Bootstrapping to $95 Million


We sat down with serial entrepreneur and Endeavor Atlanta board member David Cummings. He founded the Atlanta Tech Village, Atlanta Ventures, and bootstrapped Pardot which he eventually sold for $95 Million. David shares insights about his entrepreneurial journey, the Atlanta ecosystem, and why he joined Endeavor Atlanta.  


How did you first get in to entrepreneurship?

I was always looking for a different product, idea, or business as far back as I can remember. I started programming in middle school and by 9th grade had Microsoft applications for sale on AOL, Prodigy, and CompuServe. These sites were precursors to the mainstream internet. My early applications all had a “word of the day”; It could be Spanish, French, a famous quote, or an SAT word. Towards the end of high school the .com craze was taking off, and I transitioned from building windows apps to building websites and doing web design. As far back as I can remember I was always looking for inefficiencies in the market or ways to delight customers. Teaching myself programming in eighth grade and putting up my first app for sale in 9th grade was really the start of it.

What made you want to continue to pursue entrepreneurship after college?

In my mind there was no other way. Even in college I kept doing web design which sparked the idea for a content management software. I pitched one of my professors to be an investor, and after he said yes wrote a check for $20,000. I used that money to hire a bunch of classmates. We built one of the first content management systems the summer before senior year. This led me down the entrepreneurship path. Quite honestly there was no other path forward after graduation. I was 100% hooked.

Can you tell us what it was like at Pardot in the early days while you were really scaling?

They say the ones that work out well are the ones where it feels like you can do no wrong,  whereas that ones that don’t work out are where you learn the most. We learned a ton at Pardot, but in hindsight so many things were executing in our favor. The big takeaway from the Pardot experience was knowing that our product was revolutionary not evolutionary. Marketing teams that bought Pardot were clearly ten times better than before. We started the company three years before the market really exploded, so we had enough time to get the business going, refine the product, and hire the right people. Most importantly it gave us time to find 100 early adopter customers who consistently gave us feedback. By year three we had the foundation set and the market just exploded. Pardot was certainly in the right place at the right time with the right product. If we had started five years earlier we would have been too early. Who knows if we would have had enough stamina, energy and team at that point. In hindsight the timing was great.

Why did you choose to bootstrap Pardot?

At Pardot we pitched 29 VCs up and down the East Coast and California, including famous ones like Battery Ventures, Sequoia, and Benchmark Capital. We received interest from two different east coast firms and one other in California. As we went through diligence we realized that the math to raise venture capital didn’t make sense. We looked at how fast we were growing on our own, the cost of customer acquisition, and future dilution. For the math to work the business needed to become $5 more valuable for each dollar invested because of dilution, a bigger employee stock option pool, and expected future rounds of financing. We decided that it didn’t make sense to raise money, so we said no to the VCs that were interested. We kept bootstrapping the business and it worked out great.

What advice do you have for entrepreneurs deciding to either bootstrap or raise money?

A business is a system to put money to work and generate value. You shouldn’t raise money and then figure out how to generate value. I think bootstrapping is more conventional than people think. There are many more companies bootstrapping but don’t get recognized in today’s day and age. Here’s the way I look at it. If each dollar of investment turns into $5 of enterprise value then it absolutely makes sense to raise money. There are a small number of markets that are winner take all or winner take most. Uber needed to scale and needed money to do that, but most markets don’t operate this way. If you look at marketing automation there are tons of winners: Pardot, Hubspot, Marketo, Eloqua, Act-On, the list goes on and on. It wasn’t by any means a winner take most. As an entrepreneur you should recognize what type of market you’re in because in a winner take all market you either win the market or you lose. And losing it is worthless. Sometimes it makes sense and sometimes it doesn’t.

Why did you start the Atlanta Tech Village?

