After over 40 rejections in an epic quest to close his Series A round, Thumbtack Founder and CEO Marco Zappacosta offers entrepreneurs a singular nugget of wisdom: “Don’t listen to what VCs say.”
In an interview with his own investor, Sequoia Capital’s Bryan Schreier, at the Startup Grind Global Conference, Zappacosta took the crowd of 3,000 through his five year journey of investor pitching, team building, and emotional struggles that ultimately led to his startup, Thumbtack, raising $125 million at a $1.25 billion valuation. The result: a coveted place place among Silicon Valley’s “unicorns” - startups valued at over $1B.
Watch Thumbtack's Marco Zappacosta with Bryan Schreier of Sequoia Capital, and read our highlights below.
The Recipe for Selling a Vision
Zappacosta’s aversion to the advice of venture capitalists is intuitive. From his years as an aspiring, and eventually successful, venture backed founder, he has seen all too clearly the motivations of investors: they are all looking for specific things based on their specific models of the world.
Rather than letting financiers undermine product direction or question your confidence in your solution or mission, Zappacosta suggest, instead consider this simple fact: your pitch may simply not resonate with the variables a certain investor considers most important.
Zappacosta own mistake was just this: delivering his series A investors the same pitch he used with angel investors was a recipe for rejection - over 40 in total. His takeaway: “Don’t pitch what the previous round wanted. Know what the next round wants.”
“They’re just trying to get you out of the room at a certain point," Zappacosta notes about founders pitching the wrong vision - but feedback from a single VC firm need not shatter your confidence. A greater cause for concern, agreed Zappacosta and Schreier, is receiving the same feedback across multiple pitches across multiple firms - much like dating. Get bad feedback on one date? Could be a fluke, they suggested, but consistent rejections on the same issues is likely a reflection of an important area of improvement - in your self, or in your business.
"Culture Fit is a Luxury"
Ultimately, Zappacosta believes you should treat fundraising like the weather: “Just dress appropriately... and move on to the more important things, like delighting your customers and fulfilling your mission.”
Sometimes the fundraising climate is in your favor, sometimes it isn’t. What’s important is that you capitalize on good weather. If you planned to fundraise a year from now but the climate right now is perfect, it may be worth capitalizing now rather than running the risk of funds drying up when you need them most.
Growing a billion dollar company is about more than fundraising: who you bring into your team matters, too. Zappacosta noticed a stark difference between hiring as an early stage startup versus hiring post-Series A. “The startup community does a disservice to early stage entrepreneurs by telling them all these things about culture fit. Culture fit is a luxury.” Zappacosta’s first hire was someone he met on a rafting trip who was just obsessed with the company’s mission even though he lacked any particular cultural credentials. “He just loved the idea and wouldn’t go away.”
How To Pick Your Team and Investor
Luckily, now that Thumbtack has a massive venture capital war chest for growth and expansion, and has broken past 200,000 paying professional on the site, the team is finally able to be much more deliberate about who they hire. They now focus more on technical skills, and take more time to tease out what makes someone a proper cultural fit.
Zappacoasta is wary, though, about getting stuck in the weeds of hiring. He avoids creating laundry lists of required qualities, and instead focuses on 2-3 core points of compatibility and resolves to work through the rest.
Growing your startup to a $1 billion valuation is an emotional journey. People like to extrapolate, to project forward and imagine some semblance of future stability -- but in startup world, they don’t get that comfort.
“In a startup, every new data point can send things in a radically new direction," Zappcosta confesses. "That is nauseating. It’s a really unpleasant feeling. I call it among friends the ‘emo roco’ [emo roller coaster].” His recommendation: remember that you’re not alone. Every single person building a startup faces constant constant challenges and constant emotional shocks - The Struggle. At the end of the day, antifragility - the ability to remain resilient in the face of shocks - is what keeps entrepreneurs in the game.