Serial Bootstrapper: Oversee and Manage Founder Fred Hsu (Part 3)

Sramana Mitra: Did you bootstrap it all the way?

Fred Hsu: If I were to relay anything and I could teach people, we raised money when we least needed it. We raised $150 million for Series A.

Sramana Mitra: $150 million?!

Fred Hsu: Yes.

Sramana Mitra: What were your metrics in the business that you were successful in raising that much money?

Fred Hsu: Very high gross margin, pretty defendable tech, first-to-market advantage, and a lot of others like the patent I talked about. That and good business practices got us to several hundred million in revenue per year.

Sramana Mitra: By the time you were raising this $150 million Series A, what kind of revenue did you have?

Fred Hsu: About $230 million.

Sramana Mitra: You already had $230 million in revenue when you raised Series A?

Fred Hsu: Correct.

Sramana Mitra: So you already had built the full company. You were doing a private equity deal essentially.

Fred Hsu: We were just taking some chips off the table.

Sramana Mitra: You went from zero to $230 million in revenue bootstrapped?

Fred Hsu: Correct.

Sramana Mitra: Can you give us a few more nuggets of strategy that helped you do that? We love these kinds of stories. The ‘Bootstrap first, raise money later’ principle is pretty much what we follow in 1M/1M.

Fred Hsu: Picking your co-founders wisely is one. I owned the entire tech and product stack. I had a partner who I trusted to run the business and financial side of things. We both interfaced with our customers and vendors. We were very agile. When you’re spending your money, it forces you to think about the key problem and really solve it yourself rather than just hiring away or bringing in third-party partners.

Sramana Mitra: Can you talk a bit about the two sides of your business equation – the advertisers and the publishers? How did you find them? How did you scale that process? How many publishers did you need in order to generate this level of revenue and how many advertisers did you need?

Fred Hsu: Because it’s primarily B2B on the advertising side, there are only one or two large incumbents who we acted as wholesale traffic sellers to. There are only a handful of advertisers.

On the publisher side, we’re talking about a few thousands. We spent a lot of time in building those relationships. I speak in the context of Oversee. I actually left Oversee in late 2008. I’m working on a different company now.

Sramana Mitra: We’ll get to that. We have to capture the story from Oversee as well.

Fred Hsu: Because we were first mover in the industry, a lot of publishers came to us. We’re not talking about a market that had millions of end users. It’s not a consumer play, it’s primarily a niche B2B thing. In this niche, we built a certain level of dominance.

Sramana Mitra: It sounds like there were a handful of advertisers and publishers. You created enough technology to be able to push a lot of traffic to these brands.

Fred Hsu: Correct.

This segment is part 3 in the series : Serial Bootstrapper: Oversee and Manage Founder Fred Hsu
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