Serial Bootstrapper: Oversee and Manage Founder Fred Hsu (Part 4)

Sramana Mitra: How many people did you need to make this equation work?

Fred Hsu: We had a peak of about 225 employees across three or four locations.

Sramana Mitra: What function required a lot of people? At some level, it sounds like if you’re doing all this by technology, it’s not probably that people-intensive but I may be missing something here.

Fred Hsu: It’s probably about 40% technology, because we have large and complex systems. It involved babysitting a lot of technical hardware, which operated at orders of magnitude less efficiently than machines today. We also had to innovate pretty heavily because the space got quite competitive. The rest is sales and administrative functions.

We did make a couple of acquisitions. We acquired a small registrar that catered primarily to domain name holders. That company was called Moniker. We also acquired a domain name after market company called SnapNames. We took our traffic assets and built our own in-house advertising platform as well. It didn’t require thousands but at the same time, we couldn’t just run it on a few dozen people.

Sramana Mitra: You reached this $230 million in revenue by about 2008?

Fred Hsu: Yes.

Sramana Mitra: That’s when you wanted to take some money off the table and get some liquidity for yourself as well as your co-founders?

Fred Hsu: Correct. The company was pretty much owned by two people. Through the years, we’d taken all personal risk off the table. For the $150 million round, we took most of it personally. We did have missed opportunities. There were several instances where we could have probably built a bigger company faster. But because we were young and generating a few hundred million in revenue, we felt we were on top of the world and thought that we could do no wrong. That mindset did contribute to a few missed opportunities.

Sramana Mitra: Yes. That’s okay. You learned. Who was the private equity firm that you chose to work with for this round?

Fred Hsu: It was a firm called Oak Hill Capital Partners.

Sramana Mitra: After you took that risk off the table, you said you left. What happened to the company?

Fred Hsu: In 2008, we did the $150 million deal. In 2009, the private equity firm took control of the company. At that time, I was already out. The company pretty much shrunk and sold some pieces off. It’s a much smaller company today than it was back in 2007.

Sramana Mitra: The private equity deal didn’t work out very well for them.

Fred Hsu: Yes. What I had seen was a complete shift in company culture, innovation, and willingness to take a risk. All the dynamics had changed.

This segment is part 4 in the series : Serial Bootstrapper: Oversee and Manage Founder Fred Hsu
1 2 3 4 5 6 7