During the Pardot experience we were growing fast. We were typically doubling or tripling revenue every year with no signs of slowing down. We started playing “sublease roulette” where we’d need more space every 18-24 months. We had this high belief in our culture and we wanted to have the best place for our team members to work. Unfortunately every space I toured was old, stale and uninspiring. We had to bounce around from office to office hoping there would be a cool sublease with the right terms. No entrepreneur wants to sign a 5-7 year lease. After going through that experience, I figured there had to be a better way for a startup to go from two entrepreneurs to 40 employees. So first off, my reason for launching ATV was to solve the inefficiency problem of office space for startups, but secondly, I wanted to create more community for entrepreneurs. When I moved to Atlanta after college there were a few meetups, but they were mostly “old boys clubs”. You couldn’t go to the meetups unless you had a million dollars of revenue or knew someone. It was hard to find like-minded tech entrepreneurs all under the same roof. I believe ATV solved the office space problem and the community problem in one fell swoop.

Why did you start Atlanta Ventures?

Our goal with Atlanta Ventures is to help other entrepreneurs start and grow their business by either incubating it or writing a check to help take it to the next level. Even during the Pardot days we were incubating companies inside of the office. Once Pardot started going well, we incubated Clickscape, Rigor, and Salesloft. We were always working on new business ideas with other entrepreneurs in the office, partly for the community function and partly to support brilliant ideas from Atlanta entrepreneurs. Atlanta Ventures is just a formal name for something that had been going on for years at Pardot.

What do you think Atlanta does well as a startup entrepreneurial ecosystem?

Atlanta has great people, a can do attitude, and awesome technical talent. Georgia Tech is one of the best technical universities in the world. Typically for enterprise software you need lots of great product development, product management, customer support, marketing, and sales people. As the business capital of the southeast, Atlanta has hundreds of thousands of people that are in some type of sales job. Thousands of companies have regional sales offices or headquarters in Atlanta. We also have great software engineers in spades. Atlanta is the perfect place for building a software startup.

What are some of the challenges the Atlanta entrepreneurial ecosystem faces?

Business software doesn’t get written about as much as consumer software, so Atlanta doesn’t have as big of a reputation as it should. Consumer, social, and mobile apps get way more hype and press. Atlanta doesn’t have as great of awareness as it should, based on the level, volume, and quantity of success stories. That’s partly a function of Atlanta not telling the best story or being more boastful like some other markets. Atlanta has great ingredients and great success stories, but telling that to the world is something we can continue to improve.

If you could have a billboard in Atlanta with one piece of advice for entrepreneurs what would it be?

Take the risk. Put yourself out there and just try it. There are so many entrepreneurs that I talk with that frankly were scared starting their business. It doesn’t always work out and it's not always pretty, but every single one of them says they learned a ton. Obviously the ones where it worked, it changed their lives. The ones where it didn’t work are always grateful they gave it a shot. You might fail and there is nothing wrong with failing. If you are a motivated self-starter that loves to learn and has a good attitude, you can find a job no problem. You don’t have to be a genius to be a successful entrepreneur, so give it a shot!

Why did you decide to join Endeavor Atlanta’s board?

The idea of being able to help the scale-ups and growth-stage entrepreneurs that are already succeeding really resonated with me. This market is often underserved but these are the companies employing a great deal of people and changing the landscape of an ecosystem. I think entrepreneurship is one of the greatest forces for good in society. Entrepreneurs who build great businesses can treat their employees well and provide a great place to work which funnels back into the community through wages or quality of life. Happier work life translates to happier life everywhere else.

In terms of being an underserved piece of the market, we typically see a ton of startup events, most of which are geared towards the idea or seed stage. Very few events are geared toward helping growth-stage companies 10x there business. I think Endeavor can really be key in supporting this segment of the market.

Lastly, as the community grows and as we have more scale-ups, it is clear that we need the best entrepreneurs to give back and help the next generation. Endeavor’s mission aligns perfectly with this.  

What are you reading right now?

I’m on a kick right now reading business scandal books. I’m currently reading The Smartest Guys in the Room. It’s the Enron story and talks about them being a high flyer and then blowing up. It has tons of fascinating details, anecdotes, and stories. I recently read Barbarians at the Gate and Den of Thieves. Barbarians at the Gate is about the fall of RJR Nabisco which was one of the largest leveraged buyouts in history. Interestingly enough, the firm was headquartered in Atlanta when it was taken private. Business scandal books are my current genre.


