Editor Profile - Denny K Miu was the founder and former CEO of two startups, Gigamon Systems and Integrated Micromachines (now Touchdown Technologies). Denny has extensive experience in developing technology, products and business relationships. He has been a Professor, an engineer, an entrepreneur, a team leader as well as an individual contributor.
Denny is currently the Executive Editor of LoveMyTool.com, his third start-up. You can follow him on Google Buzz or subscribe to his RSS feed.
Two years after we launched our product in May 2005, my previous startup was able to acquire our 150th customer. Our sales continued to grow organically, from new customers as well as from existing ones who kept coming back for more. In addition, we announced that we had achieved profitability for six consecutive quarters.
By all measures, Gigamon was a spectacular success which was all that more remarkable consider that we had taken no VC money. Like so many entrepreneurs before us, the six co-Founders of Gigamon built their company the old fashion way. We bootstrapped the product development effort by dipping into our own pockets (or more accurately, our wives’ pockets) and by not taking salaries for two years; and after the product was ready, we secured minimal but adequate amount of working capital from an angel investor and not take salaries for another year.
Having spent the last decade and more as a struggling entrepreneur, I understand all too well the twin irony of accidental genius and reluctant warriors; nothing out-performs good execution like good fortune. In all honesty, the fact that Gigamon had taken no VC money was not part of my original financing plan. Between the summer of 2003 and the fall of 2004, I must have visited nearly 50 VC’s, all of whom had turned me down. So my company succeeded in spite of my initial failing.
Keep in mind that I was not unfamiliar with raising VC money (I raised $65 million for my previous startup) and I was mentally prepared that 2003 was probably the worst time to raise money (having just endured the rolling catastrophes of Asian financial crisis, Y2K, dotcom bomb, telecom burst, stock market crash, 9/11 attack, war in Afghanistan, SARS, launch of the Iraq invasion, outbreak of avian flu, etc.). But the uniformity and the abruptness of how I was turned down by every single potential investor I spoke with still startled me.
Obviously I respect the VC’s decision and I believe they have made the right one. I was not spiteful nor do I have any need for vindication. I believe VCs have an important place in our financial eco-system (as a financial instrument, their successes ultimately contribute to our 401K’s) and I respect their profession. In fact, if deem necessary and appropriate, I would have no problem taking money from VC for my future startups.
It is just that in general, I find it much more educational and rewarding if I refrain myself from demonizing others and instead focus my energy on learning from my own failures as well as from my successes (accidental or otherwise).
So in that spirit, over the last four years, I had spend much awaken hours soul searching and I have summarized what I learned in the following which were the top three reasons why we were turned down by the VC’s and why we should have failed as predicted had it not been for the good timing of the ever changing market and the enduring quality of its team (intelligence, integrity and inventiveness).
Top three reasons why VCs were convinced that we would have failed:
1) We did not have a rock star CEO
2) We were all engineers
3) We contradicted Gartner
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