Jeff Seibert is a repeat founder, with multiple full cycle startups and exits under his belt. Including going from zero to selling a company to Twitter for $100M in just 14 months. He has raised 10M for his next venture, Digits from top-tier investors like Benchmark, GV, Jeff Fagnan, and Chloe Sladden.
In this episode, you will learn:
- Skipping your Seed round to raise a bigger Series A
- Jeff’s book recommendation
- Balancing your founding team for success
- Fundraising strategy
- Getting Tim Draper to fund your business idea without a pitch deck
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
The Ultimate Guide To Pitch Decks
Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
Here is the content that we will cover in this post. Let’s get started.
About Jeff Siebert:
As Senior Director of Product at Twitter, Jeff has led the company’s consumer, developer, and publisher-facing products, including Twitter for iOS, Android, and the Web, Fabric, Crashlytics, Answers, Digits, Twitter Kit, TweetDeck, Twitter’s Publisher Platform, and Gnip.
Previously, Seibert was Twitter’s Director of Developer Platform where he led Fabric, the company’s suite of mobile developer tools, as well as its enterprise Data Platform and Content Syndication efforts.
Seibert was the co-founder and CEO of Crashlytics, an award-winning crash analysis service for iOS and Android apps. Crashlytics was acquired by Twitter in 2013 and has become an essential piece of the mobile developer toolchain – today powering over a million apps across well over two billion devices worldwide.
Seibert co-founded Increo in 2007 and served as its COO and lead architect until its acquisition by Box in 2009. He subsequently oversaw the integration of Increo’s document preview and annotation technologies into Box’s cloud content platform.
Seibert gained experience at Apple in both marketing and engineering capacities and led Stanford University’s Entrepreneurial Thought Leaders seminar series as Co-Coordinator. He was selected as a Mayfield Fellow in 2007 and received a B.S. in Computer Science from Stanford University in 2008.
Seibert is a frequent presenter on both entrepreneurship and technical topics and has lectured at Stanford, Harvard, MIT, and Tufts, as well as keynoted Twitter Flight, AppsWorld, AnDevCon, EclipseCon, and others.
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Read the Full Transcription of the Interview:
Alejandro: Hello everyone, and welcome to the DealMakers show. Today is going to be one of those episodes that is going to be mind-blowing because our guest has made it—the full cycle multiple times, and I think that you are all going to find it quite inspiring. So without further ado, let’s welcome our guest today. Jeff Seibert, welcome to the show.
Jeff Seibert: Thank you so much, Alejandro. It’s great to be here.
Alejandro: So born in Maryland in Baltimore. How was life growing up there?
Jeff Seibert: Yes. I would say it was very normal. I went to school, not a lot going on. One of the key things is not a lot of technology. I became obsessed with computers, and that was very not cool in high school. I ended up teaching myself to code when I was 13 and was one of the very few people in school who knew anything about computers, let alone wanted to program them. It was a little bit lonely, but it was very fun diving into all of that.
Alejandro: You eventually ended up in Stanford, so what was that process like? Why didn’t you stay in Maryland? What got you all the way to Stanford?
Jeff Seibert: Yes. Great question. I knew nothing about colleges. I wasn’t focused on the college process until I found a list on the internet of startup founders and where they went to college. This was in 2000, right around the dot-com boom, and the list was like half or more of Stanford. Without thinking or knowing anything about the school, I told my parents, “I want to go to Stanford.” My mom’s immediate reaction was, 1) That’s way too far away, and 2) You’ll never get in. That was the challenge I faced all through high school. Finally, my junior year, I convinced my parents to at least let us visit so we could go see it. We flew out to the Bay Area, did the tour on Stanford’s campus. Of course, it’s 75 degrees; it’s crystal clear, and my parents are like, “Oh, I guess this would be okay if you got in.” Then, that was the whole battle of applying, but I was fortunate enough to get in and came out here, and it changed everything. Just, obviously, immersed me in technology, introduced me to the concept of what a startup was versus starting a company, a business, so it was really transformative.
