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Let’s say you are a super smart kid living overseas and you get accepted into an Ivy League school in the United States. You’re ready to move to the US to go to college and then you want to start your own US company. That’s the American Dream.
That’s also job creation. The stats are clear that this nation of immigrants is still heavily powered by the newcomers, according to the Kauffman Group.
Unfortunately for the immigrants, the process is full of “pain and tears,” one tech startup founder who’s been through it told us.
And it can leave workers vulnerable to an almost indentured-servant situation with their employers.
Baderkhan is the CTO cofounder of a startup called YouVisit, a New York virtual reality company founded by three immigrants. Today it employees 85 people, Baderkhan tells us, and it’s never taken VC money – meaning it is supporting itself on its own profits, he says.
But it wouldn’t have happened if Baderkhan didn’t fall in love with a US citizen in college, a girlfriend who then patiently waited almost 10 years for him to hit his head against the green-card wall.
Baderkhan came to the US in 1999 when he was 18 years old to study at Brandeis University on a full-ride academic scholership. He’s from Jordon, a country known as one of the US’s strongest allies in the Middle East. He came from a well-to-do family: his mom a teacher, his dad an executive for a mining company, and his parents still live in Jordan.
After school, he landed a job at the Boston company where he was an intern. They agreed to sponsor his H-1B visa.
“I was so excited about being in the US, working, contributing,” he says. “This is a place where you can make dreams happen.”
But on his first day as a full-time employee, they laid off a third of the company. They kept him and told him, with everyone else gone, congrats, he’d been promoted to the head of the department.
“That scared me,” he says, not of the responsibility but of the company’s financial shape. “If I get laid off, there’s no one to sponsor me.”
If a H-1B visa holder loses their job, the person must land another job within a few weeks with a company willing to sponsor the visa. If not, the person is sent home.
“So anyone migrating to the US, studying here and working with an H-1B visa, it’s always at the back of your mind, that you could at any second be deported,” he says.
Fortunately, he landed another job at Accenture in New York, a company also willing to sponsor his visa. He stayed there for seven years.
About four years into his work at Accenture, he and two of his college buddies had an idea for their own company, YouVisit, making and hosting “virtual reality” content for businesses and organizations.
YouVisit creates content like virtual college tours, or virtual travel destination tours. It also does real estate and events.
The content can be viewed with a virtual reality headset like an Oculus Rift, or on a regular website, letting you look 360 degrees by moving your mouse around.
The problem was, he couldn’t leave the day job at Accenture. Not only did the company have to sponsor his visa, but it also had to sponsor his application for permanent residency, “the green card.” That’s a process that takes years, he says.
And he needed the green card before he could apply for citizenship.
All three of YouVisit’s cofounders are immigrants. CEO Abi Mandelbaum is from Columbia and CTO Endri Tolka from Albanai, but the two had already obtained their green cards.
And yet his own company still couldn’t sponsor him, even as it started making money and hiring people. To be a self-employed sponsor requires investing a half a million into a company, Baderkhan says. In its early years, the young company wasn’t making enough profits to quality for that.
So for two years, he did both, maintaining his day job working 10 hours a day at Accenture, and then working until 4 a.m. on his company, plus working weekends, he says.
There was one other way out: Get married. He and his girlfriend had been together nine years by then, he says.
“I’m a stubborn person. I didn’t want to get my green card through marriage. I wanted to prove to myself I could get it on my own,” he tells us.
And then things got rocky because he was working two jobs.
“During those years where I was working those hours and not sleeping, my relationships almost got ruined,” He says. “Not only with my wife (girlfriend at the time) but with my friends. Basically I had no life,” he says.
She made it clear she wasn’t going to wait forever. “I had no choice,” he said. “We were in love. I got married.”
There was one other hardship during those H-1B visa years.
He couldn’t go home to visit his aging parents because the visa he had would not have allowed him back in the country.
“Because I’m an Arab from a Muslim country and I was 28, the prime age, they needed to do a security clearance,” he says.
The clearance is done at an embassay after you leave the country, and, at best, it would take a few weeks. But it’s risky. If anything is flagged, a mistake gets made, if his name was similar to a known terrorist, the security clearance could take six months to a year. He’d be stuck out of the country, lose his job, lose his visa, and not be able to return at all.
“I didn’t go back to Jordan for six years. I didn’t see my relatives. I didn’t see relatives before they passed away. That was difficult,” he says.
Once he was married, he got his green card quickly. He immediately quit his day job.
And his business took off, he says.
The company went from 11 employees in its first two years to 85 today. It currently has over 500 customers, including the US Army, Harvard, Yale, Carnival cruises, big real estate companies, entertainment brands, concerts and so on, he says.
Within three years of gaining permanent residency, he became a US citizen.
“I love being in the US. When they say the US is the land of the American Dream, I truly believe in it. If you are smart, if you are talented, if you work hard, you can be anyone you want. And no one will judge you. People will applaud. They will cheer you on, help you get there,” he says.