Scale-Up Breakfast with Jeff Arnold

On March 30th Endeavor Atlanta held its first Scale-Up Breakfast, an intimate gathering for high-growth entrepreneurs focused on learning from successful founders. Serial entrepreneur and Endeavor Atlanta Co-Chairman Jeff Arnold took the stage to talk about scaling culture and talent in high growth companies. Jeff reminisced about his early days as an entrepreneur, founding and scaling WebMD during the dot-com boom, and his vision for his newest venture Sharecare. We were fortunate to have Hala Moddelmog, CEO of the Metro Atlanta Chamber, moderate the conversation, while Dawn Whaley (Co-President, Sharecare) and special guest Dr. Mehmet Oz (Co-Founder of Sharecare, The Dr. OZ Show) provided additional advice on scaling talent. Below are highlights from the conversation! 

Demonstrate and Maintain Culture

In 2010, Jeff Arnold and Dr. Oz founded Sharecare, a health and wellness technology company that provides consumers with personalized resources to live their healthiest lives.  Since its founding, Sharecare has acquired 11 companies, several of which were outside the United States. Jeff found one of his biggest challenges as CEO was instilling Sharecare’s unique culture throughout its 2,400 employees around the world, many of whom joined the company via acquisition. Jeff highlighted the importance of having the CEO and executive team drive the culture. It’s important executives not only talk the talk, but walk the walk. 

Being in the healthcare industry is an important component of Sharecare’s culture. Their executive team works tirelessly to remind employees that they can change lives and improve the company every day. One method Jeff and his team use to communicate their unique culture is through quarterly all hands meetings. The gatherings highlight company successes, opportunity areas, and the status of annual goals. Most importantly Jeff and team use this meeting to ground employees in Sharecare’s culture. At each all hands meeting Jeff or Dawn highlight a story they call “Sharing Care” which is an inspirational story from the healthcare industry to showcase extraordinary acts of kindness. The goal is to highlight life changing moments in their space and how Sharecare can be a catalyst for these events. For example, Q1’s story was about a nurse at a partner hospital who adopted one of her patients. The Sharing Care videos also set the tone for what comes next; a quarterly culture theme. In Q1 the theme was #NotMyJob. This theme was used to remind employees that everyone has a voice and that all employees are responsible for making things better. 

Hiring and Retaining Talent

Scaling talent comes with its own set of challenges. Jeff discussed how founders and CEO’s need to constantly evaluate talent at each stage of company growth. This requires founders to oftentimes step back and work on the business versus in the business. 

Dawn believes hiring at different growth stages requires different tactics. “When you’re less than 100 employees, you can hire through your personal networks. Then you get to that 100+ employees and you really rely on external recruiters to get any type of scale. At Sharecare we have now gone full circle. We’re at 2,400 employees and this is the first time in my career that I find we are too big for external recruiters, except for very special employment opportunities or executive hires. We have brought a team in house to do the recruiting.”

Jeff mentioned that founders, including himself, are oftentimes too optimistic during the hiring process. To counter his instincts, he often removes himself until the final interview stage. When he does conduct interviews, he focuses on evaluating two areas. First, skill diversity is extremely important in Sharecare’s hiring criteria. Jeff believes the best teams consist of leaders that challenge one another. The second item Jeff is looking for is chemistry. “We're all working really hard and you have to like the people you're working with and have similar philosophies”, Jeff said.

Dr. Oz spoke about his experience as he hires and scales his team. He highlighted the importance of addition by subtraction. Early in his career, a colleague told him he’d never regretted firing an underperforming employee. Hiring slow and firing fast is important. “Oftentimes you’ll find that after letting someone go, employees feel like there’s justice in the world. Paradoxically it helps morale. You’d think the opposite but employees recognize they are being appreciated for their good work.” 

When hiring new team members, Dr. Oz recommended pulling in great talent from their existing jobs. To build a top-notch team, leaders should continually identify and recruit top talent from other companies. “Go get someone who’s already doing a good job and build around him or her. You really want to get to a point as a company where you’re like a magnet attracting needles versus searching for them in a haystack.”

