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Season 2, Ep. 2 – Our first foray into fundraising

What startup says “no” to funding for almost an entire decade? One that’s either totally crazy or incredibly astute. Maybe we’re a little of both? Hot off the heels of our Series A raise, we talked to our CEO, Teja Yenamandra, and COO, Tyler Newkirk, about the decision to bootstrap for so long, and how, with a little patience, they found the right investors.

Faith Benson
Faith Benson
· 28 min



Faith (00:11):

Hey guys, welcome to season two. How excited are we?

Teja (00:15):


Faith (00:16):

We’re pumped.

Tyler (00:17):

Yeah. Should be fun.

Faith (00:18):

So we’re gonna talk about fundraising today. It’s gonna be a little bit different of a conversation that I think what folks usually hear, which I mean, I’ll speak for myself. I get on Twitter for marketing things and my whole timeline on the account is like founders talking about fundraising best practices and everything they know about fundraising. And it’s just like, we’re inundated with fundraising info. But I think what makes us unique is how we’ve approached fundraising in our decade of being in business, and the fact that we’re really just approaching our first kind of real fundraising event as a business. We’ve been bootstrapped for 10 years.

Teja (01:04):

Yeah. I don’t know why fundraising is so celebrated. It’s like, literally you’re asking somebody for money so you can build the business. It’s like a nothing.

Faith (01:12):

And the business might not even work, like— (Teja: That’s right.) all of these documentaries about these massive kind of unicorn businesses that failed because they never had any customers. It’s like, that’s not a business. That is like a really good marketing campaign to convince people to give you money and promise maybe one day a business is formed, you know?

Teja (01:35):

Yeah. That’s true.

Faith (01:36):

Well, sweet. Tyler, we already talked to Teja on this season, but this is everyone’s first time meeting you. So you wanna give a quick introduction?

Tyler (01:47):

Yeah, sure. Tyler Newkirk, I’ve been with Gun since late 2014. It’s been a very fun ride. I will say it’s changed dramatically since then. Born and raised in Midwest, I’ve lived all over Kansas City, St. Louis, central Illinois, but call Nashville home today. I’ve been here since 2010. Came here for college and loved it, and have been here ever since. Got a family of five, three little ones at home, which make things fun on top of this business. 

Faith (02:25):

He’s helping us—they’re all gonna work for in like what, 20 years? So we’re just getting our head count ready to rock. (Tyler: Yep!) 

Faith (02:34):

We also have a really cool blog post that just went out about a month ago about how Teja found Tyler, which is hilarious and historically accurate. So I really recommend listening to it. Sweet. Well, you know, obviously Teja’s been here since the beginning, Tyler just about since the beginning. And I’ve kind of teased this, but one of the things that makes us unique in not just like the staffing agency world, the talent agency world, but also like software businesses as a whole is we’ve been bootstrapped pretty much since the beginning. So I wanna jump right into that. What has been the primary reason why we thought it was important to stay bootstrapped for this long?

Teja (03:22):

I’ll take this, Ty. You jump in if I miss anything, as I’m sure that I will. We’ve always been really like efficient, you know, capital efficient, efficient in the way that we spend our time, and how we build the team and the company. And I think we’ve only really taken money from like folks that have sold their companies that we knew of just in the ecosystem, like friends of ours from Emma who sold their company to insight, and just like people that we kind of knew personally, and that’s kind of been enough as we’ve grown; but there’s this one fund in particular. So it’s actually less about a raise, and more maybe about relationships. There was one fund that kind of kept up a relationship with us for many, many years. And in fact, when we started the year, we were kind of like, Hey, there’s some key hires that folks on the team wanna make to do certain things. Let’s go raise a little bit. And that was the initial plan I think that Tyler and I had come up with in like Q4 of last year and maybe Q1 of this year, but this one fund kept on, you know, they did their job. They kept in touch, really cool people, sharp thinkers, awesome communicators. The relation, like, you know—as we’re building this business, as we know, we’ve been working together for like four years, I think. (Faith: Hm, yeah.)

Tyler and I have been working together for almost a decade, right? And so I think what’s really important to us is just quality of relationships. And we felt that this particular fund had people that we felt that we could build up a real strong business alongside. 

