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A Serial Entrepreneur’s Awesome Journey from Austin, Texas: Jason Cohen, CTO of WP Engine (Part 7)

Sramana Mitra: What were the financing rounds? You raised your first financing within 18 months when you were getting real traction so you did bootstrap the first phase.

Jason Cohen: Right. In August of 2011, we raised our first little A round. Then a year later in the same month, we did a B round. Then, we more publicly raised a C and a C1 round in January 2014 and January 2015, respectively.

Sramana Mitra: January 2015 financing round means you’re in the middle of the Unicorn bubble. Valuations are really running high. What was your experience in raising that round?

Jason Cohen: We didn’t do that. I think it’s a big mistake to optimize the valuation and not the optionality of what happens next. It’s tempting just to think not to be diluted too much. Plus, there’s an ego component to having a high valuation. We can understand that, but it’s not fiscally prudent. To get to the next step, whatever that means, when you’ve oversold your valuation, you have a big hop to come over. >>>

A Serial Entrepreneur’s Awesome Journey from Austin, Texas: Jason Cohen, CTO of WP Engine (Part 6)

Sramana Mitra: Where are we timeline-wise now?

Jason Cohen: We’re still in the mid-2000s. Just accelerating through that, I sold Smart Bear in 2007. I left in 2009. I had to stick around for a year.

Sramana Mitra: To whom did you sell this company to?

Jason Cohen: There was another company called Automated QA. They made testing tools. Of course, we made peer review tools. They’re both in the quality arena. What happened was Automated QA, themselves, had sold to a venture firm out of New York called Insight Partners. They manage a few billion dollars right now. >>>

A Serial Entrepreneur’s Awesome Journey from Austin, Texas: Jason Cohen, CTO of WP Engine (Part 5)

Sramana Mitra: Being the author of a book gives you huge credibility.

Jason Cohen: Even now when everyone knows you can publish, it does. We were doing enterprise sales where credibility is even more important. I remember being with a potential customer in San Diego. Our champion inside the company threw one of our books on the table. He points to it and goes, “We’re with these guys.” That wasn’t even us telling. He was our champion. There’s something different about a tactile physical thing that you can point at.

Sramana Mitra: I agree. We’ve used this very extensively actually.

Jason Cohen: Here’s another thing that’s not obvious. To get the book, we have to ship it to you which we’re happy to do for free. That means we have to ask you for information but people are happy to do that because they get something. Unlike all the usual lead >>>

A Serial Entrepreneur’s Awesome Journey from Austin, Texas: Jason Cohen, CTO of WP Engine (Part 4)

Sramana Mitra: Let’s go down the path of your content marketing. You said you published a book. Tell us more about what was the marketing strategy around your code review product?

Jason Cohen: I have to give credit where credit is due. In ITWatchDogs, Gerry had this idea because it had just become possible to self-publish. It was still hard. You would send them a PDF and they’d send you a trial book three weeks later. You had to iterate slowly. It wasn’t cheap. It was weird but you could do it. You could have a real paperback.

Gerry had this idea. He said, “Why don’t we make a product catalog? For the first 20 pages, let’s really pitch this whole idea that we’re doing ITWatchDogs.” The first 20 to 30 pages was a long infomercial on why it’s important and why things quickly burn up when >>>

A Serial Entrepreneur’s Awesome Journey from Austin, Texas: Jason Cohen, CTO of WP Engine (Part 3)

Sramana Mitra: Did you go to work for them?

Jason Cohen: I did for just a little while, but at that time, I had already started another company with Gerry’s encouragement. In fact, when we started ITWatchDogs, I was hesitant to join a startup because I thought, “Maybe I should just increase my savings a little bit more by having a real job for a while.” He said, “Listen. Why don’t you come over and do ITWatchDogs with me?” ITWatchDogs was a month old.

He said, “At the same time, I have another idea for a startup.” That turned out to be Smart Bear. He said, “You do that and do ITWatchDogs. Maybe one of them will work and you can focus on that one.” I did and it turned out both of them worked. I had this insight about version control, which is a thing that software developers use to track the versions of the software that they write. Every time they edit some code, they save a copy of that. You can look back and you see years and years of all the code changing and shifting. They do this mostly to coordinate with each other. >>>

A Serial Entrepreneur’s Awesome Journey from Austin, Texas: Jason Cohen, CTO of WP Engine (Part 2)

Sramana Mitra: It is very difficult to get any kind of financing for new companies from these community banks. I’m curious about how you managed to get that. Was Gerry offering a personal guarantee of some sort to get that money out?

Jason Cohen: Yes. He also had a history with the bank. Of course, you’ll say, “If I’m starting out, how do I get a history?” You don’t. That is a dilemma of course. Local banks don’t know how to finance startups. We had a rule with how we price things internally, which is “a third to sell, a third to build, and a third to keep”. The total cost wasn’t more than a third of the price. The rest of the expenses of the company like marketing and finance weren’t more than a third. That was the unit economics that we settled on. It worked well. Our products were cheap.

The competitors were maybe five times more expensive than our devices. We were very inexpensive. Because it was a small company, we didn’t have a lot of >>>

A Serial Entrepreneur’s Awesome Journey from Austin, Texas: Jason Cohen, CTO of WP Engine (Part 1)

If you haven’t already, please study our Bootstrapping Course and Investor Introductions page. 

Jason has done three bootstrapped startups, sold two of those, and then bootstrapped a fourth one to heavy duty venture financing.

This is a great interview with a pro who knows what he is doing at many levels.

Sramana Mitra: Let’s start at the very beginning of your journey. Where are you from? Where were you born, raised and in what kind of background?

Jason Cohen: I was born and raised in Austin, Texas. Austin, of course, is a popular place to be. It’s about 20 million people in the surrounding area. When I was born, it was 10 times smaller. I had jobs in high school. I was an intern at Aerospace writing code in their R&D department. I worked throughout college at local startups at Austin. Right after that, I started a consulting company. The consulting company and the next three companies were all bootstrapped and got over $1 million in revenue. Two of them were sold. For about 20 years, I’ve been doing startups and never worked at a huge company. >>>

Bootstrapping Using Services from Ireland: Shane Evans, CEO of ScrapingHub (Part 5)

Sramana Mitra: How long did it take you to hit the $1 million mark?

Shane Evans: I think we would have come just under it in 2013. In 2014, we would have been $2 million.

Sramana Mitra: In 2013, you were at $1 million revenue. At that point, what was the distribution between professional services and actual product sales?

Shane Evans: In terms of revenue, it would have been heavily professional services.

Sramana Mitra: At what point did that start to shift? At what point were you able to get enough technology that you were able to start generating product revenues? >>>