Tech Brew Ride Home - (Portfolio Profile) Check-in With Rownd (How To Raise A Round Right Now)

Episode Date: May 30, 2022

A checkin with Rownd about what it's like to close a round right now, and what actually being on stage at YC Demo Day is like. To book at meeting with Robert at Rownd: https://calendly.com/rob-rownd/mutant-podcast-army Rownd helps companies register and retain more users through frictionless sign-in across all of their websites and apps, with a simple code snippet. We let our customers choose how and where authentication happens, killing the static login page forever.  Rownd link: https://rownd.io Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. We've got a quick sort of check-in with a portfolio company from the Right Home Fund for you today. We've got Robert Thalen from Round. If you'll recall, they were the ones that recently went through Y Combinator.

So let's start there, Rob. I appreciate you coming on to give us a check-in. But also, tell us how YC Demo Day went. Yeah. Last time I was here was about two weeks before Demo Day. and we were just getting ready for fundraising, and we went through an entire process, and I'll tell you, it was pretty amazing.

Like, YC Demo Day is still everything that they talk about. Like, there's 420 companies going through it, but still it was, you know, one minute pitches, one slide pitches, so many cool companies all around you. And then the entire purpose of Demo Day is to get investors to wanna talk to you. Like, it's like a little introduction, a trailer. And that's exactly what a way.

was. We had over 120, like, likes or like upvotes. And each of those upvotes, like, kicks off an email that is like, hey, you guys want to talk to each other. And like, vast majority of those turn in the meetings. And yeah, it just really kind of kicked off for fundraising in a very positive way. And we ended up closing that round in just a few weeks afterwards. But all the prep for it, like so many, so much time, like probably 15 hours of time spent on one minutes. Yeah, it was a great experience. And it was just fun. to be around other people pitching their product. And we're all in like a Slack channel,

just giving each other encouragement. And it was just really fun to be a part of that. And it really was kind of a huge graduation. Well, take it from someone that did 12 weeks at TED for one six-minute TED talk. Just give me the feeling of adrenaline, the feeling of like, how did you, like, I'm sure you had it memorized. You probably repeated it, you know, 2,000 times, but what was it like in the moment? Really, nothing can really describe in the moment because you can practice all you want, but it is live.

Like, I'm not sure people really realize that. It's like, it could easily be recorded, right? So, like, there's a world where, like, you record this and they're just, like, put one after another. But this is alive. Like, you've got to slow down and talk and stay focused. And you're looking at the camera, not at the. the screen, so like even if you had words on the screen, you couldn't do it without looking like you are reading.

But yeah, it's great. And I'll tell you that the thing that really got me through it was, like, the previous speakers were still on the screen. And, like, they were, like, engaging and, like, nodding and stuff. And that really kind of made it more personal for me, who was, like, an extrovert that likes to talk and look at people. Like, even right now, I'm looking at you. Like, you know, trying to see you're nonverbal.

So, like, having someone, like, do this and, like, laugh when I made a little joke, like, that really, really helped me get through that. But yeah, it was one minute and then check your email and you have 85 emails. It's like, oh my god, now the real work begins, which is to turn those emails into meetings, to turn those meetings into checks, and to wrap up your round so you can get back to work. Well, a big secret about TED Talks is you never see the ones that completely blow up, and I've been in the audience for ones where people, you know, just completely blank and you never see those, but also some of the most famous ones that you've seen, they're masters at editing, and they train

to leave room for edits. So even some of the best TED Talks you've ever seen have all had issues that you'll never know about because of editing. But, well, congratulations on that. And congratulations on the raising the round. So you closed your seed round in early April, right? So tell me about the process.

Yeah, we went into the seed rounds. We started just with like some angel prior to demo day and we came into the like post demo day seed round with about one third of our round filled we were aiming to raise two million dollars and we got there and we did a rolling around which is really important so when you talk to an angel at the end of the conversation I would just say do you want to invest and they would say yes or no and if they said yes I would send them the safe they'd sign it and they would worry the money like it wasn't like I had to get to this benchmark and

then we circled around and get everyone right and that was what was like described to us as a great practice and we really took full advantage of it. And it was so important because then when we sort of talked to the larger VCs, you know, after the first few meetings, we were two-thirds away full and those conversations were really fast. Like, like, we talked to like, you know, who ended up being our lead investor and like, we talked on Thursday, we had like handshake on Friday and like we were doing like, you

know, safes the next week. And it just happened really, really fast because at that point, we were two-thirds way full. We had met our like cockroach mode. the survival plan, and now we were just, you know, just adding the extra bits to give us some momentum over the next few months. So, yeah, it was quick, but like,

so many meetings. Like, Ryan, I, uh, I still, like have flashbacks to it where it was basically like 9 a.m. And I definitely did it wrong at first, right? Like, they, they tell you to like leave breaks and, like, you know, only have six or seven meetings a day, maybe eight. And on some of these days I had 16 or 17 meetings, it's literally back to back.

