Three Startups, Nine Lessons and One Next Step
A Boston guy in the movie adaptation of Andy Weir's novel The Martian

Three Startups, Nine Lessons and One Next Step

“Once is chance, twice is luck, three times is skill” - Darrell Royal

I’ve had the good luck and the skill to start, build, run and sell three software companies. Before I move on from that phase of my career, I want to reflect on and share the most important lessons from each startup. Then I’ll share my excitement for the next step.

Startup #1 - WGR Media (2001 to 2004)

WGR was a bootstrapped media company that Cashman Andrus and I founded in the coldest part of the first web winter. I loved (and still love) video games. He loved portable computing. We figured that chronicling the way emergent entertainment media was intersecting with new mobile platforms was an enormous opportunity that we could start and run ourselves.

We were so right. WGR quickly became a meeting place for the wireless carriers, handset manufacturers, game developers and publishers to celebrate, rage, compete and support what we called the “obvious disruptor to the video game industry.”

We met incredible people, including Mitch Lasky , Paul Palmieri , Avram Score , Robin Chan , and so many more. We were right about the disruption, mobile is both the largest and fastest growing segment in video games . But we were early. When we sold the company to CNET, the iPhone was still three years away. In-app-purchases, which really unlocked mobile games revenues, were five years distant.

Here are the top three things I learned from starting, running and selling WGR Media:

  1. Find your superpower - This company is where I found mine: selling new tech to big companies. Cashman could make computers do amazing things. I realized I could close deals, first with Sega and JAMDAT, then with Verizon, Sprint, Nokia, Motorola and so many more. The earlier in your career that you can identify your personal superpower, the faster you can go.
  2. Dance with bears, not on them - Being at the intersection of huge industries is fantastic. We positioned ourselves between Verizon, Nokia, Qualcomm, Sega and all of their competitors. But (see below) we were not reliant on them. No one controlled the platforms we monetized on, and our revenue was never too concentrated with one customer.
  3. Companies are bought not sold - Our partnership with Ziff Davis (via Dale Strang ) turned into our first acquisition offer. That generated inbound interest from CNET (via Vince Broady ), which we were happy to accept. Spend minimal time chasing an acquisition - focus on serving your customers.

WGR gave me the startup bug. So much to create! So few resources! So many demands! It’s a work version of The Martian. Running so close to the metal, every action meaningful, the clock ticking… and the exit gave me my first look at asymmetric returns. What’s not to love?

Startup #2 - Yesware (2010 to 2018)

After tag-teaming our twins with my wife and then working with Rob Seaver and Paul Neurath , Cashman and I started Yesware in 2010. I wanted to make software sales more predictable and effective. The result would be more accurate revenue forecasting and potentially an entirely new way of engaging with customers and prospects.

We raised $50 million from incredible venture investors, including Brad Feld , Rich Miner , Neeraj Agrawal , Matt Golden and others. We grafted email open alerts onto a Gmail extension and built a viral product that spread through some of the hottest companies of the era - Salesforce.com , Box, Yelp and thousands more. Yesware is rightly recognized as an early pioneer of Product Led Growth (PLG) tactics as well as a founder of the sales software category.

Sadly, the company did not reach its potential. Here are the top three things I learned from almost a decade of running Yesware:

  1. Don’t chase TAM - We wasted so much time trying to build Yesware for Microsoft Outlook, when we should have kept our focus on the GSuite platform until at least $30m ARR.
  2. Don’t dance on bears - In contrast to WGR, at Yesware we were dependent on the good graces of much larger platforms, especially Salesforce. When they decided to give away a free version of our product, everything got harder.
  3. Most startup execs have an 18 month half life - In fast-growing companies, you’ll need to switch out most of your executive team every two to three years. Exceptions prove the rule. Do it thoughtfully, do it fairly, and do it with appreciation, but build the team for the company that you want to become, not the one you have today.