Alejandro: When people go there for the first time, it’s pretty mind-blowing to them, what they experience, the startup mentality, they try things, and move fast, and break things. How was it for you? Was it as good as the stuff you were reading online in those lists that you found, or how was that for you?
Jeff Seibert: It was fascinating just how much of the mindset pervades everything. I showed up at Stanford in 2004, and people were talking on campus of who’s going to be the next Google. That was the sole focus, and it was because Google had, of course, come out of the school. IPO’d not that long ago, been scaling massively, and it was about who was going to be next. I’d never been introduced to that mindset before. I had always loved coding just for software, just to build things. I never had thought about a high-growth company. So, it really was fascinating, like brainstorming startup ideas, talking about things, talking about the industry, having these founders and CEOs come speak. The school and the industry were tied at the hip.
Alejandro: For you, obviously, you took this opportunity, as well, to do some internships. You did one with Apple and then another one with a startup, so that got your feet wet into the startup environment. So, what did you learn from working with those two companies, because this was the segue for you to build your first business while still in college, which gets crazy, but what was that for you?
Jeff Seibert: Yeah, it was really eye-opening because growing up in Baltimore, 3,000 miles away, Apple was my dream job. My life goal was to work at Apple, and I was so excited when I was able to land an internship there and show up. You realize it’s a big company; it’s a very traditional company, and it’s, of course, a very secretive company. So you show up as an intern. You get assigned to a team. I had an office as an intern at the time, and Apple had these policies of if you’re working on something confidential, you had to keep your office door closed. Well, everything at Apple is confidential, so you had to keep your door closed. It was a really fascinating world to be in as an intern. You don’t get to know many people. I wasn’t allowed to know what the other interns were working on, so we could hang out after work, but we couldn’t talk about work, and that was one of the reasons why I decided after that I probably wouldn’t return even though it had been my life dream, I wouldn’t go back full-time just because I wanted a more collaborative, customer-driven immersive experience. The next summer, I interned at a startup right off-campus, which was completely opposite—tiny company, everyone in the same room, everyone rushing, working crazy hours trying to get the product out the door. The company was scaling incredibly fast. They were onboarding millions of users the summer I was there. That hooked me on the pace and lifestyle of what the startup world meant.
Alejandro: That actually led you to do your own thing, so this was in your senior year in college. That’s quite crazy. What was that process of coming up with an idea and for you to tell yourself, “You know what? Maybe it’s my chance right now to take a shot at this.”
Jeff Seibert: Yeah. It was interesting. I put a group of friends together, not with the goal of starting a company but to train us on how to evaluate startup ideas. We would meet for two hours every week at night, and we would brainstorm startup ideas and write them all down. Then we would come back the next week and evaluate them, having thought about them more. We did this for months on end, and it was fascinating because, in retrospect, we talked about a lot of really interesting ideas. This was in 2007. We talked about the concept of continuous backups of all of your files and how it would synch your computer to—the cloud wasn’t a term yet but to a service. That was effectively Dropbox. We didn’t have the skills or team to go build it, but we were thinking about these types of ideas. We ultimately, a few months in, got frustrated that we couldn’t hit on what we thought was the killer idea, so we ended up stepping back and deciding, “Let’s just build an idea-sharing website.” For one of our computer sciences classes, for my senior project, we built an idea-sharing site where you could type in ideas; it was collaborative; other people could comment on them. Then we did some early machine learning in the form of Natural Language Processing to automatically cluster these ideas and pull out similarities between the ideas. Much to our surprise, we ended up winning the class competition for this CS senior project, and that snowballed from there. We kept working on it over the summer. It turned into this company Increo, which was all about creativity and feedback. We built a document collaboration tool that allowed people to upload either a PDF, or Word Doc, or Photoshop file, or text, or anything and comment on it and mark it up live in the browser. Today, this sounds obvious. There are so many tools that do that. Back in 2008, that was actually quite technically difficult, so we had to build a lot of conversion technology to display files in Flash in the browser, all of this real-time commenting support, and we ended up raising money for that and building a company around it.