Faith (05:10):

I wanna get more into why we chose this fund in a minute, but I guess to start, it would be helpful for listeners to understand: What is the benefit of being bootstrapped? Why would we do that when, you know, folks—when you open TechCrunch and you’re reading about 10 million investments into a business that doesn’t have any customers yet, why did we decide not to do that?

Teja (05:36):

Fuck, that’s bullshit. I mean, that’s the best way to put it is like absolutely zero bullshit. All you have to do is answer to your customers.

Tyler (05:44):

You know, like from my perspective, when I first met Teja and the founding team and was introduced to, there’s just a scrappiness to them, and to the business that I resonated with. And I think that kind of carried over, especially in the early days of just how we thought about growth, how we thought about running the business, how whenever the team grew, that was just the culture that we had, was very much this is what we’re gonna make it, and it’s kind of up to us to do that. And so I think just some of that, you know, I don’t know if that’s just kind of who we are—just something about how we were nurtured, you know, up through the genesis of the business, but it just felt natural.

And it wasn’t necessarily a hard decision to make, I think at least from, from my perspective. It just was kind of the natural progression of how we wanted to build the company. Teja set things up, as the leader, and it just all kind of fell in step from that, I think. So it just felt very natural, right? I think it was a conscious decision at certain points, for sure, but it also didn’t feel like a departure from who we were or how we wanted to run the business either, I think. At least that was my take, you know, early on and sort through the years.

Teja (07:10):

I’ll give maybe some war stories. (Faith: Yeah, let’s go.) Okay. So dude, I think—honestly, I think nobody wanted to give us money in the early days. And then we stopped needing people’s money, unless the terms were really good, you know? So when we were working outta the EC, there was this one guy—he’s a very well-known person in town. He had a conversation with me, and I still don’t dress super well, but at least I don’t get yelled at by my girlfriend for leaving the house in a certain way. But like, this is when the business first started. We were maybe making like 10 grand, 20 grand gross in revenues as a business per year. So maybe I was netting a couple thousand bucks a year—maybe. And so this one dude says to me, he’s like, “Hey, you guys seem like really good, but you need to dress better.” Cause I’d show up to the EC and I’d be wearing sweatpants and the same damn shirt every day. This is like a real story. And he is like, you know, “I would help you run the business and help you guys grow, but you need to be dressed better. You need to be dressed more professionally.” And I was like, dude, I’m making several thousand dollars a year. There’s no fucking room in this budget for clothes.

Faith (08:25):

We do not have a wardrobe budget. 

Teja (08:27):

No, this is like a real conversation that I had. And I was like, what the fuck am I doing, trying to get advice from people? And I’m like, if we raised money, if these people gave us money, I would spend a lot of my time playing this game of appearances and not enough time with the team actually building the business. And it seemed like even if they were to give us a half a mill or a mill to start the business, whatever, an early seed, I trade off a bunch of bullshit for it, because 10 years ago, Nashville was not a city that had a mature enough tech ecosystem where you had multiple people built tech companies to exit realize what mattered and what didn’t matter. Like 10 years ago, this is a healthcare town where like appearances matter, highly-regulated—You had to kind of play the theatrical game of looking legitimate, ‘cause that actually mattered probably to your business prospects. In our industry, what matters is how good your fucking business is. It doesn’t matter how you look, right? And so I think we just sort of—and Tyler and I are very similarly minded in that regard—I think we just realized early on that it would introduce a lot of bullshit to actually growing the company, and the terms were never compelling. And so we just got to a point where we can actually start to determine the future of the company without it.

Tyler (09:49):

That’s what I meant, Teja, about, you know, feeling natural. Like that didn’t scare me, as a business, like coming in and being like, well, we don’t have any funding or, oh, we haven’t raised. That was just like, alright, this is what I envisioned growing a company to be, right? Like gotta figure it out, gotta make smart decisions, and you know, make smart investments. So it felt very natural from that regard. (Teja: Yeah.)

Faith (10:15):

The math is just—it’s actual math, right? Like when you’re bootstrapped, and you’re trying to figure out how to invest and what to do, not having that extra kind of like fake input of investment almost makes the calculation easier. But Teja, when you say appearances, like this example, I think is a hilarious, like literal appearance example (Teja: It’s true!) But also-

Teja (10:39):

It’s legit true. I was like, what the fuck, is this guy serious? And he is like a very successful local. We might even need to cut this out, because it might be offensive.