Now he and his cofounders are paying it forward. “We hire talent. If we find the right talent who needs a sponsor, I’m happy to sponsor, not just for an H-1B visa but for a green card, right away. If the person wants to be in the US and contribute, I feel that’s my duty,” he says.
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When I first tried to raise money — in 1998 for a company called 360merch — a handful of plucky angel investors agreed to trust me with one million of their dollars. I wore my fingers to the bone in that business, hawking lenticular stickers and logo’d baby doll t-shirts using affinity marketing models — and then promptly lost them all of their money when the market crashed.
The next time I tried, for BzzAgent, nearly 200 investors told us to go screw. Most thought using real people to generate word of mouth about products and services was a generally dumb idea (this was a pre-social network world, after all) so we had to build the company to nearly $3 million in revenue before anyone would give us a dime. We went on to raise $14M from General Catalyst and Flybridge Partners — and returned $60M to investors in 11 years.
My next attempt was with Smarterer, and I now had the perception of success on my side plus a deeper network of contacts to pull from. It took us about 160 days to raise $1.2M from Google Ventures, True Ventures, and Boston Seed. In 3 different rounds, we raised a total of $4M. Turns out that was a pretty solid bet, and we returned $75M to investors in just under 4 years.
We recently raised funding for a new startup, Mylestoned. The $1.5M raise was incredibly swift and awfully quiet — 56 days from start to finish, with our bank account in the black for about 40 days.
Venture fundraising is a funny thing. It’s a sophisticated game with teams and rules and failures and victories; there’s a lot of skill, sure, but much more luck. All sorts of things can impact a raise: the idea, the team, market conditions, fund dynamics, competing raises. Hell, even the damn weather has an effect.
Each fundraise is like creating a painting: experience doesn’t make it any easier, but you’re certainly better at knowing the aesthetic, the weight of the brush and how much color to use. And — as evidenced by Mylestoned’s current raise — understanding which paint to lay down and when certainly makes the art at the end nicer to look at.
So how did we make this painting? Here’s what we did, with some lessons along the way:
Istarted this raise by going directly to angels who had backed me before. Shikhar Ghosh and Guli Arshad have backed almost all of my companies, even the ones they didn’t like! I went to them first. They’re loyal to me, I’m loyal to them (Mylestoned they liked, for what it’s worth…).
Next I went to Mark Gerson and Scott Kurnit, NYC residents who are accomplished entrepreneurs of ridiculous caliber. Generous with their time and advice and friendship. Invaluable in Smarterer’s success; and loyalty comes first. With their commitments, I now had momentum with others.
I’d made a number of angel investors 15x their money, and reached out to the best of them next. You’d figure they’d be easy to land, but a few of them didn’t bite to invest in this company. Why? Could be they’re over-invested elsewhere or their model of investing is changing or their kid had the flu when I asked.
Or the damn weather again.
It doesn’t really matter, but what does matter is I didn’t push beyond the first request. If immediate interest wasn’t apparent, I just moved on because you can’t look desperate. Desperation smells like body odor, and other investors can smell it like horses can smell fear.
After a few solid angel commitments, it was time for a big whack of support. I find it much easier to get your first institutional capital with a few good angels in hand. But after a few angels, other angels become harder to close without something more substantial. So time for the big guns.
The lowest hanging fruit was Boston Seed Capital — they backed Smarterer, and I happen to now be a Venture Partner there. Plus, they’re awesome (full disclosure: me saying they’re awesome is akin to me saying I’m awesome, which is only really awesome to them and me). As the first institution they played an even more critical role in validating the terms of the raise, and agreeing to “lead”. The first angels can show their support but can’t really define the raise for others to join. Boston Seed committed, we have a lead, now we’re rolling.
Ican’t emphasize enough the importance of raising on your own soil. It’s where you will spend 20 hours a day building over the next few years and your investors will become your advocates, recruiters, connectors, future fundraisers — but mainly the blankie you cuddle in your darkest hours. Jeff Glass, Jere Doyle, George Bell, Joe Caruso and Larry Silverstein are all exceptional Boston-based investors. They got priority over investors in other cities because I know they deliver, but also because you have to own your home court.
Deborah Quazzo is based in Chicago. But, well, she’s Deborah Quazzo and she’s brilliant and unstoppable. Also, see point #1.
Istarted with a plan to raise $750k in 15 $50k increments. I’d focus on seed funds and angels only (no large VCs) with an uncapped note at a whopping 40% discount — double the standard rate. Beyond my rationale that it would drive incredible returns, I fed off of the curiosity about the unique structure and fanned those flames: by getting investors thinking, and by making something original, I opened the door to dialogue. The important part though wasn’t so much the terms, but that there was a clear, crisp, unwavering plan.
Screw “I’m waiting for someone to set the terms,” which I hear over and over. Lay out your terms and then qualify them with logic.
On these terms, the $750k was fully committed. We were done, that was that. Then things started to evolve. A few more investors, many in my Gang of Loyals, wanted to come in, so the round opened to $1M.
