Chapter One: Funding
Within 5 years, with $0 raised, I started a company that makes $1 million annual revenue. Hello, I’m Ben Cahen. I am the founder of WisePops, the SaaS for popups.
I fell in love with popups when I was running an ecommerce company. We had an attractive concept and significant traffic, but too few sign-ups. I had to do something.
I opted for a popup. If we wanted people to sign up, why not ask them? The next day, each new visitor was invited to create an account and share our journey. The result? 3x more accounts created per day. My team and I were stunned.
That said, the one thing that really led me to start a SaaS has nothing to do with popups, but with the model of company I wanted to run, the model of life I wanted to have, and the model of entrepreneur I wanted to follow. I had tried the VC way; I wanted the Do My Own Thing way.
In 5 years, WisePops has reached $1M ARR (Annual Recurring Revenue) without any funding. And it’s just the start. I have made a lot of unusual choices to get here. Here is my story.
Popups, made with WisePops
1) First Company. The Mainstream Valley Way.
“Knowledge is acquired through experience; everything else is just information.” – Albert Einstein
I launched my first company at 27 with a partner I had worked with at a VC fund. We pictured ourselves leading a meaningful and profitable start-up business, with a great team, backed by experienced investors with a strong added value. The “Valley” dream. Our project was great (the first marketplace dedicated to eco-friendly brands and products) and exciting.
My cofounder and me, thinking it would be our last picture taken as non millionaires
We didn’t think much about our “financing model,” as we thought there was only one way to go: raising as much funding as possible as early as possible.
So, we incorporated, and we started looking for money. To do so, it’s no secret that you have to commit to ambitious figures and sell the most appealing plan. There is no room for showing “uncertainty.” We built a sexy business plan and quickly found our first investors.
And then, the trouble began.
The company generated less revenue than planned, and it took us much longer to achieve our business milestones than we had anticipated. So we had to raise funds again, build a new sexy business plan, lower our company valuation. Of course we got diluted again.
Long story short, we fell into a vicious circle. During the last 2 years of this experience, I spent 90% of my time pitching to potential investors and reporting to current ones (20 people). That left a poor 10% dedicated to our team (15 people) and business.
After 6 fund raisings, my partner and I ended up with 1% of capital share. We were co-founders, but it was not our company anymore. The dream was gone.
We overpromised to attract investors, and we under delivered, and we got f***ed.
I left the company after 5 years. I was exhausted and a bit depressed. But I was not ready to give up on entrepreneurship.
2) Second Company. Looking for a New Model. The Two Zeros.
“Revenue is the best funding ever that you’ll get. It is the cheapest. It is the best validator, go for that”. Anan Sandwal, CEO of CB Insights (bootstrapped from 0 to $10m)
Before I came up with the concept of WisePops I focused on the business model I wanted to have. My new rules were clear:
– Zero investor. No reporting, no business plan. I needed a vision and a roadmap; that was enough. I wanted to be able to deal with the uncertainties without having to update a fluffy powerpoint presentation.
– Zero employee (in the beginning). How could I pay them without investors’ money anyway? I was willing to bootstrap, with limited structural costs, to break even quickly.
These two rules may appear simple, but they highly narrow the range of possibilities when you start a business. As I needed inspiration, I started sourcing ideas on YC and Techstars by looking at their portfolio companies.
I fell in love with the SaaS model. It seemed so much simpler than running an ecommerce, mostly because it needed to have only one focus (the product), while in ecommerce you need to have multiple focuses (product offering, pricing and margins, shipping, marketing, etc.).
More specifically, I loved Smore. This company had a simple model, a simple product, and a fun & creative universe. And last, simple and affordable pricing.
Imagine yourself being Smore CEO when they reach 100…1,000…10,000 customers…and you can easily see how motivated I was.
That’s how I connected the dots with popups. I knew popups were completely undervalued, and that I would be able to turn them into something great. Smart popups.. Wise popups.. WisePops! And the SaaS model was perfect to follow my new “zero investor, zero employee” rules.
3) Now Starts the (Very) Hard Way.
“You can keep going and you legs might hurt for a week, or you can quit and your mind will hurt for a lifetime.” Mark Allen, 6X IronMan World Champion.
a) My Investor? A Job at Amazon.
The VC path is well-known and structured. First, draft a business plan; second, pitch VCs; repeat. That is not true for self-financed businesses. I had to be creative to come up with the money I needed to start my company and pay my bills. Digging into my savings was not an option. So I had no choice but to look for a job. Luckily, I got hired by Amazon.
I signed the contract and did the math: 50% of my salary would go to Wisepops, then I topped that up with a $30K bank loan.
Believe me or not, no matter how prestigious a company is, switching from CEO to employee is not an easy move.
- I used to manage my own schedule. Now I had to be at my desk (see below) from 9 a.m. to 6 p.m., every weekday, no matter what.
- I used to decide what my roadmap and my priorities were. Now I had to do what I was asked to do.
- I used to have my own team. Now I was part of my boss’s team.
And more important than these comfort changes, I used to have an impact on my company, while now I was just a very small link in a very big chain. The first six months were really painful.
Hopefully, it was offset by the fact that I was learning every day from Amazon, and I met some amazing people there.
My Amazon Desk
b) Start-up + Amazon = Work Overload.
Numerous friends told me “it’s totally unrealistic to launch a project while working at Amazon.” In some ways, they were right.
