I had a great time interviewing Tableau Software CEO Christian Chabot at last night’s sold out GeekWire Meetup at the HUB Seattle. We covered a lot of topics during the 40-minute chat.
And, yes, as expected he didn’t take the bait on my question about a possible Tableau IPO in 2013.
But Chabot did open up about a lot of topics, sharing both the ups and downs of life as an entrepreneur and explaining the history of Tableau’s visual analysis software emerging from Stanford University.
One of my favorite parts of the discussion revolved around Chabot’s view on venture capital.
Chabot himself is a former venture capitalist, though he made it clear last night that he’s not a huge fan of that term. In fact, he bluntly told the entrepreneurs in the audience that they should avoid venture capital at all costs.
And while Tableau later in its history actually raised $15 million in venture financing, Chabot noted that the company has never used it. “Every single dollar of that is unspent in our bank account,” he said. Instead, of tapping into the VC well, Tableau has grown organically, now topping more than 800 employees and $100 million in annual revenue.
Here’s an excerpt of what Chabot had to say on the topic of venture capital, something he admitted to having a lot of strong opinions about.
“I would say the biggest thing I learned working in venture capital for two years and being exposed to it is — avoid venture capital at all costs. That’s what I learned…. I think it is very important for young missionary, driven entrepreneurs to avoid venture capital as long as they can, and if you can. Now, if your idea is to create some kind of chip and you need a fab plant, OK, that’s not going to work out. But, if you have software or media or something that could be bootstrapped, bootstrap it for as long as you can.”
Chabot added that venture capital can make entrepreneurs lazy, creating a “decision-making regime where there is money all of the time.”
“Think about raising your kids or your own life. Is that healthy to have money around all of the time? That actually warps decision making in an insidious way.”
Chabot said he reads stories of startups raising $20 million or more, and just knows that the outcome won’t be pretty.
“That just culturally, and I saw this first-hand when I was a VC. That destroys startup cultures. And, you know what? You can’t fix it. Because what happens is there is this bank account with $50 million in it, and you have no product, and no revenue and you were supposed to be this missionary evangelist, but yet there is this giant bank account sitting there. And you start spending the money. And you know what, in business, I don’t care if you are working for Microsoft or a little startup sole proprietorship, the fact is when there is unlimited resources, you don’t make good decisions….. The hard part of decision making in business is figuring how to solve problems without a lot of resources. That’s actually the hard part. So, when you get these dinky startups with all of this money in the bank, and they are making decisions that expense doesn’t matter, when they grow up and they do get some traction, they can’t undo the culture. And they have a very hard time building a business that’s actually a lasting business built on a concrete foundation. For us, it has just happened. We have not needed a special initiative.”
He later added:
“The bootstrapped culture we built very early ended up becoming a part of the bloodswell of the whole company, even as we got big and could have easily raised money. I think it has worked out quite well.”
“In my personal journey, I had prepared myself for being an entrepreneur for a long period of time before actually being one…. I have a couple kids now, so I saw my wife go through what people call nesting syndrome before you have a kid. And some dads go through this too, but it is a known thing, nesting syndrome. When you are pregnant, especially the mom, suddenly it is like Spring cleaning time, even though it is November, right. You just start doing all of these house products and getting everything ready. And I think entrepreneurs have to go through this nesting phase, and it helps if you are going to bootstrap. So, we did that.
I cut every single expense conceivable that I could…. I actually downsized my apartment. I was 28 at that time. And I downsized from a 2-bedroom apartment … to a 1-bedroom. I sold a bunch of furniture to save money for a year, so I could go on with the stories. All that matters is you can bootstrap. You can do it. But decide whether you want it badly enough. BS, you can’t cut your expenses. I am kind of unforgiving on this. Don’t be a prima dona. If you are really committed to being an entrepreneur, go make the sacrifices right now, so that you are ready to do it. And your bet may or may not work out. But most entrepreneurs jump because they really have this deep down need to go take a shot at something they believe in. That preparation phase makes the years that you have to bootstrap a lot easier just from a pure financial perspective.”
Come back to GeekWire throughout the day as we’ll have more from Chabot’s talk.