A Silicon Valley Bootstrapper Tells All

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Loren Feldman:
Welcome, Sharon. It’s great to have you here. I don’t often get to talk to Silicon Valley entrepreneurs. You have a slightly unusual Silicon Valley story, which is why I’ve been really looking forward to this conversation. Maybe you could start by telling us about your first experience with venture capital, which came with a company you started during the dotcom bubble years.

Sharon Gillenwater:
Sure, and I’ll just preface that by saying even though you position me as a Silicon Valley entrepreneur, I feel like I’m only that by virtue of where I’m located. I never fit into that world or had access to that world or those resources. And despite trying to break in, I was repeatedly shut out—which didn’t stop me, but I just wanted to make that clear. I’m not part of the “in” crowd here at all.

Loren Feldman:
Which is exactly why I wanted to have this conversation with you. I use that term only because I believe that’s where you’re based and have been based.

Sharon Gillenwater:
Yes, that’s true. I’m right in the middle of San Francisco. And that was a really interesting place to be back in the late ‘90s, during this big dotcom boom, the first major wave of disruption driven by the internet. And I did start a company in 1999 called Fidget.

And I started that—it was kind of a family endeavor—with the help of my sister-in-law and my brother-in-law, who both had a lot of executive experience. And my sister-in-law was dabbling in the early internet, and she was one of those early domain-name speculators. She bought up a bunch of domain names. But at the time, she was an executive at Sony and didn’t have time to do anything. So she had this idea for a hub or portal for email newsletters, which were really coming online in those days. And so she said, “You should go build it.” And so I did. She had the domain, and I built that out. It was a family business.

Loren Feldman:
You were kind of 20 years ahead of Substack.

Sharon Gillenwater:
Yes. It was more email newsletters for entertainment. We had our own branded newsletters, but we started syndicating content from the print world. So you could get Dear Abby every day in your email box or Miss Miss Manners or Art Buchwald and all those kind of old-timey print columnists.

And so we bootstrapped it for the first six months or so. And then it kind of fell into our lap—this incubator based in Burbank that had a bunch of ex-Disney people attached to it. So they understand content and entertainment. They offered us $3 million dollars for a little over 50 percent of the company, which was a great valuation. And so we took it. And another attractive thing about incubators is they do your accounting and your HR and your legal and all that stuff that’s not core to your business that you may not have the expertise or interest in doing. So it sounded like a great deal for us.

When we raised it in April of 2000, the NASDAQ was already in freefall. So we just thought we were so lucky to have been able to do this. But in the end, that decision killed the company. Because when the crash lasted longer than was anticipated, the CEO of the incubator was out, and they brought in a new CEO who only wanted to focus on biotech companies, which of course, we were not. And they ended up shutting down the company because they had a majority stake. So there’s the first red flag.

And they tried to get out of their contract by suing us for fraud, and so we ended up settling with them. But because we had started to make these big investments in long-term server hosting contracts and office space and all these things, we had to shut it all down because we could not afford those expenses without that $3 million. So it really killed the company, because I know I could have bootstrapped that thing through the crash, and it was an unfortunate lesson. So when I started my second company in 2008—

Loren Feldman:
Let me stop you there for one second. The basic business model of a venture capital organization is to throw 10, 11, 12 companies against the wall and hope that one sticks. And to my mind, it’s not just that the other companies don’t go on and flourish, but what gets lost in the conversation a lot, I think, is that many of them would, in fact, have done well if they had not taken venture capital—which means, I think you can make the argument that venture capital, kind of by definition, destroys more companies than it builds. You seem to have had that experience. Do you think that—were you unusual? Or is that common?

Sharon Gillenwater:
That is a bold statement, but I don’t know that it’s not true. It might very well be true. I don’t think I have enough experience to know that. But what I do know—and I’ve done a lot of investigation into this—is that bootstrapped founders very often have much better exit outcomes than those who have raised venture capital. And this is something that I didn’t really understand until two years after I sold my own company. And how I discovered this is, I had a viral video where I talked about how much money I made, when I sold my company for $25 million—how much I paid in fees, how much I paid in taxes, and how much I walked away with. And that video went hugely viral.

And one of the audiences that showed great interest in the video were venture capitalists and venture-backed entrepreneurs. And at first, I didn’t understand it, because I thought, you know, “I’m not in this inner circle. Why do they care about little old me and my little, tiny $25 million exit, which seems like small potatoes in Silicon Valley?” And it turned out, after I started talking to people, the reason why it captured everyone’s imagination is because, as a founder, you can raise $50 million and sell for $200 million—so around 10 times as much as I did—and walk away with a lot less money than I walked away with.

Loren Feldman:
I want to come back to that viral video, but let’s go through the story. Tell us how you wound up starting your next business.