Alejandro: Pretty impressive still in college. And you get a term sheet from Tim Draper; not bad.
Jeff Seibert: Yes. It was a crazy story. We had met an associate at DFJ through one of our college classes. As we were working on this, we were like, “Oh, let’s just ping this person.” This was Robbie Meloni. We pinged Robbie when in to meet him at DFJ and showed him what we built. We weren’t raising money. We didn’t have a deck; we didn’t have anything. The goal was to get feedback and have him tell us, “Is this interesting? Should we keep doing it, or should we actually give up and get real jobs?” So we’re in this meeting with Robbie. I would say it probably wasn’t going that well. He was sort of interested, but at the end of the meeting, he paused and was like, “You know what? Let me see who else is around.” We’re like, “Okay. Great.” He comes back with Tim Draper, of course, one of the founders of the firm, and Tim walks in and goes, “You have two minutes. What are you building?” We show him the thing, and he’s like, “Okay, how much are you raising?” We weren’t raising, but we made a number up on the spot. “$500K.” He was like, “Okay. I can do that,” and walked out.
Alejandro: That’s amazing.
Jeff Seibert: So, we were sort of speechless, and Robbie was speechless, and Robbie was like, “Okay. I guess I’ll put a term sheet together.”
Jeff Seibert: We ended up, after that, talking to a bunch of other firms very quickly, just to evaluate if there was other interest in the deal, but it was hard to match Tim’s excitement for what we were building, and so we ended up signing the term sheet for a half-a-million-dollar Seed Round.
Alejandro: As we’re speaking about fundraising, obviously, the events that ended up unfolding around fundraising really trigger what ended up being the acquisition by Box. But in this case, you guys pitched quite a number of firms, and that led you to make the decision to find a home for the company.
Jeff Seibert: Yes. Fast-forward a year. We had built the product, launched the product. We had about 20,000 customers on it, so it had some traction. Not a ton, but not none. This was now mid-to-late-’09. In the fall of 2009, if you remember, Sequoia released this deck called RIT Good Times. It immediately changed the fundraising climate thanks to the housing crisis. We were running out of money. We had to raise an A Round. We ended up pitching 36 firms up and down Sand Hill Road, all around the Bay Area, and every single one said no. This was a crazy, exhausting process, and also terrifying process because this was our first company. We had six employees. We didn’t want them to be unemployed. We didn’t know what to do. So we stepped back and started thinking about how can we save the business? How can we become profitable? We realized what was really valuable wasn’t our product as much, but the technology, our ability to display files in a web browser was very generic technology that was very rare. There were only one or two other companies that had it. So we started meeting with potential partners, other companies that were in the documents business, and one of them was Box. Box got extremely interested in the technology and integrating it into Box. We were able to make an acquisition happen, so they rescued us, literally, with 30 days of cash remaining. Our team joined Box, and it ended up being a fantastic experience. It was the first deal Aaron Levie had ever done. Box was only 40 people at the time. We came in, and [R 12:44], in Cryotech actually powered document display on Box for five years.
Alejandro: That’s amazing, and in your case, you stayed there for a couple of years, went to Boston, then eventually ended up moving back, and that was what created what has been your biggest exit to today. But we’ll talk about your recent baby, your latest company, which is very exciting, Digits, but before we do that, what don’t we now talk about Crashlytics, and we talk about that time where you came up with the concept, you finally decide that it’s time to leave Box, and you bring Crashlytics to life. What was that process like?
