I have seen a lot of young first-time founders play it fast and loose in their fundraising processes the past several years. It’s been frothy times, so I think it brings out a lot of strange behavior. It got me thinking of when I was a young founder and the things I’d do, particularly one specific story that I tell people when I get asked “what not to do” when fundraising.

Back in 2010 Steve and I launched GroupMe to much fanfare. It got a lot of attention out the gate because we built it at the first TechCrunch Disrupt Hackathon in NYC and the press thought it was neat that something could be built in a night and actually work. It was a good story. We raised a round of financing really quickly ($850k on a $2.5m pre-money - those were the days!), and then immediately got more inbound interest from VCs as the service began to take off.

We were invited to demo some new features at TechCrunch Disrupt SF (here's some video footage I found) so we flew out to the west coast and took some investor meetings before our presentation. We thought our next round was going to be preempted by a16z or Sequoia. We had met with Alfred Lin several times and loved him (as most entrepreneurs do) and we took a meeting with Roelof Botha at Starbucks across from the convention center. Vinod Khosla walked in while we were pitching and we felt like royalty being showered in attention. We certainly thought we were hot shit. I was 23 years old.

We walked out of that meeting absolutely certain Sequoia was going to be our lead. We were a small team so everyone knew what was going on, and after the meeting they asked us how it went in our GroupMe group. “Sequoia wants it hard” was our response.

Fast forward two hours - Steve and I are onstage presenting some new groupme features. We pride ourselves on live demos. Our teammate Pat is driving the presentation and on the screen in front of the entire conference he opens up our team group chat for everyone to see: “Sequoia wants it hard.”

We had no idea. But the second we walked off stage Pat pulled us aside panicking saying, “Guys, we have a problem.” Our stomachs hit the floor. I am surprised neither of us puked. Our friend Matt in the audience sent us a text that just said, “Holy shit.”

Lucky for us, not many people saw it, and nobody made a fuss about it. We asked TechCrunch to pull the video of the demo and they politely obliged. We saw some Sequoia partners afterwards backstage and nothing was mentioned. I don't think they ever caught wind of it. Crisis narrowly averted.

So I was a young founder who played it fast and loose. We do dumb things. It’s okay, sometimes. And this is an example of something I tell founders not to do when fundraising.

My favorite part about this story is that Sequoia passed on investing in GroupMe and promptly invested in WhatsApp, a move that would net them billions of dollars and go down as one of the greatest investments in VC history. It turns out that Sequoia, in fact, did not want it hard.

Sequoia Wants It Hard