Mitchell Harper, Co-Founder, BigCommerce
Mitch Harper: Big Business, Low Risk
How Mitch Harper’s no-nonsense approach to startups dominated the ecommerce field with multimillion-dollar platform BigCommerce.
BigCommerce is an ecommerce software solution that does millions in sales each year, with offices in four cities and two continents. But this software giant wasn’t always so big.
In fact, its success is something of an unlikely story, considering founder Mitch Harper got started at a young age in a region with little in the way of entrepreneurial or tech role models.
As a geeky kid born in Brisbane and raised in Sydney, Harper wasn’t surrounded by the big success stories that America’s aspiring tech titans were. Where he lived, making a successful career in software creation was practically unheard of at the time. But that didn’t keep him from watching the U.S. and its innovators like a hawk.
With American idols like Bill Gates and Steve Jobs, and an incredibly supportive single mother, Harper was equipped to do what few at his age or geographic coordinates had ever done—start and build a massive software company.
Teen Developer Turned Entrepreneur
Harper started building software at just 12 years old. It was 1994, and Windows wasn’t even around yet. As an alternative, he would print out source code from well known games and type back in altered code to create new ones.
Instead of attending college, Harper opted for a more entrepreneurial route, like many of his role models. But even compared to the greats, it’s impressive how many startups he was able to crank out at such a young age—eight, to be exact.
His first startup, DevArticles, was a content-driven site centered around coding education. At 19, he was so passionate about coding that he wanted to teach others about it, too.
“I realized that, number one, I loved to take an idea from my head and bring it into reality, and, number two, the easiest way to do that wasn’t, for example, to build units or houses. It’s to do it with software and code on the computer,” Harper says.
He continued to sharpen his programming skills by reading, asking questions, and seeking out mentors. “When you’re into software, entrepreneurship, computer science, those kinds of things, my personal opinion is that it’s better to learn by doing than by sitting in a classroom,” Harper says.
“ just a passion I had when I was younger. … build a big, important technology company that could transform the world and democratize what was only available to larger companies and give it to smaller businesses. I loved helping small businesses,” he says.
The Road to BigCommerce
DevArticles proved to be a hit for Harper. Despite bringing in little to no revenue, he sold it for almost double the asking price, due to a bidding war that played to his favor.
Harper’s next venture was a little more involved. His coding chops yielded not one, but three products he was able to sell to other entrepreneurs and small businesses—a content management platform, email marketing software, and a knowledge base solution. He sold each of the products for a one-time fee.
While seeking help in a chat room, he met Eddie Machaalani, another programmer who was doing similar work, along with an HTML editing component and an online website CMS. The two met up, hit it off, and combined their product offerings to launch Interspire in 2003.
With a shared passion for small and medium-sized business (SMB) and an expanded product offering, the company was able to increase costs and capitalize on opportunities to upsell. In no time, Interspire started making millions in revenue and thousands of loyal customers.
It would be these customers who would eventually inspire the idea behind BigCommerce.
As Interspire continued to grow, Harper and Machaalani would routinely check in with customers for feedback and suggestions. “Initially, we resisted. We figured we had enough products. … I mean, by that time we had seven or eight products. Did we really need a ninth?” Harper says. “Eddie basically convinced me, and we finally gave in.”
Three months later, Harper returned with an almost-completed ecommerce platform. Upon hiring a small team to help, including future BigCommerce staffer Chris Boulton, the product was finished and launched in late 2007. It blew up out the gate, pre-selling over $250,000 in licenses.
“We probably did $2 to $3 million bucks in 2008 just from this shopping cart product alone,” Harper says. That’s when it became clear that their new product had the potential to outstrip growth and revenue of their current top offering.
Harper and his team saw so much potential success with their new product, they discontinued almost every other one. For another two years, they sold just their shopping cart and email products, until 2009, when the practice of offering software as a service (SaaS) for a monthly subscription fee took off.
“We essentially to launch a SaaS version of our shopping cart product and a SaaS version of our email marketer,” Harper says. “After a year…we’ll go all in on the better-performing product.”
The split testing worked and provided Harper and his team clarity when it came to which product to pursue. After a short 12 months, BigResponse (the email product) had 1,000 paying customers. BigCommerce had 9,800.
For Harper, that experiment made the decision for him. Despite investing the same marketing spend and support resources, BigCommerce was the clear winner. From September 2009 forward, the company became BigCommerce.
Diamonds in the Rough
Developing BigCommerce wasn’t the only good thing to come out of Harper’s experimental period—hiring Boulton changed the landscape of his business, too.
“Chris is one of these genius guys,” Harper says. “We saw this young guy and said, ‘This guy is amazing. He’s built this amazing product, but he’s never had a job in a software or tech company. We’re going to take a chance on him.’ And he was my right-hand man.”
A Target employee by day and software programmer by night, he ended up bringing immense value to BigCommerce, especially for Harper, who had no idea how to scale a technology company.
“I’ve always said that I knew enough to be dangerous…but I wasn’t nearly as talented as any of the engineers we brought in, especially Chris,” Harper says. “I couldn’t have built the business without the team.”
Boulton and his subsequent hires were Harper’s and Machaalani’s first glimpse at the programming talent in Sydney. They knew there were engineers in the area, but most weren’t employed by major technology or software firms. In turn, Harper had to hunt for “diamonds in the rough”—the programming geniuses who needed a little polish in order to shine.
Once they realized they could find and recruit that kind of talent, it became clear that BigCommerce could potentially grow into something huge.
In Harper’s opinion, once you’ve achieved product-market fit, a founder’s impact on growth starts to drop. From that point, it’s not about how to improve the product. It’s about building a system that’s based on great people, and empowering them to build great teams and scale the company.
Not unlike his self-taught youth, Harper continued to look outward for help from mentors and incredibly smart people as he grew BigCommerce. “It’s not necessarily a great product that builds a great business,” Harper says. “A great team does.”