I learned to be patient. Looking at WisePops’ monthly growth, it was clear that I would have to stay at this desk for a while. One year after I joined Amazon, WisePops was live, and it was starting to generate some revenue.
I was under a lot of pressure, physically and emotionally. I wasn’t sure WisePops would be successful, and I couldn’t afford to lose my job at one of the most fascinating companies in the world.
I worked on WisePops whenever I could – weekends, time off, vacations…I contracted freelance people located abroad so that the time differences would allow me to make night calls from home. Luckily (for my company, not for my sleep), most of my clients were US companies. The time difference was such that my freelancers’ schedules were not conflicting with my time dedicated to client support. It was hard, but I learned a lot from customers; they helped me build a product tailored to their needs.
My setup was not ideal, and I know I lost a few WisePops’ potential clients because I could not answer their requests in a timely manner. This was frustrating, but I thought it was a price I had to pay.
The first years were tough but exciting. It was exhausting to work for a very demanding company during the day and on my project at night, but – looking at WisePops’ revenue growth – it was definitely worth it!
c) Not for Glory.
From a social standpoint, I’ve experienced difficult times, too.
In the best case VC scenario, your company raises hundreds of thousands of dollars – or even millions – and even if you don’t have any results, you can issue a press release to announce the fundraising. People around you, who always confuse the amount raised with the turnover, think your company is a success, and they love it.
In my case, let’s face it – I was just an employee with a pseudo-popup-project. Not very appealing. Here’s a typical chat when I met someone:
“So Ben, what do you do for a living?”
Me: “Currently I work at Amazon.”
“Amazon? That’s great!”
Me: “Yes but...”
At this time I wanted to explain…“Amazon is my ‘investor’”… “I am an entrepreneur”…“It’s an unusual path”…
Me: “Forget it. I work at Amazon.”
So, if social status and prestige status drive you, consider this article as an anti-guide.
4) On the Freeway to $1M.
“One of the only way to get out of a tight box is to invent your way out.“ Jeff Bezos
Eventually, efforts pay off.
I left Amazon after 3 years, the day WisePops could afford to pay my first salary. Here’s how it looked on my Baremetrics dashboard the day I sent my resignation letter.
WisePops’ MRR (Monthly Recurring Revenue) when I decided to leave Amazon.
It’s hard to describe how fulfilling it was to get to this stage. It was the stage I had been expecting for years. Being an entrepreneur, with a growing and profitable business, and above all, being free: free to decide, free to choose my model, free to work wherever I want, with whomever I want. It was the start of a new life.
My wife gave me this amazing gift the day I left Amazon.
On top of that, working at Amazon has been the most enriching experience of my professional life, without a doubt. What I learned at Amazon still shapes the way I run WisePops today (link to ..).
=> Being a free entrepreneur + having this Amazon experience helped me become super effective at my job, better than ever. Here’s why:
a) I became customer centric – for real.
Everybody knows that you should focus on your customers. Unfortunately, when you raise money, this focus changes and your main “clients” are actually your investors. When I had investors, I focused on my customers first…until we had financing issues. Then customers became my #2 priority. And there are no points for second place.
When you start a business with investors, what makes you breathe and live is their financing. Consider all the time and energy it takes to:
- build a great business plan
- pitch to investors
- negotiate a fundraising
- report to investors
This is a huge part of any funded entrepreneur’s life.
In my case, what made WisePops breathe and live was our customers. It has been my true #1 priority and focus since Day 1. And 3 years spent with Amazon, THE customer-centric company, only made this customer obsession stronger.
Now I have the freedom to dedicate all my time to building a great product and providing a great customer experience.
Amount of time dedicated to reporting? Zero.
b) Bootstrapping made me sharper.
When you raise funds, you get a lot of money in your bank account. And with this comes a natural tendency to want everything done right away. Shareholders expect you to deliver results – fast.
When you have no funds, you only pay for what’s critical. Period. When you have 50 features in your roadmap, and one developer, you have no choice but to wait / postpone / deal without it.
When I was at Amazon, I had very little time and money to dedicate to WisePops. I developed my own methodology to decide how to allocate my time and resources, in order to make sure I was never wasting one or the other.
Basically, I became a minimalist. A Pareto principle addict.
Nice illustration of the Pareto principle from 50MINUTES
I’m still using this principle today; it prevents me from making a lot of mistakes / useless investments.
c) I am free to make decisions.
Decision-making can become very difficult with numerous investors sitting around the table. I remember how some decisions could take weeks – or even months – when I had investors, as each board member had his own vision.
Board meetings can be hard to combine with agility.
With WisePops, even the biggest changes can happen in one day.
Examples? In one day we decided to:
- revisit our pricing strategy
- stop all paid marketing actions
- build a new product
I can’t imagine how much longer any of these decisions would have taken in my former company, where it was so hard to get aligned with our investors on one same vision.
It was a long, hard and unusual way to get where I am today, but definitely worth it. WisePops has evolved from a side project into a real company, with an amazing team of super high profiles and great plans to take us to the $10 million bar. And even better, we are profitable enough to finance these plans without external fundings. While it’s still Day 1 for me (we have much to do yet), I’m glad I made these unusual choices, and I hope my story can inspire some other entrepreneurs to step out of the mold.
And if you started your business in an unusual way, too, I’d love to know your story!
PS: if you want to hear more, Greg, our Head of Growth discussed our Marketing Strategy on the GrowthMakers podcast (in French).