Bootstrapping from Indiana: Passageways CEO Paroon Chadha (Part 7)

Paroon Chadha: There is a nuanced point that I’m trying to make here. I love Chris like a brother. He has worked with me for 10 years. I don’t think there will be another person who’ll ever be smarter than him. At the same time, what we needed at that time was not something we could have done together.

What we did after was to build a true SaaS subscription mentality. The marketing, sales, and tooling had to be done differently. In general, there’s a lot of evolution that happened. I had that to really leverage as well.

Sramana Mitra: Last question is about what you said about buying your other shareholders out. They took their money and left. Could you elaborate on that? You haven’t exited and you haven’t taken any financing except for that $100,000. What financial engineering did you do to give your co-founders exits?

Paroon Chadha: That’s the most unique part about my journey that I didn’t want to do. It just made sense along the way. When Chris said, “This is where I am and this is what I wanted to do.” We went through an evaluation and figured out what part of the business he owned. We made him an offer. I had to take loans to execute on that. We did that simply because I think the best days are ahead of us.

My other partner was Purdue Fed. They were ambivalent, but they said, “If we need to support you for making this transaction, we will.” This is what they did. I took some more loan from Purdue Fed and just converted Chris’ equity into debt. Once that was done, we started to find success. We started to sell in the UK and Canada.

Credit unions are heavily audited. They were not comfortable in owning a business that had exposures. We worked out an agreement where their entire equity would be converted into a debt instrument and I would keep paying over the next five years. I’m in year three of five. For the moment, I have debt.

Sramana Mitra: Interesting. It is a little bit complicated which is why I wanted to drill down a little bit.

Paroon Chadha: My employee pool is the next step. I’ve had multiple offers to sell the business, but I think I’ll continue to do this. We dream to provide unified enterprise collaboration. We also want to do this out of Lafayette, Indiana. I fell in love with the people there.

There’re so many more startups that can happen there. That is what is the heart of this. I feel I’ll be okay financially one way or the other. Once you start to think like that, then you start to do your life’s work. I think I’m in the middle of it right now.

Sramana Mitra: I’m delighted that  you’re committed to bringing up your community as well. Thank you for your time.

This segment is part 7 in the series : Bootstrapping from Indiana: Passageways CEO Paroon Chadha
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