After getting his first startup acquired, Johan Attby has gone on to raise $70M for his second profitable venture. His startup, FishBrain has acquired funding from top-tier investors like Consensus Asset Management, Softbank Ventures Asia, Adrigo Asset Management, and B Capital Group.
In this episode you will learn:
- Why you should embrace making mistakes
- How he has scaled his second company outside of Silicon Valley
- Why the US is still the best place to find your CMO
- What data do investors look for at different rounds of funding
- What’s next for FishBrain
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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.
About Johan Attby:
Johan Attby is a serial entrepreneur with a passion for building game-changing businesses. He founded the software company Tific and took it all the way from an idea and raising venture capital to a highly profitable company with a rapidly growing international customer base. In the spring of 2011, Johan orchestrated a successful exit when the company was acquired.
Now Johan is the co-founder & CEO of FishBrain which is the world’s fastest-growing mobile app & social network for the world’s biggest hobby – sport fishing.
He has also been awarded “Founder of the year” in Sweden by Nordic Startup Awards in 2015.
Johan has also invested in, advisor to, and board member at early stage hi-tech companies and he is a frequent speaker on entrepreneurship and startups.
Johan has lived in Silicon Valley and Boston and he has extensive networks (hi-tech and VC) both in the US and in the Nordics.
Specialties: Entrepreneurship, innovation, strategy, corporate development, venture capital, business development, M&A, early-stage management, bringing Swedish hi-tech companies to the US.
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Read the Full Transcription of the Interview:
Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. We have a great entrepreneur today, someone that has built and scaled companies in the past, and I think that we’re going to be learning quite a bit, especially when it comes to operating companies in the Valley in one of those hubs of startups versus doing it outside of it, and also how you conduct yourself, and how you are looking for the execution. So without further ado, let’s welcome our guest today. Johan Attby, welcome to the show.
Johan Attby: Thanks a lot. Thanks for having me.
Alejandro: Originally born in Sweden. Tell us about life growing up there.
Johan Attby: There wasn’t much happening there with the population of 10,000 people. But I started there, and I loved the place, but as soon as I went into my studies, I left it moved to Gothenburg to take my Master’s in mathematics and physics.
Alejandro: But before thinking about the whole study approach, you were a competitive cyclist. We’re talking about ten years competing. Was it professional or almost professional cycling? What was that?
Johan Attby: I would call it almost professional because, unfortunately, I got injured when I was 18, so I had to have knee surgery. I did that thing when you start to train too much when you’re too young, so that was basically the end of my cycling career. But I still love cycling. Now, I just do it to keep in shape, so I can continue to eat good food. I still love it. I switched from road biking to mountain biking.
Alejandro: Good stuff. Obviously, that got you into shifting gears, and then you went at it with math and physics in terms of your degree. But eventually, you ended up coming across artificial intelligence, which, back then was not as trendy as it is today. Now it seems that everyone and their mothers are using AI for something. Back then, it was quite a unique type of thing, so how did AI come across your radar, and how did you go about it?
Johan Attby: I always loved mathematics and physics. Even though the computer power—this is now dating 15-20 years ago, so the computing power was not nearly as massive as it is today. I liked theories of doing the mathematics models behind AI. Things were starting to cook back then, even though it was definitely not as sexy, and not many people talked about AI back in the days, but I loved it. I definitely didn’t do it for joining any kind of hype because there was zero hype back then for AI. It was for general interest in mathematics, but it was more like applied mathematics, and then it became AI.
Alejandro: And you did quite a bit of jumping from one place to another because everything started in Sweden for you, and then you went to Norway, then Sweden, and then Santa Fe, New Mexico. What a ride! So how did you land in Santa Fe, New Mexico?
Johan Attby: I think it was because my professor was on the external faculty at the Santa Fe Institute, which is this fantastic place. I think they have three or four Nobel Prize winners on the faculty there. He managed to get me in there. They took 20 people globally. They accepted—don’t ask me how, but I ended up being 1 of the 20 they accepted that year.
Alejandro: One of the 20, but you ended up not following the course because you went at it with starting your own company. So tell us about what happened there.
Johan Attby: Back in the day, I was super young and super naïve. I was 23-something. Now, I’m just naïve. Because some of the professors were not just fantastic in what they did, but some of them started their own companies; some of them, not all of them, but some of them quite successfully. I thought, “I can do this. Let’s continue my Ph.D. as a side-gig. Why don’t I start a company based on everything I know about AI? It was a story that took off then. Of course, that didn’t play out the way I thought it would because I never finished my Ph.D. But the company I started took off. First, I put my Ph.D. studies on the shelf, but I don’t think I will ever pick it up again. that was the end of my career in academia.
