The VendorHawk story: Idea to successful acquisition within a few years, and the importance of founder worldview alignment :: with Patrick Lowndes and Brian Geihsler
In this episode of Ventures we cover the full spectrum of an amazing startup story: Patrick’s original idea, recruiting a team, landing his first customers, getting into an accelerator (Techstars), raising a $1.2 million seed round, and being acquired by ServiceNow.
Overall, the purpose of this show (Ventures) is to educate and inspire a new generation of venture builders and investors. In this episode, we dive deep into a variety of strategies and tactics that are important for founders to consider.
My guests today are Patrick Lowndes (https://www.linkedin.com/in/patricklowndes/) and Brian Geihsler (https://www.linkedin.com/in/briangeihsler/), co-founders of VendorHawk (acquired by ServiceNow in 2018).
In this episode we cover the following:
2:54 - Patrick quick intro
3:37 - Brian quick intro
3:55 - The origin story of VendorHawk
7:16 - How Brian and Patrick met
8:22 - Work with the early Prota Ventures crew and support for Patrick to focus on selling the idea to potential customers with wireframes/mockups.
10:25 - Intentionality on writing down and testing hypotheses with wireframes/mockups, and eventually quick MVP demos of the business concept.
12:06 - How exactly did Patrick successfully sell contracts with wireframes? What strategies/tactics did he use?
16:04 - Key hypothesis: is this enough of a pain point that customers would pay money for it?
16:26 - What was the problem that Patrick/Brian were solving? What was the value proposition that the first handful of customers were sold on?
18:25 - How did Patrick navigate his way into an organization in order to meet a decision-maker?
20:21 - What was Brian thinking about during the time when Patrick was landing the initial customers?
22:20 - What helped ground Patrick/Brian during the earliest stage? What was the “working agreement” they put together and how was that different from the official LLC “Operating Agreement”? How did Patrick/Brian establish company values? More on this here: https://patricklowndes.com/2018/09/19/faithful-founder-1-of-3-motivation-co-founders-values-family/
26:50 - Importance of worldview and value alignment, especially amongst co-founders, and why investors should look for it in early stage companies.
28:44 - The story of scaling the company even more, getting into Techstars, and raising seed money.
29:46 - The demo day story and refining the pitch
30:30 - Help from the Seattle community, mentors, and other founders. Closing their seed round 70 days after demo day.
32:00 - The story of hiring software engineers, an early sales team, and scaling a business while navigating family life as founders, having a new baby, etc…
33:12 - At what point did Patrick quit his day job?
34:37 - At what point did Brian quit his day job?
35:12 - What aspects of an accelerator - and Techstars in particular - make it most helpful for founders?
36:40 - What did Patrick/Brian and their team do after being seed funded? How did they scale? How did they architect their product roadmap and company operations?
41:40 - How did they build a B2B software sales team?
44:39 - How did Brian help Patrick think about iterating the product with the sales & marketing team? How did he navigate keeping the product up with the sales pipeline?
46:45 - At what point did “Corp Dev” start knocking on VendorHawk’s door? How did Patrick respond to those requests? See Patrick’s 4-part blog series here: https://patricklowndes.com/2018/07/16/getting-acquired-1-of-4-engaging-corp-dev-for-partnership-or-acquisition/
50:32 - What was Brian learning during the scaling process? How did he think about building the best possible engineering team and operations processes?
52:14 - How to successfully sell customers when you can’t build all the features they need right away?
53:25 - A personal learning for Brian regarding how to be a successful startup CTO, specifically around data security and convincing customers their data would be safe.
54:47 - Where did those conversations with Corp Dev end up? What is the story behind selling VendorHawk to ServiceNow?
1:00:06 - How did Brian/Patrick navigate telling their team about the company sale? How did they set expectations with their acquirer about what the team merging in would look like?
1:03:06 - What did things look like after the acquisition? What did the team do? How did it go?
1:05:40 - Where can people learn and find out more about Patrick and Brian? Feel free to reach out to them via email at: firstname.lastname@example.org and email@example.com and connect with them on LinkedIn: https://www.linkedin.com/in/patricklowndes/ // https://www.linkedin.com/in/briangeihsler/ // // You can also learn about Patrick at his site https://patricklowndes.com/.