Bootstrapping a Virtualization Services Company: Chris Grandi, CEO of Abacus Group (Part 2)

Sramana Mitra: What was the next move after Maxim?

Chris Grandi: I took a pretty divergent turn. I thought that maybe I wanted to be in Wall Street. I joined the Goldman Sachs Associate program out of Harvard Business School and joined their fixed income group. I was an associate in that group specifically focusing on high-yield debt and bank loan debt. It’s essentially high-yield financing to companies. I was there for a very short period of time. I was very thankful that I got the opportunity to work on Wall Street, but I realized technology was in my heart. Also, the timing of this was 1998. That was the first Internet boom. At that point, a friend and I had a business idea to start an Internet company. I decided not to go back to Wall Street.

Sramana Mitra: What was that company?

Chris Grandi: We had conceptualized this idea of people using the Internet for online invitations. If you wanted to have an event, you would actually send out a web-based invitation, and people would respond. You would be able to see it. At the exact same time, there were a couple of individuals who graduated from Stanford Business School who had gotten financing for their company called Evite. We created that market for online invitation.

Sramana Mitra: How long did you do that?

Chris Grandi: A year and a half.

Sramana Mitra: Why such a short time?

Chris Grandi: The sky started to fall in 2001.

Sramana Mitra: That I remember. Your platform didn’t work?

Chris Grandi: The platform worked phenomenally. It’s just when we started that company, we and Evite were strongly encourage by our financers to get as many eyeballs as you can, and not to worry about revenues. It was very contrary to how businesses should work. Get as many users as you can and raise as much money as you can. We were getting a lot of users. At the inflection point when things turned, everyone looked and said, “There is no more money. If you’re not making money, you have to change.” We pivoted quickly. We got rid of that. It was not a profitable business model. We couldn’t even see how it would be profitable.

At that point, we said, “Let’s carve out this payment feature that we had developed.” We changed the company into a payments company. This is the exact same time that PayPal was launching. We knew those guys. It’s very similar to PayPal. We ended up selling the technology to big financial institutions like American Express. At that point, the money was running out. We just wanted to get out. We ended up selling it to a subsidiary of Deutsche Bank. One thing I always tell entrepreneurs is venture capital is absolutely outstanding. We wouldn’t be where we are without venture capital, but make sure you know how you want to use venture capital.

This segment is part 2 in the series : Bootstrapping a Virtualization Services Company: Chris Grandi, CEO of Abacus Group
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