Alejandro: This company was Tific. What was Tific about? What was the business model of Tific?
Johan Attby: My idea with Tific was that I wanted to solve all of the world’s computer problems using AI by crowdsourcing a ton of computer-related data. When the Windows-based computer crashed, I would have all of the configurations of millions, and tenths of millions, and hundreds of millions of computers. Finding the common denominator and automatically figuring out what the root of the problem was and fix it. Of course, that was incredibly hard, but it managed to actually reduce the portfolio for some of the big players like Microsoft and Semantic, and some others at a very, very large scale. So it had some value, but only at the very, very grand scale.
Alejandro: In this case, you guys raised quite a bit of money, and that ended up becoming quite a successful outcome and exit. How much capital did you guys raise to date with that company?
Johan Attby: Maybe $50 million or something like that. We didn’t need to raise money because this was a little bit before B2B, so it wasn’t really a SaaS solution; it was more of an enterprise solution. We managed to land quite big deals, so we were, not from the get-go, but a couple of years into this, we managed to become cash flow-positive, so we didn’t need to raise money. When we sold the business, when the business was acquired, we had a 21% EBITDA. We were actually cash flow-positive, which is almost unheard of these days. FishBrain, today, is profitable.
Alejandro: I hear you. On Tific, you were at it for about 11 years, give-or-take from start to finish, so I’m sure it was a remarkable journey. You guys ended up going through an M&A through the company getting acquired, so what was that process like? Tell us how it happened and how did it come about? How big was the company at that point? Tell us about this process.
Johan Attby: We got some good traction. I lived in Silicon Valley back then. I drove sales and marketing. We still have R&D and operations and finances in Sweden, but we had sales and marketing in the States, in Silicon Valley because the big clients like Microsoft and Semantic, and the others were based in the States. We got an offer, and then a company wanted to acquire us, so that was inbound. We were not in the process of actually selling the company. During that time, we managed to land a deal with Microsoft, and since we did I by the Windows Operating System, we didn’t think it would be any better than that. That would probably be the peak of Tific. Since we had an offer on the table, we used a banker. We went through a process where there were a couple of companies bidding for it, and the buyer ended up being PlumChoice in Massachusetts on the East Coast.
Alejandro: What was the process like? You guys engaged an advisor? You went through it. The people listening are probably wondering how one of those M&A processes works. Can you give any pointers, or could you make us an insider on how that process was for you guys?
Johan Attby: You can never say it was frictionless because it took about three or four months. The process was extremely intense. They did heavy DD (due diligence) on the company. We needed to recover papers, agreements—as I said, we’d been in business for 11 years, and we didn’t have the first agreements and stuff like that. We needed to find and collect everything; I mean everything. The process was quite super intense. At the same time, we needed to have a successful quarter. This is something I’ll tell all entrepreneurs that when you’re in the sales process, that will probably be the worst time ever for you because not only do you need to have a great EBITDA—typically, it takes three or four months. There are very few shortcuts. Yes, you hear about some companies that get acquired in two weeks or something like that, but those are real outliers. The typical process takes three to four months. So you have to do all this work—the DD for the buyer, and it comes on top of your regular business. You need to make sure that quarter is super successful while you do the other work with due diligence. That was probably one of the most intense work periods in my entire life.
Alejandro: In this case, you close the deal, and you end up joining the company that acquired you guys, which was PlumChoice, and you end up moving to Boston, and you worked quite a bit for this company—a year and a half. How was that vesting and resting period of time?
Johan Attby: It wasn’t that much of resting [laughter] because I had high intentions with this. I liked the buyers. Also, for the people that I brought with me, I wanted to make sure that they were finding a good home with the buyer and that our product got appreciated and got the attention that I believe it deserved. I was on the management team of the buyers. I was also involved in strategy for the entire company, so it wasn’t that I sold the business, and then a couple of weeks later, I could check out. The reason I stayed for a year and a half was because that’s how long my lock-in period was. I knew early that this was not what I wanted in my life. I’m an entrepreneur! This was a big company that acquired my business. I really like companies when you’re in the innovation phase, and you’re growing 50-100% per year, not when you’re growing 5-10 years. It’s all about operation, efficiency, and if you can improve the bottom line with half the percentage points, that’s a huge win. That’s not really the phase where I’m at my best. I’m at my best when you’re still at a double-the-revenue stage every year, and there’s still a lot of innovation that has to be done.
