Bootstrapping with a Paycheck: Axosoft CEO Hamid Shojaee (Part 2)

Sramana Mitra: When you were going in to raise the second round of financing, what were you able to achieve at that time?

Hamid Shojaee: We had created four different products around this fingerprint recognition device. One of them was for picking up your son or daughter at a day care center so that no one else can pick them up unless they had your fingerprint. We had a registration system where you had to register as a parent to pick up your kid. We had a clock in and out system for employers who had hourly employees. No one can clock in and out for other people. We also had a rudimentary system for controlling membership for a club. We had actually built a combination of all-in-one PC that incorporated the fingerprint device into it. So we had taken all these parts ourselves and built the custom case. We put it all together.

Within 10 months, we actually had some pretty cool products, if I may say so, but we had hardly any customer. We had a couple of customers for our attendance software, which is the one that we had spent the most time on. For the most part, we didn’t have a lot of customers. We went in raising our second round with a bunch of products to demo but without paying customers.

Sramana Mitra: Bottomline lesson from that is that instead of doing a full product portfolio with the first round of financing, you should have done one product and really made sure that you could get customers for that.

Hamid Shojaee: That’s exactly right. We made the cardinal mistake of not having focus. That’s a very hard lesson to have learned. We had a board of directors. We brought on one of our board members who was a little bit more savvy and experienced at about the 10-month mark when we were doing our second round. His question at the board meeting which changed the fate of the company from that point forward was, “What does this company want to be when it grows up? By the way, you can only choose one thing.” By the end of that board meeting, we decided that we’re not going to build hardware, day care center software, or the membership thing. We’re just going to focus on time and attendance which was the one we had spent a lot of time on.

Sramana Mitra: With that, were you able to move forward?

Hamid Shojaee: We did and we raised the round. The company started doing better. Of course, we were still negative. We went through a couple more raises and some mistakes. We had basically made every mistake you could make in the book. After five years of perpetual raising, I decided that I was done and I was going to leave and let the company go from there.

From that point in time, we were doing a couple of million in revenue and we had something like 30 employees. We were still bleeding money. I just felt like we were going in the wrong direction with the raises. At that point in time, I had so little influence on it because of the percentage owned. I decided that it was better for me to leave, sell my shares, and be done with it.

Sramana Mitra: What year are we talking about?

Hamid Shojaee: This is in 2000. We started the company in late 1995 and late 2000 was when I left and went to work for Microsoft Consulting Services. Microsoft has that office in Phoenix. I worked for them for the next four years.

This segment is part 2 in the series : Bootstrapping with a Paycheck: Axosoft CEO Hamid Shojaee
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