Bootstrapping a Billion Dollar Unicorn with Services from Utah: Dave Elkington, CEO of InsideSales.com (Part 7)

Sramana Mitra: Are you building the whole organization in Utah?

Dave Elkington: Yes. Here’s why. I’m maniacal about that. I drive everybody crazy. So much of a business, especially in hyper growth, happens ad hoc. It happens in the hallway. It happens in ad hoc meetings. If you distribute your leadership team, you impair them. That strategy is so fluid. It’s so quickly evolving that if you don’t cluster your key strategic leaders, you can’t be successful.

Sramana Mitra: I don’t want to get into this discussion but we have a completely global organization because of the nature of what we do. It works perfectly for us.

Dave Elkington: There are scenarios where it doesn’t work. There will be a day when I don’t need all of those key leaders here in Utah.

Sramana Mitra: I think the downside of building a startup at Silicon Valley these days is the talent war is crazy. That is not an easy game to play. >>>

Bootstrapping a Billion Dollar Unicorn with Services from Utah: Dave Elkington, CEO of InsideSales.com (Part 6)

Dave Elkington: Everybody who was willing to give us term sheets were great firms but what mattered to me was the cultural fit. Ultimately, we did $35 million from US Venture Partners. It was because I had Steve Krausz and Dafina, who were one of the newer partners. They were the right people. I loved their experience. I liked their engagement. They weren’t the highest valuation by a significant amount but they were the right people. They gave me the exact same terms that Mark Gorenberg gave me.

It allowed me to put much more fuel into the fire. By this point, I was surrounding myself with a lot of advisors that have done this before. >>>

254th Roundtable Recording On April 9, 2015: Billion Dollar Unicorns with Gaurav Dhillon, CEO of SnapLogic

In case you missed it, you can listen to the recording here:

Bootstrapping a Billion Dollar Unicorn with Services from Utah: Dave Elkington, CEO of InsideSales.com (Part 5)

Sramana Mitra: We’re talking 2010 now?

Dave Elkington: That experience was in 2011.

Sramana Mitra: Where were you revenue-wise at this point?

Dave Elkington: We were probably doing $6.5 million. A lot of companies in the SaaS space talk about bookings. When you’re bootstrapped, that gap is the only important thing that exists and most importantly, it is cash flow. It’s all about managing cash flow. Other companies would compare with us on, “What are you on revenue?” I’d be like, “We did $6 million in gaps.” They’d say, “What about bookings?” I’m like, “What’s a booking?” All that matters is the cash I’m going to bring in.

Sramana Mitra: It’s not very helpful.

Dave Elkington: I talked to a company and I really didn’t know what a booking was. He tried to explain it to me and it was such a foreign concept. At that time, I was like, “Who cares?” >>>

Valuation Without Revenue, Revenue Without Valuation

A tale of two tech companies.

One has an outrageous valuation, venture capital pouring into every pore, no revenue.

The other, quietly, has turned $11 million of capital into an annual revenue run rate of over $100 million, went public, and has a lousy valuation.

>>>

Unicorn in the Making: Avi Steinlauf, CEO of Edmunds.com (Part 7)

Sramana Mitra: Does that mean that you can charge higher rates for the leads? Are you even able to take a transaction commission? What does that give you in terms of financial metrics?

Avi Steinlauf: All of the above. It allows us to work much more closely with our partners, and depending on the individual relationship, allows us to just just have a much better sense as to what’s going on. In a way that works better for us and our partners, and candidly, better for our shoppers, because it provides them with a better solution.

Sramana Mitra: What about your strategies for acquiring traffic? I understand that you have relationships with the manufacturers and direct relationships with the dealerships? What is the strategy in acquiring the consumers?
>>>

Unicorn in the Making: Avi Steinlauf, CEO of Edmunds.com (Part 6)

Sramana Mitra: Did you have venture capitalists in your early rounds?

Avi Steinlauf: There were some small venture funds that were portions of larger companies but none of the blue chip VC funds that you would be familiar with today.

Sramana Mitra: When you were raising money at that time, was this part of the conversation—that the family plans to keep majority ownership of the company and you wanted to keep the company private?

Avi Steinlauf: I’m not sure how evolved our thinking was at that time. We didn’t quite know what was in store for us. We were in an environment where all sort of things were going on. I think the same values were in place then that are in place now. The long-term orientation was in place, but I’m not sure I could say that we had the understanding that we do today 17 years ago. >>>

Unicorn in the Making: Avi Steinlauf, CEO of Edmunds.com (Part 5)

Sramana Mitra: The Internet business model that you were settling on was CPA lead generation or was it just straight up advertising?

Avi Steinlauf: CPA lead generation would be a fair description using Internet lingo. That was just the beginning because we were also being approached during the later part of the ’90s by a number of the automotive manufacturers as well as their ad agencies. They said, “You’ve got this audience of several million people on your site monthly. We’d like to put our advertising messages in front of that audience. We’ll pay you for the ability to do that.” Candidly, in the early days, we weren’t comfortable with that. Advertising has not really evolved where we felt it was reputable or legitimate. For many years, we deferred. >>>