Alejandro: Yeah. In this case, what was that process like when you eventually decided that it was time for you to pack things up and go at it again?
Johan Attby: Since my background was in mathematics, it was an analytical process for me. I didn’t do this one ad hoc because I had a year and a half to actually think about what should be my next gig. I started thinking about what are the microtrends that I believe. Of course, it’s not that I have a crystal ball like Tier 1 Silicon Valley investors like Sequoia or Greylock or Goldman Sachs or Andreessen Horowitz don’t have. But you have to believe in something. I thought a long time about that. I came to two conclusions. This is now seven years ago. I think these two conclusions are pretty obvious today, but they definitely weren’t seven years ago, and a lot of people told me that FishBrain would never work when I started FishBrain. The first one is if you have a passion for something, it doesn’t matter what it is, whether this is cooking or drinking wine, photography, or whatever, you have a much better engagement if you’re in a like-minded group versus a group of friends. The reason is because if you post anything specific on like Facebook, Instagram, or TikTok these days, you get very little engagement on any type of specialty content. There’s this wide behavior in the feed, so these platforms are not good for Evergreen content either. That was the first. My second is, I think there are a lot of fantastic business opportunities left when it comes to crowdsourcing of data. Of course, at Facebook, they crowdsource a lot of data, and they use it for targeting that. It’s a fantastic business proposition. If you look at the quarterly report, then it would mean you’re okay. But personally, I much more like companies like Waze, where you crowdsource the traffic information and deliver a great service for the customer. Based on that, I actually wrote a blog post saying I thought there would be a business opportunity for vertical social networks and especially for the big passions hobbies where you can actually crowdsource this data and deliver service that you cannot deliver if you don’t have this data. This was published back in the days by this Silicon Valley tech blog, PandoDaily, and I got a ton of feedback. I got feedback from Marc Horowitz, himself, from Sequoia, from Greylock, and many of the investors of Facebook that said, “Yeah, this would probably happen—not replacing general social, because there will always be a need for sharing pictures and whatnot. So I got great feedback. Based on that, I decided to create one. It wasn’t obvious that I would go for fishing, but that’s a different story.
Alejandro: So let’s talk about why you went for fishing and why you went for FishBrain.
Johan Attby: Having been a competitive cyclist, I looked into doing this for cycling first, but I decided not to pursue cycling because when I looked at the numbers, it’s not super big. Yes, it’s big, but it’s not gigantic or superglobal. There was already a company that had started their company a couple of years before called Strava, and they were quite good. They’re really good today. They were really okay back in the days, but it was mostly because I didn’t see the market being that big. And also, when it comes to Strava, they have expanded beyond cycling, so now it’s endurance sports, in general, so they have running, skiing, and basically all sports on the platform today. It’s a really good company today. This more or less happened by accident. I was doing research on hobbies. I stumbled upon an article. I believe it was in Forbes listing the world’s ten largest hobbies, and this is by spending, and guess what? Sportfishing was number one. There are more people running, but runners don’t spend nearly as much money as anglers do. So having been born in this little town in Sweden, I had been fishing since—it wasn’t my biggest passion, but I certainly know how to fish. I love to fish. I love to fly fish, so I could think like anglers, but still, despite that, I spent quite a bit of time doing research and avid anglers and see whether there was a business opportunity here, and I thought there was.
Alejandro: What was that moment where you decided that this made sense to go forward with FishBrain?
Johan Attby: I think that moment was when I interviewed a lot, maybe 50 avid anglers, asking them the same question: when, where, and how will you fish? Since I got 50 different answers, I thought this is exactly like Waze. One person can only drive that much. One person can only fish that much. If I somehow manage to crowdsource this sportfishing data and make it extremely granular, and I apply my favorite machine learning on top of this data set, I was convinced I could deliver a much better fishing forecast than the best angler in the world, which is basically how we monetize FishBrain today. Everyone told me, “This is not going to work.”
Alejandro: So that the people that are listening get it, what ended up being the business model with FishBrain, and how do you guys make money?
Johan Attby: It’s a community for people that love fishing, so people are around the platform to brag about their catches. They log their catches on the FishBrain platform, and when they do that, similar to Waze, we crowdsource, we gather a lot of data, so we not only have the location and species, we also have the weather conditions: Was it sunny? Was it cloudy? Also, humidity, air temperature, wind speed, wind direction, tide, moon face—25-some parameters in every single catch. Then we apply machine learning based on the status that we give users as a recommendation of when we’re out to fish. We have the community. Then we have these utility services that make an angler a better angler. We charge the customer; it’s a subscription model. It’s free to join; it’s a freemium model where you can start logging your catches, and take your place in the community, and engage on the platform. But if you want access to any kind of utility features telling you when, where, and how to fish, it’s a subscription, which you have to pay for. That’s how we monetize today.
