Hey everyone! In today’s episode, I share the mic with Brad Feld, co-founder of the Foundry Group as well as an entrepreneur, author, blogger, and venture capitalist.
Tune in to hear how Brad sold his business in 1993 for $2 million, how the entrepreneurial lifestyle affected his relationship with his wife (and the book he wrote about it), why being deliberate about relationships and who you invest in is so crucial, and how to build a startup without compromising your well-being.
Download podcast transcript [PDF] here: Brad Feld Shares the Struggles of Building a Startup without Compromising Your Personal Well-Being TRANSCRIPT
Time-Stamped Show Notes:
- 00:38 – Please leave us a review and subscribe to the Growth Everywhere Podcast
- 00:58 – Eric introduces Brad Feld
- 01:33 – Partner at a venture capital firm called Foundry Group which is based in Boulder; they invest in tech companies all over the US
- 01:42 – Has also co-founded Techstars and organizes Techstars Music and Techstars Healthcare
- 01:57 – Has written a number of books on tech and entrepreneurship
- 02:22 – Espouses the 3% rule in his book, Startup Life: Surviving and Thriving in a Relationship with an Entrepreneur
- 02:22 – Brad only cares about and has his way with 3% of what they do as a couple; in 97% of things, Amy has her way
- 04:08 – However, when Amy asks for his opinion, he gives her the same look that a golden retriever gives when he sees a hamburger
- 05:15 – Works hard to give each other positive cues
- 05:50 – Realizes that life is finite and unpredictable; wants to make the best of it by spending time with people he wants to be with
- 07:08 – Set yourself up for as much positive joy and happiness you can against the backdrop of this complicated and often unsatisfying, unfriendly and unfun world
- 07:35 – Brad shares with us his investing story…
- 07:35 – Foundry has been around since 2007; been investing since 1994
- 07:43 – Sold his first company in 1993 and made 40 angel investments; invested in Harmonix, the creator Guitar Hero, Rock Band and Dance Central
- 08:08 – Co-founded Mobius Capital, a venture firm in 1997
- 08:16 – Through Foundry Group he has invested in some prominent players like Zynga, FitBit, Sphero and MakerBot
- 09:44 – Made $2 million by selling his first company; invested everything and saved $100,000
- 10:13 – Was able to exit by 1996; a risk taker, Brad was more concerned about learning to be a good investor than having money in the bank
- 11:09 – Brad explains the premise of his book, Startup Opportunities: Know When to Quit Your Day Job
- 11:18 – When you are starting a business, the idea is unimportant; what you DO with the idea is important
- 13:20 – Lays down the various characteristics of a great business
- 13:40 – Entrepreneurs and their spouses can get some great tips to build a harmonic relationship by reading Brad and Amy’s book, Startup Life: Surviving and Thriving in a Relationship with an Entrepreneur
- 13:40 – Gives an insights into the many ups and downs, and the craziness that comes with creating a company
- 14:39 – Does not think of the term, “work-life balance” as inspiring; work-life harmony is more suitable since it is highly improbable to have balance in an entrepreneur’s life
- 15:06 – An entrepreneur’s relationship with his spouse is like playing jazz; strive for moments of harmony and remember to not despair, but learn from moments of discordance
- 15:41 – Recalls a moment when Amy wanted to walk out of the relationship; mutually decided to let Amy make the rules of the relationship in a bid to save their relationship
- 17:01 – The first rule that Amy laid down involved tracking how much time Brad worked each day
- 17:32 – In an effective relationship, only one partner can have a crisis at any particular time, and it cannot always be the entrepreneur
- 14:07 – What’s one big change that you have made in the last year that has impacted you? – Learned to delegate
- 18:32 – For Brad, depression is the “complete and total absence of color”
- 19:30 – The anxiety level keeps on increasing and reaches a point where it is debilitating
- 20:05 – When depressed, experiences extreme anxiety which is not proportional to the current situation
- 21:48 – “Self-Care” tips to deal with depression
- 21:48 – He cuts down on caffeine and alcohol
- 22:36 – Observes a “Digital Sabbath” from Friday night sundown to Saturday night sundown
- 22:55 – Brad ends up feeling depressed when he does not go for his daily run
- 23:08 – “Self-care” is different for everyone; you have to discover what works for you
- 23:23 – Could you share with everyone something unique that you do every day? – “Throw everything away”
- 24:00 – What’s one new tool that you’ve added in the last year that’s added a lot of value? – Todoist
- 24:50 – What’s one must-read book you recommend to everyone? – Zen and the Art of Motorcycle Maintenance: An Inquiry into Values
- 26:10 – Connect with Brad via email, Twitter or his blog
- 26:30 – End of today’s episode
- 26:41 – Please leave us a review and subscribe to the Growth Everywhere Podcast
3 Key Points:
- When you start a business the idea is unimportant—what you DO with the idea is what matters.
