SM: What stage are you at now? Revenue? Profitability? Traffic? Customers? Users? Any other metrics you track?
KR: We launched our service in Q2 of this year, and the response has been fantastic. We’ve already signed up our first set of paying customers, which is a great milestone for us.
Initially, our primary goals are based on reaching a certain number of paying customers. However, we are moving towards goals based on a key metric for an on-demand company: Monthly Recurring Revenue (MRR). A lot of on-demand companies focus on the bookings number, but that can be very, very misleading in a subscription service business like ours. MRR captures all aspects of the business: new customers, renewals, customer churn, discount amounts, and so on. At the end of the day, the goal is to have MRR increase by a certain percentage each month.
SM: How did you finance the different phases of the company? Seed? Angel? VC? Corporate?
KR: We decided to finance our company through VC’s. We have great investors from great firms. But, when we went looking for funding, our most important criteria was looking at the specific investor first, and then at their VC firm second. That is, to me, the person who will join your board is much more important than the firm they’re with. We wanted to make sure we had board members who were seasoned, who were insightful, and who we would be able to work well with. We’ve been very fortunate to have a board that has been extremely helpful.
SM: What financing stage are you at right now? Will you be raising more money? What timeframe? What is your ideal investor?
KR: Currently, the company is going through its series B funding round. The round should close in the near future but we haven’t settled on a specific date yet. We will definitely let you know when it does close however. Currently we have received funding from Benchmark Capital and Matrix Partners.
Our criteria of whom we choose to work with is similar to the previous round: focus on the individual, less on the firm. I want Board Members with great operating experience building companies, not just investing experience. I check references on VCs. I like to work with VCs whose portfolio company CEOs rave about them. Of course, this luxury only exists if you have more than one term sheet.
SM: What do you look for in your VC reference checks?
KR: I look for passion, not just some CEO being nice. I look to hear things like “If you have an opportunity to have this guy on your Board, and choose not to, then you’re an idiot …” I am also looking for VCs who don’t pound their fists when there is a problem, and start triggering executive team changes immediately. Instead, I want VCs who recognize and acknowledge a problem, and ask, “We have some challenges. How can I help tackle them?”
SM: Do you look for domain expertise?
KR: Not really. We have plenty of domain experience on the team.
SM: So who are your VCs? Looks like they’re stars …!