Jeff Seibert: At Box, they actually sent me out East, to Boston, to start their R&D group. We were building Synch technology because it’s funny how these things connect. In the interim, Dropbox came out, and Dropbox was crushing Box with Synch. It was such an easy, natural product, and Box didn’t have that. So I started leading the team that was building the Synch Tech at Box, and for anyone that has worked on Synch algorithms, they are immensely complex and tend to be quite buggy. Our beta version crashed a lot. I started spending more and more of my time trying to figure out why it was crashing than actually building the product. This gave me an idea, and one weekend, I started fiddling around with automating our crash detection. The concept was like, “Could we just detect that our Synch Tech had crashed and upload the crash report so that we could do something about it. I built this prototype. It was working. I was sort of intrigued, but I realized it wasn’t specific to Box. This could work with any app. So I chatted with the VP of Engineering and told him what I had built, and asked, “If I did this on nights and weekends, could I just do this outside of Box and keep going on it?” To their credit, they were fantastic. They were super supportive. They were like, “Great. Do it nights and weekends. Maybe if it’s good, we’ll use it at some point, but go for it.” I kept developing it. I ended up chatting with Mike Krieger, who had started Instagram. At the time, Instagram was very small. This was in early 2011. They had just started ramping. I asked Mike like, “What happens when Instagram crashes?” He said, “Oh, you have no idea. I get more crash reports per minute than I can read.” That was the lightbulb in my head. I was like, “Okay. We’re starting the company.”
Jeff Seibert: In the meantime, I had met my cofounder, Wayne, at a random startup dinner in Boston, just getting a group of folks together. Wayne got very excited about the idea, and he was more on the marketing and business side of things, and he was like, “I’m going to get every app interested. I, of course, as the technical founder, was a little skeptical. I was like, “Really? Everybody says this. What are you going to do?” He’s like, “No, no. Let me show you. Sure enough, three weeks later, he comes back to me with a spreadsheet of 30 apps. He’s talked with their mobile lead, gotten their feedback on the idea and our commitment to use a beta version. This wasn’t some random app you hadn’t heard of. This was VP of Mobile, The Weather Channel. I was like, “Okay. Maybe we should work together.” That was it. We ended up deciding that spring of 2011, “We’ll start the company.” I gave notice to Box, and we went out to raise money and got going.
Alejandro: What ended up being the business model of Crashlytics?
Jeff Seibert: Crashlytics was SaaS. Developers would download RSDK. They would put it in their app, ship it to the app store, and then they would pay us monthly. Funnily enough, we actually stayed in beta for quite a while, grew to hundreds of millions of devices, tens of thousands of apps, and had only just started charging when we were acquired by Twitter. We were acquired by Twitter 14 months after we started the company. It was extremely fast in early 2013. As part of that process, they agreed to make Crashlytics free. We ended up actually having to refund everybody who had paid for it in order to get out of the contracts and just make it free.
Alejandro: Wow. So how much capital have you guys raised in total for Crashlytics?
Jeff Seibert: We were very capital efficient, so we started with a $1 Million Seed Round, and then we raised a $5 million Series A one year later, but of the six, we only ever spent three. Actually, as part of the Twitter deal, we never revealed to them how much cash we had on the balance sheet, and we were able to redistribute that cash back to shareholders outside of the deal.
Alejandro: Wow. That’s amazing. In this case, what was that process like? How did the whole acquisition of Twitter come about because, at this point in the game, you guys were very early? Probably, you were looking at your next round and really ramping up, so how did this process come about?
