge of how to launch startups to as many people as possible. And that’s not just a moral imperative. That is an economic imperative.

[00:15:30] So here’s how I’ve created more impact via trying to create more opportunities for folks I launched some years ago. Yes, we code through with my old friend Van Jones of CNN. It’s now called Dream Core Tech, but I’m really proud of the work that they’ve done over there. It’s all about helping over one hundred thousand low opportunity youth of many colors to find high quality tech jobs. Because our jobs are amazing, right? More people should know that. Then I also wrote this Amazon best selling book, Mechanical Bull. It’s pretty funny. I used to in the before times, I called it a good airplane book, but maybe you some of you are still writing airplanes, not me.

[00:16:15] But, you know, it’s it’s funny, but it’s really packed with a lot of practical insights, not just for entrepreneurs, but for investors as well, because I know there are investors who really do believe in democratizing access to capital and bringing the best ideas and innovations forward.

[00:16:36] So check that out. It has a lot of my personal experience in it, but a lot of experience from other other founders, other investors. So some good stuff there. People often ask me, hey, Cheryl, you’re a single mom as CEO. When when on earth did you find time to write a whole book? I work with great media. Those guys are amazing. And I really recommend checking them out. And look, you know, what are you doing to help democratize access to capital or show that great ideas can come from anyone else? You, too, can ride the mechanical bull. That’s Ross Lemieux right there, my old friend Shewan showing us how it’s done. So thank you so much. I’m super easy to find after this.

[00:17:23] And I’m I’m also but also happily take questions from the chat. Do you guys have any questions?

[00:17:42] Otherwise, I will just keep talking. OK, well, until we get questions, I can I can tell you guys some of the frequently asked questions that I get if that’s useful. So I would say frequently asked questions that I get are, look, Cheryl, I’m more of a techie than I am a you know, a visionary. You know, I’m not really sure where to where to where to start. Right. With, you know, I don’t know how to network. And networking right now is a lot more difficult because of the pandemic. I get it. Know, it’s not like you can just show up at event. And for some people, that’s not very comfortable. The good news is that there are some really great spaces and social networks that you can see where you can start to connect and find people who are interested in the same things you are. Because I guarantee you there are people who, you know, they want to participate in a startup, but they don’t necessarily have the idea. Right. You know, they’re looking to join a team. So great places to look. Angel list for six are great places. There are so many. LinkedIn is a really amazing place. And if any of you listening are, I’m happy to connect with you on LinkedIn. Just tell me where where you came from that you were that you saw me on ascent. Otherwise, I think you’re just a random stranger and I probably won’t accept you, but LinkedIn can be an awfully powerful tool in starting to provide that access to, OK, who where is my posse? Who is my team? You know, not only, of course, team members to fill out your startup, those those archetypal startup roles, but also those folks who could be investors potentially or connect you to capital, because, look, this is really harmful for those folks who are, you know, minority, you know, like, look, you know, and I joke about I wrote a Harvard Business Review article that that mentions this and I mentioned it in the in the book. But look, if you’re if you’re a black or brown technologist or a startup founder, you’re probably already making the most in your family like there is no friends and family. Right. If I had gone around when I was launching my startup attentively, if I have gone around in my family and said, hey, I’ve got this cool tech startup, you know, social listening, marketing, automation, influencers, online, etc., here’s what would have happened. A whole bunch of people would have owed me twenty dollars. All right. That’s that’s all that would have worked. So you look, you have to do a lot more networking, you know, if you don’t look like the typical entrepreneur because you know that friends and family around, it’s just a nonstarter. And I do hope that investors listening, you know, really take that to heart because, you know, there are you know, if you’re coming from behind the eight ball a bit, you need more startup capital. You need more networking access. I think that’s something that investors can provide. The best investors are going to provide you with a lot more information than money. You know, the best angels really want to help you succeed, not just with their check, although that is a pretty big you know, hey, I believe in you kid kind of moment, but I really do lean on your investors to give you advice and to help connect you, including looking at, hey, do you know a tech lead or a manufacturing leader? I need a product person or I’m looking for my next. Is this the time to start? My next rounder’s is the time to start to look at acquisition partners. Another frequently asked questions. Another frequently asked question is, what about investor relations like how does that how does that best work? Well, you know, investor relations, once you have your investors, you want to keep in touch with them. Right. And I would we wrote maybe quarterly reports along the lifecycle just of like, hey, here’s how we’re doing, you know, and those were fairly lengthy updates. But another product with which I was associated, proud tangle. We helped vision. My company helped to provide the source code. Some of the early source code for tango and tango actually ended up being acquired itself by Facebook as part of its journalism project, which was really exciting because as minority shareholders, we also participated in that acquisition. But recruiting goals sent out super quick monthly updates that were maybe a few bullets. And I think those in a way, I think that investors really like that now. You know, in especially in your first round, you’re going to talk to an awful lot of investors, the great majority of whom are not going to invest in you. However, a lot of times when investors say, look, we’re not ready for this first round, but keep us posted, a lot of people think that that’s just nice. You know, they’re just being nice. You know, they say that to everybody, but that’s actually not true. Investors, generally speaking, are serious when they say we’re we don’t we’re not ready now, but we’d like to watch your progress. So create, you know, a special, you know, include them in the investor updates, you know, all those people who didn’t invest in you, because chances are if they see that you’re achieving growth and scale, some traction is happening. They actually might want to invest in you. And that’s something that happened to us, actually. You know, we got recommended that we had a major angel fund that actually turned us down in the first round. And then they came back around in the second round because we kept in touch with them and they ended up becoming major investors and helping to lead the subsequent round. So that’s something to keep in mind. And this is a relationship, you know, when people sign on for that first check, they’re actually they’re actually committing to making to writing more checks. And I think people don’t realize that. And then finally another. We only have one more minute left. People ask, well, when you say, Sheryl, I should have my exit strategy in mind at the beginning, what does that mean? That feels like I’m not committing fully own. And I know what this is about strategy, because when we launched attentively, we thought, oh, well, this isn’t likely to get big enough to IPO. That’s not likely to happen. If we’re successful, this is probably going to be an acquisition. And so along the way, from the very beginning of our process, we formed strategic partnerships and alliances with the types of companies, big companies that might acquire us. And look, an acquisition happens because, you know, people either have been watching or talking about your software, but more likely it’s because you have created these amazing relationships. All right. I think we’re out of time. I hope this was useful. I really wish you luck in your startups. Get out there. You can do it. If I can do it, I’m like the worst coder ever. I know you can do it. Thanks for joining me today and enjoy the rest of Essent.

Leave a Reply