TechCrunch, yesterday, published Bernard Moon‘s interview of me as The Ribbit Rollercoaster: A Founder’s Story From Concept To $105M Exit.
Bernard interviewed me in downtown Palo Alto over a loooonnnng cup of coffee. The draft interview Bernard submitted to TechCrunch was seven pages long.
TechCrunch, to their credit, published almost the entire article leaving out only a very few paragraphs to make the article readable. These cut bits may be interesting or useful to many TechCrunch readers, so here is the rest of the story from Bernard’s interview:
Personally, I think one of the most a critical parts of the Ribbit story is the legal structure put together with Syndeo.
Bernard: Tell me about the Syndeo assets. How did they end up part of Ribbit?
Crick: Good question. The reason that Ted and I joined forces was to leverage the Syndeo softswitch. Syndeo Corporation had significant prior investment making it an unattractive corporate vehicle for us. So I set up a series of legal dominoes that, when tripped, would transfer the Sydneo IP into my company. We changed the IDP Communications corporate structure by bringing Ted Griggs, Peter Leong, and Ramani Naryan on as co-founders and changed the operating name of the company to Duality Inc.
The legal dominoes worked like this: Once Duality raised three million dollars, it would then have enough money in the bank for the shareholders of Syndeo and owners of Syndeo switches to feel confident that Duality could assume Syndeo’s support obligations.
In exchange, and in consideration for assuming those support obligations, Duality would receive all of the intellectual property of Syndeo leaving Syndeo a shell that could be easily dissolved. This would allow Ted and the rest of the Syndeo engineering team to move to Duality with Ted as CEO. So once the dominoes fell, we would end up with the four founders, Ted Griggs, Ramani Narayan, Peter Leong, and myself; along with our Director of switch engineering, Dayanand Shetty, and our controller Chris Im. Of course, none of this would happen unless we raised at least $3M into Duality.
At the end of 2005 we set our sights on building Mobi-Link as our proof of concept application. I built the website, designed the product features, and defined the user interface. Ted did all the Flash development work for the UI, Nara built the application layer, and Peter with Daya built the switching and telco pieces.
Another piece of the story that many entrepreneurs, and even more so, future entrepreneurs, may find inspiring. In my case, as it may be for others, there was a catalytic event that pushed me to the decision to go forth and try. If the following hadn’t happened, I may have ended up staying with AT&T and chasing another internal corporate (and more likely than not – phantom) project:
… So it wasn’t until August 2006 that Ribbit was actually first funded.
Bernard: August 2006? So how long had it been? When did you actually leave AT&T to go on this whole journey?
Crick: Quite a while. I think it was the end of the third week of July 2004 that I had a conversation scheduled with David Krantz, who was VP of Strategy for AT&T consumer at the time.
My plan was to present to David a bunch of ideas I had been percolating for reinvigorating AT&T’s consumer products. Unbeknownst to me or to David, the night before our call, AT&T’s Board of Directors voted to pull AT&T out of the consumer market altogether. AT&T would support its installed base, but would make no new sales or introduce any new products.
So the morning of our meeting, David and I basically said to each other, “There’s not really much we have to talk about is there?” It was right after that I started working on putting these ideas to work in my own company.
That same fall of 2004, AT&T announced it had accepted an offer to be bought by SBC. There was nothing left to do at AT&T except wait out the merger. So instead, I volunteered for early departure. I think I was still officially an employee for the first quarter 2005 but I was basically transitioning out by the end of 2004.
It’s important to give credit where credit is due and Allegis Capital is due credit in this story. I had approached Pete Bodine of Allegis Capital in the late fall of 2005 for funding of Duality. Pete was intrigued and introduced us to the rest of the firm. Though Pete maintained contact with us, the conversation with Allegis was like so many valley funding conversations: “We like the idea and the team, we’d like to see more traction.” Nonetheless, Pete stayed on top of our progress through 2006 and into the spring of 2007, then stepped up for us at a clutch moment:
Bernard: And Series B was with Allegis Capital right?
Crick: Yes, but there’s a whole fun story around that. We got our first $3.3 million dollars in August of 2006 and built a strong team pretty fast so that by the summer of 2007 a year after funding we were running out money.
Alsop-Louie offered to buy another one million dollars of our A-preferred at the same price as the original A-round done the year before. I thought, “That’s pretty expensive considering what we’ve accomplished in a year.” We were weeks away from launching Ribbit for Salesforce, had our API development moving along crisply, and had a working beta of Ribbit Mobile.
Allegis capital was one of the venture firms that we had pitched in November-December of 2005 but Allegis had not stepped forward to invest. They did stay in touch with us month after month in early 2006 before we met Alsop-Louie, and even put together a term sheet for our A-round after they learned that Alsop-Louie had made a move. I didn’t think selling shares in 2007 for our 2006 price was in the best interest of the company, so I called Pete Bodine at Allegis on the weekend before we were scheduled to sell more shares to ALP and offered Pete the chance to get in on the B-round if he could write us a $1M convertible note by that Monday.
Pete Bodine and Spencer Tall of Allegis came through. So we bridged with them, and they led the B. We took $7.7 million in the B around in a two-part close spanning the end of 2007 and the beginning of 2008. This money was still fresh – the ink was barely dry on it – when BT showed up at the door.
This last piece is a very important lesson for any entrepreneur: building and maintaining relationships, whether with customers, acquirers (BT in our case), or with the financial community can make the critical difference in the evolution of your business.
In a nutshell, there are two things of which always to be in pursuit:
- build new serendipitous relationships by extending the edges of your network (as described by John Hagel in The Power of Pull,) and
- invest in these new relationships to keep them alive (social media has made doing so easier than every before).