Charles Thiede left the security of his job as CTO of a large business information provider to launch his own ‘Expert as a Service’ business, Zapnito. Moreover he did this successfully, without the backing of venture capitalists.
I know a CEO who dropped out of Cambridge to create a startup. His company is VC-backed, he has been interviewed by Bloomberg, and his brand is chasing major market growth. That is his journey, and I admire him.
But I haven’t gone that route.
As the CTO of a large business information provider, I oversaw product and development teams. I also witnessed this portfolio company buy and integrate smaller businesses. With every acquisition, I saw pride and passion on the faces of these founders. Soon, I realized that was what my own work life was missing: a sense of ownership and creation.
Once out on paternity leave, I developed an idea for a new online network of experts. Looking down at my newborn daughter, I knew it was time to build my own business. What first seemed like a crazy impulse became my strongest inspiration; I know I’ll tell my daughter to take risks, and I need to live by that myself. From this fatherly gaze, Zapnito was born.
The idea was to create a SaaS publishing platform platform modeled around the concept of experts as a service, or ExaaS. Set on a move back to California from London to seek funding, I exited my company. My co-founder and I made some half-hearted VC pitches on behalf of Zapnito, including one to Imperial Innovations. A big part of us didn’t want investment at that time; our idea needed more development. But to help it grow in its early stage, we felt we had to try.
Perhaps our lack of enthusiasm showed, but our lack of success in the form of no funding quickly proved to be a blessing. Soon after those pitches, our business pivoted significantly. I don’t believe that would have happened had we taken early stage funding.
So how did we fund Zapnito’s early stage sans investment?
Instead of spending all our energy on the investor mating dance, we used a tech consultancy approach to find one initial client. This client is a large publisher helmed by entrepreneurs that fund small businesses from within. They are not investors in Zapnito, but they have been an amazing supporter of us in their own way.
Jon Beer, my co-founder, and I also built a consultancy that sits alongside Zapnito. Our consulting revenues initially funded the R&D of Zapnito in its early stage. Today, Zapnito’s SaaS revenue funds its R&D, while our consultancy lets us live within our accustomed lifestyles. We quit our jobs to bootstrap from scratch, yet we still are able to support our families.
Both models are symbiotic, and we plan to continue this approach. We certainly the work 15 hour days that are typical of whiz kids in a garage. But we aren’t running out of money and watching our equity diminish with every round from a VC. This allows us to pivot Zapnito’s market, add value to our consultancy, and support our families all at once.
I think there are lots of careerists who yearn to break out and develop a business, but are afraid to lose their income streams. I don’t blame them. But there is a different path to building a software business then the whiz kid/ramen-eating/Venture backed model. It involves finding select initial customers with a strong need for your service, building your own value by adding to theirs, and scaling from there.
It’s less sexy than the garage-to-Google grind. But if you value autonomy and security in equal measure, it’s an ideal way to have both.
This Professional Profile has been contributed by Charles Thiede, CEO of startup Zapnito. Would you like to be featured on Startups Geek? Get in touch.