- The entrepreneurial journey is hard on a couple; try to have more moments of harmony with your partner and learn from the moments of discordance.
- Self-care is KEY for dealing with depression and it looks different for every individual—discover what works best for you.
Resources From This Interview:
- Foundry Group
- Techstars Music
- Techstars Healthcare
- Brad’s books:
- The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries
- Mobius Capital
- Must-read book: Zen and the Art of Motorcycle Maintenance: An Inquiry into Values by Robert M. Pirsig
- Brad’s e-mail
- Brad on Twitter
- Brad’s blog
- Brad on LinkedIn
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Full Transcript of The Episode
Eric: So what's like the pricing range? Let's say you're talking about a big company out there, like you compare it to Logitech size or somebody starting out. What does that look like?
Paulo: We start at about 25k per year but some of these installations with a lot of views ... Given that in some cases we save tens of millions of dollars, it can go up to 500k, 750k, one million and plus per year.
Eric: All right, yeah. What kind of numbers can you share around the business today? Revenues, employees numbers, customers, things like that.
Paulo: In terms of the customer base, today we are approaching about 800 enterprise customers worldwide, spread across 43 countries today in the 22 industries. So it's a horizontal sale if I say so. Last year we grew at a clip rate of about 60%. Last year we hit 100 million dollars in sales.
Eric: You said 100 million?
Paulo: 100 million yeah.
Eric: Wow incredible. Great, congratulations on that. So in the early days or even right now ... I guess let's go with the early days first. How did you go about acquiring ... Let's just say your first 50 enterprise customers.
Paulo: Very painfully. So it's a ... So we talk about enterprise, right? Enterprise customers so this is not a consumer model, a consumer business. So it's a ... We were very early in the market and so we were probably around 11 to 13 years ahead of the market. So during all of that time, it was a very evangelical sale. So in the beginning, we did ... I personally closed a lot of sales. So we had to push the idea. We typically had a ... We very much faced the issue of too good to be true so no one believed the numbers. And so we actually had to water down the productivity numbers to be credible. And so we amassed one by one, we amassed the initial base.
We also were spread across our countries. We started first in Europe and then we moved to the United States when we were about 30 customers. And so every country that we started was almost like a restart. So that was a little bit of a mistake, if I had to do things a little bit differently today, I would probably concentrate on one big region first and create a base there.
But the fact of the matter is we emerged out of these very painful years with a very large customer base across a large number of countries.
Eric: Got it. You mentioned you were early, kind of before your time and you had to be really [inaudible 00:07:12] I don't how to say the word, what-
Eric: Evangelical. That's like ... I've never said that word in my life so-
Paulo: No, no. It's like a missionary say, all right?
Paulo: You go door to door like the [Gizwits 00:07:23] did in Japan and you try to convert people to something that for a very long time was a very weird product, right? If you think about the whole concept of DevOps which we introduced in our product in 2001. DevOps, the term continues [inaudible 00:07:43] full integration between development, and production, and operations. Those terms only really came to mind about seven, eight years ago. I mean we were really early in the market so whenever we presented this type of product, only after doing a PLC, only after experimenting, only after the customers talking with the other customers did they actually give it a shot. And then of course, they would become addicted and they would grow very very quick but why we didn't create that critical mass it was painful.
Eric: How long did you have to suffer for before you started getting traction?
Paulo: Real traction like 60% growth, 50% plus growth, only really started about three years ago.
Eric: And how long did it take to get there?
Eric: 13 years?
Eric: Wow, my God. So I imagine the first ... Let's say the first five years it's really tough sliding. How did you know it was time to keep on going before throwing the ... Either throwing the towel or not?
Paulo: Yeah. I think if ... First of all, we had very patient investors. I mean we're a European based company so Europeans tend to be a little bit more patient than in US. I don't think this company would exist today if it was born in the States.