Funding a Billion-Dollar Business
For a company already doing millions in revenue, why would its founders deem it necessary to raise not one, but five rounds of funding? This is a question Harper’s been asked many times.
“When you see a billion-dollar opportunity in a market, that window is only open for a certain amount of time. … When you see an opportunity, you can bet others have, too.” Harper says. If you don’t take action within a certain window, that window goes away, since there’s only room in the market for a limited number of businesses.
Harper didn’t have to raise money, per se, but doing so set BigCommerce apart and secured its future for years to come. They could have kept bootstrapping the business with its profits, but they wanted to expand into something bigger.
And expand they did. In 2011, they raised $15 million in Series A funding. Every year after that, they practically doubled what they’d raised in their previous year. Series B brought in about $25 million, Series C raised $40 million, and their most recent round, Series E, saw almost $70 million.
Harper and his team approached fundraising differently than most, as inspired by one of his favorite books, Mastering the VC Game. “The big thing we did was decide to bootstrap the company and fund it from our Interspire profits, so when we went to raise, we weren’t desperate and we could do it on our terms,” Harper said. “We purposely mitigated the risk before we pitched.”
Entrepreneurship Doesn’t Have To Mean Risk
Harper loves discussing the risk associated with entrepreneurship. In fact, he’d likely introduce himself to you as “the most risk-averse person he knows.” That doesn’t quite make sense for a seven-time entrepreneur, does it? Well, to him it does.
Especially because one of his idols, Richard Branson, feels the same way. “ wanted to buy a few planes, and the first thing he did was mitigate the risk of his airline not working out,” Harper said. “So he included a give-back clause in the lease for the planes.”
In short, Branson’s clause said that if the airline didn’t work out, he could give back the planes at no cost to him. But, if it did work out (which it did), he’d be able to lock in the purchase price from those first few planes and expand the airline.
According to Harper, one of the biggest misconceptions about entrepreneurship is that it’s all about risk. Entrepreneurship may not always be practical, but it doesn’t have to be unpredictable or hazardous to your financial health, either.
“My number one question isn’t ‘How can I 10x my investment?’ it’s ‘How can I mitigate the risk, so in the unlikely event that it doesn’t work out, I’m no worse off than when I started?’” Harper says. That’s a very different angle than a lot of hungry entrepreneurs take.
Harper penned a Medium article on this very topic. As he describes in the blog post, the very first thing he does when starting a new business is to build a cash-flow-heavy business. By spending a year or two selling a course, freelancing, or consulting (the latter of which he’s doing right now), Harper can then completely fund another business idea. In a way, he acts as his own bank or venture capital.
Why exactly is he so risk-averse?
“Maybe I never wanted to go back to the way I was raised. I also knew, one day, I wanted to have a family and never wanted to put them in the position where we had to sacrifice everything for an idea,” Harper says.
His goal with any new venture or investment is simple: zero or minimal downside, limitless upside. Otherwise, he won’t move forward.
But finances aren’t the only thing Harper refuses to risk. After experiencing a few tough, eye-opening years, he also refuses to put his health on the line. “I was burnt out. That’s another common misconception for entrepreneurs, that you’ve got to work 14-hour days, seven days a week, sacrifice your life, health, marriage. … I was doing that, and I was miserable,” Harper says.
“The saying I came out of that with was, ‘You never want to be the richest guy in the grave.”
On paper, BigCommerce was exploding. But Harper was imploding. Between long days, intense travel, and stressful decisions, he constantly felt like he was missing out on life. He decided it was time to remove himself from the day-to-day, and the birth of his daughter in 2013 was the catalyst for a major life change.
“It was a night-and-day shift for me, from a seven-days-a-week entrepreneur to family man who runs a successful company with a great leadership team,” Harper says. Building a great leadership team got him out of the weeds of his business.
Equipping his BigCommerce leadership team allowed Harper to find equilibrium in his life and to go on to build more businesses, invest in more ventures, and spend more time with his family.
To learn more about Mitch Harper and BigCommerce, visit http://mitchellharper.me and on Twitter at @mitchellharper.
- Why timing is critical when securing investors, from seizing the opportunity early on to waiting long enough to mitigate risk
- Mitch’s top book recommendation for entrepreneurs looking to raise capital
- Why entrepreneurs don’t need to “risk it all” to become successful.
- Mitch’s battle with depression and how he altered his life to avoid burnout and achieve work/life balance
- The power of an A-player team to grow companies
Full Transcript of Podcast with Mitchell Harper
Mitch: My job as an entrepreneur, or my first real employee job?
Nathan: How’d you find yourself doing the work that you’re doing today?
Mitch: Oh, wow, that goes back. I started building software when I was twelve. A pretty loose definition of software, I was using … You’re probably way too young to know what I’m even talking about, but I was on QBasic on an old XT computer back in the day, probably around 1994, I was twelve, yep. I was building games, ASCII-based, text-based kind of games, back in the days before Windows and I would print out the source code to other games and I would just type that into QBasic. So there might be three or four hundred pages of code, and that’s how I learned programming essentially in QBasic. And then I had a few jobs, built a few early businesses around teaching coding.
One of my first businesses was a website called Dev Articles dot com, kind of like SitePoint. I sold that when I was about 21. That really taught me programming, software, design. I did a few courses in classrooms and online and everything like that, and realised that, number one, I loved to take an idea from my head and bring it into reality, and number two, the easiest way to do that is not to, for example, build units or houses, it’s to do it with software and to do with code on the computer. So self-taught software engineer, designer, product manager, marketer, just by reading books and asking smart people, and yeah. Turned that into eight companies now since 2001 when I got started. Really it’s been the last seventeen or so years implementing what I was teaching myself from when I started when I was twelve, which is software engineering, design, and of course all the other stuff like hiring and raising capital and all that kind of stuff.