Lastly, Jeff reminded the entrepreneurs the importance of retaining talent. The effects of keeping your best people are important not only to support growth but also to improve profitability. Jeff shared a story to illustrate the potential savings from retention. “We employ over 750 nurses and have about 220 nurses in Maryland. Two years ago, the turnover rate was very high. Through some tactical changes, we reduced turnover by 43% last year. It was simple changes like getting them all on the same benefits package. Oftentimes it’s the little things that make the difference. When you reduce churn, it has massive positive financial ramifications on the business.” 

Endeavor Atlanta would like to extend a huge thank you to Jeff, Hala, Dawn, and Dr. Oz for spending time with some of Atlanta’s best high-growth entrepreneurs. And thank you to Cherry Bekaert and Cushman and Wakefield for sponsoring the event. 

Interview with Dave Keil of QASymphony


Endeavor Atlanta is publishing a monthly blog where we interview great entrepreneurs, mentors, and investors in the Atlanta ecosystem. Dave Keil, CEO of QASymphony and Endeavor Entrepreneur, kicks off our interview series. Dave has a diverse background leading early stage companies as well as large enterprises (e.g., ChoicePoint). Under his leadership, QASymphony has grown from a few employees in 2014 to a team of 100 generating significant revenue. In 2017 alone they opened a European office, grew revenue by 113% and raised a $40M Series C from Insight Venture Partners.

We sat down with Dave to get his perspective on leading a high-growth company and the entrepreneurial scene in Atlanta.

You joined QASymphony at a very early stage but your early career included stints as a consultant and investment banker. What made you want to take that jump from steady enterprise to high-growth startup?

I've had a diverse career. I've worked at later stage companies and I've worked at earlier stage companies. When I was introduced to QASymphony, the business had fairly low revenue. I was initially skeptical, but when I studied the business and talked to customers and others in the market, I could see that the market was really ready to explode. That's what got me very interested and excited. I was very happy to learn that the product had received significant investment over the previous two and a half years, so it was very well built and ready for the primetime.

When you took over what were the biggest challenges you faced and how did you overcome them?

I started in June of 2014. We had a very strong product but there had been a minimal investment in sales and marketing at the company. We were pretty open and honest with ourselves that there was very little sophistication in this area. It was clear to me that this was the first challenge we needed to tackle. We needed to beef up the sales side so that it could catch up with the incredible capabilities of the product. In the first couple of months we interviewed a lot of folks and hired a great leader in Jordan Rackie who had a lot of success at Pardot. I could tell that he had the ingredients to build a great team and also construct a disciplined and scalable sales process. As soon as we brought him on the first priority was to round out this team and provide the necessary resources to ensure success.

Any funny start-up stories you want to share as you got off the ground?

Well, most of the good stories you know I can't share, but I will say there was one funny story that sticks out. We have a large development team in Vietnam, about 40 employees. I went there very early on in the summer of 2014. I had never been to Vietnam before and was really impressed with the team. They put a big emphasis on showing me the country and getting to know me, so they put together a trip up to a fishing village. We spent the day on this dock with a whole bunch of other companies that would do these things for the day. We basically sat around drinking beer on the dock, eating great seafood and singing songs.  It was a really fun experience and I was getting to know everybody. On the bus ride home I got them all to learn and sing "Meet the Mets" which is one of the few songs I actually know the words to*. It was quite humorous and I wish I had recorded it. Still to this day my colleagues in Vietnam remember the words to the Meet the Mets song.

*If you hadn’t figured it out,  Dave is a HUGE New York Mets fan.

What do you think Atlanta does well as a startup and entrepreneurial ecosystem?

What I found when I moved down from Boston was a sharp contrast in terms of how collaborative executives and other business leaders are in Atlanta. Boston is a fantastic tech city but I didn't find Boston to be as open. I think Atlanta has an unusual mix of senior leaders that are willing to spend time and pay-it-forward. Many of them have had good mentors and realize that, which is why they're willing to take time to help many of the emerging tech executives.

I know things like the Atlanta Tech Village have been a huge catalyst as have several other organizations in Atlanta. I've been involved with the Techstars program where they pull in 50 or 60 mentors to assist with 10 companies every year. I've been a mentor the past two years. As most know, Techstars is also replicated in other cities but I think it's done really well in Atlanta.

