David Elkington is the CEO, chairman and founder of InsideSales.com, a sales acceleration platform. Under his leadership, InsideSales.com has experienced year-over-year growth since its 2004 founding and today boasts a billion-dollar valuation.
What are the essential steps InsideSales took in its early days that you think led to its success today?
When Ken Krogue and I founded InsideSales.com in 2004, we wanted to build it from the ground up based on great ideas and sound execution—and we wanted to do that without outside funding. We spent the first seven years bootstrapping, which required strict financial discipline. When the only money coming in is that from your customers, it forces you to look at your product and constantly refine it so that is providing the most value for those customers. And, over time, we built a really great product that actually had a purpose in the market.
We saw the payoff of this approach in 2008, when product we carefully built helped our customers streamline operations during the financial crisis, closing more deals without constantly wasting resources. Although bootstrapping was difficult, it was what forced us to create a phenomenal product that helped us and our customers thrive in the financial crisis.
Did you make any big mistakes in your early days as an entrepreneur?
Early on, I erred in my judgment when deciding to lean on credit, and I hit a rough patch where my credit line had been suddenly removed. I had payroll I needed to meet and no line of credit to meet it with. My leadership team offered to take no pay for as long as it took, but even then I had to be honest with vendors and customers and tell them that I needed help. Thankfully, they all came through—and we were back in the black in half the time we projected it would take.
From this, I learned never become fiscally dependent on one entity. There were specifics—I learned to build a greater buffer in my month-to-month management, leaving at least a three-month cash buffer just in case. But most importantly, it taught me the value of strong relationships with vendors, customers and employees—and you create those relationships by delivering true value to them.
What tips do you have for a startup to get in front of a VC and take home an investment?
Even though it will distract you from other operations, it’s critical for the founder or CEO to take the time to research and assess investors—do not delegate the work. Because the search does deter from other business needs, be sure to set a timeframe with investors and give firm deadlines for them to make their offers.
Call other founders who have dealt with the same VCs to learn about the firm and its individual partners. Ask other entrepreneurs who have or purposely have not taken money from the VCs you’re looking into, but be sure that those other founders dealt with the relevant partners at the firm. I spoke with at least a dozen entrepreneurs who’d either worked directly with a partner or decided not to.
Be able to negotiate boldly and leverage your ability to walk away. Not all firms will be culturally aligned with your vision. I spoke with many firms that just weren’t culturally aligned with what I saw as the future of my company.
You have the freedom to say that you’ve built this company just fine without that VC and you can continue to do so.
What key pieces of advice would you offer an aspiring tech entrepreneur?
Don’t let anyone else control your fate. When I started looking for VC support, I created my own term sheet saying that we’d be engaging as partners, but I made sure I retained the control and freedom to do what I needed to do for the company.