Steve Loughlin has gone from being involved in the operational side of very successful startups to now sitting on the other side of the table making investments in early-stage ventures with one of the most respected firms.
In his first venture founding a startup, Loughlin created a $390 million company that was acquired by Salesforce. Now as an investor, he’s looking for others to fund.
I recently interviewed Steve on the Dealmakers Podcast. He shared how he got started, why he went back to school after his first gig running a startup, their fundraising rounds and who he is looking for to fund now ().
Training For Entrepreneurship
Even our very early experiences can prepare us for entrepreneurship far more than we can realize at the time. In many cases, it doesn’t even involve lemonade stands and learning to code on Commodore 64s.
Steven Loughlin was born in Massachusetts. Heading into the third grade, his parents and three siblings packed up and took off across the country to relocate to Oregon.
While his parents weren’t small business owners themselves, they had a lot of characteristics that Steve learned from.
They were great communicators. His father worked in big technology companies like Sequent Computers and Wang Computers. They taught him a lot about teamwork. In sports the kids were rewarded for passing the ball, hustle, helping teammates, hard work, and generally unselfishness rather than scoring points.
Steve went on to university at Stanford. After trying math, human biology and computer science he discovered he liked economics best and ended up majoring in Public Policy.
There he got into running and was a part of the track and field team, along with some of those on the Olympic team. They practiced even harder than they had to perform in competition.
Do You Want To Run A Company?
Early on, Steve benefited from some internships where he got to learn about customers, sales and marketing and productivity. But he was fascinated with operations.
Finishing his senior year, he was walking down University Avenue in Palo Alto when he ran into a classmate who had just started his own company.
He was invited to check out their offices and signed on. He was still green in many parts of running a business but ended up doing very well at customer acquisition.
90 days in the chairman of the board calls and says things weren’t going too well, they were making dramatic cutbacks and asked if he wanted to take over running the company.
Loughlin ended up running the company for the next four years. He gained experience running board meetings, hiring and firing, and managing a company through difficult financial times.
Through many mistakes, he turned the company around.
Back to School
Like many entrepreneurs, after four years Steve wanted to start a company of his own. Yet, one of his mentors suggested that he go back to business school first to get a more classical education and to be able to learn the language of the VCs and bankers he’d be dealing with.
He took his advice, applied and got into Stanford Business School.
At the same time some of his friends were starting a little $40 billion company Peter Thiel wrote about in his book Zero to One, Palantir.
Steve ended up being an advisor, and assisting with operations and go to market while he was still in business school.
There he met Adam Evans, who ended up becoming his co-founder at RelateIQ.
Did You Put It In Salesforce?
Adam and Steve thought it would be amazing to apply machine learning and AI to business relationships (customers, partners, potential hires and sales prospects).
Of course, the problem was—as it has been since companies began investing in productivity software and CRMs—that people weren’t entering the data.
That sparked the idea of creating something that would automate the population of all the data, which can then be used to gain actionable insights.
They built a prototype and went out to validate it with 10 or 12 customers over three weeks. One of their conversations ended up with the person asking if they could buy it. That was the moment they decided to commit to starting RelateIQ.
Going out and talking to potential customers they focused on:
- Showing their basic prototype and visual story
- Asking discovery questions and finding the existing pain
- Testing the demand
- Ensuring the market was large enough
Steve and his three co-founders turned his home into their first office. They pulled in a $2 million seed round led by Accel with participation from Morgenthaler Ventures and a number of individual investors.
They gained beta users, and Accel again followed up with leading their $7 million-plus Series A round. They kept gaining momentum and raised another $20 million. At this point, investors included alo Kleiner Perkins, Battery Ventures, Redpoint, Felicis Ventures, Formation 8, Sway Ventures, and NFJ Capital to name a few.
Then just six weeks before their Series C, Steve gets an inbound email to go have coffee. That turned into a $390 million acquisition by Salesforce just six months later.
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