Saying No to Investors Helped This Company in the Long Run. Here's How.
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After years of sixteen-hour work days, StratIS founder Felicite Moorman and her team hoped their soon-to-close first round of funding from venture capitalists would ease up the stress that bootstrapping her own tech company required. She had big plans to use StratIS technology to dramatically decrease energy usage — and with it, carbon footprints — in multi-family residences. But Moorman says that when investors asked her and her team to compromise their integrity and what they believed in, she said no to a big check.
This interview has been edited for length and clarity.
How did you approach the loss of investment with your team? Did you tell them?
We had to have a really vulnerable talk with our team. We are very transparent, and we lost people over this. We lost leadership. I told them, "I can’t give you any relief. We are going to have more pain to get through this moment. We work 16 hours a day most days. We eat, breathe, sleep the product (some of us live together), so we can do this well. Bootstrapping takes more than throwing money at a problem. The constraints require creativity. We are constrained, so we have to think smart about how to get things done. We can’t just hire people to do it." I had to say to them, "This isn’t going to work. If we go through with these investors, we will lose our market. We created this market. We built it ourselves."
How did they react?
One employee took me aside and asked, “Felicity, I thought this was the best thing ever, and now they're just gone?” I said that they didn’t have to be 'just gone — we'd 'just' have to compromise ourselves. I asked him if that’s what the team wanted us to do because I wanted to know. And he said, “That’s not what I want.” So first we had to get leadership and then talk to the team. Then we had to assess whether what we were accomplishing was worth it to keep moving forward at the pace we were moving, which was fast. And that everyone was going to have to continue the 16-hour days a little longer, and everyone would have to give a little bit more when we were really at the edge of what we were capable of. It was a breakthrough-push-through moment, and we did.
How did you personally handle it?
I have a co-founder, so I’m never alone. On the rough days, we give the other person the grace of space. If you've got to take a day and walk by the river for four hours and get your head on so you can come to this team and be kind and generous with them, take the four hours. It’s better than coming in with a bad attitude.
Why did you decide to bootstrap the company for so long and not seek funding earlier?
As a very hands-on CEO, I will get in a car or get on a flight to meet my customer. But I won’t get on a plane to meet with VCs over and over again. Those are two different jobs. And one of those jobs I love — I treasure. I don’t want to spend any time raising money at all. That’s a waste of my highest purpose, and it’s frustrating. When you think about single-family home automation, you have competitors in the marketplace that price the market. We don’t have anything to price against in multi-family. We can’t forecast because it’s never been done before, so that also made it difficult to find investors at first and to be valued. We don’t have any competitors, so we are creating a market without pricing.
You eventually found the right investors for StratIS. Are you glad you stayed true to your values, and has it paid off?
Yes. There are two types of people — those who think things happen for a reason, and those who think that’s a load. I don’t know which type of person I am. If in that moment you would’ve said, "Everything happens for a reason," I would have not said nice words back. But today, we have investors who are number-one in their industry, global strategic partners that will grow StratIS times four, times six, times 10 next year. The other investors could never have done that.