But the fundamental point was that we were ... We could see evidence in our customers that we were solving one of the most traumatic pains inside ... That are faced by IT departments. It's just that we started in 2001 right at the cusp of the bubble burst and for a very long time, we were offering to do fundamentally web applications, fast and more productive. At a time where people were not really into the mood to change things. And then the big trigger that accelerated the explosion of OutSystems was when mobile became a must have inside enterprises. And so we cut the wave of replacement of a lot of front end. It's part of the difficult transformation process that most organizations underwent three years ago and now everyone does, today.
They had to actually change the way they interacted with customers, the way ... They had to put ... They had to make all these portals responsive so that they could work on smartphones and tablets and that created a huge wave of redesign.
What was the lucky break for us was that this notion of extreme productivity, very fast change, continuous integration which we always had in our product, was a must have for the design of mobile apps. So mobile applications are an exercise in change because it's really difficult to build a mobile application where you can get the requirements right upfront. So you have to do testing, most of the time, the first prototypes don't even work from an adoption point of view. You change them and you go back to the field and you change them. And then it's a ... You're constantly changing. Then in the end, that was a lucky break for us because our platform is perfect for those type of processes.
And so today where agile methods are the norm. [inaudible 00:11:07] in very large organizations, a lot of people are facing the situation where traditional technologies to build software using agile are very difficult. There is a mismatch and platforms like OutSystems were really meant for agile, for high productivity, high change and so we just took off.
Eric: Great. It's all about timing at the end of the day. But was there at any point in time where you felt like business was going to blow up or fail?
Paulo: Oh yeah. You always have these stories, right? So when we started we got one million dollar funding in October 2001 if you remember, this was one month right after 9/11.
So we slipped into as one of the last adventure investments in Europe. After that the market basically shut off for two years. So if that didn't happen, we would have bankrupted even before starting. And then what we did from a business point of view is we decided at the time to tackle telecoms. So we decided to assist telecoms as partners and at the same time use them as customers. Telecoms were very rich in Europe but it so happened that in the end of 2002, our telecom pipeline had completely dried out. Telecoms were in a hang over, trying to recover from a lot of investments they did during the bubble and so-
Paulo: We basically at the end of the year, we had absolutely no sales. And so we had to switch back to the enterprise, that took six months and very month, there was that ... The cash in the bank would reduce a little bit and so we were driving against the wall until we started selling into the enterprise. We took off, put the company in the black and then from that rebound and we just ... We're okay. But those initial times, those first three years were really tough.
Eric: Wow. And some people are probably wondering just high level. How do you sell into the enterprises? Is it just phone calls, emails and then just keep banging against it?
Paulo: No. I mean this type of sale is a fairly sophisticated sale, is a transformational sale. So we have a product that's really easy to use. So we have a free version, on site we have thousands of trials and people will go there and use it as experimentation, even to build their own personal labs. But at first in the United States, we've been traditional, relying on a direct sales force. In countries where we're more mature ... And United States actually, is switching into that model and more than 17% of our sales are done through partners who want to build business solutions, custom building business solutions either mobile, web or very large systems. But they want to build it very quickly so they use our platform and they end up by being a channel for us to push the platform into the enterprise.
Eric: Got it. Makes sense. So what's one big change you made ... This is more of a personal question. What's one big change you've made in the past year that's impacted you? So it could be like joining soul cycle for example or joining a yoga class.
Paulo: No. I think probably the big change ... Last year was an interesting moment with ... We went from 400, we switched ... We crossed the 500 employee barrier. I think when you start having a very large number of layers in an organization and you come from a start up background. There's a moment where there isn't a single task that you can do on your own. Everything is done through others. I guess I hit that point last year and that's a very painful process because I like to be involved but I realize now that every little project, even small projects inside OutSystems that I can not do them on my own. And also I truly became a non-individual contributor last year.
Eric: How does that make you feel?
Paulo: It's weird but you know it's gross, it's just another stage. I don't know if I could go back to the skunk work in the garage and the old model. But today, it's what it is. I work through a great team and the team is fantastic and I've truly learned to fully delegate even things that I would really like to do a little bit, to participate a little bit more on my own.
Eric: Great. And your team with all 500 are in Europe or are they distributed?
Paulo: Oh no, no. A very large team is in the United States. It's such a completely virtual distributed organization. So we have several critical masses but we are in 11 countries.
