As the first hire at a startup, I get a first row seat into what it means to build a culture that every person at the company can be proud of. An enduring culture is built up over time by daily behavior, but there are certain events that set the tone. I call them culture stories. There were two such events in the first couple months I joined.
Fighting tooth and nail to close the first customer was equal parts exhilaration and despair. We had been nurturing a handful of leads but the warmest one was a crypto news startup. I’ll refer to them as Acme.
To call our conversations contentious would be an understatement; they were combative. As a fledgling startup, we always understood we’d be short on leverage at the negotiating table. But conversations with Acme left a bitter taste: they often went back on previous statements, refused to share information, pushed us relentlessly for lower prices, and made steep demands.
One customer has to be better than none, right???
After a couple weeks of back and forth, Acme was ready to sign. That night, we circled up in our CEO’s bedroom/office and debated what to do. We ultimately made the right, but incredibly painful, decision not to close them. Our customers are our partners; they should want to work closely with us and provide the feedback we need to solve their problems better and faster. And nothing suggested that Acme would be a good partner. If this is how they treat us now, how would they treat us when they were actually using our product to verify new users? When there were actual stakes on the table?
Later that month we signed our first customer, who went on to become a trusted partner. I’m glad we waited.
In my second month, we set out to raise a seed funding round. The founders had raised a $500k pre-seed round shortly before I joined, but continued interest from investors presented an opportunity to strike while the iron was hot.
The first investor we verbally locked in for the round was the same venture capital firm that provided the previous pre-seed. I’ll call them VC X. The rest of the round quickly filled up with angel investors, and was effectively wrapped up when a second institutional investor offered a term sheet.
As we reached the closing stages of the round, a final venture firm reached out, one that we thought we’d be fools not to pitch. I’ll call them VC Y. In retrospect, life would’ve been easier if we hadn’t.
The short version— VC Y wanted to squeeze VC X out of the round. I’d be hard-pressed to blame anyone for saying yes. Y is a brand name in the startup world; hitching your wagon to their name instantly boosts your credibility and brand awareness. Most startups only dream of getting a term sheet from them. And here we were, staring at a term sheet that valued the company higher than ever before.
I remember the three of us driving back from Mountain View one night after a Y Combinator interview. A partner at VC Y was calling our CEO before, during, and after the drive — trying to convince him to take the term sheet. He skipped dinner to take all the calls (one of the many ways we’re different). Needless to say, it was a stressful evening. But despite the last-minute blitz, we made good on our verbal commitment and closed the round with VC X, carefully and politely turning down VC Y in the process.
There’s always “what ifs” but I prefer to focus on what is. Our word matters; our relationships matter. And that’s why half a year later, we raised a series A round from VC X.