What Goes Up Must Come Down

I started my software company Edify when I was 29. To my knowledge, it was the first technical engineering onboarding product on the market. (In retrospect, there was a good reason for that.) I had been running a consultancy, and my clients were engineering leaders from dozens of companies. They often asked me for a tool to help them manage their onboarding processes. As I prototyped, it became clear that people were interested, and in September 2020, just one month into fundraising, I signed a term sheet for a million dollars.

My goal was two million. I knew I had another $500,000 accounted for from other investors, so that left only $500,000 more to go. I thought I’d get it done before I turned 30 two months later. I had the hubris to start drafting an article, How to raise two million dollars before you turn thirty. For some reason that milestone felt special to me. Of course, a few months later, I’d meet amazing founders in TechStars Seattle who were much younger and who ended up raising much more than I ever would.

It took me another four months to raise the last $500,000. Meanwhile, I eloped in the beautiful woods of southwest Washington, and my husband and I were excited to start our family. I thought it might be good to try to have a baby in between rounds of fundraising, so I wouldn’t have to go out and talk to investors while pregnant.?

A few months later, I was pregnant and I learned that you’re never done fundraising. You have to meet with investors essentially all the time, sharing your story and building relationships, even when you’re suffering from intense nausea and vomiting two to three times a day, when you’ve lost fifteen pounds when you’re supposed to be gaining.?

My job as CEO had changed drastically. In my consultancy business, my job was to develop the vision of the company, sell and execute projects, market the business, hire, and manage. Now my job felt like it was mostly about performing for investors.?

In September, right in the middle of my pregnancy, it was time to go out and raise three to five million for our second round. I got commitments. Those commitments were pulled. I got new commitments. Those got pulled. I started to get nervous.

In theory, the founder is supposed to have the power because investors need to deploy capital, but it didn’t feel that way. Investors are unique humans—they’re incredible rolodexes, great at math, and generally really good people. But they receive pitches from hundreds of founders, and some of them feel it’s their universe-given right to pillory founders when they know they’re never going to invest anyway—just the kind of meeting you want to have when you’ve got all-day sickness that’s not just nausea, it’s throwing up.

Meanwhile, the pandemic kept everyone remote, so no one could see that I was pregnant, but my mornings started with getting sick a few times, eating instant mashed potatoes, putting on makeup, and trying to look and act like a normal, charismatic founder. Most people don't want to hire you when you're pregnant, and certainly investors who think they’re smart don't want to invest in pregnant women. This was my constant fear. There was a time I had to drive up to Seattle to pitch a firm in person. I spent days trying on clothes to figure out which ones made me look least pregnant.

In trying to raise our second round, I realized too late that I’d spent too much of my time remaking pitch decks, presenting them, and responding to questions that often missed the point. When I realized the raise was unlikely to happen before my son would be born, I started to think through other options for managing and pushing Edify into the future.

In January 2022, about a month before my son's due date, I knew I had enough money to get us through the end of the year, but then I didn't know what would happen. The economic downturn was starting, especially for tech. We were struggling to acquire new customers—engineering leaders weren’t hiring and had no one to onboard.?

I could see the writing on the wall. In the midst of managing out some poorly performing employees and laying off others, I started to look for companies to buy Edify. At the same time, I kept trying to raise money and sell to customers. These are extremely different strategic priorities that a single CEO shouldn’t work on all at once. (My kind lead investor gently told me this, but I didn’t see any other way at the time.) It was torture, and it lasted for months. But I felt like I had no choice if I wanted to keep the business running and productive for my investors.?

I had my baby and went on maternity leave for five weeks. When I came back, I knew I couldn’t make Edify work. The employee I’d coached and left in charge failed to close two key accounts we’d been depending on, so I focused on selling the company. I stopped trying to acquire customers. I stopped trying to raise money.

I began to face the truth that our product just wasn’t saleable. That’s really hard for a founder to admit to herself, let alone say to an investor. We’re supposed to have this undying faith in what we’ve built. But as a realist/woman, I knew that there's a fine line between undying faith and a stubborn refusal to see the facts.

Back when I was doing customer research in 2019 and 2020, everybody thought Edify was a great idea, but I never once asked anyone to pay for it. I never asked them to put down a deposit or enter their credit card information. I just heard what I wanted to hear. I was so sure I’d done everything right. That’s the danger of thinking how investors want you to think, following Lean methodology, failing fast and improving. If you don’t actually try to run a real business, you might end up not running a real business.