So, yeah, just the passion I had when I was younger. I don’t know why I liked coding and building software, maybe because of the maths, maybe because of the creativity. But that’s kinda how I got my start and I had a lot of jobs. I started at Burger King or what we call Hungry Jacks here in Australia. Worked in fruit shops, worked in computer hardware repair companies, but then got to the point where I was out of school and I just wanted to do my own thing and wanted to be my own boss and do what Bill Gates and Steve Jobs … back then, they were my mentors and idols … do what they were doing with Microsoft and Apple, which is build a big, important technology company that could transform the world and democratise or take something that was only available to larger companies and give it to smaller businesses. Because I love helping small businesses.
Nathan: That’s crazy. Did you go to uni or anything? Cause you’ve been an entrepreneur … for seventeen years.
Mitch: No, I didn’t go to university. I did a few private college courses back in the day to learn different programming languages like ASP and .NET, this was fifteen years ago or something like that. I kind of didn’t like the classroom environment, I liked to teach myself, I liked to find people who were the best in the world at what they do and get them to mentor me, so I just, I didn’t find the dynamic of sitting in a classroom listening to someone from academic background try and teach me practical skills in software engineering and design. That was the main reason I never went to uni and by the time I was ready to go to uni, that would’ve been around nineteen, the year 2000, I finished high school in ’99, so in ’99 or 2000
I had my first company up and running by then, which was Dev Articles. I’d started another online e-commerce site that was generating 500,000 dollars a month in revenue. So by the that time, the opportunity cost of going to university didn’t make sense to me. I kind of said, why would I spend four years sitting in a classroom learning how to build software when I already know how to do it and can keep learning on the job and make a lot of money, help a lot of people, at the same time. That’s kind of how I weighed it up and decided not to go to university. I think when you’re into software, when you’re into entrepreneurship, when you’re into computer science and those kinds of things, my personal opinion is that it’s better to learn by doing than by sitting in a classroom and learning from someone with an academic background but doesn’t have the practical skills that you need to either be an employee in a tech company or to run one as an entrepreneur. So I decided not to go to university.
Nathan: Were your parents very supportive of that? Did you have a family or did you know anyone that was an entrepreneur? I find that really, really interesting because, back then, that wouldn’t be something that would be very common and would be shunned upon even more in society back then, right?
Mitch: I mean, we’re talking the year 2000 and I grew up in Brisbane. So I was living in Brisbane at the time, I hadn’t moved to Sydney yet. Actually, sorry, I grew up in Brisbane and I just moved to Sydney in 1998 so I was fairly new in Sydney. And back then, we didn’t have the , the BigCommerces, the big tech success stories that we have now. So my view was always US-centric. I’d always look at what was happening in the US. This was the height of the dot com bubble at the time where, Pets.com had a little bit of revenue and was valued at a billion dollars with no profit. I was looking at the US and mainly …
To get back to your question, I was raised by a single mom, my dad left when I was two. Very hard upbringing. My mom always encouraged me to be able to do whatever I want. She never pushed me to go to uni, she never pushed me to do well in high school if I didn’t want to, because I was always working on my companies for twelve hours a day, when I’d get home from school. I had a very supportive mom, she obviously is still supportive today. Her view was, you can do whatever you want. She never pushed me to do anything or go in a particular direction, I think, because she saw that my mind was creative and curious more so than academic to go down that education path.
That’s really been important to me because I’ve never had any pressure from anyone to go down a certain path or to perform in a certain way. I think that gave me the space that I needed growing up to choose my own adventure, for lack of a better term. Decide to do what I want to do on my own terms, how I wanna do it, and to do it at the speed that I wanted to do it. My mom was amazing and still is in letting me essentially do whatever I want, in terms of work and even school back in the day.
Nathan: That’s an amazing story. I find this really interesting cause these are some things I’ve never asked you before, right?
Mitch: That is true, we’ve spoken a lot and we’ve never gone into my background. It’s always me grilling you. This is
Nathan: Yeah, that’s right. So, just for the context of everyone listening and I mentioned at the start of this podcast. I’ve been very privileged and lucky to have … Mitch is like a mentor and coach and he’s taught me a lot and a big part of Foundr’s growth and what we’re doing to … all this crazy strategies … to Mitch. One thing I really want to talk to you about which I think is extremely impressive that you’ve done is eventually founded Big Commerce. I wanna come to that because I think it’s just incredible what you’ve built and how you started out of Sydney, and you built this massive, massive, massive start-up. First of all, you’re working on Dev Articles and you ended up selling that. What happened next? You’re building this website, and you said you had a e-commerce player doing half a million a month?
Mitch: Yep, so the e-commerce play was where I was an employee during the day. They were a hardware company, I don’t think they’re around anymore. My job was essentially to come in and build their online presence from scratch, because in the early 2000s there was no BigCommerce at that time, there were no point and big-type tools to set up an online store. So that’s really where I got my skillset around e-commerce, I built the entire online platform from scratch using … back then, it was ASP and DLLs, for anyone that knows what I’m talking about. It took me a long time … It took me about three months to build that and we launched and within six months we were generating about 500,000 dollars in revenue from our online store.
That’s really how I got my main expertise in e-commerce. Little did I know that that would come back and help massively when I decided to go BigCommerce, probably about five years later. To get back to your question, started Dev Articles, sold that when I was probably about nineteen or twenty or something like that, for a good sum because I had two US companies and I got them into a bidding war, which was awesome. We ended up getting double the initial offer price. When you’re that age, it’s a great outcome to be able to sell a company like that, considering we had no revenue. It was just an online site, very similar to SitePoint, where we had … I think we did about five million visits in the first year. And then I was building products that you would instal on your web server as part of your website. This was again for SAS, cloud was really early, was around but SAS and cloud weren’t common terms that everybody knew.
I built a content management platform, I built an email marketing platform, similar to MailChimp, this was fifteen years ago. Built a knowledge-based solution and was selling them online. You’d come to the different websites for the products, you would pay … It was about 500 dollars one time, and then you would instal those scripts on your web server and run the products. Found it doing really well. Then, I was in a chatroom, a Perl chatroom, Perl being a programming language similar to PHP. It was an American room and I was asking for help.
