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A Startup Tale (Acquisition!)
- Patrick Hulce
For as long as I can remember, I've dreamed of tech entrepreneurship.
At the age of 6, I wrote in a school journal that I wanted to be a "softwere writer [sic]," and by the age of 8, I had built my first static website. At 9, I ran a little family soda and candy business on the street corner, you know, typical lemonade stand shenanigans. But unlike most kids' lemonade stand adventures, our outfit was complete with separate commercial bookkeeping of revenue and COGS, ironclad corporate veil (I reimbursed the business for retail price if I ever ate a Ring Pop myself and even asked my not-yet-3-year-old cousin to do the same, whoops 😂), shareholders (my cousins and I who ran the stand), and formal dividends. At age 11, I picked up videography and expanded my enterprise to shoot school productions of skits and sell DVDs to parents for a couple bucks each.
As I grew older, my passion, and more importantly my ability, for business continued to develop into more realistic endeavors. I learned how to program dynamic web applications at 13 and had inked clients by the end of the following year. At 15, I secured jobs that took me across the country to shoot documentaries in Manhattan, build productivity apps for local businesses, and produced multimedia courses that went on to be sold at major professional conferences.
This year, at 28, the business I started 3 years ago was acquired, and a dream 21 years in the making has been realized. This post is the story of how that happened.
The Optyx Timeline
I used to work as a professional event photographer when I lived in Philly and would often come back from shoots with thousands photos. I dreaded the frustratingly manual experience of sifting through duplicate bursts and filtering the shots with open eyes and happy faces. For years, this sat atop my "Startup Idea List," to finally build something that could solve the culling problem once-and-for-all.
In late 2018, after leaving Google, I finally got my chance. Free of the shackles of IP assignment contractual obligations, I started work on Optyx. Optyx is an AI-based photo culling application that automatically groups similar photographs from an event and picks the best of each set for you. Where industry-standard Photo Mechanic offered "loading pictures faster" (saving you maybe 20-30% of your time at best), Optyx offered an double-order-of-magnitude 100x improvement, culling your entire event with a single click in less than 60 seconds.
I funded the company by doing consulting work and chose not to take any VC money. Although my split time between consulting and developing the product did affect the pace of progress, I learned valuable lessons about the often misaligned incentives between VC and founders while in Silicon Valley. I had no aspirations of becoming a unicorn, and no time or patience for navigating conversations with backers to fight it. While mid seven-figure exits would be life changing if bootstrapped, I might walk away with next to nothing after VC liquidation preferences were considered.
By mid-2019, Optyx entered private beta and launched publicly with a media blitz in the first week of March 2020. The reaction was incredible, and we processed 1 million photographs in just the first few weeks. Unfortunately, as the timing would suggest, COVID-19 majorly impacted our momentum. Software for large events was hardly a priority purchase for anyone in Spring 2020.
As volume started returning by the end of the year, several copycats sprung up (including some that used our marketing copy verbatim! 😡). We were "old news" with few outlets willing to cover us again compared to new entrants. Struggling to balance the consulting work, Optyx, and a newborn baby, I made a final push for Optyx v2 paired with an influencer campaign to generate some buzz in the spring 2021 before deciding to shop around for exits in July. A few months of pitches, negotiations, and due diligence followed before a speedy close this past week.
My motivation to build a successful startup was always fueled by two main desires:
- A yearning for financial stability.
- A love of computers and programming.
The first desire is obvious where it came from. Mostly raised by a single mom making minimum wage, money was never exactly free flowing. The first time you get kicked out of an Old Navy for not being able to pay for some cheap children's pants because the coupon expired is definitely an experience you want to be your last.
The love of computers is a little more complex but definitely the stronger of the two. My dad was a programmer and always encouraged interest in computing. He even put a PC in my own room in the mid-90s! But my nice little kid life was turned a bit upside down as he left the picture when I was 9. Programming ended up being an incredible escape for a number of reasons. It was not only a way to stay connected to the memory of a father who was no longer around but also aligned deeply with my need to make sense of problems in my life and solve them, cleanly. Real life was messy, confusing, and unfair. Code was an unbiased, straightforward organization of a problem, the ability to neatly categorize the world around me into interfaces, classes, and enums. Where meatspace lacked stability, cyberspace was reliable.
