Non-Technical Founder Scaling SaaS Venture to Exit: Velocify Founder Jeff Solomon (Part 4)

Sramana Mitra: Go back to the 2004 timeframe when you were just getting started. How did you finance the product development and the early stage of the journey. It doesn’t seem like revenues were of a scale where you can fund it with revenues.

Jeff Solomon: Initially, we funded it with cash flow from the consulting business.

Sramana Mitra: Bootstrapping using services is what we call that.

Jeff Solomon: One of the guys was a talented engineer. He also came from a wealthy family. He loaned the company $300,000. That got us to a point where we were self-sufficient. That’s when we raised our first round. We were doing just under $300,000 a month when we raised our Series A.

Sramana Mitra: Series A is from?

Jeff Solomon: We raised from an LA firm called Rustic Canyon Partners, which is no longer in operation. In 2005, there weren’t as many VCs and angels in LA. We raised just under $4 million. We were able to run from that point.

Sramana Mitra: You did this until 2012?

Jeff Solomon: I did. I was one of those types of founders that did every role. I did marketing. I did product development. I did sales. I built every department except for engineering. I was CEO for most of that time. I eventually transitioned the CEO role to someone and I focused on enterprise sales. I left the day-to-day operations, but I was certainly still a major shareholder.

Sramana Mitra: You have a very interesting entrepreneurial journey. After the Series A, what were the strategic moves that you made?

Jeff Solomon: Strategic moves or strategic mistakes?

Sramana Mitra: Both. You must have been somewhat successful. Otherwise, you wouldn’t get that far.

Jeff Solomon: We were, but I was still very inexperienced with a venture-backed company. I never had a board. I was really pushed to make decisions that maybe we wouldn’t have made. A lot of that around recruiting. They were very aggressive on hiring very high-end people.

Sramana Mitra: Translation, very expensive people who shoot up your burn rate.

Jeff Solomon: Exactly. With the shift in the market in 2008, we were in a situation where we had a huge payroll overhead. As much as grew, we came down really fast. In 2008, the company almost went under. I was able to get an extension on the round. We cut costs. We refactored our efforts and focused in terms of diversifying the client base.

It was a tough time. What we did right was, we continued to focus on the customer development effort – talking to customers, seeing what else they needed, how we can get more seats. We really invested in our customer success team. That worked out really well because we were able to impact our retention rates significantly which were not great at first. We did some good stuff there, but the market turned really fast.

This segment is part 4 in the series : Non-Technical Founder Scaling SaaS Venture to Exit: Velocify Founder Jeff Solomon
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