Posted on October 14, 2010
Filed Under Entrepreneurship |
In January of 2009, Backupify was a consumer SaaS backup company. The vision was small, yet I still found myself presenting to First Round Capital’s Philly office. When I was done, Josh Kopelman asked me a simple question.
Rob, if I invest in your company, and someone wants to buy it at the end of this year, what would you say is a good price?
Looking at a $2M post money valuation, I answered quickly with “$6 million dollars Josh.”
He frowned and said “$6 million? Rob, do you understand how venture capital works?” It was embarrassing. Josh took a couple of minutes to explain how most early stage companies go out of business and thus, to return anything to their investors, First Round needs big wins from the companies that make it. 3x doesn’t cut it.
I flew back to Louisville and met with one of my angel investors to explain how I blew a potential investment. He just laughed. “Rookie mistake,” he said. Then came the most important piece of advice I’ve been given throughout my entire startup life.
“Rob, you should write down on a piece of paper that this is going to be a $100 million dollar company, and make all your decisions as if that is true. It will become a self fulfilling prophecy.”
It sounds crazy to think of building something from scratch to $100M. But that day, everything changed for me. The vision got bigger, because a consumer SaaS backup company isn’t a $100M idea. The path got clearer, because I knew what we had to do to reach that kind of eventual valuation. And most importantly, the decisions got easier, because for the first time, I had a clear goal in mind. I threw out the ideas of early exits and decided to shoot for a homerun come hell or high water.
So if you find yourself in a similar situation… unsure what your company can be and thinking small… step back and make yourself think big for a change. The first step in building a big company is that the founder needs to have a big vision, so set out a big goal and go after it hard. It may become a self fulfilling prophecy.