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The title of a recent Techcrunch article said it all: “Venture capital will soon be brimming with Ghosts.” It’s a good fit with the Halloween season and appropriately scary. As the writer opined,
“...Hundreds of new VC firms will either decide to merge with each other to build a more enduring franchise. (Some) will leave the VC profession and others will lose senior partners to retirement and have to figure out what the future of their firms will look like.”
As funding drops, and VCs narrow their portfolio and reserve what remains of their last investment raise, we’re noticing an interesting turn. The easy money VC spigot has been turned way down. While some startups continue to raise funds, it’s obvious that the companies that are best able to raise money are often those that prove they can grow without it.
These days, investors want to see more than a great idea. They want to see a track record. They are looking for strong, focused and disciplined leadership teams that are well positioned, have a compelling story and growth strategy, and have shown they have what it takes to build a successful, scalable, business. And, they want insurance against the erosion of value over time. Take the case of recent SaaS marketplaces. A recent Crunchbase article showed that among SaaS startups going public in 2021, the average decline in their offer price is 58%.
Some young startups have opted for a different path, avoiding early investment and bootstrapping their initial growth. Among the best of these is Mash, a Melbourne based platform for marketing, advertising, and related creative freelancers. CEO Tash Menon and her co-founders Sarah Churchlow and Amy Williams chose to bootstrap their company into profitability rather than seek early funding, and the partners believe that decision has helped Mash to deliver strong growth since their start in 2018. They now counts well-known global and regional brands among their growing client base. Revenue is growing too, at over 200% year on year.
Over the course of a number of conversations, Mash partners shared their plans for the future, and the value of waiting to raise investment:
Tash, as CEO, what’s been your focus and priorities over the past two years?
“My first priority has been, and will always be, making sure we deliver for our clients and platform members. Our purpose from day one is to help great clients succeed by empowering the success of our Mashers, our amazing creatives. It’s at the heart of all we do, and is a continuing source of energy and inspiration. Workplaces have undergone a significant shift during the past two years, and companies are growing comfortable with freelancers. On the other hand, nothing beats a pandemic to pressure test every aspect of your business. Growing a self-funded start-up, especially one working across the globe is hard and hustle is a big part of who we are. But as we grow, we are also continually challenging ourselves as a team, to think more deeply about how to remain true to our purpose.”
Amy, startups generally start raising funding very early. Mash didn’t, and you described it as a blessing in disguise. Say more about that?
“In early days we were approached by multiple investors. But, they always wanted to make us something different, to reshape or focus us in areas that weren’t us. So we pivoted, speaking to industry executives, product managers and startup teams to understand what we really needed first. Fast forward, with the help of great advisors, we gained a far deeper understanding of what we needed funding for, and how to build a platform that delivered speed, high service levels, and a lean operating model. We also learned the importance of engineering support for collaboration among our creatives within the platform, making it easier for people to work and plan together across geography and time zones. The self-funded “virtual office” we’ve offered Mashers is set to launch in December. We’re so much clearer now about the need to give Mashers the tools they need to work together. It’s become the corner-stone of an improved community engagement and growth strategy.”
Sarah, you mentioned that having to bootstrap became an asset: something we could use and leverage. Say more about that.
“That’s right. I read somewhere that taking VC investment is really taking on a partner who expects to have an active say in how you run things. We weren’t ready for that. Bootstrapping made it possible for us to demonstrate the growth potential of Mash to ourselves first. The need to make payroll every two weeks challenged us to be quite disciplined, helped us to know what risks we could take, and what initiatives we couldn’t handle yet. Our “secret sauce” is our unique community of Mashers, our fantastic creatives, and we are constantly working with them to identify new ways to increase their success. For example, we recently rolled out “Mash Makers” – an initiative encouraging our most entrepreneurial members to build new revenue streams within our client portfolio. We weren’t sure it would work, but it was beautiful and has doubled our pipeline leads.”
Amy, I understand why a client would want to hire Mash, but how are you able to attract senior CMO types and the quality of experts that have joined you?
“Our community is 100% referral-only. Many platforms have prioritized the size of their freelance platform over quality and connectivity. An article recently estimated that half of global ad professionals will shift to freelancing. We’ll grow, but one expert at a time, and will never be an Upwork.com. Most Mashers have 10 or more years of experience, and have worked on two or more continents. Our recruitment and engagement plan does a great job of welcoming new members of our platform, on-boarding them, and involving them as quickly as possible in interesting and financially attractive work. And, we understand the importance of continuing to build our reputation. Great creatives want to work for great brands, and being recently named B&T Entrepreneur of the Year in Australia was a great help to us. BTW, here’s a stat we like. While the average attrition rate in agencies last year was 35 - 45%, our’s is 3%. That’s a 10X difference!”
Tash, Mash is opening the team’s first office outside Australia, in Singapore. Why now, and where will it lead?
“Last year over half our revenue was Asia. We’ve built a reputation across APAC for helping global brands, campaigns and messages be culturally relevant across this diverse continent, and have clients and Mashers in most of East and Southeast Asia (including our first Masher from Myanmar). We self-funded the first stage of our tech platform via the help of an incredible Mumbai India advisor. Our ambition is a global borderless ecosystem, but Asia-Pacific is part of who we are. And, Singapore is a great place to operate from: central location in APAC, very business friendly, and lots of opportunity.“
Readers of an early draft of this post mentioned that the Mash story reminded them of the ending of Robert Frost’s famous poem The Road Not Taken: “Two road diverged in a wood, and I took the one less traveled by. And that has made all the difference.”
Viva la revolution!
