Becoming a startup CEO was never an explicit career goal.
I started PitchBook because of a simple and pure motivation — to solve a customer problem.
At my previous employer, I saw too many smart customers (investors, advisors, corporate development) held back by a lack of quality data, research, and insights into the private markets. This bothered me. I’ve always liked finding a better way to do things, so I championed the idea for PitchBook to my previous employer for four years, but the answer was always “no.”
One day, I said f*** it and decided to do it myself. That motivation and focus to find a better way to serve our customers has carried PitchBook through the ups and (many) downs of startup life, and ultimately, to our acquisition by Morningstar late last year.
What once was a seven-person team — housed in a windowless, 200-square-foot office — has now grown into a 650-person company across eight global locations. As we celebrate our 10-year anniversary and the GeekWire Deal of the Year award, I’m reflecting on some of the lessons learned throughout our journey.
1. Focus on focus
PitchBook started on the eve of the Great Recession and survived through it due to our focus. For startups, resources like time, cash and people are scarce, and there’s an opportunity cost for everything. I often see startups make decisions based on suboptimal factors. They may do it simply because they think it’ll be fun, innovative or “just cause they can.” But unless someone is going to derive real value out of your product or service — enough to presumably pay for it — it’s not likely something you should spend your scarce resources on. There’s a saying (maybe from venture capitalist Bill Gurley) that more startups die of indigestion than starvation, which I agree with. It’s the lack of focus that leads many startups to die off.”
2. Embrace the grind: Oreos vs. breathing
Starting up is not glamorous, and throughout the entire PitchBook journey there’s been immense sacrifice. In the beginning, I would put in an honest full day of work at my day job then head straight to the UCSF library or a nearby coffee shop to work on PitchBook’s business plan. For four years, I worked 80-100 hours a week and was fueled by a diet of pizza and Coca-Cola. Not the healthiest, but quick, convenient and remarkably energizing. For the first 20 months, I lived away from my family, but luckily, I had some great friends who adopted me during that time. We had a ton of hurdles, but never had a Plan B that didn’t include PitchBook. I had an insanely strong desire to make PitchBook happen.
Want is a vague word. Lots of people want lots of things. But how badly do you want your startup to be successful? To illustrate the vagueness of want at last year’s University of Washington business plan competition, I used the example of Oreos vs. breathing (it was a riff on Eric Thomas’s talk about want). That is, you may want both, but you really want one a hell of a lot more than the other.
For startups trying to make it, ask yourself, how badly do you really want it? Enough to lose sleep? Time with loved ones? Hobbies? It turns out there are no free lunches, and contrary to popular belief, unless you give someone a reason, no one owes you anything. Starting a business is a continuous grind you chip away at every day, and success hinges on how badly you want to make it happen. (Note: I’m still trying to understand balance better.)
3. The “no’s” never end: Be resilient and be happy about making it to tomorrow
Through the process of fundraising, I received more than 200 “no’s” from potential investors, while just 18 said, “yes.” Those 18 helped us raise $4.20 million in angel funding, which kept the lights on in our windowless office and was all we needed to build PitchBook (we actually built it on $3.7 million, but were happy to have a little cushion). I regularly get asked for my thoughts on startups in the process of fundraising. My answer typically is: you can’t be afraid of the “no’s,” because if you stop there, you will never hear a “yes.” Remember that investors only need one good reason to say “no,” and most will find that reason. There will always be people who don’t believe in your idea, but if you believe in it, remain steadfast and passionate. You’ll eventually find the right investors.
4. Get comfortable with being uncomfortable
As a founder, you must wear a lot of different hats — regardless if it’s your strength or not — and consistently venturing outside your wheelhouse takes grit. As a CEO, playbooks simply don’t exist for every situation and discomfort comes in many forms, whether it’s asking for capital in a room full of skeptics, letting someone go, having hard conversations, being more assertive than usual or picking up the phone to make a cold call. Of the 30,000+ cold calls I’ve made in my life, one of the last was the most important. That was to Joe Mansueto, the founder of Morningstar. That call led to Morningstar being the last investor in PitchBook, and eight years later, the acquirer of the business.
5. Ideas are easy to come by: Preparation and execution are the hard part
There’s often an ounce of luck involved in every great founding story, but it should never be factored into your business plan. Good planning should guide your actions. I can’t tell you how many startup pitches I’ve seen where the business plan is an afterthought — especially when it comes to understanding customer needs, how you’re going to drive customer adoption and the costs that are likely to be incurred to breakeven and reach profitability. One thing I’m most proud of is building PitchBook for $100,000 less than what the business plan called for back in 2006. PitchBook’s original business plan outlined $3.8 million in financing, but we did it for $3.7 million (although it took a little longer during the recession). That discipline granted us credibility with our board and investors. Fun fact: I still have the original PitchBook business plan in my office and look at it often. And while we’re leaps and bounds ahead of where I originally imagined, we haven’t deviated significantly from the original blueprint.
So, while you may have a great idea, creating a solid plan and executing insanely well on that plan will increase the odds of reaching your goals.
6. Hire based on potential, not resume credentials
One of the hardest things about starting a company is finding people who engage and embrace your core values. Industry knowledge can be taught, potential can’t. Some of my first hires were recent University of Washington graduates with minimal industry knowledge, but a hunger to make an impact. Those early hires included great people like Fabrice, Adley, Brian, Yura, Alex, Skylar, Carver and Prado — along with many others who played an instrumental role in growing PitchBook and are still part of our team today. Because of the power of potential, PitchBook invests heavily in talent development. All new hires go through PitchBook University (PBU), a two-week crash course designed to arm employees with a foundational knowledge of the private capital markets. At last count, just 1% of PitchBook employees came from a finance background.
This emphasis on potential and talent development is something we focus on intently to continually keep our team engaged and growing. Once you hit your growth stride, keeping bright, motivated employees involved and on clear growth paths will likely be one of your biggest challenges (as it remains ours). This is a two-way street, where the team members also need to take ownership of their career paths. And frankly, they have more impact on that path than any employer ever will. Again, it depends on what they want. We just provide the runway.
7. Make it fun
I know a lot of what I’ve written about is the work vs. the fluffy stuff. But amidst the startup grind, we embraced the value “Make it Fun.” We have great people. We laugh every day. Teams regularly go on outings — from sailing on Elliott Bay to playing whirly ball to attending a Mariners or Yankees game (we’ll soon add noodling to the list). We work hard and make it a point to celebrate our accomplishments. By doing so, we’ve created an unmatched company culture where people come to work surrounded by their friends and genuinely enjoy each other. Really, the best part about PitchBook is the people. From the beginning, I said I’ll be damned if I created a company that wasn’t fun to show up to every day, and I’m glad to say I still enjoy showing up and getting after it.
We still have a long road ahead and more obstacles to overcome, but I expect these lessons I’ve gathered over time, alongside Morningstar, will help guide our future. No startup journey is easy. It takes heart, passion, grind, and a willingness to sacrifice everything to make it happen. I’m very appreciative for our team, my wonderful family and friends who have helped make it all happen.
Enjoy the journey. Nothing worthwhile is ever easy.