Silicon Valley co-founder Trip Adler on hustling, timing and raising less money than you need
This is the first in a series about the nitty gritty of entrepreneurship, for which Moneyish asks tried-and-tested founders of successful startups how they got funded. Read more here.
Scribd’s problem is having almost too much money.
Since it was founded in 2007, the company which calls itself “the Netflix of reading,” has acquired almost $50 million in venture capital. Scribd hasn’t spent much of that money, but it has helped the San Francisco company become a profitable subscription service with magazines and bestsellers from authors such as Marie Kondo in its stable. Last month, Scribd began offering feature articles from the likes of the New York Times and the Wall Street Journal, Moneyish’s sister publication.
Scribd’s premise is simple: anyone can read or host a document on its cloud. It makes money by charging subscribers $8.99 each month for access to eBooks, audiobooks, magazines and now newspapers. The company has 110 employees and now counts 500,000 paying subscribers and 100 million registered users. Scribd is valued at $160.7 million, according to CB Insights.
Scribd chief exec Trip Adler co-founded the firm with friends in his early 20s after noticing that his professor father had trouble publishing scholarly work online. They built a prototype document sharing service and invited 100 people to try it out. Almost immediately, each document was publicly accessed at least once a day. “Extrapolate that and we figured we’d get a lot of traffic once we scaled,” the 32-year-old tells Moneyish.
Scribd began with an obvious source: they applied to Y Combinator, a then-fledgling startup accelerator that offers advice and money in return for a stake. They were accepted and received $12,000 in seed money from the incubator, which has also funded Airbnb and Dropbox. “Back then it wasn’t as hard, but it’s now very competitive,” says Adler. That said, there are many more startup incubators out there today.
Still, fundraising without a known product was difficult. “The top venture capitalists wouldn’t take meetings with us,” says Adler. “So we had to go out and hustle to anyone that might be interested.” Scribd asked family friends and even bugged acquaintances of their parents to share contacts, even if they only had an inkling of investment experience. A co-founder’s family friend eventually put in $40,000. “He was new and a little easier to impress,” says Adler. “If you talk to enough people, someone will come onboard eventually.”
Timing was also crucial. An early mover in the cloud-based reading space, Scribd—which today has 100 million monthly users and 500,000 paying subscribers—quickly amassed a following. At about that time, Google acquired YouTube for $1.65 billion. With Scribd then-billing itself as a YouTube for documents, investors looking for the next big thing started calling them. “The traction made it easy,” says Adler. “It was interesting learning how fast things go from no one to everyone” being interested.
That said, don’t fundraise unnecessarily. While standard tech industry advice is to bank as much money as possible, Adler suggests the opposite. “It’s possible to accomplish more with less money than you realize because [it forces you] to make smart decisions,” he says, recalling a popular Silicon Valley adage that there’s more funding in the tech industry than there are good ideas, and more smart ideas than good engineers.
“At the end of the day, it’s all about execution,” he says. “If you build a good product and focus on the right problems, funding will follow.”
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