Faith (10:50):

No, I think it’s valuable. But I’ve got friends who are, you know, founders, and they’re taking on crazy amounts of investment, and like, it’s not just appearance, you know, what you’re wearing; but it’s also like the appearance of your business on paper—with what comes down to be often like vanity metrics that you’re spending a lot of cycles trying to get right, or make it look good so you can share it with investors and no one panics. And I feel like in my four years here, we’ve been able to have a really clear picture of what’s most important, because Teja, you said this up top, we’re serving our customers and nobody else. And when I say customers, I mean our devs on the platform and our companies that we serve. (Teja: Totally) And we don’t have to—we spend zero time trying to make ourselves look good to anybody else. (Teja: Totally.) And so I think that’ll be an interesting kind of growing pain over the next year or so.

Teja (11:51):

I have, in my hand, a gift from a good friend of mine from back in the day. It’s a Jeff—it’s a founder’s prayers candle, and it’s of Jeff Bezos, and it’s praying to margins. And so this is what we focus on: Fucking margins. And delivering value.

Faith (12:11):

Speaking of margins, I wanna talk about the thing that has allowed us to stay bootstrapped for this long, and not panic fundraise, which is: we’ve been profitable pretty much since the business was founded. And Tyler, I think we’ll talk a little bit more around your strategy for that in a coming episode, but I’d love to touch on it now. What do you guys think has allowed us to be profitable as a business for this long?

Teja (12:43):

I’ll answer real quickly, then I’ll shut up and give the floor to the guy who makes it happen. Like what is margin other than like how efficiently you provide value? That’s all it is, right? Like all your margin is, is like, there’s a value that people are willing to pay money for, and then how efficiently you can deliver that value is basically the margin on a net margin basis, right? And so now I’m gonna shut the fuck up and let the man who makes it happen—

Faith (13:12):

Math lesson. I appreciate it.

Tyler (13:16):

No, I think—I mean, foundationally, obviously that’s true. And the how has just come from, I think, a shared discipline that we’ve had to learn and not always been great at—definitely ups and downs, you know, in that journey. But when you don’t have outside funding, you have the cash that you have and you have to make that work if you, you know, wanna make payroll at the end of the day, right? So I think, you know, it just comes down to making sure that, you know, as a leadership team, we’re intentional about budgeting, sticking to those things, being very precise about the investments that we choose to make, growth, other areas. A lot of times you just don’t have room to make extraneous investments to things like appearances or, you know, this looks cool or doesn’t, right? 

Teja (14:05):


Faith (14:07):

Wardrobe budget for Teja or a stylist—even better.

Tyler (14:11):

These are actually the same clothes from that initial conversation.

Faith (14:18):

I did make these guys get professional head shots recently, which—I feel like whoever that guy was at the EC would appreciate that, Teja.

Tyler (14:27):

So, I mean, I think the how isn’t as mysterious as like, I don’t know, somebody who maybe isn’t familiar with a bootstrapped company, you know, can seem. It’s really just, if you’re gonna survive, you have to make the cash work. And that comes down to, as Teja said, understanding your margins, making sure you’re being smart about budgeting, planning, and sticking to those things, right? Like being disciplined, having to cut if things aren’t going to plan, over-investing if things are going above plan to keep growth high, and that’s a shared discipline, right? That’s— I think, as I said earlier, there’s been ups and downs to that, but it’s something that we come back to on regular cadences, whether that’s weekly, monthly, quarterly, annually…and that’s been a big part of how we’re still here today, you know?

Faith (15:14):

Yeah. And maybe this doesn’t work for every business, but something that we’ve embodied over my years here has been, if it doesn’t work on a micro level, it’s not gonna work on a macro level. So I think a lot of companies kind of shoot themselves in the foot where they say, we’ve got this great idea, and one day it’s gonna make us a ton of money, but we’re gonna have to invest a ton of money up front to make it happen. And if you’re Tesla, you know, building electric vehicles, like sure, that’s probably true. But for most businesses where you’re dealing in knowledge work, or even software to like a smaller extent, there’s always kind of a minimum viable product that you should be able to make the numbers work on, right? Like, this many dollars in equals this many dollars out, and the out better be greater than the in, right? And so I think we really use that with everything we do here, whether it’s bringing on a new team member or investing in a new process, or even our platform, like the app that all of our customers and devs use today started out like very light, ‘cause we wanted to prove with every step that this investment and efficiency would pay off. 