Jeff Seibert: It was very unexpected. Crashlytics was going gangbusters. We were ramping up to start raising a B Round. I think we had crossed $300 million devices that the code was on, and we got called out of the blue from Twitter’s Corporate Development Lead who was Jessica Verrilli. She asked us on the phone, “Have you ever considered working for Twitter? We were like, “No. Why would we do that?” The call didn’t go all that well. We were like, “What are you thinking? I don’t know if this is serious or not. Why would we join you? Can you throw out a number?” She threw out a number that was not interesting, and we were like, “Thank you. We appreciate the interest,” like, “We’re going to keep building this company.” So, that was that. Three months later, she called back, and she was like, “We’re serious. Would you actually consider working for Twitter?” We’re like, “I don’t know.” She was like, “At the very least, come out and meet the executive team.” Then she was like, “Oh, and we’ll pay for your flights.” Wayne and I were like, “Fine. Okay.” This was the fall of 2012. We ended up throwing a Christmas holiday party for our team, giving them the next week off, and Wayne and I silently disappeared to San Francisco so that we could meet Twitter without anyone knowing. We were shocked, honestly, by their level of sophistication, understanding of the mobile ecosystem, a strategy they had for their mobile developer platform and spent time with Dick Costolo, who was CEO at the time, and with Jack Dorsey. They had this vision for Twitter becoming this huge force in mobile development and then building a huge Twitter mobile API and all sorts of stuff. That got us very excited because they were willing to make Crashlytics the bedrock piece of that, and make our product free, and keep investing in it. So after a very intense week of negotiating, we signed the term sheet at 10:00 am Christmas morning after being up with them until 2:00 am Christmas Eve negotiating the deal.
Alejandro: It’s interesting here because, typically, people will talk about partnerships and things that would lead to an acquisition, but it’s one of the most unique ways to trigger an acquisition by telling someone, “Why don’t you come and work for us.”
Jeff Seibert: Right.
Alejandro: At what point did it cross your mind that it was not really an employment or recruiting type of thing but more of an acquisition process that you were getting into?
Jeff Seibert: It became clear quickly because a partnership wouldn’t have made sense. We couldn’t have achieved Twitter’s goals with having their own Twitter astika and all sorts of stuff through a partnership. It was pretty blunt. I would say, in my view, there are three types of acquisitions: pure aqua hires, which was Increo’s acquisition by Box. They did get the tech, as well. There’s a business acquisition where you want to buy a company for their revenue or for their product, whatever it might be. Then I would bucket this more in the camp of what I call a strategic acquisition, which is yes, they were interested in Crashlytics, but not for what it was today, and not the current revenue or anything like that. They were strategically interested in what it could unlock for Twitter. Twitter, at the time, had a very strong corporate development program, led by Jess, and they were very strategic, so went out and bought Periscope way early, prelaunch. They bought Mopub, the ad platform, and so Crashlytics ended up being one of their pretty landmark acquisitions.
Alejandro: Nice. It was actually reported and leaked that the acquisition was over $100 million, so what a good outcome. Good stuff. So, Jeff, in this case, you go and join Twitter. What was the experience because, at the end of the day, it’s learning from others, which is critical? I’m sure that being able to have those interactions with someone of the caliber of Jack Dorsey allowed you to understand what it looks like and how these incredible high-performance individuals operate. What did you learn from interacting with someone like Jack Dorsey?
Jeff Seibert: Yeah, it was a fascinating experience. To put it in context, obviously, way early in my career, I had thought Apple was too big. Then we joined Box when they’re 40. I saw Box scale to 400 in two years, so a hypergrowth period at Box. When we joined Twitter, I believe they were around 1,500, so first followed them, they were today, it was very intimate, particularly among the leadership team. They were always in meetings, giving input, trying to get product advice, all sorts of stuff. Twitter had an overabundance of ideas. Everyone and their mother had an idea for what Twitter should be, could be, would be, with just one more feature. It was a real challenge in focus of the company in deciding what Twitter had to be and shaping that. I think that was a lot of the interaction of the executive team of plotting out the strategy, aligning on what we wanted to do on the mobile developers’ side, how we wanted to take it to market, how we wanted to interact with developers. One of the most special experiences was when we got there; we reincarnated Twitter’s developer conference. We ran a conference for two years called Life. I gave the keynote at the Bill Graham Civic Auditorium in front of 2,000 developers. It was a really fun momentum-building time at Twitter. This was all in the runup to the IPO and right after the IPO. It was a super-energized period of the company. Obviously, a few years in, Twitter had started having some challenges. The stock flatlined, growth flatlined, so they had to pull back on a bunch of stuff. But in the early days, it was a fantastic company to see.
