Nearly a decade ago I was two years into starting a new company, one that was growing quickly, but at the same time struggling with all the classic problems of a startup. We needed to raise more capital, we needed to hire more of the right people, and we needed to retain and motivate the people we already had brought onboard.
But more than anything, I was personally struggling with whether I could keep up the pace. This was my fourth startup, and I’d been at if for nearly 20 years. At that point in my career, I had serious questions about whether it was worth the time and energy, given that the pay was low (gotta keep burn down) and the hours were insane. I had three young children, all in expensive schools, and a mortgage to worry about. I wasn’t making enough to cover our monthly nut, and I wasn’t certain that the upside of any startup – even one I believed in with all my heart – was worth potentially failing my obligations to my family. After all, I was reasonably established, and I could always go get a higher-paying, more stable job.
So one morning at my kitchen table, I poured out my concerns and dreams to a close friend, Chris Albinson, who just happened to be a venture capitalist. I explained my dilemma – my responsibilities as a father and husband were in direct conflict with my career as a startup founder. I remember Chris asking what I’d need to keep my focus on my startup. At that moment, the reality was, I needed cash. I needed to be able to look my wife in the eye and say “Don’t worry, if this doesn’t work out, we’ll have enough to cover living expenses while I look for another job.”
Chris asked me to tell him more about the business I had started (it was Federated Media), and then right there, over the kitchen table, agreed to lead a financing, but with a twist: A small portion of the proceeds were distributed to me, the founder, in exchange for my personal shares of the company. Chris explained that this was called a secondary stock sale, but I didn’t care. For me, it was a lifeline, and a way to keep doing what I loved to do.
I hadn’t thought much about that story for some years, but today Chris and his partners Mike Jung and Ken Loveless are announcing the birth of a new kind of venture firm, one that has at its heart the “kitchen table ethos” that defined Chris and my partnership nearly ten years ago. It’s called Founders Circle Capital, and you can read all about it here.
FCC was born of the insight that companies are taking longer and longer to get to a traditional “exit” of an IPO or sale. For Federated, that process took nine years, and its spinoff, sovrn Holdings, is now entering its tenth year (it’s doing very well, I’m proud to say). When companies take that long to provide a return on the early invested capital or sweat equity, serious misalignments can develop between the original founding team and later investors and partners. It’s one of the great headaches of any CEO running a late stage startup – figuring out how to please all the different stakeholders who occupy an increasingly tangled cap table.
FCC was created to help align founders, investors, the company’s board, and its management team. I’m proud to say that I will play a part in the new company’s story as Chairman of its “Founder’s Circle,” a group of extraordinary founders who are in one way or another connected to FCC’s mission and community. It’ll be a safe place for founders to talk about their personal and professional journey – a virtual kitchen table of sorts, welcoming and intimate.
Companies with breakaway growth look awfully fun from the outside – but having been on three such journeys (Wired, The Industry Standard, and FM), I can tell you it’s anything but easy. In fact, as I look back on the most stressful years of my life, they map to the times when my companies were growing the fastest. Back then, I felt deeply alone, with almost no one to talk with. It’s my hope that through the Founders Circle, we might be able to change that just a little bit. Congratulations to Chris, Mike, and Ken on the launch, now let’s get to work!