Sharon Gillenwater:
Yeah, so after the disaster of Fidget, I took some time to regroup. I had a second child in that timeframe. And I took a job after 9/11, because I was desperate—the job market had still not recovered from the dot bomb, and then we had 9/11 after that. And so I took on a terrible job. It’s kind of unbelievably hilarious. But after that job—I worked there six months—I decided I’m never working for anyone else again.

So I hung out my shingle as a consultant for whatever anybody wanted me to do. I was good at writing and communicating. And one of my former employees from my first job in the city contacted me and said, “Hey, I’ve started doing marketing consulting for big tech, and I think you would be perfect at it.” And I said, “I don’t know anything about that.” And he said, “It’s okay. It’s great. You’re gonna be great.”

And so we started. We became a little duo working for various agencies, working for companies like Intel, and Cisco, and PeopleSoft, Sun, all the biggies. And I’d started to develop this expertise in helping those companies effectively communicate with and engage the C-suite at their customers. Because tech deals were getting bigger and bigger. They were starting to attract the scrutiny of CFOs and chief information officers and even CEOs. And these tech companies did not know how to approach and have conversations with those folks. So I started coaching sales and marketing teams on this. And before too long, after a few years, I was kind of the go-to person for this type of work.

Loren Feldman:
How did that happen, Sharon? Did they just come to you and say, “We’re having trouble reaching the C-suite. Can you help us?” Or was it your idea that these companies were missing an opportunity, and you sold them on the idea?

Sharon Gillenwater:
It was both. It was both the push and the pull. At the time, I was really focused on high-level events. These companies spent millions every year on trade shows and small summits designed to attract higher-level C-suite players and SVPs and the like. And they were having trouble getting people to come to these events. And I could see why: Because they were only talking about themselves, basically. They weren’t making it about the audience.

And then I did a whole research effort where I started interviewing people who worked for C-suite leaders, and I even interviewed some C-suite players themselves to figure out what attracts them to an event. Like, what are the events they go to? And why? And how do they evaluate all the invitations they receive? Because they do receive many.

And so, I was able to create a body of research that said: This is how you get C-suite people to your events. This is what they want. This is what you talk to them about. And I developed a point of view that it’s really one-to-one marketing. If you want the chief marketing officer of Procter & Gamble to come to your event, you’d better make it a one-to-one value proposition for him or her.

And how you do that is you research them. You learn about them. You look for anything they’ve said publicly about what they’re working on, or what they’ve done in the past. And you approach them and you say, “Hey”—and by the way, you have to have your CMO or your CEO approach them. It can’t be some salesperson. You say, “Hey, I loved what you said about X, Y, and Z last year. This really resonated with us because we’re doing A, B, C. We’re having an event, and we would love to have you come and share your story.”

So it’s a hard thing to do. It’s very time consuming, but it pays off. Everyone wants to just make everything super easy, but it’s not effective if you just send them blanket emails. They’re not going to respond to that. But the core of it, to be effective, you have to know a lot about them. So I developed this template for an executive profile that was like seven pages long, very detailed, very current, and connecting the dots between company initiatives and that person’s role.

So even if you didn’t have them saying anything specific—maybe they’ve never given an interview—you might have the CEO saying about the marketing team, like, they’re gonna spend 80 percent of their budget this year on personalization initiatives, right? So that’s something you can take to that CMO and say, “Hey, we saw your CEO said this. Our solution helps. It would help you do exactly that. In fact, your competitor is using it. Would you like to have a conversation?”

Well, it’s that person’s job, per the CEO, to explore that. So they almost can’t say no to a request for a conversation from someone who says they can help them with that. And so this is the kind of consulting that I was doing for a number of years. And at some point, I thought, “Hmm, everyone is chasing the same 2,500 people at these Fortune 500 companies. What if I put these profiles in a database and sold a subscription to the database?” So that’s how it started. That’s how Boardroom Insiders started. And then it evolved and was enhanced over the years. But I started the company in 2008, and then we sold it in 2022.

Loren Feldman:
One of the things I enjoyed about your book is that it’s nothing if not painfully honest, in certain ways. You’re the only entrepreneur I know of who I’ve seen compare his or herself to Elizabeth Holmes, in terms of trying to fake it until you make it. Tell us about that.

Sharon Gillenwater:
Yeah, and by the way, one of my closest girlfriends read that, and she said, “That is ridiculous. You need to take that out of the book. You’re nothing like her. You’re not a fraud.”

Loren Feldman:
Well, the truth is, you did deliver. So that was different, but you were figuring it out as you went. Correct?