Then things really started to change. Our raise was all done, it was a pretty little painting. Then David Frankel and Founder Collective showed up. I’ve been dying to work with FC for ages. They’re local. They’re smart as hell. David’s reputation is outstanding. Their DNA completely fit this company and this round, and I believed their involvement would be valuable for the next round (see point 7). But there was a problem. They didn’t like the uncapped note. There are times in a raise when you bend, and this was one of them.
With a commitment to work through and flexibility on all sides we reconfigured the terms and then started calling all of the previously committed investors. A few had already wired money under the previous terms, but with hat in hand — and clearly articulating the rationale for switching — everyone agreed to the new structure. Boston Seed remained flexible as well (they actually upped their investment as the round progressed), Converge and Maia Heymann added a little to the pot, and now we were at $1.5M total.
This is where many entrepreneurs tend to flail, but it has to be a core strength. Forget “always be closing” and focus on “knowing when to close” (Guessing this won’t catch on because I’m not Alec Baldwin, there are no steak knives and KWTC is not nearly as cute as ABC).
Nothing good can happen between commitment and signing, so you need to move fast. I set a date two weeks out, and emailed every investor clear instructions regarding what they had to do to “confirm their spot”. I ensured there was pressure: Without commitment, others would take the spot (True. Never ever lie in a raise); of fearing they’d be the only investor holding up the close. Then I pushed my legal team to update the funding documents and pushed everything to 5th-grader-simple online signature via docusign. If anyone didn’t seem responsive within 12 hours, I called them. Damn it people, use the phone to close!
All throughout the fundraising process I met with a number of non-seed Venture Capitalists — who would never, ever fund the business at this stage. The truth is most raises happen long before you start raising, and this was a key moment to start building relationships. Also, VCs — for the most part — are really smart and are a wealth of information and experience. Consider this free advice from palm readers with lots of money.
If any of the meetings started to feel like pitches (“I’m going to have a few other folks join us,” or “do you want to send over the deck in advance”), I backed out. This wasn’t a time to pitch, we were too raw and it would only end up as a “not right now”. I actually mistakenly ended up in one meeting that turned into a pitch, and the VC called me later to tell me they wouldn’t invest. But I wasn’t asking for an investment! The dreaded “no” without even asking for a yes.
All in all, I’m super proud of this raise, but not because we got it closed. I’m proud because it’s my damn job. Fundraising isn’t a one-dimensional equation, and during the whole raise, I was also in the fat, sweaty swing of building the vision and recruiting the Mylestoned team. People were quitting their jobs, they were changing their livelihoods — and there’s no way in hell I wasn’t going to succeed for them. An entrepreneur’s job is to capitalize the business, and you can’t delegate that to anyone else.
So now we have 1.5 million dollars to turn our vision into some form of a reality. That equates to exactly 78 weeks. Every week counts. And you can sure as shit bet that I know exactly which of those weeks I’ll fire up the fundraising engines again.
This article originally appeared on Medium and has been published here with the author’s permission.
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VaynerMedia founder and CEO Gary Vaynerchuk has a simple leadership philosophy.
“Everything in business stems from the top, whether you’re the boss of two people in a three-person team or the head of a Fortune 500 company,” he writes in his new book, “#AskGaryVee.” “And everything that happens in a company is 100% the CEO’s fault.”
CEOs, after all, oversee their organization’s leadership, which in turn makes them responsible for even the lowest-level employee down the chain of command.
When a company is successful, its CEO should praise the team members involved in a particular win, but when it’s struggling or enduring a scandal, according to Vaynerchuk’s argument, the CEO needs to handle all of the blame.
Vaynerchuk said he enjoys seeing this in sports, such as when a quarterback takes the blame for a failed play even after the wide receiver let an accurate pass slip through his fingers. In sports or in business, “People are going to fight for you when you’re willing to do that,” he told Business Insider.
But he wishes he saw this more often in his own career. “I’m stunned by how many CEOs and leaders want to throw other people under the bus,” he said.
He can’t help thinking, he said, “Are you lacking self-awareness at that high of a scale that you truly think the person you just anointed to be the director of X or director of Y and who is failing, you don’t realize that you could have prevented them from starting there in the first place, and that you’re an absolute part of that equation, of their lack of success?”
Vaynerchuk didn’t want to call out specific names, but Volkswagen America’s CEO Michael Horn was criticized for this very failure last year in a Congressional hearing over the accusation of Volkswagen’s use of illegal software in a half million cars to artificially pass emissions regulations.
Horn flatly denied any knowledge of why the software was made to game the system, and blamed “a couple of software engineers” without claiming to know who was responsible.
On the other hand, General Motors CEO Mary Barra was generally praised by the media for her handling of a massive recall that happened two months after she became CEO in 2014.
Her ownership of the crisis, which stemmed from decisions she didn’t make, inspired faith in consumers and was able to turn a potentially fatal blow to GM into a complete rebirth of the company that resulted in a record sales year.
“It’s no accident that when some companies change their CEO they go from winners to losers or vice versa,” Vaynerchuk writes in his book. “It may be the most important variable for success in running a business.”
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