SM: What role did your mom play during that time?
JH: Two things happened. Emma was born with a birth defect. She had a cleft in her soft pallet that they did not detect in the ultrasound. We found that out the day after she was born. Kevin went into action mode, and he was meeting with experts all over the state within the week after she was born. When you find out about something like that you want to know all the options. Surgery was something she had to have. Her surgery was at nine months.
The second thing is that three months after she was born I was diagnosed with Graves disease, which is hyperthyroid [disease]. My mom had also had Graves disease. It is related to acute stress and hormones. Between the time Emma was born and her surgery, times were very challenging.
My mom was the backbone. She was the reason we survived it. We had a business that was taking off. Kevin and I have a motto which is divide and conquer. He had to go to work the next week, and I had to get better. My parents live in Santa Cruz full time, but they rented a studio apartment across from us and they were going to be there for three months. They ended up extending their lease for a year. She lived around the corner from me.
Now we live in a place that has an in-law unit. She comes up one a week and spends the night as part of her regular schedule. Every three weeks she is with us all week because we are out of town for business or something. She is our backbone, and is the reason why we were able to do so much.
SM: You raised your initial set of funds at the time Emma was born. When did you raise money again?
JH: Right around the time she had her surgery. The business was about break-even at that point, but we did not have a ton of cash in the bank. We thought that 2009 looked like it would be a bad year, so we thought we should raise some funds to survive it. That is when we went out to our friends and fellow entrepreneurs, and I point to Kevin as the source of this; he pulled together a very impressive list of angels. We raised another $1 million almost effortlessly, and we put in some of our own money again. It is another testament to Kevin’s place in that community. He approaches entrepreneurship from the heart. He loves being an entrepreneur. We amassed a great advisory board from that.
We did not know what was going to happen in 2009. We had built a very lean, capital efficient business. Then something happened in January. That was the inauguration [of President Obama]. We had no idea how much related activity we would have on our site, and it was incredible. We saw DC explode after January 2009. It gave us rocket fuel to propel us through the year. We grew to 30 employees in 2009. In September of 2009 an advisor we had brought on our board encouraged us to raise our first round.
We had taken a bootstrapped philosophy as an almost academic decision. We had gone through the experience of raising a lot of capital. Xoom was very capital intensive and a lot of money was raised. In our case we wanted to see how far we could get with almost no money. We spent less than $250,000 in burn between 2006 and 2008. When we went out to raise money it was an incredible experience. With the guidance of our advisor we did something we never do. We went out for three weeks and told people when we were willing to accept term sheets. We were direct and confident.
SM: What was your revenue level when you did that roadshow?
JH: We were around $3 million. More to the point, we were looking to process $100 million in ticket sales in 2009. We met with fifteen to twenty firms and knew most of them.