There are many key lessons in listening to Steve Francis' story of how he built LogicMonitor into a leading Saas based network monitoring solution, but one theme that is remarkable is that successful bootstrapping has almost nothing to do with Thought Leadership and Unicorns (someone perceived to have incredible functional expertise, almost magical in capability), and everything to do with market focus and work horses who don’t just think, but also do.
Saas Startups Need Doers, Not Thought Leaders
Steve literally started off as a company of 1, and then hired programming and networking colleagues that he had known and worked with for over 10 years. In speaking about his first critical hires, Steve said, “I didn’t need people that just think about gold or identify where gold is. I needed people that can figure out how to mine the gold, and were willing to shovel the dirt to get the gold.”
Steve’s domain of expertise was almost exclusively around the product. Sales and marketing were the big gaps in building his business. Unfortunately, this made him easily impressed by applicants with backgrounds working for successful well known companies, and advisors who recommended people with a “track record of success.” He hired sales and marketing leaders with these credentials with the tantalizing dream that their past success would translate to his bootstrapped company. What he found instead was that Unicorns are that way because their “track record” was typically established at a name brand company, and that background and experience locked them into a marketing and sales process that may have worked at their last company, but had no hope of working at a no-name startup.
Bootstrapping vs. Venture Capital
Steve did not approach Venture Capitalists for 3 years until he had a decent customer base and was approaching breakeven. With a product that worked and a solid number of continuing customers, Venture Capitalist were no longer evaluating an idea, but a company with traction. Instead of begging for money, Steve’s early success triggered bidding between Venture Capitalists, resulting in more capital for less percent of the company, and retaining a significant share of control.
Early Year Hardship
That’s not to say there aren’t trade offs. In the first year, he nearly ran out of money. After a couple of bottles of wine at a friends house, he asked “Are you still interesting in investing in my company?” His friend said yes, and Steve asked, “How much are you willing to lose?” The friend responded, and Steve said, “That would be good. Can I have it tonight? I’m almost out of money.”
To protect cash flow, Steve’s offices were not the cool tech location you hear about in Silicon Valley. Instead of massage chairs, and organic lunches for employees, Steve bought his team earmuffs and blankets for Christmas because there was no heating. While this meant LogicMonitor did not attract employees easily, it meant that those people that did take jobs did so because they believed in the team and the product, and wanted to help take it in the direction of the company’s vision. This meant very little turnover of employees - and employee turnover is far more expensive than even free organic lunches.
Now Unicorn Friendly
Steve says that now LogicMonitor is larger, they do think of seeking unicorns for filling employee roles - but not because they are looking for applicants with the latest trendy ninja-growth hacker title. Rather, it’s because they now have a better idea of the specific skills and attributes it will take for the employee successful at LogicMonitor, and the kind of employee LogicMonitor can help succeed.
“We really look for people that the company can help to grow. We want to get the best fit for us, and the best fit for them, so everyone does great work, grows and benefits. We always want to keep the mindset that finding this fit is like finding a unicorn - but it’s based on how we can help each other, not on past jobs.”
Steve is a long term customer of SecureDocs, which he used not just fundraising, but security for employee information and day to day operations. He talks about SecureDocs here.