I happened to meet a guy on there called Eddie who was also in Sydney, and he was asking for programming help as well. I was like, alright, what are the odds of another Aussie guy being in this American Perl coding chatroom? We started talking and long story short, I was in Rosehill at the time, Eddie lived in Marrickville at the time, and we met up and got along really well, and decided to merge what we were doing together. Eddie had a WiZiWiG HTML editing component and an online website CMS, if you like. And I had my products and we brought them all together and that’s how we started Interspire, which we launched in 2003 and we built that completely bootstrapped up until 2007, when we got into about ten million dollars in revenue in four years. That was not recurring revenue, we had to earn that revenue every single month. So that was ten million dollars a year in about 2007, from one-time payments of about 500 dollars each first off.
Nathan: When you said about Dev Articles and you said “we,” did you have any partners back then or was it just you?
Mitch: No, it was just me and some writers that I found online, freelance type writers who wanted to contribute because they liked teaching and they were really good at it as well. It was just me, I was running it from my bedroom at night, so I would write articles and then reach out to advertisers, I mean, we had a little bit of revenue but it wasn’t a lot. And write the email newsletters, had an email list of about 250,000 people, and it was just me. A server in … somewhere in the US, just a crappy little web server that did the job and managed to hold up for 5 million visits in the first year.
Nathan: I see. It sounded like you were building … you built some other products that you and Eddie both combined when you started Interspire.
Mitch: Yeah, so this was really early on, before SAS, before products like BigCommerce or MailChimp or Help Scout or Zendesk. We both, funnily enough, saw the need for tools that would help small businesses run their website, do customer service, and do marketing. That’s why I built a CMS for the website and email marketing platform, so they could send out newsletters, and a knowledge-based tool so they could help their clients. Funnily enough, Ed had the same kind of thing in his products. When we merged the products, there wasn’t too much of an overlap but we ended up having five different products that we could sell essentially to the same kind of customer. Instead of just selling one product to one customer for 500 dollars, we had a shot at selling them four additional products over their lifetime, so we could increase their lifetime from say a one-time payment of 500 dollars to maybe two or three thousand dollars if they bought a few of our products and used them all at the same time. We saw the synergies there.
I’d put in some of the money that I made from selling Dev Articles, I did go and buy an S2000, which was the Honda S2000, it was one of the sports cars that I wanted at the time, because I was nineteen and when you’re nineteen and you sell a company, you buy a sports car. Ended up crashing that into a pole, almost killing myself, but that’s another story. I put in a good six-figure sum into Interspire, Eddie had some money from some freelancing and web design work he was doing, he put that in, and we were off and running. We had some cash to invest in marketing and we hired a few people and built that up really well up until 2007 to around ten million a year doing eight million in profit.
Nathan: Wow. That’s a pretty awesome business. So why didn’t you just stop there?
Mitch: In 2007, we had the idea to build a shopping cart product … Customers actually gave us the idea. We would always do customer feedback and customer development and not only would we ask them, hey, what do you like about our current products, but it would also be, hey, what other pain points are there in your business that we could help you with? Shopping cart just kept coming up. Initially, we resisted, we had … we’ve got enough products, we don’t need to build any more products, by the that time we had seven or eight products. I thought, do we really need like a ninth product? I remember Eddie and I were standing at the front of our old terrace on National Street in Rosehill, if anyone’s in Sydney and familiar with the area, which is where we were running the company from. Probably illegal, we had about eight people working on the top level of a terrace, but we did have harbour views, which was awesome, and I did live on the bottom level. It was free rent for me. And we had a gym in there and we had crazy parties, but I’ll save that for another time
We were standing at the front of the terrace, we just had lunch, and Eddie basically convinced me, he said, dude, we should build this. And I was like, alright man, I’ll see you in three months. He said, what are you talking about? I said, I’m gonna go dark for three months. You’re going to run the company and I’m just gonna sit in a corner and build this product. I don’t want to talk to anyone, do any customer service, don’t wanna deal with anything. In three months, we’ll have a product. Maybe it was six months, but I think it was three months. And he kinda was confused and said, well, okay, go and build it if you want. I said, see you soon.
Three months later, I built the entire product to about 80% completion and it had online ordering, catalogue and search and a back end. You could upload your products and import from all that kind of stuff, reporting analytics, insights from multiple users. And then I was burnt out. So I worked on that for three months nonstop and at the time I was probably doing sixteen hour days, I was single, I hadn’t met my wife, didn’t have any kids. I said, let’s hire people to help me finish this off. We hired a young guy called Chris and a few other people and Chris went on to … We’ll get to this later, but Chris has gone on to being a really lead role at BigCommerce, even still today, and was the catalyst for the success of Interspire shopping cart, which is what we called it at the time, and then we pulled it out and pivoted to a SAS model with BigCommerce.
Long story short, we launched that in … it was probably late 2007 that I finished the Interspire shopping cart product and out the gate, it just blew up. It killed all of the other products in terms of revenue, in terms of customer count. We pre-sold a quarter of a million dollars in licences, just by me blogging about it as I was building it, saying hey, I’ve just built this feature for a shopping cart product, we’re launching soon, what do you think of it? And there’d be a little promo below that said, sign up now before we launch, I think you got 50% off or something like that. We had about 1000 people do that at 250 dollars each. Because we were going to launch it at 495 US when it launched, which we did.
We generated a huge amount of cash pre-launch, and then when we launched, I can’t remember the numbers cause it was eleven years ago, but we probably did something like two or three million bucks in 2008 just from the shopping cart product alone and the profit on that would’ve been 80%. That’s when you really thought, whoa, this is insane. Because our email marketing product was doing really well at the time, probably generating five million dollars. So we said, this product has the potential to outstrip growth and revenue generated from email marketer. We decided to really focus on the shopping cart product, we discontinued all of our other products except for the shopping cart and the email marketing product. That’s how we ran Interspire for another two years, until about 2009, and then we said alright, SAS is here, we need to move away from this on-premise stuff to SAS.
