Startup lessons from Bill Me Later's success
Today I attended a talk given by Mark Lavelle, one of the four co-founders of Bill Me Later -- a Baltimore area online payments company that was snapped up by eBay/Paypal for $945 million last year. (Yes, that would be almost one billion dollars.)
He was speaking to a group of ambitious entrepreneurs at the Emerging Technology Center in Canton, sharing some nuggets of wisdom about his company's startup experience, growth and eventual big payoff-sale. He and the three cofounders were in the banking business but left it to start their own company in the 1990s. They each had different skill sets, but knew they wanted to do something that involved online transactions, because of a lucrative potential market. Launching in 2000, their first office space was in the Renaissance Harborplace hotel in downtown Baltimore.
Here are some of the "lessons learned" by Bill Me Later, according to Lavelle, who is VP of business development:
* For startup businesses, you have to double or triple the timeline to self-sustainability and quadruple the cash you think you'll need. "That's exactly what happened to us," he said.
* "Don't underestimate the time you'll have to spend pitching your product." Lavelle said he probably spent 80 percent of his time on pitching the company to potential customers and investors.
* Focus on the team. "If you have a partner, make sure it's the right partner." Also, know how and when to hire as your company grows. Many entrepreneurs can have a hard time letting go of control.
* Doing a startup is a commitmen, "so you have to be all in and you have to be in it for something other than an exit or money."
* Speed: You can move quickly and push your company hard, but sometimes progress and new business will happen at its own pace -- and you can't sometimes control that.
* Integrity -- you don't want to damage your reputation with partners and clients. So don't over-hype or over-promise what your product can do. Before the company was finally bought by eBay last year, it had raised $300 million in venture capital over an eight year period.
Lavelle said he probably pitched 300 venture capital firms in an effort to raise money. In the end, only three jumped in with Bill Me Later. That's a 1 percent success rate. "That one percent was tough," Lavelle said.
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