By Bill Klump | @TheKlumper | January 3rd, 2011
It’s no secret that I’m a huge fan of the “Lean Startup” principles as espoused by Steve Blank and Eric Ries. For many businesses it is a good idea to keep your costs low as well as your capital raises until you discover whether or not your product/service has created a sufficient amount of market demand. When you see evidence that there is this so called “product / market fit” then not only are you ready for larger amounts of capital to take your business to next level, you have also put yourself in a position where you have the luxury of choosing your investors rather than the other way around. That is where our “Disruptor of the Day” has found themselves today.
Introducing RJMetrics:
RJMetrics was founded in 2008 by Robert J. Moore and Jake Stein, colleagues at a leading technology-focused private equity and venture capital firm. The firm’s target verticals ranged from enterprise software to e-commerce to online advertising and content. During their tenure, Moore and Stein recognized a common trait among the thousands of investment prospects they profiled: an opportunity for each company to extract actionable intelligence from the mountains of data they already possessed.
The team observed that most companies routinely examined some set of metrics but were unable to produce deep analyses, keep them current, or use them to inform business decisions. The human and financial resources required to build such systems were overwhelming, and the daunting universe of third-party business intelligence solutions lacked the simplicity and affordability required to make them worthwhile.
As investors and advisors, Moore and Stein worked with countless companies to build such analyses from the ground-up. The work they did shaped each company’s core understanding of how their business truly worked, and those companies they assisted became poised to achieve higher profit margins, more stable growth, and an increased likelihood of a lucrative exit.
RJMetrics was founded to make these valuable insights accessible to any company that uses the Internet to do business. Their tools allow every online company, no matter the size, no matter the funding, to harness the power of their data and gain a competitive edge.
RJMetrics is announcing today that they have closed a $1.2 Million financing round from a syndicate of world-class technology investors. The new investors include SoftTech VC, Lerer Ventures, SV Angel, Zelkova Ventures, Upstage Ventures, Red Swan Ventures, Venture Capitalist Jon Anderson, Wharton Professor Kartik Hosanagar, DuckDuckGo CEO Gabriel Weinberg, and Fab.com CEO Jason Goldberg. Jason Goldberg has also joined our Board of Directors.
As a fully-bootstrapped and profitable company, the decision to raise capital was not an obvious one. Jake and I both worked as VCs prior to founding RJMetrics, and that experience taught us the benefits of waiting as long as possible to raise capital. We agreed from day-one that we would only take on investors when we were certain that it would generate positive returns.
I’m happy to share why that day finally came.
Robert Moore Explains Why They Did It:
Opportunity. In 2009, Jake and I emerged from my attic with a minimum viable prototype of our hosted business intelligence product. Jake hammered the phones and we got our first few customers. By 2010, we had enough revenue to make our first hire. We improved our processes and product by leaps and bounds. Word started to spread and more customers arrived.
By the end of 2010, we had grown the team to four people and moved into a real office in Center City Philadelphia. In 2011, our customer count exploded, our headcount tripled, and our product got even better.
We got efficient. We added automated marketing with Hubspot, CRM with SalesForce.com, customer support management with Zendesk, code control with Github, product management with FogBugz, and (of course) robust analytics with RJMetrics.
Thanks to our own product, we were seeing compelling data about customer lifetime value and retention. This led to the conclusion that the only thing between us and even faster growth was more rapidly iterating on our product and getting in front of even more people. Raising money was the key to going after this this huge opportunity as aggressively as possible.
Amazing Investors. We knew that the right investors could contribute far more than capital. We spoke to a number of institutional investors and angels, and ultimately decided on an angel syndicate because of the speed, flexibility, terms, value-add, and diversity they were able to provide.
We were fortunate to be oversubscribed almost immediately. This gave us an opportunity to be selective about the partners we chose. Naturally, everyone is well-connected, smart, and experienced. If you look closely, however, everyone who invested also falls into at least one of these categories:
- Actual RJMetrics Users: Almost 100% of this round came from firms or individuals who have used our product extensively. From Jason Goldberg (Fab.com) to Ben Lerer (Thrillist/Lerer Ventures) to Andy Dunn (Bonobos/Red Swan), these investors had done their product diligence without even knowing it. They will bring practical, in-depth insights to our product development strategy from day-one.
- Stellar West-Coast Investors: Silicon Valley is underrepresented in our customer base, and we see that as a huge market for us in the coming year. Funds like SV Angel and SoftTech VC give us a west-coast presence and bring credibility, strong networks, and valuable regional expertise to the table.
- SaaS and Lean Startup Experience: Raising money doesn’t mean we’re going to abandon our mantra of capital efficiency. Investors like Mark Wachen (Upstage Ventures) and Gabe Weinberg have personally built and exited technology companies without depending on outside investors to survive. Their expansion-stage experience will be invaluable as we take things to the next level.
To learn more about our “Disruptor of the Day”, please visit their website at www.rjmetrics.com