Alejandro: Crashlytics ended up being acquired by Google, and quite a lot of momentum and traction and being in many devices. How many devices?
Jeff Seibert: Today, Crashlytics runs on five billion MAU. It’s effectively on every smartphone on earth. That was a crazy process, as well. Twitter, as it started struggling, realized it couldn’t afford to build and maintain this large developer platform, but it was way too widely used to shut down. We ended up negotiating, and there was a bidding war going with a bunch of the other major internet companies to buy Crashlytics and this greater suite of fabric developer tools. Google ended up winning. The entire team moved over to Google in 2017, and that’s what allowed me to finally step back and focus on something new. I had now been doing crash supporting for six years, and it was time for a little bit of a breather.
Alejandro: When you stepped back, it was time to have another brainstorming with Wayne, your cofounder from Crashlytics, and that brainstorming led to Digits. So tell us about that incubation and bringing Digits to life.
Jeff Seibert: It did, indeed, come right from Crashlytics. Wayne and I knew we wanted to start something again. We did take a small break to travel for a little bit, but we knew we wanted to start something again. What we love is applying consumer-grade design, really high design sensibility to complex business problems. As we started thinking, literally, our brainstorm session was: imagine we start a company today. What’s wrong, and how can we go fix that? There were a lot of parallels because back when we started Crashlytics in 2011, payroll was lacking. It was so frustrating to call ADP every two weeks and fiddle with them, and it was just tedious. Of course, Gusto has come along and built a great business. Accepting money was lacking. We had to deal with Authorize.net, and PayPal, and Merchant Accounts, and all of this stuff. And now, Stripe has made that drop-dead simple. As we were talking through these examples, we realized, “Wait a second. Whatever happened to accounting? It really was lacking back in 2011 to today. The challenge is, when you as an entrepreneur go and start a company, you have no choice but to go hire an accountant or bookkeeper. You’re going to have to file taxes. So you hire them. In the U.S., they almost always set up QuickBooks for you. QuickBooks has 80% U.S. market share. From that moment, you, as the business owner, basically lose all visibility into your company. Any questions I have, I have to go ask my accountant. They have 20 other clients. They’re busy, they work for you a day and a half a month, and so their answer is always the same. It’s like, “Oh, give me a few days to update your books, and I’ll get back to you.” Sure enough, a week later, four days later, or whatever it might be, they follow back and reply to your email with an Excel sheet or a PDF report and hope that answered your question. In our experience with Crashlytics, the business is moving in real-time. I don’t want to wait a week for a black and white PDF that now answers a question that I’ve since forgotten about. I need to make decisions in the moment. As we started talking through this, we just became more and more obsessed with this problem and the parallels to the product side—when you’re building a product, you have Google Analytics; you have AB testing tools; you have real-time performance monitoring like Crashlytics. Those are all live dashboards. Why is my finance a PDF report weeks later?
Alejandro: That’s incredible. How did you guys monetize? How did you guys end up with a business model where you were actually extracting value from bringing this to life?
Jeff Seibert: Great question. The first thing is, it turned out to be way harder to build than it sounds. We started Digits in early 2018. We ended up raising a $10 million A Round from Benchmark to tackle this problem. We have spent the past three years building.