You also hear it often, but having Georgia Tech here is a tremendous advantage and highly differentiated relative to what you see in most cities.

What are some of the biggest areas of opportunity for Atlanta to better support its entrepreneurs?

I've thought a lot about this. When you think of other cities that are really strong tech cities -  and I put Northern California on a different planet - but if you think about Seattle or Austin or Northern Virginia, I think we're behind in having some of the premier public tech companies remain public.  If you look at Seattle you have Microsoft and Amazon creating a base of talent other local companies can lean on. They can pull from the network there to start up and scale other businesses. I know we had some great successes from ISS when they were public. I know Dun & Bradstreet Software, the old MSA, was a very strong software company that was a part of a public entity. These successes spawned lots of other great entrepreneurs. I'm not sure of the reason, but in general I think it's disappointing that a lot of Atlanta companies that get to a certain size end up getting acquired. Take Airwatch and their billion dollar acquisition as a good example.  I think if the marquis companies remain public it creates a better overall ecosystem. Successes like Manhattan Associates or Global Payments, both happen to be great customers of ours, are two that come to mind, but I had trouble identifying any recent successful public technology companies in Atlanta that have remained public. I think that's something that could really be a positive change over time.

What advice would you give to entrepreneurs that are scaling quickly and hitting an inflection point in their business?

Three things are at the top of my list and I've learned a lot of this from having made these mistakes in my career. First: over-invest in A-players. The returns are always highly accretive to give a little more equity or pay a little more for the real top performers. Second, raise more capital than you think you need. And lastly, always have the discipline to keep "top-grading" your talent as the business goes from one phase to the next. An executive when the business is at $2M dollars may be perfect, but may not be the right fit when you get to $10 million. I think having the discipline to do that is tough but very important.

Why did you decide to apply to Endeavor?

Well, as you guys know, I didn't know anything about Endeavor when I was introduced through Frank Dalton . I've known Frank for many years and he is one of the partners at Fulcrum Equity who were a close partner of ours that led our Series B a few years ago. To be honest, out of respect for Frank, I took the meeting. Again, I didn't know anything about Endeavor and wasn't interested in joining a place for startups but as Aaron (Managing Director of Endeavor Atlanta) explained and as I eventually learned, Endeavor is very different. The "scale-up" emphasis aligned well with where QASymphony is in its lifecycle. I was really sold on the opportunity to take part in this Global Network. Everyone I've met in this organization and network is second to none and truly wants to help you grow.

We've done really well in the United States but there is a huge opportunity for QASymphony to create similar success in Europe, South America and Asia. I'm convinced Endeavor can add tremendous value there.

What are you reading right now and what music are you playing in your car?

I actually try and read two books at the same time so I can go back and forth when I get bored reading one. I'm going to Russia this summer for the World Cup in Moscow and to make sure I'm not a completely ignorant American, I'm reading a book called "A Concise History of Russia". It's a 500-page book and I'm only up to year 1820 now. It's really fascinating.

And then for a little light reading, I'm reading a book about a guy I knew at Bain, his name is Bill Browder. Bill was a successful investor in Russia and ran into some conflict with the government officials there, and was able to escape to London while his lawyer was jailed and later killed. He wrote a book called "Red Notice" that one of my colleagues gave to me. I just started to read that. Also very interesting.

In terms of music, I listen to satellite radio all the time. I'm an old-school guy. Classic rock. Springsteen, Pearl Jam, Grateful Dead. A lot of the old stations. You won't catch me listening to any of the new stuff unless one of my teenagers had control of the radio.


What We've Learned in Year 1

Endeavor Atlanta will turn one in March.  With this milestone approaching, Adam and I thought it would be a good time to share what we have learned about Atlanta’s entrepreneurial ecosystem and highlight the areas of opportunity the region can address to create an even better environment to scale a business. 

Before we dive into our findings, we want to reaffirm the many assets Atlanta has today – things even “the coasts” would covet. This includes our amazing cost of living, diverse population, highly-skilled talent pool, and access to the world through our airport. And perhaps most importantly we have an increasing level of startup activity and support mechanisms in place for founders.  Indeed, a great foundation we shouldn’t take for granted.