We essentially … And cut me off if I’m rambling … We essentially said, let’s launch a SAS version of our e-commerce product and a SAS version of our email marketer product. We’ll put the same budget behind both of them and after a year, we’ll look at which one has the most revenue and then we’ll can everything else and go all-in on that product. So we were split-testing our products to figure out the future of the business. Because we knew we wanted to be in SAS, we knew we wanted to focus on one product, and we started to have this idea that hey, we might be big enough to raise money from US investors in a few years, so we wanted to have a singularity of focus. After the first twelve months, BigCommerce had 9,800 paying customers and Big Response, which is what we called our SAS email marketing product, I think it had something like 1000 customers. That made the decision for us.
We split-tested two products against each other with the same marketing spin, same support resources over a year, Big Commerce had 9,800 paying customers, we were aiming for 10,000 but we missed it and email marketer had something like 1000. So that made the decision for us, shut down all the other products, renamed the company to BigCommerce, and from September 2009 it was on. We said, we’re in SAS, we’re in e-commerce, we’re not doing anything else and it just took off. The first year I said we did 9,800 customers, they’re probably paying us 25 dollars a month, so I’m just doing some maths here, so we got it to about a quarter of a million dollars in monthly recurring revenue after the first year. At the end of the second year we had something like 25,000 customers so it just kept growing and growing, we took our average revenue per user up from 24 dollars to hundreds of dollars.
Now the company’s just huge. We announced last year that we did 100 million dollars in annual recurring revenue and it’s still growing massively. That’s kind of the long-winded version of how we ended up getting to what became BigCommerce.
Nathan: That’s amazing. I’d like to delve a big deeper. At first you built the company in Sydney, right?
Mitch: We did. We were in Rosehill in Sydney, we moved to Alexandria, we stayed in Sydney.
Nathan: And then, why was Chris the catalyst?
Mitch: Chris, and if you’re listening Chris, I hope you’re well. Chris is amazing. At the time of hiring Chris, he’s one of these genius guys. He was running an opensource forum software called MyBB. I think it might still be around. So, my bulletin board. If you remember ten, fifteen years ago, there was forum software like vBulletin and all these kinds of tools. Because forums were cool before social media arrived. They were really the precursor or version one of social media tools like Facebook. He built this whole product that ran amazing forums and you could customise it and whatever. That was his side hobby because it was open source. During the day, he was working at Target on the register, helping people check out and complete their orders.
We saw this young guy and said, oh my god, this guy’s amazing. He’s built this open source forum product but he’s never had a job in a software or tech company, we’re gonna take a chance on him. He came in and was essentially my right-hand man. Helped me finish building up the product, eventually he was the lead developer on it, and everything like that. He just took off. He was the world’s nicest guy, still is. We worked together for such a long time and he was really the catalyst because he was just an amazing programmer.
I’ve always said and thought that I’m an entrepreneur. I knew enough back in the day to build software, but my coding was rubbish basically. I knew enough to build stuff and get it to work, but to scale a company, the guys that we ended up hiring rewrote most of my code after the first two years and there was always the joke that if something didn’t work in the product they’d look in the comments and ah, there’s Mitch’s code. I said that I knew enough to be dangerous but I was not on any of the glass levels that we brought in to run engineering and to build the product, especially Chris. He was the first glimpse that Eddie and I had of, wow, like, Sydney has really good engineers. They’re just not at big companies because we didn’t have big SAS, tech-type companies here at the time.
Our last in was maybe five or six years into their journey, they were built on Java back in the day, I believe they were on-premise as well instead of SAS. There was no BigCommerce, there was no anything. We really had to hunt for these guys who were almost like diamonds in the rough, they needed a bit of polish, they never had any work in a commercial environment, but man, they were programming geniuses. We managed to find a few of them in the first few years and then I built the engineering team and a lot of those guys have gone on not only to do well at BigCommerce, but they’re running engineering at other big SAS companies here and in the US as well because of that experience that they got helping Eddie and I Interspire and BigCommerce and seeing what it’s like to scale a technology company up from hundreds of users to tens of thousands or hundreds of thousands and billions of hits on all of the e-commerce stores, for example, .
He was really the catalyst that made us. We can find good talent and technology and software and entrepreneurship in general is all about finding good talent. I think we can build this into something big. That’s when the lightbulb kinda went off for us. As I mentioned, we went all in on BigCommerce and had singularity of focus from 2009 until, when I left the company in 2015 or whatever it was, 2016.
Nathan: Along the way, you guys raise a tonne of money as well. Why did you decide to do that, if the product was doing really well already?
Mitch: BigCommerce has raised a quarter of a billion dollars so far. They just raised … And when I say “they” it’s cause I’m no longer active in the company. It’s still my baby, right, but I speak about it as a third person … They just raised another 80 million dollars, I think it was 80 million, 65 from Goldman Sachs, just a few weeks ago that was announced. I think the thing is, when you see an opportunity to build a billion dollar business, which is what our goal was for BigCommerce, back at the time. There’s a few different ways you can look at it. Keep in mind at the time we were both single, had no girlfriends, had no wives, had no kids. When you see a billion dollar opportunity in a market, that window’s only open for a certain amount of time because if you’ve seen that opportunity, you better bet that others have seen it.
At the time, Shopify had been around for four years I think it was. Magenta launched a week after we launched BigCommerce. We-Commerce was probably coming out as well. The space is very saturated now. What you tend to find is, if you don’t take action within a certain window, within kind of one or two years after we figured this out, then that window goes away. Because someone else will take that action. Someone else will go and raise money from investors saying they wanna build the world’s best e-commerce platform. There’s room in a market for three or four companies that wanna do that, that say they’re gonna be big and democratise e-commerce and build a billion-dollar business, but once investors have made those bets and they see that other investors have made bets in competing companies, there’s two things that happen.
