Bootstrapping to $12M+, Getting Ready to Raise Money: MindTouch CEO Aaron Fulkerson (Part 7)

Sramana: With $12 million, in revenue you can raise money anywhere you want. When a company has substantial revenues, they do not need to move to Silicon Valley to fund raise. Have you considered where you are going to look at raising money?

Aaron Fulkerson: Making the decision to move to Silicon Valley or not is an intriguing discussion. I personally believe that the culture in Silicon Valley merits making the move. People in the Valley are moving with their hair on fire. They want to impact the world.

Sramana: When you try to scale a company, it is hard to find the management talent that is available in Silicon Valley anywhere else. If you are looking to find a highly experienced person to lead your sales team, you will have better luck finding that person here than you will in San Diego.

Aaron Fulkerson: Even in the early days, I remember we went through people who where not motivated and driven. My and Steve love what we do. We work our asses off. That is just a part of the culture in the Valley. It can be challenging to find like minds in other places.

Sramana: I just published a piece on the Harvard Business Review dealing with the theme of moving to Silicon Valley. My thought is that if you move to the Valley without preparation, and you do not have a validated business, you are going to be doomed. You can’t compete in that talent war.

Aaron Fulkerson: At that phase it does not make sense. You would be doomed.

Sramana: Your company is at a different stage. You have a validated market and product. You have a $12 million company. This is a point where you could hire talent and attract investors. The justification of moving to the Valley is high. There is a strong case for you to move to Silicon Valley.

Aaron Fulkerson: If you are focusing on shipping a minimally viable product, then it does not make sense to move to the Valley. It is very valuable to live in this culture. There are events every Tuesday that don’t exist anywhere else. I have no intention of going to Silicon Valley, but there are people who have recreated that culture. New York and Boston have created that culture as well.

Sramana: The point is if you are building an early stage company, you don’t have the time to network. You need to spend your time working. That is part of the reason we created 1M/1M. We meet once a week for a private roundtable and a public roundtable.

Aaron Fulkerson: You are creating that culture within 1M/1M. It is not about geography, it’s about creating that culture.

Sramana: I started 1M/1M as a method of bringing aspects of the Silicon Valley culture to the entire world. That is the purpose of our case studies and round tables. We have been able to bottle aspects of that culture and make it broadly useable.

Aaron Fulkerson: The idea of 1M/1M is helping people tap into the right culture. That is what matters, not geography.

Sramana: Have you started talking to investors yet?

Aaron Fulkerson: No, but I get a few emails a week from people who are interested. I get notes from private equity and VCs. We have created a short list of people we are willing to take funding from and we are putting out deck together now. For me, it is always going to go back to delivering a product to customers that they love using. That will ultimately lower our cost of customer acquisition which is a big metric to me.

For every dollar that we spend in sales and marketing I want to know what to expect in return in the form of new customer acquisition. I also want to know what to expect in cohort analysis in years 2, 3, 4 and 5 from that same customer. That is a critical indicator to me that we are doing a good job at the company.

Sramana: You are going to be in the enviable position of selecting your investor. How do you determine whose money you want?

Aaron Fulkerson: The non-politically correct answer is the truthful one. Do I want to go have a glass of beer with them? I am making a big commitment by taking an outside investor’s money. That is a five- or 10-year commitment, so it better be somebody that I like at a personal level. Second, there needs to be a professional rationale for partnering with them.

Sramana: Good luck with your fundraising. You have definitely covered a lot of distance over the past eight years. Enjoy the fundraising process; I hope it works out to your satisfaction.

This segment is part 7 in the series : Bootstrapping to $12M+, Getting Ready to Raise Money: MindTouch CEO Aaron Fulkerson
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