In speaking with hundreds of entrepreneurs, mentors, and investors (including outside Atlanta), several opportunity areas emerged that would move our ecosystem forward: better access to capital and mentors.

On the capital side, we surveyed some of the top entrepreneurs in Atlanta that are running high-growth, revenue generating businesses and found the following:

  •  82%* found it challenging to raise money locally
  •  43% noted misaligned traction expectations based on the round being raised (e.g., expecting $1M in revenue for a seed round)
  • Capital raising challenges occur at all stages of equity financing, from pre-revenue and seed rounds through growth equity, although it's most pronounced in angel through Series B
  • 30% specifically mentioned onerous terms as a barrier to taking local investment

Interestingly, many investors we spoke with, including local, SF and NYC based firms, mentioned the lack of quality opportunities in Atlanta. This is causing local investors to invest more and more outside our region.  So, is it the lack of great ideas and entrepreneurs, or a lack of capital? Or both? We don’t necessarily have the answers, but we have a few theories to offer:

  • Theory #1:  the chicken or egg problem. Money tends to follow success, which begets more success through increased investment.  Increased investment allows founders to tackle bigger problems, and so on.  With few local home-run** stories to point toward, Atlanta’s ecosystem is conditioned to settle for singles and doubles. This drives investment down, creates lower valuations and less friendly terms, and home runs become harder to find. As one founder in our survey stated, "Entrepreneurs in Atlanta need to think bigger. We have a reputation for exiting with a single or double rather than hanging on to scale to a home run.” 
  • Theory #2: Conservative and siloed capital.  Local investors (non-institutional) prefer traditional investment opportunities (e.g., real estate) over venture deals. Breakfast capital is hard to find and often hidden in very closed networks of wealth individuals. This makes it very hard for early stage startups, especially in very new or cutting edge markets.
  • Theory #3:  Talent to scale. Several investors we spoke with mentioned the valuation haircut Atlanta companies often face raising capital in part due to fear the company will struggle to scale talent locally. Part of this is likely cultural given the large percentage of Atlanta’s talent that works in lower risk corporate environments, but part is lack of brand recognition for our diverse, educated talent pool.  Unfortunately, perception is reality.  But having firms like Amazon and Apple and many others look to Atlanta as an HQ market shows that perception is changing.

We believe all three areas are being addressed somewhat organically today. Local success stories like GreenskyMailchimpSharecare, Rubicon Global, Kabbage, and AirWatch are creating the north stars new Atlanta founders can use for inspiration and investors can see as examples of Atlanta’s potential. A few more “IPO ready” firms that scale and stay in Atlanta can help address many of the areas above too.  

The second area of opportunity entrepreneurs mentioned was increasing access to high-quality mentors.  At a local level this means pulling in more successful founders and executives to pay it forward as well as increasing access to mentors outside our region. The entrepreneurs we’ve had the pleasure of working with desire a mix of “generalist” founders that understand broad areas related to scaling a company and “subject matter expert” advisors that know their specific challenge areas or industries very well. Finding a great mentor for each entrepreneur situation is a non-trivial exercise that requires a broad network to pull from and a high level of trust.

The last area of opportunity we’ll mention is really an output of the first two:  speed to execute.  Assuming it’s harder for an Atlanta based entrepreneur to raise capital and find great mentors to support scaling, these companies likely lose precious time in the process.  Time is the enemy of every founder and time spent looking for help provides an opportunity for competitors.  Solving for the first two opportunities increases the speed with which entrepreneurs can execute, increasing their chances of outsized success.

As we’ve interacted with Endeavor’s global mentors and entrepreneurs, we realized many of these opportunities are not unique to Atlanta. In fact, Endeavor’s model, now in its 21st year, focuses on addressing the areas outlined above. In other words, Atlanta’s challenges are often the same ones faced by entrepreneurs in Spain, Japan, Ecuador, Louisville and many other locations outside the proverbial coasts.

As one local founder put it, "Atlanta's ecosystem has good bones, but we still have a ways to go."  We agree, and we’re excited to be a part of building the future.

* – Endeavor Atlanta survey of over 50 top local entrepreneurs leading revenue generating companies

** – Defined loosely as $500M+ exits