Capital Efficient Entrepreneurship from Utah: Ben Dilts, Founder and CTO of Lucid Software (Part 2)

Sramana Mitra: We’re now in mid-2009?

Ben Dilts: That’s right. At this point, it was still very much a one-man show. I may have collected a grand total of a few hundred dollars in revenue from some users. It was a product but it was in no way a company at that point. When I came down to return to school, I immediately sought out the entrepreneurial clubs to try to get in contact with people who could help build this up into a real company. I started meeting a lot of people in the local community here in Utah in an effort to gather a team.

Pretty soon, I ran into Karl Sun. He was a longtime Googler. He joined Google when there was a few hundred people there. He was their first patent attorney. He moved into business development and opened an office in China. He came back and ran their green tech investment arm. He was an executive there for eight to nine years. After dragging his family to China, his wife said that it was her turn to choose where to move. She took a job teaching at BYU Law. They wound up here. That was shortly before I met Karl. He was looking around at the local community to see what there was and how he could get involved.

I ran into him as a potential investor. After so many years at Google, he was really drinking the Kool-Aid on web apps being the future of applications and productivity. He saw what I had built and it compared favorably to what he had seen being built, internally, at Google. He did write a cheque. More importantly, I had him join as the CEO. I am, very much, the technologist.

I am the CTO. I love to work on the very difficult technical problems. I realized pretty early on that I needed help from the perspective of fundraising, recruiting, and generally operating the business that I probably could have been competent at but it wasn’t going to be the best use of my time to help the business grow. Karl was a fantastic fit. He’s valedictorian at MIT. He’s a real honest to goodness engineer himself. He has a great technical background and good business background. It was a golden opportunity and I brought him in. Without him, we certainly wouldn’t have grown to where we are today.

Sramana Mitra: Tell me a little bit about the investment that got you going at that point. When did Karl come on board?

Ben Dilts: Karl came on at the very beginning of 2010. By the end of 2009, I met Karl. He joined as CEO in early 2010. He wrote a small cheque. With that, we hired one more developer. We hired a student at BYU who had been working for the university to come and work with us. He had a very complementary skill set to my own.

Frankly, we got really lucky with him. I didn’t have the experience to know how to vet a developer. We got lucky and got a great one. He and I worked through the majority of 2010 and peeled the beta table off by the end of summer 2010. By that time, we had rounded up a little bit of additional investment, largely from friends and family. I developed a correspondence with our very first paying customer. He wound up investing in those very early days. I think that’s a testament to what we’ve been building.

He saw the value in it. He  saw that we were clearly going to go places with this. That has paid off pretty handsomely for him now. We raised just a few hundred thousand dollars in early 2010. We were looking around for a real first round of investment. We needed to raise about $1 million in order to hire the people that we needed to get this off the ground.

We spent some time here in Utah talking to some of the investment groups. In 2010, there wasn’t as much of a community of tech investors and a culture of success in tech investments as there is now. Now there’s actually a tremendous tech scene here. Then, it was very difficult to find investors who were interested and understood how software investment worked and how the business model would play out. We turned our sights to Silicon Valley. We started to fly out and taking meetings there. In a matter of just a couple of months, we had closed a round on favorable terms with great investors.

This segment is part 2 in the series : Capital Efficient Entrepreneurship from Utah: Ben Dilts, Founder and CTO of Lucid Software
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