Sharon Gillenwater:
I did deliver. And I wasn’t playing with the dollars of some of the most famous people in the world. And I didn’t have Henry Kissinger on my board. But what I did do, and why I did compare myself to Elizabeth Holmes, is when you create a database that has these incredibly detailed profiles that are very expensive to produce, you can’t just launch with a database of thousands of profiles, because you can’t afford it. So my early customers would find the website online, and then they would contact me. And it was just me, at that point, and some contractors, and they’d say, “Oh, do you have a profile on this person?” And, you know, they couldn’t see what I had and what I didn’t have. So I would just say, “Oh, yes, I do. But you know what? It hasn’t been updated in a while. So let me refresh that a little bit. And can I get it to you tomorrow?”

And then I would stay up all night completing it, and then I would deliver it the next day. And you know, sometimes they wanted multiple profiles. And I remember one time, I think Lockheed Martin wanted these profiles, and my husband and I stayed up all night doing them. I trained him to do them, and he did a lot of the graphic stuff. So that’s what was happening.

And so it did remind me of Elizabeth Holmes, because there was this story about how they would bring these visitors into the conference room. And they would take a drop of their blood and put it in this machine that was in the conference room. And then they would take them for a building tour, and someone from the lab would just race in and take it, and take it back to the lab, and manually complete the test. And that’s exactly what I was doing in the early days.

Loren Feldman:
That left you with the challenge of figuring out how to move from consulting to making this kind of a DIY project where someone can do the work themselves, going into your database. You wanted to scale the business, and I believe this was the point where you needed some money to start doing that. And you had to think about what you would do to raise money, raise capital, to build this scaled up version of what you were doing. Is that basically right?

Sharon Gillenwater:
Yeah, I was making a really good living as a consultant. At one point, I had multiple people working for me, although my clients didn’t know. I trained them to create these frameworks and decks that I had developed, and I would train them to do all the research, but I would be the client-facing person who would present all the work. So, I mean, there were months I was making—and this was back in, I don’t know, 2008, because I kept doing that work for six years after I started the company—I was bringing in like $35,000 a month or something with that. And I had to pay my contractors, but the point is: I was taking money from my consulting, not only to live and support my family, but I was using some of it to build Boardroom Insiders. But there came a certain point when I had to really build out the database.

And it was very expensive to do that in those days. It was actually more expensive than it would be now, and I needed money. And I knew this personal friend, actually my husband’s, who my husband had worked with. And he had created a company, and he had sold it and made a lot of money. I have no idea how much, but I knew he was loaded. He’s a great businessman. And so I talked to him about what I was doing. And he was very intrigued because of the price point that I was getting for these profiles at the time. I was getting like $1,000 a profile. And he said, “You’ve got to get those in a database and keep them updated.” He said, “Even if you slashed the price to $200 a profile, that’s huge.” And I said, “Well, I don’t have the money to build a database.” And he said, “I’ll write you a check right now. How about $125,000 for 10 percent? And it was like a two-minute conversation, and he wrote me a check.

And that was a huge motivator for me. And I wonder—because I really didn’t know what I was doing—if having that money was what made me keep going all those years. I mean, I think it really was. The more people you get involved in what you’re doing, the more is on the line. And for me, it was a huge motivator. So first, it was taking this money from a personal friend, and I was determined I wasn’t going to lose it. And then the second step was, when I took on a partner who also had a family, then we’ve got two families depending on the business. And then when you hire a team, you’ve got more families and people depending on you to succeed. So it was a real motivator.

Loren Feldman:
Did there come a point where you started thinking, despite your original experience with venture capital at Fidget, that maybe venture capital was the way to finance this company, too?

Sharon Gillenwater:
Oh, yeah. I mean, there were several inflection points where my partner and I wanted to tackle something, and it cost more than we had in revenue. And so we created a few decks over the years and shopped them around, and nobody was interested. And I think we just weren’t something that had a large enough TAM for them to be interested or that—

Loren Feldman:
A large enough?

Sharon Gillenwater:
The total addressable market. I’ve learned all this stuff, actually, since I sold the company. I did some research. You know, VCs are really only interested in companies that have a billion-dollar total addressable market potential. We were kind of a niche product, targeting a very high-end audience in tech, at the time. Now, the total addressable market is more applicable to all sizes of tech companies. And in fact, the company, which still exists, has a lot of companies of all sizes.

But at the time, it was really only the big tech companies that were experimenting with C-level engagement and this kind of one-to-one C-suite selling. So VCs aren’t really interested in that. And they’re not interested in companies that have a lot of people doing the work, which we had, because of the type of information that we were providing. It was absolutely mission critical. It had to be accurate and current. We didn’t do data-scraping, which was the fashion at the time, so we had a very contrarian production model and business model.

Loren Feldman:
Despite your first experience with Fidget and with venture capital, you were ready to take venture capital again with your next business, but nobody offered it. Is that right?

Sharon Gillenwater:
Yeah, we were cautiously considering it. And we did talk to a few firms. And they just declined to get involved, for the reasons that I mentioned. And then at a certain point in our business where we were consistently profitable and growing, there emerged these groups targeting women entrepreneurs who would invest in women entrepreneurs, but the numbers were too small, at that point.