Number one, they’ll either look at the landscape and say, well this company’s already raised a bunch, this one and this one has as well, you guys are a bit late. Number two, the thesis of the investors will change. No one today, for example in 2018, is gonna go out and fund a SAS e-commerce platform start-up. Because the market’s moved past that. Today it’s AI, machine learning, wearables, IoT. Those are the thesises that investors have and investors research a thesis around an area or a particular type of product and they say, alright, for this year, my theses … I think that’s the plural of thesis … X, Y, and Z. So if you’re late to the game, their thesis has moved on from e-commerce for example to marketing automation or to IoT or to something else. They’re the two things I was really conscious of at the time.
That’s kind of how we looked at it. Could we build a business that would give investors a 10x return? I didn’t know any of this until I read a book called Mastering the VC Game. That really taught me everything in the early days about raising capital and how to speak the lingo of investors. It’s called Mastering the VC Game, it’s on Amazon, it’s incredible. One of my foundational books that I refer all entrepreneurs to that wanna raise capital. We saw that opportunity, we realised that we could keep bootstrapping the company without profits. By that time we were probably generating five, six, seven million dollars in profit. Maybe a little bit less cause we’d started building a team of about fifteen people. We could’ve kept bootstrapping the business, reinvesting profits, and today I’m sure BigCommerce would be doing twenty or thirty million dollars a year in revenue and it’d be worth half a billion dollars and maybe a bit less, three or four hundred million, and Ed and I would own 50% each and we would’ve been more than happy, more than grateful.
But at the time, our business was already making so much money. We didn’t have to make decisions for ourselves. We were twenty-something year old guys whose businesses were generating high seven-figure profits. Not revenue, profits. Profits that we were taking as dividends. We didn’t have to make decisions around, what do we do so that we can pay our mortgage next week. We were already taken care of financially because we’d built the business in a way that that was the outcome that we got. Because we both wanted that. I came from, as I mentioned, single mom growing up, we were dirt poor. Eddie’s family, his dad has always been a hardworking small business owner, his parents came over from Lebanon, he’s first generation Lebanese Australian. He’s always had that work ethic instilled in him from his parents. We knew that if we worked hard and were smart, the money part of it for us would take care of itself, which it did within three or four years.
We had the luxury at the time of not having to trade off between, do we take a salary and live poor for a bit while we bootstrap this? Or do we go and raise money and risk losing it all, because we couldn’t lose it all because we’d already made so much that we’d stashed away or we’d invested, that that wasn’t … Failure wasn’t even on the table for us because we’d already made it past that. I think that was really important as well. Most people when they raise money, maybe they do 100,000 dollars a year in revenue or a million. By that time we were doing 10 million revenue in a year. When we were pitching, our view was respectfully, take it or leave it. If you don’t like our terms and our valuation, that’s okay. We’ll keep running the company and we’ll make a tonne of money anyway, if you wanna come on board or not.
We were able to shift the dynamic of dealing with investors because we honestly didn’t need their money. We’d liked it, and we saw a billion dollar business, but we weren’t in there with our tail between our legs begging for money cause we were gonna run out of cash in eight months. We had ten years of cash in the bank if we needed to use it. When we raised, it was a very different approach than what most founders go through and it was really easy for us to raise because we’d gotten the business to such a point where, if they didn’t invest, it just … They were silly. That’s kinda what made us go all in and make that decision around raising money and our series A was … I think we did fifteen million in our series A. I hope our early investors aren’t listening, but they ended up giving us almost double the valuation that we were hoping for, so we were very happy with that.
Nathan: Did you guys have to go to the States? Did you go together or just you? How did that work?
Mitch: We did go to the US. We decided to set up in Austin, Texas, because we had a marketing adviser there and he said it was a great spot, it was near the University of Texas where they had 200,000 students, they had a good computer science programme there, there are big companies like Dell where they had a lot of young sales reps. It made sense for us. Eddie went to live there for nine months. He took his … They may have been engaged at the time, his girlfriend slash fiancée, Micheline, at the time. He lived there for nine months and once he got the office out there and hired a few people and whatever, I went over and we’d go back and forth. We would go four or five times a year for two or three weeks at a time, because we had the Sydney team and the Austin team.
When it was time to raise money, I built the pitch deck. We had so much inbound interest from investors leading up to raising that we just would reply on email and say, alright, we’ve decided to raise money, we’re gonna be in the US on these dates, are you available? We’d done a lot of phone calls with these investors leading up to the pitch because investors always wanna check in with you, they’ll wanna see how you’re going, they wanna “share their view of the market.” So I built these relationships in the eighteen months leading up to deciding to raise money and actually doing it. So yeah, we were in the US … From the series A we went up and down the West Coast for two weeks, and then we hopped on a plane and we did New York and Boston, and then we came back to the West Coast and did a followup with all of the partners at the firms where the initial partner liked the idea of the company and liked our pitch and liked us.
I believe, it was 2011 we raised our series A. So it’s a while ago. But I believe, we had the term sheet done before we got on the plane to come home. We went out to dinner with Larry and Nitesh from General Catalyst, two amazing guys. We were maybe drinking too much wine because Larry likes red wine and he gave us a term sheet at dinner and we had to keep our poker faces because it was double the amount we wanted to raise and almost double the valuation we were hoping for. We kept our straight faces and said okay, we’ll think about this. After the dinner Ed and I were jumping up and down like little girls because it was a really good deal. It included some secondaries, which means we were able to sell down some more of our shares and put some money into our pocket to mitigate that risk.
Jumped on the plane, came home, Larry came over to Sydney from the US, I think he wanted to make sure we weren’t just two guys in a garage pretending we had a company. We took him out to dinner, met his beautiful wife, spoke a lot about business in the future, and then we did the contract and everything closed. That was how we raised our initial series A of fifteen million in 2011. Pretty much every year after that we raised at almost double what we raised the previous year. I think we did fifteen and then we did twenty or thirty for the series B, and then Steve Case, the founder of AOL, came in for our series C at forty million. Then we did … I’d left the company before the D round but we did a D round and then we just did an E round for 65 million with Goldman Sachs. American Express is an investor is SoftBank.