In the end, the CEO I hired to replace me, Joel Stevenson , sold the company to one of our customers. Huge thanks to him and his team. Our software lives on in a larger organization and the team continues to push forward. We created a new category and a great place to work, but it was not the outcome we were aiming for. I licked my wounds and started thinking about…

Startup #3 - BodesWell (2019 to 2022)

My father died in 2019, so I was helping my mom with her finances. My kids were thinking about college, so tuitions and retirement were on my mind. I researched and was appalled by the state of financial planning in the 21st century. Despite the strident advice of people who had tried it before, Bernie Bernstein and I founded BodesWell to democratize access to planning and wealth-building tactics.

We gathered a small team of product people - Chris Christensen , Avram Score, Matt Sponer and Scott Williams . I thought fundraising after Yesware was going to be a layup. It wasn’t. But we hit the half-court three pointer with Grit Capital , Riot.vc , Argon Ventures and several key angel investors. Then we got to work.

After three insane years of designing, building, selling, and iterating, American Express bought our company to augment their incredible consumer banking division. It was a great exit for everyone involved.

Here are the top three things I learned with BodesWell:

  1. Distribution is more important than Product - I hate admitting this because I love product, but it’s true. WGR had niche viral content. Yesware had the Chrome extension store. BodesWell had to quickly pivot to B2B because we had no B2C distribution leverage. Without that move, our amazing product would have dominated a tiny niche.
  2. Drive your family crazy - I spent so much time interviewing early customers that my family kicked me out of the house in the middle of the pandemic. They still tease me about how I ruined our vacation with my product-market-fit interviews. If your friends and family aren’t a little worried about your obsession, you aren’t obsessed enough.
  3. The best investors bring more than cash - Every investor says this, very few deliver. When Julia Huang at American Express Ventures (now leading Vesey Ventures ) invested, she also connected us to Phil Norman and Christina Anzalone at AmEx Digital Labs. That contact never would have happened if Paul Palmieri and Jenn Byrne at Grit Capital hadn’t hosted a conference and put me on a panel with Julia. The best investors can completely change the trajectory of your startup. Seek partners like that as if nothing is more important.

Whew. Almost 25 years building and running startups. I wrapped up my time at American Express in late 2023 and have been considering what to do next .

What’s Next - Grit Capital (2024 - )

I’m proud to announce that I’m joining Paul, Jenn, Mike Flannery and the rest of the Grit Capital team as a General Partner. That means I’ll be investing in and working closely with early stage startups at the intersection of fintech, martech, commerce and media.

It’s a mistaken cliche to call this transition a move “to the dark side”. I have seen the difference that great investors can make in a startup’s trajectory. The rest of my career is about helping “those who bet on themselves become a better bet.”

The Grit partners are all experienced entrepreneurs. We’ve started, sold, IPO’d and shut down our own companies. We viscerally know the joys and the sorrows of the startup journey. Grit means “Passion and perseverance for a long term goal.” We strive to epitomize that spirit.

If you have comments, questions, suggestions or responses to this post, please leave them below. I would love to know how this resonates with you and your experience.

If you know any early stage fintech, martech, commerce or media companies that we should be talking to, please let me know.

And if you just want to connect or re-connect, I would love to do so. Please send me some times that work for you - matthew [at] grit [dot] vc.

Now, onward into this new adventure. Details and dispatches to follow.

DALL-E's version of "the illustrated metaphorical journey of an entrepreneur's path through the challenges and lessons of three startups, leading into a future adventure"


Paul T.

Serial entrepreneur, cannabis industry executive, video game industry veteran, crypto currency investor and former skydiving instructor.

8 个月

WGR, baby!! That's the year we all cut our teeth in mobile. I'm so incredibly proud of you, sir. ????

回复

Fabulous read Matthew Bellows with such honest and humble advice to digest. Thanks for sharing!

回复

Congratulations and best of luck, Matthew! I have fond memories of spending time with you at conferences, including real money Monopoly!

Kevin Kelly

Experienced entrepreneur and private capital markets executive - currently on sabbatical

9 个月

Wow, so cool to see the whole history (and the history lessons) laid out like this. Congrats on all of the success!

Luke Bussey

Building Monocle, a powerful platform designed to help B2B SaaS companies improve their in-network advertising attribution.

9 个月

Congratulations Matthew. I rarely use LinkedIn anymore, but your post came up as soon as I logged in. I'll email you as I would love to catch up!

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