Teja (16:30):

That’s true.

Tyler (16:31):

Yeah. Hundred percent.

Faith (16:32):

All that said, we are on the cusp of kind of a big season change, I guess, internally, where we’re gonna take on a Series A round of funding. And so I really wanna get into what that process has looked like. You guys talked about—Teja, you mentioned, you know, what made us decide to pursue that. But as we know, we’re recording this in July, 2022, we are US based, and there’s all kinds of factors that might make this not the best time to fundraise. But walk me through it. You know, when did we decide to pursue it? What has the process been like?

Teja (17:15):

So, we’ve always just wanted to build a great business—I think the entire leadership team. And by great business, you know, a great business in our universe is like one that delivers value to companies and to developers, that creates an awesome recruiting and staffing experience, and is like the premier global talent agency. I think we got to a point where we realized there was more—there were more solid ideas than the company had money to finance out of our internal operations, like the way that we were running the business. And to do all the things that all of our leadership team wanted to do would just take us a long time. ‘Cause we have to sequence things in the right way really carefully when you’re building a profitable business, right? (Tyler: Yeah.) You have to make sure not to get too ahead of your skis, manage your cash, all these sorts of things—where we were letting the financial constraints that Tyler and I were managing to dictate the strategic investment decisions that we wanted to make as a leadership team. And that’s where I think it actually made sense to go and raise money, where we’d be like, Hey, we can, unconstrain the financial dimension of the business for the next few years so that we could take these big bets in these strategic areas that the team wants to make bets in around product, around automating certain things, around building an awesome experience in dev, about doing the right things in marketing to get our story out there. And so that was like the broad reasoning to raise money despite having been bootstrap. I think the timing of the global recession that’s being caused by inflationary spiral is like what it is—that’s, you know, that was kind of like, Hey, it’s gonna happen.

But I think the business story around requiring investment is true, no matter what the macro climate is. Right? And I also think that if one were to raise money, the best time to raise it is actually probably preceding a lot of macroeconomic uncertainty for a number of reasons, right? You show up the balance sheet, you have a lot of runway, you have the right partnership at the financial level, the help, determine the future of the company. So I actually think it’s a long way of saying we made the financial decision to raise money to help unblock certain key things in the business that we wanted to grow. You know, we were choking our own growth, I think. But that sort of was just fortuitously planned, because I think the folks that we’re raising with are really ethical and have not shown any sense of concern, fear, hesitation, despite us heading into a potential very uncertain future.

Tyler (20:05):

Yeah. I think there’s also, you know, Faith, you mentioned this earlier about a discipline of taking small bets, which is very true. But I think there’s also a downside in some scenarios, where certain experiments and vets just take a higher level of capital investment to pull off, right? Like that’s just the reality of it. And so I think, you know, Teja, if I could add, it’s not only a quantity of, you know, good ideas that we wanna pursue, but also some that are just big enough that it’s hard to do if you don’t have, you know, a war chest kind of from which to draw. So I think that is also a constraint at times for a bootstrap company to deal with, right—is like, there may be some really cool, big ideas you wanna go after, but you’ve gotta make sure you’ve got the cash out to do that. And at times we haven’t able to, and to Teja’s point, I think doing this allows us to do some of those things that feels like the right time to pursue. 

Teja (21:03):

Yeah, well said.

Faith (21:05):

What’s been—because this has been a month, long months, long process—

Teja (21:10):

No, seven months is fair. Six, seven months. It’s a long time. 

Faith (21:16):

That’s a long time. That’s almost —yeah. That’s a long time. Have there been any surprises, anything that you guys didn’t expect?

Tyler (21:24):

Yeah, I’d say so. Maybe—case in point is, I think when Teja and I first had this conversation, the notion of timeline was three to four weeks versus six to seven months. And obviously, you know, our plan for pursuing capital changed throughout the journey too. So it wasn’t necessarily [that] we thought this whole thing could be done three to four weeks, but I mean, I think at a lot of times, it’s just been—not necessarily surprises, but new learnings. At least for me. 

