Plug-and-Play Cloud Storage At Home: Cloud Engines CEO Daniel Putterman (Part 2)

Sramana: You did not take a term sheet to start MaxInfo. How did you finance the company?

Daniel Putterman: I bootstrapped. I used credit card debt, I borrowed money from friends and family, I did consulting and converted those revenues back into financing for the company. I carried almost 30 people on payroll for a couple of years before we got to the point where we were getting regular VC offers. I had a great time as well.

Sramana: I was an entrepreneur at that time as well, and the culture of the Valley was such that everyone was always talking about how much venture capital they had raised. It was a bit gross. What gave you the instinct to not take VC funding?

Daniel Putterman: One aspect was complete sheer ignorance. My first term sheet was for a million dollars on a two million dollar pre-money valuation. If you translate that into percentages, then giving away a third of your business sounds OK. When you are looking at the amount of money coming in, the question is how that math relates to the revenues coming in.

The subsequent term sheets were more interesting. They ranged from $7 million to $10 million at far higher valuations. At that point there was a bit of an M&A frenzy going on which was helping me shape my decisions. The bootstrapping methodology was in stark contrast to the second company I did. What makes all of us as entrepreneurs better each time around are the mistakes we make.

By the time I did my second company, I had established my first exit. I paid off all of my debt and drove a car that did not break down. I had a house that was larger than any other one I lived in. That afforded me the opportunity to step back a bit and derive a vision that was not reactive and one that could embrace the entire market.

The next company I started was EoExchange. We applied an industry editorial to search. Imagine that you were searching for a PC. We would only search relevant sites within context. We categorized results based on revues, prices, and similar aspects.

Sramana: So you essentially created an catalogue on-demand?

Daniel Putterman: Correct. We had a team of editors, and we picked particular domains to become experts in. It was a combination of manual editing and technology. With that company, I felt the gloves had to be off and I needed to raise money so I brought in close to $50 million. The board came in and told me that I was not spending the money fast enough. This was in the late 1990s before the bubble had peaked. I told the board I would help them write the S1 in conjunction with hiring a new CEO. That company went off and ran, and I cashed out. That was good for me personally because the company spent all of its money.

The next couple of companies I found a happy balance of areas that have included my personal passions. I love team building. I love growing an organization through its various phases. My personal goal is to bridge all the phases of a company. I also must be involved in a space that is interesting to me. I really like consumers and what people do at home. If you get the technology is right, you can affect people’s lives. Steve Jobs affects my life in a positive manner every single day.

This segment is part 2 in the series : Plug-and-Play Cloud Storage At Home: Cloud Engines CEO Daniel Putterman
1 2 3 4 5 6 7