Jeff Seibert: It turns out that reconciling your finance data in real-time is an immensely challenging problem, and you need to get it right because if you make big mistakes, the numbers are 1) wrong, which is embarrassing but also not useful. We have spent three years and heads down in R&D. We’ve been doing a ton of true machine learning, deep learning, in production with large trained models. We’re not actually able to bring in the company’s finance data straight from their banks, from their credit cards, from their payroll providers and book it for them into their books, into a live dashboard so that they can understand their business as it happens. So we just launched a couple of weeks back. We could not be more excited to be out there. To answer your question, Digits is SaaS, so it’s free to start. In fact, you can use it for free forever, and then you upgrade for a bunch of paid features that make it even more powerful.
Alejandro: At this point, when you’re going with Digits, I’m sure the fundraising was a little bit easier because having done a few startups and having had a really good outcome on the last one, I’m sure that investors were kind of like throwing money at you. In fact, your Series A was something completely unexpected, so what was it like for you, out of the blue for you guys, something that you did not expect that would happen?
Jeff Seibert: Yeah. We were sort of overwhelmed by the change because you’re right. Normally, as a founder, you’re used to fundraising being a slog. You have to convince people. There are lots of meetings, and follow-ups, and data, and everything. When we started sharing what we wanted to build, we were inundated with investor interest. We had set out to raise a $3 million A Round. We thought that would be enough to get a prototype out the door. Within a week, we probably had that overcommitted five to ten times with firms interested. Then we ended up meeting with Benchmark. I caught up with Peter Fenton. He had been on the board at Twitter. I had known him for a while, and I shared what we were working on more as an FYI because I was like: Benchmark doesn’t do many Seed Rounds. I just want to give him a heads-up. Peter heard the story and was like, “Help me understand. Why would you raise $3 million today and then get diluted again for an A Round, maybe in a year if you could just raise the A Round today?” I was like, “Is that something you would be interested in discussing?” He was like, “Yes. I think I would. Give me a few hours.” Literally, that night, we get a text from him saying, can we pitch the full partnership at 9:00 am tomorrow morning.
Jeff Seibert: We, of course, had no deck. We had no time to prepare. We came in and met with Benchmark’s partnership on a Friday morning, and by the end of that day, they had given us a term sheet for a $10 million A Round.
Alejandro: That’s incredible!
Jeff Seibert: That was remarkable and was, of course, disappointing to all the other firms who had been excited to participate in our Seed Round but was really important in retrospect because it gave us the runway we needed to now go and build this product.
Alejandro: How do you navigate those discussions with the other firms so that you don’t create any enemies and you don’t burn bridges?
Jeff Seibert: It was very awkward, and we hate to be the bearer of bad news. We also definitely learned that investors are often more used to saying no themselves than being told no.
Alejandro: Right. Yeah.
Jeff Seibert: So I won’t name any names, but there were definitely those who took it less well than the others, and it just doesn’t reflect. We have to make the best decision we can for the company. I would love to work with these people. They’re all great investors, but it just is not possible, so we had to have some pretty awkward phone calls where we let them know that the Seed Round wasn’t happening and they would not be able to invest.
Alejandro: As a fun fact, you’ve gone through at least six rounds of financing, and you’ve never used a pitch deck. How is that possible?
Jeff Seibert: Yes. I think it was the [32:13] the first time because we raised that $500K for Increo without meaning to on just our demo. That went so well. I’ve used that technique the whole time. Across six venture rounds, across three companies, I have never made a slide deck. We often don’t show demos in the early stages. The reason to me is, you have to think about fundraising as a psychological process. You are trying to get someone to see the world as you see it and believe that you have the ability and the team to go make that world a reality. When you use a deck, you’re stuck in this very formula pitch. Yes, you might have practiced a lot, but it doesn’t leave room to customize it to the actual investor you’re talking to. What I’ve found the most effective is to start with a very short problem statement like, “What problem are we trying to solve, and why are we the people to solve it and have the team to solve it?” Then let them ask questions. This guides the conversation far more on what they want, what they want to know, and they don’t have to sit there being bored, tuned out, seeing these slides that they don’t care about. Obviously, your responsibility as the founder is you need to know your pitch drop-dead cold. You need to know every single figure by heart, every single number, because you have no deck in front of you. You just have to be able to talk about it. I have found that to be way more effective because you build the relationship with the investor, and you can control the narrative better and customize it for what they want to hear.
