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    31 Replies Latest reply on May 29, 2008 4:02 PM by SBC Team

    Event:  Bootstrapping to VC Funding

    CommunityTeam Adventurer
      Learn how Jive Software grew profitably from a two person business in 2001 to over 150 employees today. Dave Hersh, Jive's CEO will talk about their journey and lessons learned in bootstrapping the company for six years, and when they decided to raise $15 million in VC funding from Sequoia Capital in 2007.

      About Jive Software
      Jive Software believes work is broken and that people-driven software can fix it. Jive delivers social productivity software to bring together employees, partners and customers in a unified collaboration system, allowing them to create better products, faster processes and improved relationships. Its flagship products, Clearspace and Clearspace Community, are used by over 2,000 customers worldwide, including over 15% of the Fortune 500. Jive was founded in 2001 and is headquartered in Portland, Oregon. For more information, visit Jive Software online at http://www.jivesoftware.com/.

      The SBOC Team will take advance questions from users who want to pose a question to Dave. If you have a question, post it here and then check back Today 3-4 PM ET/noon - 1:00PM Pacific or anytime after for Dave's response. You can also pose a question in real time to Dave anytime during the event time. Remember you need to be registered to post a question. So, if you haven't signed up yet, do so now, it's free!

      Logistics for events:

      Please start posting questions to Dave. Remember the community guidelines; stay on topic and be professional.

      The event will be moderated to queue the questions for our guest. After a question is posted it may be delayed and/or moved into a queue. You do not need to repost. Your question has been received but is in a queue waiting for the guest to respond to.

       

       

      Dave will attempt to answer as many questions as possible; however he may not get to all questions.
        • Re: Event:  May 29 3-4PM ET:  Bootstrapping to VC Funding
          Bluesuit Adventurer
          Why did the company finally decide to accept venture capital? What were the key decision making factors? Or did the founders always envision and plan for VC funding?
            • Re: Event:  May 29 3-4PM ET:  Bootstrapping to VC Funding
              jiveceo Newbie
              Basically, our industry was taking off. We had a great product, a great
              team, a history of profitability and a strong desire to win, but it was heating
              up quickly and we weren't about to cede marketshare to newer players. But to
              get the next level, we needed a partner to help us get there....and it's a lot easier to raise money when you don't need it! Sequoia was a
              great fit as they've got the best track record in the industry and they could
              strengthen our position as the leader. A few of the points on what they (Sequoia) brought
              to the table (taken from a blog I wrote):

              1. Smart Growth: They allow us to think big and grow in the
              right ways. We now have the ability to make investments that support our larger
              goals, such as acquiring a key technology or investing in remote offices.

              2. Recruiting: As the growth continues, making sure you get
              the right senior leadership on board is paramount, and a good investment partner
              can attract great talent.

              3. Partners: We've done a great job building relationships
              with the likes of SAP and Oracle, but there's a lot more opportunity out there.
              Sequoia not only knows the right people, but is well-connected to the rapidly
              changing needs of those potential partners.

              4. Mgmt assistance: We've got a great management team in
              place, but having such a stellar set of coaches helping you out makes a big
              difference. These folks have seen these challenges many times before, but are
              still open to creativity and not treating the business plan as a formula.

              5. Advisors/board: As we build out the board and advisory
              board, they can help think through and attract the right folks.

              6. Guidance: If we ultimately decide to take the company
              public, or if the company were ever to get acquired (not a goal of ours and not
              something we're pursuing), these guys are the ones we want to have in our
              corner.

              So we felt like it was the best route for us -- bootstrap until things exploded, then raise the money to make sure we aggressively captured the market.
            • Re: Event:  May 29 3-4PM ET:  Bootstrapping to VC Funding
              caffeinated Scout
              Hi Dave, I use to work for a company that utilized Microsoft's Sharepoint product and wondered how does Clearspace differ? Have you won clients over who originally leveraged Sharepoint?

              BTW, I caught your article in Forbes earlier this month, very impressive.

              Thanks for listening
                • Re: Event:  May 29 3-4PM ET:  Bootstrapping to VC Funding
                  jiveceo Newbie
                  Thanks. Yes, we were very happy with the Forbes article.

                  Sharepoint is composed of many pieces and positions itself in many markets
                  (Enterprise Content Management; Business Intelligence, Horizontal Portals, and
                  more). They are pretty document focused, so most organizations associate them
                  with document management, whereas Jive is a lot more focused on a) lightweight
                  web-based content (forums, wiki-documents, blogs, etc.) and b) "people-focused"
                  features (social networking, expertise location, etc.). So we see them as
                  different applications that can sometimes overlap in terms of the business problems they
                  try to solve. To that point, MSFT has recently been setting up partnerships
                  with companies like Jive who can extend Sharepoint to make it more social.

