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Originally Posted by fishsticker
Great post John! Wow...I'm currently in the process of trying to raise venture capital myself and have a lot of questions. If you would:
Wow, lots of questions... I'll do my best
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Originally Posted by fishsticker
1. Milo, bringing the store inventory to the online world. That's quite a tall order. What were your ideas of making that happen? What were the key strategies to making that happen?
Well, ultimately we figured we'd need to end up where we are now -- with individual biz dev deals with all of the merchants, but when we were just starting down the path we knew it would be a hard sell to call up and say "hey we're this startup that you've never heard of, please give us all of your data" so we knew we'd need another approach -- fortunately we were able to get enough data out of the various big box retailers web sites in the beginning that we could put together the initial site without having to do the biz dev deals. Since the big box retailers cover the vast majority of the country and product catalog that was enough to get started.
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Originally Posted by fishsticker
2. What were some of the challenges you faced when trying to raise series a and how did you overcome them?
As I alluded to earlier, we actually had a relatively easy time raising money, especially considering the climate at the time, so I don't have a lot to say on this... I guess the two things I could mention don't directly have to do with the actual fundraising efforts but the first would be the process I described above of getting to a specific idea that was good enough to raise a series A for, and then the second (related) thing is getting the prototype good enough that we felt the time was right to raise a series A.
In our particular case we iterated on the UI of the site until we thought it was good enough and then focused on sustained traffic growth which we accomplished through SEO (the good kind, not the bad kind).
By the time we went to raise a series A we had reached 1m unique monthly visitors which was a nice round number and the graph to get there was a pretty nice hockey stick.
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Originally Posted by fishsticker
3. How large was your team prior to series a?
I don't remember exactly but I would guess somewhere in the 8-12 range.
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Originally Posted by fishsticker
4. Were you launched to the public prior to series a?
Yes.
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Originally Posted by fishsticker
5. If so, how was it received and what were revenues like before series a?
I am not sure if I can talk about revenues or not (I'll ask) but we raised the series A based on visitors and product and not on revenues. We actually intentionally avoided a lot of monetization early on (e.g. we could've put ads on the site but didn't, we could've activated more affiliate deals then we did, etc) because we didn't want our valuation to be based on revenue (because then you get stuck in this game where you have to have ever increasing revenues and you get focused on that instead of building the best possible product).
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Originally Posted by fishsticker
6. What was your initial Angel investment range? Was that enough to carry through your first few phases?
Yes, as mentioned above the ~$950k number thats reported on a couple of sites is in the right ballpark. At each stage (seed->angel, angel->series A, series A->acquisition) we still had plenty of money in the bank from the previous stage. We were relatively conservative about making sure we always had plenty of runway.
This was driven mostly by Jack but if it were up to me I likely would've taken the same approach due to my experience at the startup I worked at during the bubble which suddenly found themselves with only 1 month of payroll left and forced to do a fire sale to avoid layoffs.
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Originally Posted by fishsticker
7. Was your team confident in executing the idea prior to a series a and even if no VC was interested, Could you make it work?
One of the things Jack always said was that it's our job as entrepreneurs to create options for the company. In this vein we always had a primary plan (e.g. raise series A) and one or more backup plans (do a follow-on angel round, throw some ads on the site and crank up the affiliate machine, etc).
Overall we were always confident but part of that confidence probably came from knowing that we always had a backup plan.
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Originally Posted by fishsticker
8. After funding, what was your game plan to make some of the big boys interested in what your company had to offer? Or did they find you?
Well one of the major reasons we wanted to raise money was to be able to crank up bizdev efforts and start trying to build out a distribution network. To maximize the bang for the buck of these efforts we went after the big guys (like eBay among others) first to try to get them to become a distributor of our data.
As a result we wound up with partnerships with quite a few big companies. With all of the biggest (like eBay) the word acquisition came up fairly early on but always in a very casual way. As time moved on though the word would come up more and more often and eventually it would become obvious that the partners were serious. We had talks of varying degrees of seriousness with several big players before things started to get really real with eBay.
The whole process reminded me very much of dating -- in the beginning you're just flirting and maybe you have a couple of different girls that you are talking to but then things start to get serious with one or another and you have to decide when to stop talking to the others or if this is the right one for you, then you start to get to know each other better, but you're still holding back some info and trying not to fart in front of each other, etc. and then things heat up more until they pop the question... then you start sharing more and more intimate details to make sure this is what you both really want and then finally the big day comes and there's a big party with all your friends and then you go to vegas for the honey moon.... or at least that's what we did
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Originally Posted by fishsticker
9. This is a web venture, and anything e-commerce related is super saturated, super low margins. What were some of the challenges you faced when trying to show the uniqueness of the product/service/website?
Well, one nice thing about web ventures is that they are (relatively) cheap to build, so we didn't have to deal with inventory, physical locations, call centers, equipment, etc.
One nice thing about e-commerce is, as I've mentioned before, the monetization is essentially a given: if you can help people sell more product (or service) then they will happily give you a cut to keep doing it.
One of our advantages in this regard was that the average sale price in the store is much higher than on the web -- retailers are able to upsell much more (you buy a plasma tv but you also get the warranty, a blueray player, a power strip, some hdmi cables, and a coke and a candy bar at the register) ... so retailers would definitely prefer that you send them foot traffic than that you send them online traffic.
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Originally Posted by fishsticker
10. How many developers did Milo have?
When we sold I think the team was 25 and of those almost all were engineers except for maybe 6 or 7. We were a very technology/engineering driven company.
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Originally Posted by fishsticker
11. Most important question! How did you spread the word to attract an audience at launch?
As I mentioned above it was primarily via SEO but we also hired a PR firm and they helped get the word out to all of the tech media outlets as well as doing some blogging and infographics that helped draw attention as well.
As an aside our 3rd co-founder, Ted Dziuba had in the past been a bit of a silicon valley troll, going so far as to run a website called uncov that basically just ripped on bad startups. As a result he had a sort of friendly professional rivalry with Michael Arrington from Techcrunch so that probably helped get us some coverage there.
My favorite was this:
http://techcrunch.com/2010/03/11/mil...in-image-form/
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Originally Posted by fishsticker
I have a ton more questions, but if you have the time for the above that would be awesome.
ooo... last one ... Holdem, Omaha or some other type?
I love all forms of poker... but my best game is still NLHE followed probably by PLO8. I've been out of the game for the past couple years while working on Milo but I hope to have a triumphant return soon