Lots of different amazing investors and funds are in the business now because we’ve raised 250 million. That’s kinda how we got started on the path to raising money. The big thing we did is decide to bootstrap the company and fund it from our Interspire profits, so when we went to raise, we weren’t desperate, we could do it on our terms, we could find the investor that we wanted, and we didn’t have to be nervous about pitching because if we failed, and shit hit the fan, we came back to Sydney we still had a bunch of cash in the bank and we just keep doing what we’re doing. So we mitigated purposely the risk before we even pitched.
Nathan: You talk about mitigating risk, that’s one thing that you’ve taught me in a big way, around maximizing the upside and minimizing the downside. Can you elaborate on that, because I think it’s a common … Do you think it’s a common misconception that entrepreneurs like taking risks?
Mitch: Great question. I think it is a massive false belief that entrepreneurship is about putting it all on the line, mortgaging your house, living on ramen noodles and whatever and going all in. That stuff works when you’re seventeen, eighteen. If you’re in your late twenties, early thirties, like I am 35 so I guess I’m almost over the hill … A lot of people have husbands, wives, boyfriends, girlfriends, kids, parents that rely on them, so it’s not always practical to just go balls to the wall and go all in. I’ve never believed in that. The big proof point for me was how Richard Branson started Virgin Atlantic. This is in his book, the first book I think was Losing My Virginity and the second one was Finding My Virginity. Both amazing books. He wanted to buy a few planes, get a few planes for Virgin Atlantic. I think he went to Boeing or got some from Singapore and the first thing he did was say, alright, how do we mitigate the risk of this airline not working out?
He had a giveback clause in the lease for the planes. I think he had like three planes or something like that that he started with. The clause was, if this airline fails, you guys will take the planes back and there’s no downside for me. But the upside was, if the airline works with three planes, you guys are gonna give us another ten or twenty or thirty planes or whatever it was at the same rate. He literally created an airline, MVP, where he could walk up to Boeing, if it didn’t work, throw the keys at them and say, I’m out. No risk, here are the planes back, thank you very much, love you guys, but I’m gonna stick to Virgin Records. As an example. Of course it worked out and Virgin Atlantic spawned Virgin Blue and Virgin Australia and Virgin America, all these different airlines. Now the conglomerate is worth billions to Richard Branson.
That story always stuck in my mind … If one of my idols, one of the smartest most successful entrepreneurs in the world mitigates risk that heavily upfront, I’ve gotta do that too. Everything I go into now, whether it’s investing in a business, starting in business, buying real estate, shares, whatever it is. My number one question is not how can I 10x my investment, it’s how can I mitigate the risk so in the unlikely event that all of this doesn’t work out, I’m no worse off than when I started. Or if I didn’t do this in the first place.
And that’s a very different angle from how I see most entrepreneurs looking at a business, where they’re gonna go all in, they’re gonna mortgage their house, they’re gonna put in all of their savings, they’re gonna skimp for five years, and there’s a 1% chance, maybe 2% chance, that things will go how they want. But they risk it all up front and when things don’t work out, because most of the times they won’t, if we look at the metrics around small businesses, within the first five years, something like 90% fail, another 8% just survive and another one or two are breakouts. They’re going for that one or two percent chance but risking everything they’ve worked for and saved and accumulated up until that point in their life. Which has never made sense to me.
A lot of your listeners might be thinking, dude, how do I … What do I do then? I wrote about this on Medium, maybe we can link to my article under the resources for this post. The first thing you want to do is build a cashflow business. Such as an agency, a digital agency or create an online course. Or even sell your time by the hour. To build up a cash reserve to fund the first two years of your start-up. You essentially become your own bank or your own VC. I still do this today with all of my companies. There’s a reason I’m doing consulting. I work with dozens of entrepreneurs. A, it pays a lot of money, and B, I’m gonna use that cash to fund my new companies so I don’t have to dip into my own money or I don’t have to go to VCs.
So I still use this model today and I teach it to every found that I know. We were speaking about it, you and I, last week. About something related to this. I am the most risk-averse person I know. Which is may come as a surprise to a lot of people. My companies have done over 200 million dollars in sales, we’ve raised a quarter of a billion dollars at BigCommerce … I’m the most risk-averse person … maybe besides Richard Branson. I think that was something that I’ve always been, risk-averse, I don’t know why, maybe growing up we had nothing and I wanted to make sure I never went back to that kind of dirt poor way of living and especially for me, when I got started, I knew I wanted to have a wife and have a family and to have kids.
I have two beautiful girls at the moment and that was a big driver for me. Even ten, fifteen years ago, that one day I wanna have a family. I never want to put them in the position where we’ve sacrificed everything for some stupid idea I have that may or may not work. I’ve always structured everything to be zero downside and uncapped upside. If I can’t get the downside to be zero, I want it to be minimal. If I can’t get it to be zero or minimal, I won’t invest in the business, I won’t start it, I won’t do whatever the project is. You can ask everyone that knows me, that’s how I’ve always been. A lot of people will say, you made all this money, you’ve done all this stuff, why don’t you just gamble some money and put it on this? I still won’t. I just can’t. Because I don’t believe that’s the right way to be an entrepreneur where you can impact millions of people and of course make lots of money and do all that stuff at the same time. That’s how I think about risk.
Nathan: I love it, man. We have to work towards wrapping up but I’ve got a few other questions. One thing you mentioned to me was around the hard times. It wasn’t all easy and you said. .. I don’t know, maybe you went through some, like, depression? Or like, it was really tough and you said … turned to drinking and stuff, like … What was up with that? What happened? Are you able to share?
Mitch: Yeah, of course. I’ve written about this as well. Between roughly 2007 and 2010, before my wife and I got married, before we had kids. BigCommerce was doing amazingly well, but it was a lot of pressure. It was very intense. I was essentially a first-time founder at that point even though I’d built two companies before because the size and scale of the company and the number of employees we had. Around there, it probably would’ve been 50 to 100 people that we were employing, I’d never done that before. I was learning on the job.
