From Friends and Family Funding to $30 Million Exit: Vertical Response Founder Janine Popick (Part 3)

Sramana Mitra: 2001 was a very difficult time.

Janine Popick: Over two developers that I’d worked with previously asked me if I wanted to start this company. I agreed. My husband agreed not to start the company with me, which was actually a great thing because he came on later on and helped us kick-start our marketing and sales. He and I are in the same business, which makes for a really interesting yet boring conversation sometimes. We came back to the US and I started talking to lots of VCs. They were very eager to take the meeting, but funding was rejected.

Sramana Mitra: At that point, you were basically discussing a concept? You didn’t have anything going. You were just asking VCs for money to start something.

Janine Popick: Exactly. I had a really great PowerPoint that looked like a product.

Sramana Mitra: PowerPoint financing, even though it happened before the 2000 crash, had stopped by then.

Janine Popick: What I decided to do at that point was go to family and friends. I had a lot of great people that I worked with at Xoom.com. They decided to take a risk and invest in me. Sometimes I say that taking money from a VC might have been easier because the emotional attachment to the people that you love who give you money puts more wear and tear on yourself.

Sramana Mitra: But you didn’t have a choice. Even though there was a very short window in the late ’90s when this was happening, the whole notion of PowerPoint financing just went away.

Janine Popick: Gone. I think that there was a little hesitation from a lot of VCs on the whole email marketing because they didn’t know how there would be any kind of legislation around email marketing. Quite frankly, I think that the fact that I was a newbie was a big red flag. I hadn’t run a company before. It didn’t help that I was a girl. I just felt that.

Sramana Mitra: How did you feel that? Can you put more substance behind that comment?

Janine Popick: I can’t. I wish I could. I’m 47 now. I started the company 14 years ago. I was in my early 30’s. I ran a large part of a company but there was just still that, “Who else is with you?” Frankly, I would bring one of my lead investors Bob Ellis to say, “I have this older gentleman who’s investing in me,” or I’d bring one of the two guys who co-founded the company with me. They were technology guys and they were younger guys. I just felt like there’s too much going on that they were worried about.

Sramana Mitra: The reason why I’m probing a little bit on the girl issue is there’s a lot of sensationalization of this women in entrepreneurship. In this case, you were coming in with a PowerPoint presentation and you didn’t really have a business that was rolling. It was the early days of email marketing. People don’t understand where it’s going to go. People don’t understand what the regulatory framework is going to look like.

My gut feeling just listening to you is that it’s not about you being young or being a woman, it’s just the fact that stage-wise, it was unacceptable. It was a time in history where the market has crashed very badly. Very little was getting funded. I don’t buy it because I was a lot younger than you when I raised money. I didn’t sense that. I raised money before the bubble and during the bubble. Things were just different. People were funding differently. People were thinking differently. I was very active in the industry in 2001. I remember I was actually doing a bunch of EIRs. People were just funding things.

Janine Popick: I do also think that the fact that I was not in development nor had an engineering degree didn’t help me either.

Sramana Mitra: That is a reasonable point. There is a definite bias in favor of engineers in Silicon Valley. That is the DNA of Silicon Valley. You got some of your friends and family to invest and you got this company off the ground. How did it build from there?

Janine Popick: My first investment was just half a million dollars. I kept raising money at the same valuation for another year and a half till I got to about $1.3 million. I felt like that definitely would get me to profitability in about four years. Then you had competitors who were getting funded after the crash. I just never went back after raising money. I just said that I’m going to grow slow and I’m going to grow it methodically. I’m going to watch what I spend. I’m going to keep a close look at my KPIs and make sure that even though my cost per customer is going up, it’s going up controllably.

For every milestone that I measured myself, I’d go back to the investor and say, “How about another $300,000?” It turned out great for my investors and me because every single time I went back to them, I also put my money where my mouth was. If I had to do it all again, would I go and get larger money? Probably. 14 years is a long time. I’m quite proud of it. I did it. I got the investors 10 times their money.

This segment is part 3 in the series : From Friends and Family Funding to $30 Million Exit: Vertical Response Founder Janine Popick
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