                  So the short answer is that we are about people, community, and
                  conversations while they are about content based collaboration - some
                  organizations need both, some are comfortable just using one environment. In
                  cases where they need both, we seek to integrate with Sharepoint and have
                  released integration code to support that.
                • Re: Event:  May 29 3-4PM ET:  Bootstrapping to VC Funding
                  devaney Adventurer

                  Dave, what advice would you give to inspiring entrepreneurs who want to start their own business in the high tech industry and attract VC funding? Is it about coming up with an innovative product or is it more about having a strong team?
                    • Re: Event:  May 29 3-4PM ET:  Bootstrapping to VC Funding
                      jiveceo Newbie
                      I could go on for days on this, but here's a few
                      that are top of mind:
                      1. Focus,
                        focus, focus: it's all about the one thing you can do better than anyone else
                        (and that your customers truly need and will pay for). Sounds obvious, but we
                        screwed it up in the early days :).
                      2. I
                        put a lot more emphasis on the team, than on the product. A good team will win
                        99 times out of 100 over a great product.
                      3. If
                        you want VC funding, make sure you believe in your heart you can earn them 10X
                        the amount of money they invest. Also, try to get to a point where it's a "just
                        add water" type of scenario - in other words, prove the model out to the extent
                        possible before raising the money (ideally with real customers). They always want to come in when it's a game of scaling, not of investing more in R&D (angels are better for that).
                    • Re: Event:  May 29 3-4PM ET:  Bootstrapping to VC Funding
                      CommunityTeam Adventurer
                      Any more questions for Dave? It's not too late to submit your question right now. Or make sure you join us for the live event tomorrow!
                      • Re: Event:  May 29 3-4PM ET:  Bootstrapping to VC Funding
                        start_up Wayfarer

                        Dave,

                        What tips would you have for someone new starting out. I am trying to develop a services company to use software and technology to make it easier for small US companies to export to China and India. Did you envision Jive's growth from the outstart or was it more organic. I am a 2 person type shop today and don't know if I should plan to get huge or let it happen more organically
                          • Re: Event:  May 29 3-4PM ET:  Bootstrapping to VC Funding
                            jiveceo Newbie
                            With Jive, we always wanted to go big, but we had to be patient for the
                            market to come around to these ideas. We made some mistakes, went down some
                            paths that didn't work, but ultimately got it right. However, if we had just
                            tried to go big from day one and bring on a lot of folks, it would have gone
                            sideways as we just didn't have the product or the market yet. So if it is one's
                            goal to grow a "great company" (like as defined in Good to Great), then I think
                            there's got to be a very focused, deliberate investigation into how that growth
                            would really play out. It also helps to have smart advisors who can help you
                            see into the future and understand how to get it done -- hard to find those folks, but they can make a huge difference.
                          • Re: Event:  May 29 3-4PM ET:  Bootstrapping to VC Funding
                            clnshirtz Wayfarer
                            What has been the secret to winning contracts from large companies. I am in a different business - dry cleaning. However, I'd like to win some bids to do work for companies in my area, so I am not 100% reliant on individual cusotmers. Any tips?
                              • Re: Event:  May 29 3-4PM ET:  Bootstrapping to VC Funding
                                jiveceo Newbie
                                I actually looked at buying dry cleaning businesses once. Great business...especially
                                if you get those larger contracts.

                                In our industry, our strategy is to establish a
                                "beachhead" in the large companies by doing something valuable that only we can do (and that the larger
                                players can't). Then we use that beachhead to expand into other areas and expand our relationship into something much bigger. In your business, maybe that's personal service, quick
                                turnaround, on-site cleaning or something else. Or maybe it's just a case of
                                being better at sales and relationship building.
                              • Re: Event:  Today 3-4PM ET:  Bootstrapping to VC Funding
                                FCPainter Adventurer
                                Dave - congrats on your success - quick question: what communities do you belong to and what do you get out of them?
                                  • Re: Event:  Today 3-4PM ET:  Bootstrapping to VC Funding
                                    jiveceo Newbie
                                    Many thanks! Other than this community now :), I contribute to
                                    some communities that we host for our customers (sharing ideas on our software and
                                    how to roll it out), I use LinkedIn and Facebook, I'm a part of communities for
                                    software execs, one for Oregon-based businesses, and one for local non-profits.
                                    I wish I could say I was part of a community for a hobby, but with the company
                                    and a 2 and 4yr old at home, hobbies don't really exist anymore. I use them for
                                    connecting with people, recruiting, business development, getting ideas for the
                                    business and learning (new ideas, industry, operations, etc.).
                                  • Re: Event:  Today 3-4PM ET:  Bootstrapping to VC Funding
                                    SBC Team Guide
                                    Community Members,

                                    Please join us in welcoming Dave Hersh to your Small Business Online Community. Dave is here to answer questions on their journey and lessons learned in bootstrapping the company for six years today. Dave will be using the screen name jiveceo.

                                    Dave, feel free to answer away.
                                    • Re: Event:  Today 3-4PM ET:  Bootstrapping to VC Funding
                                      SBC Team Guide
                                      Community,

                                      Remember to refresh your browsers often to see the most recent post.