Eric: Got it. So how do you acquire ... I mean when it comes to building a great distribute team, how do you hire great people?
Paulo: One of the reasons why we hire great people is because we remove the restriction of the location and so we instead of hiring ... If I have the option of hiring an A+ person or an A- and the A- is Francis either in Boston or Lisbon because those are big offices we have, but the A+ is in Chicago for instance where we don't have an office, I would prefer to hire the Chicago guy or girl. So that's one way we do it. We truly embraced this notion, virtualization and we do a lot of ... Far more processes to make the people together around a single consistent culture.
We also benefit from the fact that our culture is really really strong. We have these booklets called the small book of the few big rules which is a fantastic ... Almost like cultural little booklet that we give everyone. And they really abide by those rules. Those rules help ... First of all help recruit people that have those principles, that believe in those principles. And the culture itself is a culture where everyone searches the collaboration of others and so that helps bridge a lot of the natural barriers that exist in people not being in the same location.
Eric: Love it, okay. Well Paulo, what's one new tool that you added in the last year that's added a lot of value like Dropbox?
Paulo: Well Dropbox actually ... I've always used Dropbox but now I'm ... I have ... I could tell us what was the fundamental tool. Fundamental tool was the iPad pro with pencil.
Paulo: Well, I do a lot of [inaudible 00:17:28] and so during meetings I'm constantly writing while making drawings as I collect the core of the conversations. And I used to just go through Moleskines like you can not believe. I would accumulate 20, 50 Moleskines per year.
Eric: Got it. First I thought you were saying something in Portuguese but I realized you talking about the note books, right?
Paulo: I'm sorry, my accent has Moleskines.
Eric: Got it. Yeah, yeah.
Paulo: And so I replaced Moleskines with the iPad pro and the pencil and I use every note with Penultimate. And so what I do is I write note, draw a note, that thing synchronizes automatically with every note. And my PA for instance has access to that so she can immediately ... I have a code which I draw using the iPad that says, "This is an action item, these are things to follow up and reference." So it's a much much faster ... Everything is digitalized so I stopped using pens which is one of ... Four years ago I stopped reading books in paper and now I finally got rid of the pencil.
Eric: That's cool. That's a cool hack, I might steal it. Cool. What's one must read book you'd recommend to everyone?
Paulo: There's a lot of books. The one book that impressed me the most lately is the culture map, what is Erin something, I don't remember the name.
Eric: Culture map, I'm going to google it.
Paulo: The culture map, it's a fantastic ...Are you searching for it?
Eric: Yeah. I'm searching for it, I got it right now. It's Erin Meyer.
Paulo: Yeah, exactly.
Paulo: For an organization like OutSystems where we have Dutch, we have people from Dubai, we have Portuguese, we have British, we have Americans. It looks like a joke in the sense that we have all these cultures together. This book really gives us a framework for a lot [inaudible 00:19:23] evidence that we have in terms of culture gaps. India secrecies that we see or little annoyances when we are discussing, we're giving feedback. The book is fantastic and from all the examples I've seen, it creates a framework for two people that are from different cultures to actually understand why the other react the way they are or the other they ... And so it helps into a lot of the communication process.
And for us, this particular book we introduce it. Some of the learnings we put formally in our training processes. It really helped us further create a unified culture across all these roads, geographies and offices.
Eric: Interesting. So this kind of book isn't a book that you just kind of find on your own, I mean you must have heard about this from someone. So how did you find this book?
Paulo: Well, we're going through a really innovative and cool leadership enhancement and training process across our systems. So today we have about 100 leaders and in the process of looking into it and creating frameworks, one of the people, operation ladies came up and said, "We should probably introduce some of the concepts of this book." I don't where she found it but I got it from her.
Eric: I love it. Great. Well, Paulo this has been fantastic. What's the best way for our people to find you online?
Paulo: They can just email me, Paulo, P-A-U-L-O.rosado R-O-S-A-D-O at OutSystems.com.
Eric: All right, Paul thanks so much for doing this.
Paulo: No, it was a pleasure. Thank you very much for the conversation.
Speaker 2: Thanks for listening to this episode of Growth Everywhere. If you loved what you heard, be sure to head back to growtheverywhere.com for today's show notes and a ton of additional resources. But before you go, hit the subscribe button to avoid missing out on next week's value packed interview.
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