I mean, if you’re hitting a million dollars a year in revenue, and you’re still growing, 100 grand isn’t going to help you. You need to raise a million, right? And then if you can’t find that, and you keep growing, at some point, you look around—you literally lift your head up and look around at your business, and you say: Wait a minute. Why would I raise money now? We’re doing really well. We may not be able to grow as fast as we like, because we can’t invest as much money as we ideally would like to do. But it’s not worth giving up a huge chunk of equity to accelerate that. Let’s just keep plugging along. And so that’s what we did.

Loren Feldman:
What was the company like when you really hit your stride? What was the high watermark? And then how soon after that did you start thinking about selling it?

Sharon Gillenwater:
The company really started to hit its stride in 2016. And that’s when we hired our first employees. Was it 2016? Or somewhere at the end of 2016, early 2017, we actually started hiring people. So from 2011, when I took on my partner, to 2016, it was just the two of us and some contractors. And that’s a bootstrapping hack right there. Don’t hire your first employees until you absolutely have to. You just use everyone as contractors, so that you can scale up and back if you have a revenue issue. And so that’s when things really felt great.

In 2016, I got an idea for a true SaaS product that we could build on top of our database, and I sketched it all out on a bunch of paper. And then I put it in the closet for three years, because we couldn’t afford to build it. But I had the plans for that ready to go. It was just a matter of getting enough revenue so we could build that.

And so 2017, 2018 on, it was just really exciting and fun. Because my partner and I were paying ourselves a reasonable amount—still under-paying ourselves, but we were paying ourselves a good amount. We had a team, so things weren’t so chaotic for us. We weren’t having to do absolutely everything. We had a great team. It was very engaged and focused on our customers, which was fantastic. And we were winning deals, and we were winning deals with some of the biggest tech companies in the world. You know, Amazon Web Services, Adobe, Salesforce, Cisco. I can’t even remember them all, but all the big ones were coming across, and we were closing deals with them. And that felt really good because we were just this little, tiny company. And these companies were validating what we were doing, and they loved us.

So we kept growing. And then the pandemic hit, and we thought that was going to kill us. But it actually gave us another shot in the arm. Because if you think of what was happening in the Fortune 500, they were trying to figure out how to not lose their customers, their suppliers, their partners. So CEOs, instead of flying across the country to have two meetings, they were sitting in their homes having 10-12 meetings a day. And they needed intel on those people they were meeting with. And at the same time, the event marketers I talked about earlier, they spend millions on these events. Those were getting shut down. So the marketers had tons of budget they needed to redeploy or lose it, and so they gave it to us. They gave a little bit of it to us, which was a windfall. And so we doubled in size in 2020, both almost revenue and our team doubled in size.

Loren Feldman:
How big did you get, in terms of revenue?

Sharon Gillenwater:
When we sold, we were at $5 million ARR.

Loren Feldman:
Annual recurring revenue.

Sharon Gillenwater:
Yes, annual recurring revenue. That’s what the people who will acquire you really care about. You know, we had some consulting revenue as well. Because when you work with tech marketers, you could have the most easy product to use ever, but they still want you to do it for them. And they want you to add a bunch of info. And they want you to create decks for them and give them recommendations on how to engage people, to the point where I was even writing emails coming from their CMO to an executive at their customer company saying, “Here’s the information on this person. Here’s what your CMO needs to email to them.” So we had all kinds of side things going on that brought in revenue. But when you’re acquired, all the buyer cares about is that annual recurring revenue. So that’s very important to keep driving to that at all times.

Loren Feldman:
So Sharon, it kind of sounds like you were living the dream. You were having fun, your company was growing, you had the team, you weren’t working as hard as you had been previously, your customers loved what you were doing. Why did you start thinking about selling?

Sharon Gillenwater:
Because my partner and I were very worried about a tech crash. Our customers were heavily concentrated in big tech. And when tech crashes, they all crash. We had a team in Russia. We never hired technology folks or developers. We outsourced all of that to a great team. The company was based in Charlotte, but our team was in Russia. And there were rumblings about Putin invading Ukraine. And that could have really disrupted—and, in fact, it did disrupt eventually, after we sold.

And we also had not quite figured out some critical aspects of the business, and we thought that that would come back and bite us eventually. Specifically, we never built a solid, effective marketing funnel. Our customers came primarily from referrals and a few trade shows that we went to, and people moving from one company to the next and bringing us along. So you know, that’s a double-edged sword. If your customers love you, they keep renewing. If they move to another company, they bring you in. They refer you to all their peers. That’s all fantastic. But you should have some kind of lead gen, where you can predict how many of those leads will convert and to what kind of revenue so that you can forecast your sales pipeline. And we never figured that out, and we tried. And so we thought that was going to come and bite us, at some point, when times got tougher.

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