Teja (22:01):

No, I mean, that’s true. We went out to the capital markets. We went out to go raise like a very small amount of money, and get it done quickly. And the funny thing is [that] through the journey, we actually got the offer that we wanted to get to. And we were like, well, with the other things on the table, do we still want it? I mean, we had folks flying here from the coasts to go and pitch us to take their money. So it was like, we did not intend to run as long of a fundraising process as we did, but, you know, because of the hard work of the team and the business that we had built over the last couple of years, we had a lot of different options. And so we spent a lot of time sorting through, refining the offers that we got, tightening ’em up so they fit within our business plan.

Faith (22:54):

What made the fund that we ultimately went with stand out in all of that?

Teja (22:59):

Pretty aligned expectations on how we grow the company—from the way we wanna build the business to the growth trajectory we wanna achieve to the way we even look at the philosophical nature of like building a company and what it means like as a mechanism to create economic opportunity, I felt like there was so much deep values alignment with the fund that we chose. Because for us, building a business is like, yeah, okay. We get to make money, and create value, and all this shit. But there’s a philosophical underpinning to it around creating value for people that we work with, building relationships, having an opportunity to practice some manner of our personal value set day to day, craftsmanship, shit like that—we were so aligned with the firm, and the firm is filled with like super geniuses, like very, very smart people. You know, where every time I get on a call with the partner on our deal, I’m like, oh, fuck. I just learned a new word. That’s cool. Yeah. Serious. Real shit.

Faith (23:58):

Oh my god.

Teja (23:58):

I think the growth plans were aligned, just like—I could see us building another five to ten year relationship with these folks. That’s not to say anybody else that we spoke to for fundraising was not also awesome, but I felt that we were the most aligned with these folks.

Faith (24:21):

Tyler, I feel like—and again, most of the like founder Twitter kind of like, thought boy content bullshit that I read, like it’s always you know, founders and CEOs talking about their experience fundraising, but you are the money guy here. Tyler does all of our  finances. The books. And so I’m curious for somebody listening, who’s in your position, whether they’re running operations or finance or a combination of the two at a business like ours, what advice do you have for them, if they’re embarking on a fundraising journey as well?

Tyler (25:00):

I’d say, if you’re not organized, start now.

Faith (25:05):

Organized how, like, what do they need to get organized?

Tyler (25:08):

Really? I mean, across the board.

Teja (25:10):

Organize their whole shit up! 

Tyler (25:11):

It’s things from being able to articulate why you have a growth plan or projectional set that you do, right. Like why is it a hundred percent growth or 50% growth or 25, right? Like, can you explain that and have that be effective. To things like, Hey, do you have your client contracts organized, such that if they wanna see them, you can pull them up quickly, right? And a lot of that is not me. A lot of that’s the team that has done a great job and like keeping those types of things, you know, organized. But yeah, but if you get far enough into a process, the diligence is a thing. And having all that squared away can save hours and hours. And so I’m very glad that a lot of that for us was—a lot of the heavy lifting there was done, not all of it, but a lot of it was, so that’s something.

And then, you know, I think there’s just a lot of learning that happens from an outside perspective, right?So it’s really interesting to get to see like what people who are not steeped in the business think about your business, or at least from like the perspective of the numbers and the KPIs that you track. Hey, why do you track this? Why do you track that, have you thought about this new metric? Oh no, we haven’t. You know, and so there’s, there’s been a lot of cool learnings that way too, of just how other really intelligent people who’ve seen a lot of businesses think about ours, you know, versus us, who’ve been so narrowly focused on this one business. And so that’s been really cool too, is just to kind of expand the way that I’ve thought about certain metrics or how we’ve thought about them as a team. So yeah, it’s been, I think first and foremost, the learning process—very glad to, you know, have gone through it. I’m sure there’s still way more to learn. But going through it once has been really eye-opening in a lot of ways. And I think that this probably the coolest thing so far is just feeling like you’re leveling up in your understanding of the business and how other people think about your business.

Faith (27:10):

Well, I’m excited for us as a business, but also for listeners, because they’re gonna have a front row seat into how this funding affects everything for our business, from how leadership thinks about managing and growing their teams to the initiatives that we choose, and all of the, the bumps along the way. So guys, thank you for joining for the second episode of the new season of the Frontier. I’ve learned a lot. I hope our listeners have, too. If you wanna find Teja or Tyler, you can email them. Their emails are very easy to guess. So you can also find them on Twitter, which is where most of us hang out. So, thanks guys. Have a great rest of your day. 


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