POV: Bootstrapping to a $225M valuation, raising $50M, and losing your Co-founder.

ShipHero was founded in January 2013 by Aaron Rubin. After starting an eCommerce store in College, Aaron couldn't afford the logistics software he wanted, so he built his own with friends.

ShipHero took 12 months to win its first customer and lost its Co-founder before bootstrapping to over $13 million in annual revenue and raising $50 million at a $225 million valuation.

Today, 10% of Shopify stores globally use ShipHero. In the last 12-months alone, $12 billion of product has been shipped with the software.

Hamish: Take me back to before you started ShipHero.

Aaron: As a kid, I taught myself how to write code and build video games before I realised I could sell them to make extra money. I started running my first real business in my second year of College when I began selling martial arts equipment online.

The idea for ShipHero was born when we went looking for logistics software, and every salesperson was pitching us $200,000 packages - that just wasn't affordable. As a team of engineers, we felt like we could build something ourselves instead, and so we did.

Hamish: Is that what triggered the idea to start a company?

Aaron: It wasn't long before we had friends asking if they could pay to use our in-house software - It was a triggering thought - that people would buy it.

We were already making plenty of money from the eCommerce business, but this software was an opportunity to swing for the fences - so I left and went all in on building ShipHero.

Hamish: Did you plan to grow so big?

Aaron: I could have sat on a beach and collected from our eCommerce business, but I have always wanted to build a public company. ShipHero felt like a real opportunity to do so.

Hamish: Why the ambition to build a public company?

"I guess because I knew it would be so hard, it felt like a challenge, but one that I believed myself capable of - that was reason enough to do it."

Hamish: What did the first 12 months look like?

Aaron: I had enough money to bootstrap it, so we started writing the code one summer. Our initial team were people we had worked with in the past, and at the time, I had a Co-founder too.

We were a team of delusional engineers - we naively thought that it would only take a few months before we would start making our first dollars. It took 12 months before we won our first customer, so that wasn't easy.

We found out that building a market-competitive product took a lot longer than anticipated. It wasn't pretty. And we were barely there - it was another four months before we got our second customer.

"But we maintained a lot of confidence - we're smart people, we'll figure this shit out. It can't be that hard forever."

Hamish: What happened to your Co-founder?

Aaron: We meant to build ShipHero together and achieve this big dream. He had quit his job, but I guess it was a long journey to customer one, and one day, he said we needed to talk.

'I took a job, and I'm starting Monday. I'm out.'

I thought about quitting that day. I wouldn't have started it if he wasn't alongside me.

But we already had a couple of employees, and I felt responsible - I had to keep going because these people quit their jobs to work here. I couldn't leave them hanging.

Hamish: Did you believe you could do it without him?

Aaron: The biggest thing he gave me was the confidence I could do it alone. He was my technical Co-founder - I was the one who knew how to run a business - but I found that I ended up writing the code and that I was capable.

"The hardest part was thinking that if he doesn't believe in this and he's inside the business, then maybe it's just a bad idea. Maybe it's not a viable company."

But my eldest daughter was five, and I was always in my head that I couldn't tell her I quit. If we failed, that was OK, but I never wanted to stop because it was too hard. That wasn't an option.

Hamish: Do you think your mixed background in business and engineering helped you?

Aaron: I mean, I had never worked in a B2B company. I was full of confidence, but I had zero experience with it - that led to some lessons.

For example, we didn't hire our first salesperson for five years. For half of our company's lifetime, it was just me and my VP of product on live chat, taking calls inbound from the Shopify app store.

We would have grown much faster if we went out and actively sold. I found growth frustrating in the early years - I hated that I couldn't get people to adopt it by sheer force of will. Looking back, I realise potential customers had just never heard of us.

There was a period when we had 80 Engineers and one salesperson. That was too much - It can't be 95% engineering and 5% sales. We're much more balanced now.

Hamish: How were you so successful?

Aaron:

Not quitting for 11 years.

I think the most important thing that we've done is care more about the product than we did about the revenue. We never built flashy features or things potential customers asked for if they didn't make product sense.

"We chose to build what would help our customers, not what would sell. Those are often not the same thing."

For the short term, that sucked because you leave money on the table, but over a decade - you end up with such a better product that it pays off.

Hamish: Why raise $50M?

Aaron: We probably could have and would have bootstrapped forever if the environment was different, but it seemed every competitor was raising hundreds of millions of dollars.

I remember my team looking at me, and there was just this feeling that we would lose because everyone had so much more money than us. I felt like I had to raise - there was pressure.

Whether the money helped us that much is difficult to answer, but the investors did force us to make some positive changes - like investing more in sales - where I was likely being stupidly stubborn because it was just us.

We maintained control, which was always most important to me. And we did well to push off for as long as possible, which meant we could take $50 million and only give up 22% of the company. We took as little dilution as possible.

Hamish: Is that when you thought, "OK, this is a big deal"?

Aaron: No, we were already generating a lot of revenue. At that point, it was more just the stress of what to do with all of this money.

We went from ten years of spending less than we earned to suddenly having $50 million in the bank.

That was a big learning curve that we had to take on quickly.

Hamish: What's next for you and ShipHero?

Aaron: We keep building and growing towards the IPO goal.

I've now watched most of my team grow from their early 20s to having children and buying their first homes. I love that - seeing how everyone develops. I take pride in that my team has a great life - and I'm part of that.

When that IPO happens, and everyone gets the real payday, that'll be special.