I found it really tough and I’d have to keep upscaling it almost every month, I’d have to learn something new, hire someone new. I had people who were forty, fifty, sixty years old reporting to me in senior leadership roles. For me, that was intimidating. I didn’t know that older people were okay to report to younger founders. Of course, it’s normal today and I know that now but I didn’t know that at the time. The travel was getting to me, I was in the US four or five times a year. Sometimes my wife, my fiancée at the time, would come. Sometimes she wouldn’t so I’d miss her. My family, my friends, I’m very close to, my brother and my sister and my mom. A good group of friends. I felt like I was missing out on a lot of life to go to business.
When times got hard I was drinking more than I should’ve. Never blackout drunk or anything like that but compared to how I am now, I don’t drink very often. If I go out to dinner or whatever, that’s it. It was a lot and it was taking its toll on me mentally, and I’m the kind of guy back then that would keep everything to myself and bottle it up. Just because of my upbringing, I’m not like that anymore. Drinking, to me, and even eating at the time, my weight would kinda go up and down massively. For six months I’d just eat whatever I want and then for six months I’d be on the treadmill seven days a week running for an hour a day. There were definitely some issues there that I got sorted, clinically diagnosed with depression, started seeing someone to help me with that for a year.
I moved past that stage with the help of my now wife, my friends, my family. Really stepping back and … I was burnt out. That’s a common misconception for entrepreneurs, that you’ve gotta work fourteen hour days seven days a week, sacrifice your life, your health, your marriage, all that kind of stuff. I was doing that and I was miserable. The saying that I came out of that with is, you never wanna be the richest guy in the grave. Or girl, depending on who you are. Someone told me that at the time and it really shaped my view of how I saw the business. At that time I decided to really step up and build a senior leadership team and started to think about, this is five years before I did it, or even longer … How can I get out of the weeds of this business? How can I get out of the day to day? How can I work two or three days a week on the right things with the right team so I don’t need to be in there running everything all the time? I don’t need to be a blockage point for everyone in the company.
That’s what got me out of it, long story short. Building a great leadership team, reducing the amount of travel that I was doing. My wife and I got married and we had our first daughter in 2013 and that … It was a night and day shift for me from balls to the wall seven days a week entrepreneur to family man who runs a beautiful and successful company but with a great leadership team that’s there to do the work that they want to do and they’re paid to do, that report to me, and I’ve taught you this, using traffic light metrics, where I can manage by exception instead of having to be in the business and freaking out about all these fires that are going on in the business.
That’s really what put me out of that funk that I was in for two or three years and allowed me to go on and build the additional businesses that I’ve built or that I’m building, and not fall prey to the common misconception that entrepreneurs go all in, put their money on the line, cross their fingers, work their butts off, and build a successful business, cause it just doesn’t work. You just burn yourself out. And you wish you’d never started.
Nathan: Thanks for sharing, mate. We have to work towards wrapping up. One last thing that I’d love for you to touch on, cause I think it’s really, really important. You kinda hinted at it before and this is something I’m learning now is like, one of the most powerful things when it comes to scaling, I believe, which you taught me, is just finding incredibly talented people especially if somebody’s done it before. That’s an exceptional powerful to building a great company and taking a business to the next level. Would you be able to touch on that just briefly?
Mitch: I think once it achieves product market fit, which … If you Google “Sean Ellis product market fit” he’s got survey.io, or if you’ve got a net provider score from your customers of sixty or above, they’re kind of the two ways you look at whether you’ve got product market fit. Once you’ve got product market fit, it means you’ve got a good product in a market that’s willing to pay for it. Beyond that point, the impact the founder has on growth starts to drop. Because it’s not about, can we add more features, can we hustle and spend more money on AdWords or can we add more content on our blog, it’s how do we build a system that’s based on great people that have done this before or have done a lot of what we want to do before, that have done what I call “seen a movie,” bring them in and empower them to build great teams and to scale this thing way faster and way better than I could on my own as a one-man band.
That’s another trap that I see a lot of founders, they don’t want to hire people because they don’t know how to. When I don’t know how to do something, my default view is not, I’ll leave it. It’s, who’s the smartest person in the world that I can tap into to get me to … To teach me how to do that or to do it for me. I will relentlessly not stop until I find that person or people, and then I’ll learn how to do it or they’ll do it for me, and then I’ll move on to the next challenge in the business. I always say that a great product doesn’t necessarily build a great business, a great team does. Founders always get all of the credit. Do you really think Elon Musk built Tesla? Do you really think Elon Musk has built SpaceX, the Boring Company, SolarCity? No. He’s the figurehead for the company because the media love him. He’s a very smart guy, no doubt he’s had a lot of impact, but there are tens of thousands of people working for him that are doing the real work, that are building those businesses.
It’s the same for BigCommerce. Eddie and I got all of the credit. We had the idea, sure, I built the first version and raised a bit of money. But without the team, it would still be two guys in a terrace in Rosehill or twelve people in Surry Hills trying to build this product, generating a few million dollars a year. If there’s one thing that transforms any business once it’s beyond product market fit, it’s thinking about who do I hire, when can I afford to hire them, and what are they responsible for when they come into the business.
Nathan: Love it.
Mitch: That, more than anything, will grow a company.
Nathan: Awesome. Thank you so much for sharing that mate, because I know that it’s something you’ve really drilled into me. I think it’s really important to share. We have to work towards wrapping up, but mate, I just wanted to say thank you so much for everything you do. Where’s the best place that people can find out more about yourself and your work?
Mitch: Probably my website and Twitter, so mitchellharper.me and then I’m on Twitter, just MitchellHarper. Mitchell with two L’s, Harper. You can look on there, I post a lot about startups and give advice there as well.
Nathan: Awesome. Thank you so much for your time, mate. I really appreciate all your help and support and everything you’ve done for me. I can’t thank you enough.
Mitch: No worries, it was good talking on this podcast.