In my eyes, Edify had become a $2.2 million fake business. We spent three years not seeing that the problem we were trying to solve wasn’t painful enough for engineering leaders to spend money to solve it. Apparently the investors didn’t see this issue coming either. It’s sort of shocking how few investors have experience running profitable businesses. Later, I was lucky to have several angel investors who had indeed run successful businesses, and they became beacons in the fog of the last few months of running Edify.

But when a founder is intelligent or well spoken, when they come into a board meeting with a lot of ideas—or just a clear plan—investors will nod their heads and say yes. Sometimes they might argue with you, but none of my investors ever really looked at Edify’s financials and challenged me on why money wasn’t coming in.

We had maybe six paying customers. We had over 130 customers at large, but it doesn’t really count if they’re not paying for it and your company can’t raise more money. I couldn’t find a way to pivot Edify fast enough to make it a sustainable business. Companies that were considering buying us probably saw it too: a quick return on investment was impossible. A product that enhances an employee experience has a long-tail return.

With a few exceptions, my board and investors were compassionate. One investor gave me the distinct impression that it was my job to pull up my big girl pants and succeed in order to be an example for other women founders. I needed to find the “grit,” to buck up and get this done, to not quit.?

I knew this investor had the best intentions for me, but those intentions became too much of a burden. During this time, I was slipping into postpartum depression and feeling increasing anxiety—as anyone might if they had to rock a screaming baby in a dark closet for six hours a night only to have them wake up every forty-five minutes, for nearly four months.

Eventually I decided to lay off the last few employees, to try to find them new jobs, and to slowly exit the business and return just a modicum of capital back to investors. Very few founders in this industry give money back. Founders are told to try until you hit an actual wall, like missing payroll or falling into debt. I didn't want to do those things. I’d just wanted to run a business as intelligently as I could.

The process of exiting a venture-funded tech business felt like escaping from a cult. I had all of this confirmation bias pushing on me to not take care of myself. This industry doesn’t allow the people who work in it to be human and interact with the world in a way that is safe, ethical, and compassionate.?

Eventually I called that well-intentioned investor, trying to stay calm and avoid sobbing. I told her I knew she wanted to be benevolent, she wanted to help me, mom to mom, investor to founder, but the best thing she could do would be to let it go and stop pushing me.

During that conversation, I realized that I don't know that there can ever be a truly benevolent investor. Investors might think of themselves that way. They add mental health coverage, childcare coverage, all of those perks, but these are like the old “new” tech offices of the world (think Google, Yahoo, and Facebook), bringing all the amenities to the office so you never have to leave. You can just buckle down and focus—and not be a real human.?

Why did I work so hard? Why did I drag myself out of bed when I was so unwell, when I physically couldn’t do the things that I was being asked to do? It wasn't healthy. The industry isn’t healthy, no matter your gender or parental status. I had to ask myself what I thought I was doing. Was I performing for the investors, the market, or myself? What did any of that have to do with what I really wanted out of life??

I’d heard the fables about founders who reached the edge of failure and came back. I wanted to believe that I could do the same. I didn’t want to believe that I helmed a failing company. And my investors didn’t want to believe that their investment was going down the drain. (Granted, most have already written you off after the wire clears.)?

I had excellent relationships with the vast majority of my investors. I was honored to be deemed worthy of their investment. At Edify’s stage, that’s really what is happening: the investor is making a decision about the founder more than the business. The problem with the whole picture, for me at least, was never about the individuals I had the opportunity to work with; the problem was really about the whole stage we were all dancing on. I’d thought our investors were there to help us succeed. I expected them to question my beliefs and biases and assumptions, but for the most part they didn't do that.?

With the help of my incredible coach, I began to see things more clearly. Running a business intelligently is nearly antithetical to the philosophy of venture capital. Venture capital wants you to perform, to pivot, to sell the company in a Hail Mary pass. “Success” is all that matters. Failures only count for anything once you’ve succeeded. The pressure is intense and unsustainable.?

As a founder, CEO, and new mother, I tried to do too many conflicting things in the last year of the business. I tried to meet too many people’s different, often contradictory expectations. Ultimately, I was the one who got injured. I think it’s curious that we don’t hear much from founders who shuttered their startups, or founders who are women. Perhaps this story will draw critique, sympathy, cynicism, but I’m not looking for any of that.?

I’m simply looking to share my view: We should have a conversation about how healthy venture capital (and broadly speaking, pure capitalism itself) is—for founders, for businesses, for the economy at large. Hopefully you’ll explore that with me.