Excerpt: Ross Andrew Paquette, founder, and CEO of Maropost, explains why he believes that you can build a successful business without investor funding.
Everyone talks about the cons of investing in startups. It’s risky business, they say. The majority of new companies never even make it off the ground, they explain. And then they point to the statistics that everyone likes to throw around — like how “9 out of 10 startups fail.”
In the current landscape, things are even more complicated. COVID-19 threw a wrench in the economy that had 77% of startup founders facing imminent failure (and 37% actually failing because of a lack of capital or profitability.)
But forget about that for a second. And look with me, at the other side of the coin.
Did you know that 75% of startups that are backed up by venture capitalists fail?
Now… I don’t know about you, but this sounds like the statistics that founders should really be paying attention to. Not what you have to do to convince a VC firm to provide you with capital.
But, instead, whether you even need that funding to begin with. And, what, exactly, you are risking, when you bring in new people on the table that may never truly be on your side.
“Never lose your voice.” This is the advice that the founder of Maropost, Ross Andrew Paquette, was kind enough to share with me as he told the story of how he managed to turn a bootstrapped, lifestyle business into a multi-million-dollar enterprise.
Growing A Successful Business Without Investor Funding
To really be able to understand Maropost’s ‘bad experience’ with investors. We have to look back to its beginnings. For that, we jump 10 years into the past, to 2011, when Ross Andrew Paquette was in the process of bootstrapping Maropost from his own apartment.
Paquette was working as a sales executive at the time for an email marketing company called Campaigner — relevant because it meant he wouldn’t “be worried about keeping the lights on” while he worked on his Maropost project.
“When I started Maropost, I had every intention of running it as a lifestyle business. At most, I expected maybe around ten customers that I would support very well with a basic but solid solution,” Paquette told me. “But, that intention didn’t last for very long.”
He goes on to explain that for the first year of business, they were working with a very bare minimum crew. No, perhaps even less than the bare minimum. Seeing as it was just him, his CTO, and one other person.
“Suffice to say, we were shorthanded,” Paquette said. “But that didn’t stop us from continuing to develop the platform. We took every opportunity to give it as much as we possibly could in terms of added features and functionality.”
And, because of this, he said, “people started to notice.”
Historically, Maropost has been able to generate about 50% of its revenue through the goodwill of its clients, or more colloquially, through “word of mouth.”
This was especially true in the beginning. When the Maropost team had been so focused on building the platform that marketing it just didn’t seem as important.
Turns out, it really wasn’t! Between 2011 and 2016 (the year that they brought investors onboard), Maropost became known as one of the fastest-growing tech companies in North America. A title that is much deserved, seeing as, between that span, they jumped from $300,000, to $3.3 million, to $13.3 million, and finally, to $30 million in revenue!
It probably needn’t be said. But it deserves pointing out anyway, that Maropost had been quite able to build a successful business without investor funding!
Losing Your Voice — A Common Misstep Made by Founders
One can say that Maropost’s rapid growth had been entirely down to luck. But I would argue that it was because the founder, Ross Andrew Paquette, was able to build a work environment that was built upon a very strong foundation of ideals.
He knew what he wanted Maropost to be when he first created it. He knew he wanted a solution that would be able to constantly evolve. That would be better than all the stagnant and undeserving options that had been available while he was still working for Campaigner.
For their first years of business, while they were more than doubling in revenue (each year), a lot of their success was because he never lost his voice. Because he continued to push himself, and his team, to be better.
“A lot of our competitors fall into the trap of focusing on how to survive until their next round of funding. That’s never been our strategy. We’ve always put our efforts into building a better product—a product that delivers more value to customers. Because we weren’t answering to investor demands, we could listen to customer needs,” Paquette said.
Now… in 2016. That took a bit of a turn. It was August of that year that Paquette accepted funding from the Venture Capital Firms Elephant and Highland Europe in an all-secondary deal. He sold 25% of Maropost to these two firms that year, believing that having these investors on board will help them grow more than ever before.
That’s not how it worked though.
And, by 2019, he had exited both firms out of the company completely. “I didn’t get the support that I expected,” Paquette told the Entrepreneur during an interview. “It became clear that our investors had opposing views, so we exited them from the business.”
He goes on to say that, if he had the opportunity to talk to his younger self, he would tell him that: “Investors are not your friends, partners or mentors, so tread lightly. They have only one goal: getting a return on their investment. Most don’t care about you as the founder or about your vision, for that matter.”
He has refused to take any further investor funding for Maropost since. Even now that Maropost has its own venture arm, called Maropost Ventures — that Paquette built with the intention of turning around his own bad experience by ensuring that they did things the right way.
“The irony is we’re complaining about the same industry that effectively we’re subscribing to,” Paquette told Betakit, commenting on why he decided to start up Maropost Ventures. “But the reason we’re subscribing to it is that we believe that it can be done in a different way. It can be done from the perspective of investors that truly believe in the founders and are comfortable with the success or failure of the business at the end of the day.”
And so, we reach our conclusion. “Never lose your voice.” That’s what Ross Andrew Paquette told me, and that is what I share with you today, hoping that you can avoid this common misstep made by founders — with the words from one of your own.
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