Capital Efficient Entrepreneurship: Don Mal, CEO of Vena Solutions (Part 5)

Sramana Mitra: Why was he calling you? How did you know this guy?

Don Mal: We were together at Clarity. This is Rishi Grover, one of the Co-Founders. He’s 20 years younger than me. This is where it connects to the golf business. He said, “I need someone to help raise the money. We need someone to start our sales and marketing.” All that experience came together for me to be able to confidently leave a million-dollar job to come work and start a new software company.

Sramana Mitra: What stage did you raise money for Vena at? What did you have? Did you have some 

customers? Did you have an early product? What were the metrics with which you went to raise money?

Don Mal: You’re going to love this. We value the company at $10 million on day one with zero customers.

Sramana Mitra: This is not something that is a repeatable story. You can tell me how you did it, but it is not very doable.

Don Mal: We did have a product. Rishi was busy for about six months in a basement working with the other co-founder who coincidentally was at IBM as a developer. They went to high school together. They basically wrote the first version of the product. It was in a demo state. It wasn’t fully-baked.

Sramana Mitra: What was this software supposed to do?

Don Mal: It’s corporate performance management. We take Excel, integrate with our product, we have a database, we give it workflow, and auto trail. That’s what we do.

Sramana Mitra: Rishi and your other co-founder had built some portion of the software when you went out to raise money. What about customer validation?

Don Mal: We believed that we had a business worth $10 million because we had the team that had done it before. Rishi and I worked at a company that just sold for $300 million to IBM. We went to investors and said, “We’ve done this. We know that this product solves a very similar problem that that other product solves.”

The beautiful thing with IBM is that they don’t have a non-compete. We were allowed to go to market with a product that essentially competed with one of their products. We showed the market that we had a product and the ability to go to market.

Sramana Mitra: I got exactly why you were able to do this. Let me summarize, based on my experience, exactly what happened here. You guys were a team out of Clarity that just sold to IBM and had spent a little bit of time at IBM. You had domain knowledge in the exact same domain that you were selling. You went to the investors and said, “We’re going to do this again with a competing product. We have all the customer relationships and it’s the same team.”

There is one question that follows from that. What did you do differently or how did you improve the product? You were setting yourself up for a situation that you were going to go back to the same customers that you’ve sold Clarity to before. What is the justification? What was the sales pitch?

Don Mal: We had to respect a one-year non-solicitation agreement. We weren’t able to go to the customers for one year. We knew that we could go to other prospects that were like those customers. Having said that, that is the beauty of Vena. Our approach was that we leveraged Microsoft’s native Excel technology in our software. All of the competitors, including Clarity and IBM, replaced Excel with proprietary grid technology. That was the big differentiator.

This segment is part 5 in the series : Capital Efficient Entrepreneurship: Don Mal, CEO of Vena Solutions
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