The founder’s journey with Brenda Stoner

We’re doing something a little different this month. Instead of a normal ENO8 Answers webinar + video, we wanted to switch it up and interview someone with decades of experience building and launching software startups who could speak to all things founder’s journey. 

I met Brenda Stoner about a decade ago as she was scaling her company Pickup nationally. Her companies have raised $40MM+ in venture funding, she’s navigated successful exits, and is currently building a new enterprise software company. I picked her brain about her founder’s journey (multiple times over), but specifically in the world of software development. She had some great insight that could benefit any founder regardless of company stage, which I’ve condensed and edited for clarity below.

The Full Founder’s Journey

If you’re like me and want all the nitty gritty details of how Brenda built a slew of successful companies, check out the full interview below. There’s great context and backstory throughout that I think really underlines her key points about successfully navigating the founder’s journey.

But if you just want the highlights, read on:

Knuckle Dragging

Brenda founded Pickup as a logistics and delivery company for same-day moving of small freight; it was built on the ubiquity of pickup trucks throughout Texas. Pickup eventually became a national peer-to-peer pickup and delivery service provider powered by tech, but that’s not how it started:

Jeff: What was one of the early lessons you learned building out Pickup?

Brenda: We didn’t think about stepping foot into technology development until we learned what the business looks like… One of the lessons you learn there is, you’ve got to do some knuckle dragging before you ever commit to code.

You have to know your business before you start your business. You’ve got to learn it, and you’ve got to learn it at the street level. There’s a lot of people who sit in an office and try to build something. You have to get down and talk to the customers, go to trade shows, get on the street, run the route, use your own business process before you try to connect with something.

We were doing technology by text message and by yellow pad, but it was working — and people loved it. And so we thought, okay, that’s a consumer hit. So let’s bring this thing to market, let’s find a way to build some technology.

Sticky Revenue

Jeff: We say it here all the time — validation often makes all the difference between success and failure. So you get that consumer validation, decide to build out the tech to support that business… what came next? Fundraising?

Brenda: We ended up with 24 consecutive quarters of revenue growth. That’s really hard to do. Along the way, we’re like, okay, it’s time to do a series A so we can start getting outside of Texas. So as we looked at, how do we scale? So the markers for Series A — everybody was asking “what’s your CAC and LTV look like?” And I’m like, “what’s CAC and LTV?” We got a big lesson there. CAC is customer acquisition cost, and LTV is lifetime value. That’s what everybody was using to measure. And so we did some math around that and found that we were spending $45 to acquire one customer — that’s not scalable. So we sat down with our biggest investor, and he said, “okay guys, we got to go find some customer aggregation.”

We ended up working with some retail stores, and that gave us demand density. If you can aggregate your demand at certain points, then it makes it easier for your drivers to get repeat work.

We also started going after every national retailer that had big and bulky products. By the time we finished, I think we had 35 or 40 contracts nationally and the big ones, like with the Williams Sonoma group, are great brands. But when we started looking at series, A, Series B, these were attractive things for people. 

So what people are looking for in terms of value and investability in a business, they would dig into your contracts. Are these one-year contracts, or are they three-year contracts? How sticky are they? Do you get real recurring revenue?

Jeff: We’ve seen that with many of the early-stage founders we’ve partnered with — if there’s “sticky” recurring revenue, it’s much easier to secure funding going forward.

Growing Pains

Jeff: So you go after these national chains, raise some capital… Then came rebuilding the tech, right? What were some lessons you learned in that process?

Brenda: Each time we did raise money, it was just enough to stay alive at each stage of the business. And so we had, I think it was a team of two and a half that rebuilt all of our technology. So we had to cut some corners there; we weren’t very smart about our data structure. So at the end of the day, we needed some stuff out of our data that we couldn’t get. I would encourage people to spend the time architecting properly, and make sure that your future needs are met, along with your current needs. 

Basically every time we got some money, we added some more technology and then things were getting pretty strong. We got to a Series B; the Series B guys said “hey look, you need a qualified CTO,” so we went out and found one. He started putting in a proper order to things.

Over time, as you mature, your team matures along with you. Your leadership has to go along with it, which is one of the things you have to do as a startup founder: 

Sometimes, your talent that starts with you isn’t the talent that can finish with you. We all have trouble with that, but that’s exactly what we had to go through.

The Building Blocks of a Successful Startup

Jeff: Any other overarching tips you’d give to founders who are starting out their journey to building a software product?

Brenda: There are three places I would not cut corners. I would lump legal and accounting together, because you need to have a solid foundation as you get started.

I would not cut corners on architecture, because it matters — it really matters, scalability matters. And if somebody hasn’t thought through that properly, you’re either going to be operating in a very expensive way, or you’re not going to be able to scale it. 

And then the third one is product, and I might even put product at number one. 

Building what’s needed for the customer problem is the most important thing to consider. The architecture and the construction of the business around that is secondary; you almost want to start with product.

Jeff:  Absolutely. A couple of things I like about hiring a product person or a product strategist or an experienced product manager really early is that you do get that definition around “what are we really building?”. You get them interacting with customers. You get more of that validation and understanding of what really is going to solve the problem. You get better clarity for the developers to build off of because they can work with designers, and they can really help get that baked out a lot more. The thing that a lot of people overlook, I think helps a lot too (especially if you have a pretty big sales function to getting your product to market) — Product Managers are terrific with helping the sales team.

Hiccups on the Founder’s Journey

Jeff: Any other parting nuggets of wisdom for early-stage founders?

Brenda: There’s two things that will sink a startup. Risk number one is running out of capital. Risk number two — they’re interchangeable — is choosing the wrong partner. So be very considerate and strategic about who you go into business with.

The other thing I’d say is that taking other people’s money is a huge burden on you. You want pressure? Take a dollar from somebody else. It becomes like a sprint — your job now is velocity. Your job before was thoughtful architecture, now your job is velocity, because the minute you start diluting your stakeholders with additional capital, the race is on.