So, like, I would all give them, like, the one of that pitch, and we would, like, talk a little bit. And most of it was just conversation all about it. It was so, so much. But I'm really glad I did that because I was done. And when you're done, you're done. And then I get to say no to a lot of people, it's just kind of fun. Like, like, the proudest thing I think of fundraising for me is that there's about $2.5 million that I said no to. And that was because we met our goals.

We met what we needed to do to get to the next round, plus some safety in case the economy is doing what is doing. And we're in a good spot. That all required some math. And we had to really think about what are our goals to get there. Well, let me just a little bit of background. You're mentioning a safe for those that don't know. A safe is a fundraising agreement. It's a called literally it stands for simple agreement for future equity.

It's a really simple one to two page thing that actually My Combinator came up with that for a specific specifically, specifically, for seed and early stage companies where the idea is, is you put your money in now and then depending on when an actual equity round is raised, your money goes into that at the terms agreed. But you're also mentioning, you raised $2 million, you could have raised more, but let's go into your motivation for that math because when you're raising money, you're giving away equity in your company. And so you're trying as the founder to maintain as much equity as you can and not get diluted down. So just, you know, to the degree that you're comfortable, tell us about some of your thinking

in terms of turning down that extra money. Yeah. Go ahead. Yeah. And YC really kind of really makes you aware of this, right? Every single founder they brought in, I was talking about the thing that they regretted most, it was taking too much money to early on, believing themselves too much. The truth is that folks can say, hey, this is going to extend my runway, but it's human nature.

We'll just spend more faster. Like, you're not going to actually extend your runway with the extra cash. So all you're getting is you're chasing ideas that don't have any like market validation. You're doing little science projects or you shouldn't be. Instead of focusing on the one goal we have. And that's to find and harness product market fit. That's all we are doing. And if I have too much money, I'm going to start working on like 10 different little projects

and hiring a bunch of people, hiring a marketing person. Like I don't need a marketing person right now. I am doing that. And if I delegate that to someone else and they're just going to bring people in, we're just wasting money. So we now have a six-person team, six full-time people. Four of them are developers. One is Rachel, our design co-founder, and then there's me, right? So this is our team.

This can be our team until we find product our fit. Our burn is about $75,000 a month. It's attracting all MRR. and all other contracts. We really spent a lot of time finding great developers that we could afford. And being in a position where we now have between 28 and 34 months a burn. And that's assuming no growth. Zero.

And yeah, we're growing. And our goal and like why see, you know, shot at this nice little email and talks about, you know, being default alive or default dead. Like we're default alive because we have a long runway. But we have got to increase that that's, you know, that's monthly growth rates. So we get the profitability as fast as possible and start to, you know, really clamp down on product market fit, which is my entire job, right? That's all we're doing is building products for stuff that people need. Sorry, building products and stuff that people need.

And it's been really focusing. But yeah, we wanted to raise $2 million to want enough runway. We wanted to be able to survive whatever's coming. We also got this government contract that's going to add another $750 to that. So like we're in a position to survive. Yeah. And that's all this is, right? We're going to be around in two and a half years, no matter what happens in the world.

If literally nothing else happens, you guys can, you have two and a half years to tinker and hope something lights on the match paper. But speaking of, we've alluded to this, the current environment. And so, you know, you're happy to be in that space where at least you know what sort of runway you have. have you heard anecdotally maybe from, I'm not asking you to out anybody else or blow up anybody's spot, but have you heard from other startups that shit is going down and things are tight? Yeah, yeah, yeah, yeah. The friends at like later stage startups that you're probably like reading about in the news

that are now looking at, you know, that B round is a lot harder, that C round is a lot, lot harder. Even companies that have product market fit, that have these giant growth rates are having problems right now. And it's starting to like trickle down into, you know, the Series A and some seed. Like seeds are still kind of going once in a while. But and they're two different kind of like growth mechanisms. Like, but yeah, why see it shot out email that was probably like roughly like roughly like replicated everywhere across the world that everyone is seen now?