Alejandro: That’s amazing. I always say that fundraising is not about talking. It’s about listening. You’re not listening for looking good or for giving the right answer. You’re listening for identifying the concern that is in-between you and the money because, at the end of the day, that’s what it comes down to. So I love what you shared. In your case, and now with Digits, if you were to sleep tonight, Jeff, and you wake up in a world five years later where the vision of Digits is fully realized, what does that world look like?
Jeff Seibert: Yes. Fantastic question. Wake up five years from now, and you should have a live financed dashboard and a proactive model, a brain of your business running for you 24/7. It will know when you can’t make payroll. It will know when a customer has not paid you when they usually do. It will know when your travel-spend spikes because this sales team did something that you weren’t aware of, and it will draw your attention to what matters and give you, as the business owner, the peace of mind to know that someone is watching out for your company. This is really important to me. I believe that as a founder, you have one job, and that job is to fire yourself from every other role in the company. As you grow your business, you need to bring in your head of marketing and your engineers, and so on. You’re constantly firing yourself from roles so that you can focus on the future. Up until now, there hasn’t been any way for the founder to fire themselves from stressing about the financial health of the business. In five years, Digits will make that possible.
Alejandro: I love it. Now, imagine that I’m putting you into a time machine, and I’m bringing you back to that point where you’re able to have a chat with your younger self, that younger Jeff that is still in college and thinking about maybe starting a company. So imagine that you’re able to tell your younger self one piece of business advice before launching a business. What would that be and why, given what you know now?
Jeff Seibert: Yes. Two crisp things for you. The first, I would say, is, balance your cofounding team. The big mistake I made with Increo was we started the company with myself and my friends from the computer science department. That was great. We could build the product, but none of us had any knowledge of marketing, any knowledge of sales, any knowledge of any other part of the company, and more importantly, we didn’t have the interest in it either. Everyone just wanted to code more. That was a huge liability that is probably one of the reasons we couldn’t get enough users to raise the next round of funding. The other, I would say is, distribution is king. It is absolutely everything. That was probably the biggest thing I did differently at Crashlytics is we spent only about two-and-a-half months building the core Crashlytics product. We spend nine months designing and building the onboarding flow. We realized that if we could make Crashlytics go viral and spread through word of mouth instantly during the onboarding process, it would grow a lot faster. From now on, that’s all I think about is yes, the product is nice, but how do you get distribution, how do you make it go viral, how do you get the word out. If you solve that, then you have an actual company.
Alejandro: That’s absolutely right. There are a lot of people that talk about “build it, and they will come.” I like more “Sell it and figure it out how you deliver.” So good stuff. Now, for the people that are listening, I think that they’re probably going to enjoy it if I ask you what has been a book that you wish you would have read sooner?
Jeff Seibert: The most transformative book I read was Dale Carnegie’s, How to Win Friends and Influence People. It’s a very old book. I think a very popular book, but I should have read it even earlier in my life, especially coming from a computer science, techie background. It was completely eye-opening in how the world of negotiation works and everything. If you have not read it, 100% go read that book.
Alejandro: That’s a great one. I love how he positions how to elevate others to capture their attention.
Jeff Seibert: Yes.
Alejandro: That’s a really good one. Jeff, for the people that are listening, what is the best way for them to reach out and say hi?
Jeff Seibert: Please ping me on Twitter. I’m very active on Twitter, given all my experience working at Twitter. I am JeffSeibert on Twitter, and I’ll see you there. Also, my DMs are open.
Alejandro: Amazing. Jeff, thank you so much for being on the DealMakers show today.
Jeff Seibert: Fantastic. Alejandro, thank you so much for having me. This was a ton of fun.
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