Alejandro: This was your second company. In your first business, you were at it for about 11 years, so you learned quite a bit, especially when it came to team building. How did you go about building your team around this company?
Johan Attby: A lot of things are much, much easier the second time than the first one because you made so many mistakes the first time. I still make mistakes at FishBrain; trust me about that. I think all entrepreneurs will make mistakes because if you don’t, you’re not taking a big enough risk.
Johan Attby: The biggest difference here is I tried to get a bit more senior people. You know, when you’re young, you think you know everything, but then you realize you don’t.
Johan Attby: Especially in the second company, you realize there are so many things you don’t know, so I expanded a management team much earlier than in the previous company. I brought in more experts, of course, depending on how much funding you have but trying to bring in senior people earlier than I did in the first company. I definitely scaled this one much faster than I scaled the first company. It’s definitely not just because of me; it’s because I brought in people that are way smarter than I am, which is not that hard, earlier in the company.
Alejandro: And you already had the exposure to having experienced Silicon Valley and building and scaling in the U.S. Why did you decide to stay in Stockholm and execute versus doing it in the Valley, where you probably would have had better access to capital or to human resources?
Johan Attby: That definitely wasn’t an easy decision for me. I could have easily tossed a coin because I don’t think in today’s world, it’s not a place that you have to start for a company to be successful. I decided to go with Stockholm for a couple of reasons. First of all, I think it’s more obvious seven years later than it was when I made the decision seven years ago, but it’s definitely less competitive when it comes to getting talented employees because you want to have the best people working with the company if you’re competing against like an Apple, a Tesla, and a Google that can pay astronomical salaries. You can never compete with the salary when you’re a startup. That’s not the currency you have. You have to bring them in on the vision. I think that’s actually much easier—it’s getting increasingly hard, also, in Stockholm because today you have Spotify, Klarna, iZettle that acquired by PayPal. It is getting increasingly competitive, but I like your people in—I would say in Scandinavia and Germany. They are super good when it comes to product—not when it comes to sales and marketing. We Swedes are awful at marketing. We do. No matter whether we’re talking about Spotify—I would say everything. We have to more or less bring in Americans. My CMO at the company, Lisa, is American. She’s brilliant. A Swede would never be able to do that, for sure. But in the early days, it’s a lot about building the right product and making sure you get product/market fit and making sure to get a product that’s good enough that some cohort users will appreciate and continue to use. I think we’re really good when it comes to product and engineering. At the later stage, then you add some marketing on top of that. I think this is a really good place. Also, we have a long heritage with it comes to design. We are a consumer-facing company, and design is so important today. It’s not just about delivering the best features; it’s also about UI UX, making sure that the sign is in place, that it’s user-friendly, users can quickly use the journey, understand the product, and they can use it. Spotify spent a lot on UI UX. It’s not just about the features set and the content. It’s also a product that starts immediately, it’s user-friendly, and it’s easy to get started with.
Alejandro: 100%. In your case, how much capital have you guys raised to date?
Johan Attby: In total, we’ve raised a little bit over $70 million.
Alejandro: $70 million—that’s quite a lot of millions, especially for being in Sweden, Johan. So what’s the approach to raising the money there versus the U.S.?
Johan Attby: The way it looks today in this ecosystem, there’s enough capital available locally for first, a Seed Round, and even for an A Round. But then, when we hit our B Round, we had to look outside of Stockholm because also what we’re building is basically a vertical social network, and now we launched a marketplace on top of this. It’s high risk. I still believe that Silicon Valley investors are the ones that have the biggest appetite. They can write bigger checks, and they have bigger appetites for risk than in Europe. When we raised our Series B, I had to look outside Scandinavia. I even had to look outside of London. In my Series B, I managed to get SoftBank on board, and I also managed to get B Capital onboard with the Facebook co-founder, Eduardo Saverin, as one of the LPs in the B Capital Fund. He’s a huge believer in social going vertical, and also commerce going vertical, but especially social going vertical. When we came to our Series B, I had to start raising money from outside Scandinavia and also even outside of Europe.
Alejandro: When raising money for a social network, and then as you were alluding to now with the marketplace built on top of that, what were some of the expectations that you were encountering from one financing cycle to another one? I’m sure that you filled a very different lens or a different way of analyzing the opportunity when you were dealing with more of the international-type of investor.