                                      Thanks!
                                      • Re: Event:  Today 3-4PM ET:  Bootstrapping to VC Funding
                                        OrganicMix Newbie
                                        How have you managed employee growth and make sure you're always attracting the best talent? I'm going my company this year as well.
                                          • Re: Event:  Today 3-4PM ET:  Bootstrapping to VC Funding
                                            jiveceo Newbie
                                            This is a huge and very important question. There's a book called Topgrading on the subject, which I found pretty compelling -- it's long, but there are some summaries available. The point is trying to find the top 10% (A Players) that you can afford for each position through deep interviewing. You've probably heard it before, but A Players hire other A Players and B Players hire C Players. Hire slow and fire fast.

                                            I would also add to that methodology that a) you should hire less people, but better people (spend more on rockstars) and b) do a lot of backchannel -- talk to as many people as you can that have worked with these people. That was another benefit of working with a VC -- they're backchannel ninjas :).
                                          • Re: Event:  Today 3-4PM ET:  Bootstrapping to VC Funding
                                            Interpreter Wayfarer
                                            Hi Dave,
                                            Have you worked on communities in foreign languages? What were the toughest obstacles? How did you work through some of the language barriers?
                                            Thanks
                                            • Re: Event:  Today 3-4PM ET:  Bootstrapping to VC Funding
                                              simon07 Wayfarer
                                              How has location and real estate decisions helped your business grow? I noticed that Jive is in Portland. Is that the new Silicon Valley?
                                                • Re: Event:  Today 3-4PM ET:  Bootstrapping to VC Funding
                                                  jiveceo Newbie
                                                  Location has definitely been a huge part of our growth. We were originally in New York City and just couldn't grow because it was so expensive. Portland has been great because it's a lot less expensive than Silicon Valley, the people are great and there's enough of a software infrastructure that we could hire from. The hard part was finding senior mgmt -- there are less folks here just because the software companies here are a lot smaller than the Bay Area. All in all, it was a great move for us to make -- we've never had anyone leave us for another tech company (great loyalty) and we're close enough to the Bay Area that we can get there quickly. If we had located in the Bay Area like everyone else, I'm sure it would have been a lot harder to get to where we are.

                                                  Is Portland the new Silicon Valley? No, but it's definitely got some interesting stuff going on. I feel like it's a bit like San Francisco 30 years ago (before the tech boom hit the region). Artists can still afford to live here, which gives the city a lot of vibrancy and culture.
                                                • Re: Event:  Today 3-4PM ET:  Bootstrapping to VC Funding
                                                  CommunityTeam Adventurer
                                                  Dave Hersh, Jive's CEO is live right now answering questions. Post your question right now by hitting reply.
                                                    • Re: Event:  Today 3-4PM ET:  Bootstrapping to VC Funding
                                                      akgold Adventurer
                                                      Hi Dave,

                                                      Thanks for sharing your advice with the Community. Here's my question:

                                                      In the early days of Jive, what were some of the hardest challenges that helped define the character of your company? Did you have any interesting struggles and/or challenges that after overcoming opened up new windows of opportunity?

                                                      Thanks in advance,

                                                      Andrew
                                                        • Re: Event:  Today 3-4PM ET:  Bootstrapping to VC Funding
                                                          jiveceo Newbie
                                                          Wow. You throw fastballs :).

                                                          Tons of challenges. A big one was what we ultimately wanted to get out of the company and why we were in it. We had a chance to sell the company before leaving NYC, but after some heartfelt discussions, made the decision to double-down on going big. We weren't in it for the money -- we really were passionate about finding better ways for people to get work done online and building a great company, but it took that decision to solidify it. Those crucibles in a company's development are very important and do define the character of the company.

                                                          Another one was focus (alluded to in an earlier post). In the early days, we had about three different products and eight people. Now we effectively have one product with two editions and 160 people. It's easy to have a big appetite and want to do everything, but you need to drown out the voices of specific customers and make sure that what you're doing has big impact across most or all of your customers.
                                                      • Re: Event:  Today 3-4PM ET:  Bootstrapping to VC Funding
                                                        SBC Team Guide
                                                        Dave,

                                                        Clearspace and Jive are interesting names. How did you come up with them?

                                                        Thanks,
                                                        The SBOC Team
                                                          • Re: Event:  Today 3-4PM ET:  Bootstrapping to VC Funding
                                                            jiveceo Newbie
                                                            The name Jive was an idea from the significant other of one of the founders. It was close to the word Java (which it was written in) and was a form of communication (and the original product was a discussion forum application). Plus it was memorable. It has turned out to be a great asset -- no one forgets the name :).

                                                            Clearspace was more the result of a classic brainstorming exercise. As we get more focused on the enterprise, "Clearspace" as a brand helps the overall image because it sounds a lot more professional, whereas "Jive" can sound a bit consumer-oriented.