Basically says like be prepared for six to 12 months without fundraising. And that's really, really hard for a lot of precede companies that were like focusing on getting that benchmark in six months. Everything is now about getting to a place where you are in control, where you are profitable, where you're at least break even so you can survive. And yeah, it's really turns, the overall environment has turns kind of dark and stormy. And yeah, it's not pretty out there. Well, congratulations on giving yourself a lily pad that will hopefully last two and a half years. But, you know, hopefully you won't need it because you're going to, like I said, the match paper is going to light fire and it's going to be great. One more thing that we were talking about offline, something about Tribeca film?

Yeah. Okay, so Round is that Tribeca film? the film festival or what are we talking about? We are the login and sign up and authentication provider for Tribeca Film. So if you go to the festival this weekend, you can go, or not this weekend in three weeks New York City and you go to Tribecafilm.com, you will get your tickets by logging in through around. If you buy tickets for Tribeca, we automatically create accounts for you without even having to

log in. We are dealing with them and they're a great use case that shows off exactly how to how seamless and frictionless login and sign up can really work. Like at no point do you feel like you gotta sign in. We just kind of make it just flow. And then like after you buy your ticket, two months later, you come back and check out your ticket right there on Tribeca. And you can like things on Tribeca and, you know,

curious for it into the future. But yeah, that was a huge opportunity for us. They are amazing partners. The biggest day of round's history was about three weeks ago when Tribeca put their single tickets sales on, they had 250,000 people visit their website over like six hours. And every single one of those people got to see round in the hub in like the little corner. Like we're just kind of over there hanging out.

And every single one of those people that bought a ticket, got logged on with around. And we somehow stayed up. Like we stayed afloat in this crazy time period to include when like Taylor Swift was announced. And 10,000 people a minute were coming to the websites. That was about five times more than we anticipated, which was already like, 20 times more than we've ever done in our lives. And yeah, it was just a great moment to, like, be a part of something like that. And know that's like, Tribeca trusted us to do this, to be a part of this entire process

that so much of their entire festival lies upon. So, yeah, it's been a great partnership. They're an amazing team. And, yeah, we just really enjoyed working at them. And their ticket provider squad up just does amazing work as well. And, yeah, it's been a great journey for us. But it really shows out what we can do. And, yeah, we've really become kind of like film snobs now.

And we're definitely looking forward to the festival coming up here in three weeks. Well, see, this is why we're doing this. These are the stories that 20 years from now, you know, when Round has been a huge success, and you're a big mogul that won't take my calls anymore. Like, the future Internet History Podcast historian will have these sort of stories here. Like, Round was born at the Tribeca Film Festival. I mean, you know, people remember that that Twitter took off at South by Southwest that one year, whatever. You know, so right, this is why we're doing this.

People are listening along in real time as your entrepreneurial legend is being born right now. So congratulations. Congratulations on the round. Congratulations on YC. Congratulations on closing the round and having some safety margin. Robert, come back anything. time and, you know, to the moon, I guess, right? Absolutely.

And do one of it, have I made a quick ask? Ask, yes, please. Sorry, I forgot that. So my quick ask for this time around is if you work for a company or a part of a company that need, that are starting to like batten down the hatches and you're like, we need every dollar in account. You have got these holes in your marketing funnel. They're like, I don't know where they're going.

And people are falling off at this old, staticy logger. or sign up page and I don't have enough money to fill the top of this funnel anymore, give us a call. Or I will once again, like, make a special link for you to, like, set up special time for your listeners to call up. Like, at least, we can chat about it. Like, I would love for you to use round, but if not, I love to chat about, like, off and love to chat about funnels and love to chat about anything to do with, like,

profile creation and registration. So please grab some time. last time I did this, we talked to like 25 people, and they were just awesome. And we learned so much. And that's how we grow is by Kevin's Conversations. Well, I will put that link to sign up to talk to Rob in the show notes, but also if you need to talk to around, you can also get in touch with me. All right, till next time. Rob, thanks so much.

Thank you so much. Talk to later.