Johan Attby: Yeah, and also, we had been through three different stages in the company, so fundraising has been different for different stages. We also, like Spotify, had competition when we started. We were not the first fishing app. We had 15 competitors and American companies when we started, so we couldn’t monetize first because they are a very strong network that affects what we do. We knew we needed to be the first ones to get the tipping point; hence, we didn’t monetize for the first three to four years—no money at all. Then when Visa looked at FishBrain, it was all about retention, daily or monthly, how did it retain, what did you do on the—the lens that they looked at was all engagement metrics. That was during a time when it was possible to raise money on an engagement metric. It’s super hard today. It’s really, really hard to raise money simply on engagement metrics today. When we came to our Series B, then we had launched a subscription. We had some subscription data, so that was more on what’s the conversion from an installed user to a regular user to a paying subscriber, and what does churn look like? We didn’t have that much on data, but I think we had 12 months or something of churn data. That was more about the economics of the subscription. They, of course, looked at the engagement numbers. When we raised our round now, with $32 million, that was for building up the second revenue stream, which is the market base, which we had launched before we raised the $32 million round, but we had very early data. It’s not a big business for us, but it’s growing nicely. That was based on subscription going, positive unit economics on the subscription side, but adding a second revenue stream that we are in the process of building out and scaling right now.
Alejandro: As you guys are thinking now about the future and what things hold and what’s in store if you had to go to sleep tonight and you wake up in a world five years later where the vision of FishBrain is fully realized, what does that world look like?
Johan Attby: My vision has always been to become the platform for the industry. Today, we are an app for anglers, and I think that’s where we needed to start because that’s how we crowdsource all the data. But my vision for the company is really that we want to be the platform that the entire industry is using. We’re definitely getting a step closer to that now. When we launched a marketplace, we had 300 brands, most of the biggest brands in the industry are on the platform, so they are also starting to use FishBrain as a tool for them as well. We just announced that we have a partner with Garmin, and they’re the leading manufacturer of Marine Electronics, so now, we collaborate with the hardware. With FishBrain, I know nothing about hardware. We’re not going to build hardware for FishBrain, but anglers use a lot of hardware. They use electronic devices, and I want to be the platform that integrates with the hardware. This will take time and cost a ton of money, build a lot of money to go from being an app to become the app for the entire industry. Also, today, we haven’t really started with geographic expansion yet. We have 82% of our revenue and MA used in North America, and fishing is global. It’s big in Brazil, most countries in Europe, Russia, China, Australia. It’s very global, so we definitely need to start with geographic expansion as well.
Alejandro: Let’s say I put you into a time machine, Johan, and I bring you back in time to that moment where you were in Santa Fe taking a look at all the people doing companies. “I want to do it myself, too, and take a crack at this and maybe do this in parallel with doing my Ph.D.” If you had the opportunity of giving your younger self one piece of advice before launching a company, what would that be and why, given what you know now?
Johan Attby: I think the advice would definitely be to—it took me 11 years before I got an exit in Tific. Now, I’ve been with FishBrain for seven years. The advice would be to go with something that you personally and strongly feel about. That wasn’t really the case in the first one. Come on. This is tech support. It’s not like, “I want to solve all the world’s tech support problems.” That’s nothing that I’m personally passionate about. Was it a good business proposition? Yes, it was, but it wasn’t something that personally made me passionate, which makes it really hard. In the first company, Tific, I had two near-death experiences. Luckily, we haven’t had any near-death experience at FishBrain. Running a company as a founder is always a rollercoaster. Look at the most successful companies in the world. Most of them have had near-death experiences. If you truly believe in what you do, if you’re at the personal level, making money is not the end-game. It’s actually doing something that you’re passionate about. It makes it easier on the bad days in the office because there will be a lot of bad days in the office. Trust me on that. It’s much easier to overcome these bad days if you’re actually passionate about what you’re doing. And also if you can share it with people that share your passion. Bring in people; bring in co-founders. Yeah, it looks nice to have 100% on the cap table, but I don’t think that it’s much better if you have a couple of co-founders, and you can share the bad days together doing something that you’re passionate about.
Alejandro: 100%, and as they say, “It’s better to have 1% of a billion than 100% of nothing. Yeah, good stuff. So Johan, thank you so much. For the people that are listening, that want to reach out and say hi, what is the best way for them to do so?
Johan Attby: The best is you can send me an email to firstname.lastname@example.org. That’s the easiest way to reach me.
Alejandro: Amazing. Johan, thank you so much for being on the DealMakers show today.
Johan Attby: Thanks a lot for having me.
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