These two motivations were powerful, and I poured my heart and soul into work. I skipped parties as a college freshman to make sure my drip marketing campaign got out the door before the fiscal year closed in the industry I was targeting; I worked 80-100 hours a week at other startups to learn as much as I could in Silicon Valley to be able to start my own; every day that I spent not preparing to run my future company was a day wasted.
Motivation to Exit
I share all this because it has become clear to me over the past year or so that none of these motivations really apply to my current startup journey anymore.
COVID changed the potential trajectory of Optyx while at the same time opening up many career doors that I thought had closed with my move out of the Bay Area: even prestigious companies now were offering top-paying engineering roles, working from anywhere. Optyx was doing fine, but by no means a rocket ship, and the ceiling of success now much lower with my first mover advantage erased. The highest probability path to life-changing wealth was now actually back in individual contributor roles in big tech, not to mention after a successful career arc in Silicon Valley, I was not remotely close to being kicked out of an Old Navy anymore.
The biggest reason to leave though was aligned with my biggest original motivator. My love of programming had not faded, but the percent of time I got to spend actually doing it had. At this phase in the company's lifecycle, my biggest responsibility as a solo founder wasn't building the product anymore, it was recruiting, building out sales funnels, content creation, and people management. The time of being knee-deep in the code all day was over, and I didn't like it nearly as much.
The Acquisition Process
Knowing the end was near for me, I put the wheels in motion for an exit. Thankfully, with 3 years of Wharton connections and a successful extended family of hard-working immigrants, I had a decent personal network of investment bankers and private equity connections that I could tap into for early conversations and information gathering.
In July, I started having early conversations with my personal network about what the next steps for Optyx would look like. It was an exciting, yet cautious, time, full of potential possibilities with a healthy dose of skepticism that it could all work out. By mid-August, one of my investment banker connections generously offered to make warm introductions to a few dozen potential landing spots (without any official representation). I knew I had only one shot at this, so I spent countless hours perfecting my pitch deck and one sheet, describing the situation I was looking for. I really wanted 3 things:
- I wanted the product to live on.
- I wanted to walk away from the day-to-day of the business.
- I wanted a swift close to lift the burden of running the business behind me.
Late August and early September saw me busy with pitches and initial conversations scheduled with half a dozen interested parties. It was a thrilling experience as I got to share my vision and ideas with these companies and see their enthusiasm for what I had poured my heart and soul into for the past 3 years. I narrowed down my options to two remaining landing spots by mid-September and negotiated potential terms. By late September, draft terms were in writing and verbal intent established with one of the companies. I was thrilled and felt a sense of relief knowing that things were progressing well. At the very least I would have some earnest money in the bank and the experience of having gotten this far in an acquisition. In the coming months, we engaged in due diligence. It was a rigorous process that tested our patience and attention to detail, but, committed to the process I knew it was all going to be worth it.
As a huge credit to the buyer, we moved swiftly and by late November, the deal was closed; Optyx officially became a part of the acquiring company. It was a surreal experience, and I couldn't help but feel enormously proud of all the hard work I had put in over the past few years. The terms weren't financially life-changing, but, hey, I built a company out of nothing during a freaking pandemic that destroyed my target market, did it all without any outside investment, ended up getting a nice payday for it, and had the most fun building something I've ever had in my life. If that's not what entrepreneurship is all about, then I don't know what is 😁.
The Solo Founder Life Is Hard
As a solo founder, the most obvious challenge is that everything falls on you. From legal to sales to recruiting to engineering, every decision, no matter how big or small, was mine and mine alone. While it does wonders for taking decisive action, this can also be incredibly daunting at times, and it's easy to feel overwhelmed, especially with other responsibilities in your life.
Another challenge that I didn't anticipate was just how easy it would be to coast. With no one else holding you accountable to specific objectives, it's all too tempting to just focus on other, more fulfilling work instead, even if it's less important for the business. This is especially true when faced with tasks with which you are unfamiliar, or you are particularly bad at. I considered myself a pretty self-motivated and disciplined dude, but this experience definitely pushed the limits of that discipline.
I was also surprised by precisely how lonely it could be. When you're working in a public company or even a typical small startup, you're used to sharing your wins and having peers familiar with that type of work to provide social recognition of your accomplishments. However, as a solo founder, you often work alone, and the people around you may not understand or appreciate the significance of what you're doing. Even if you have a whole sales team in Slack with you everyday, they don't really know whether it's impressive to implement occlusion culling and a custom image rendering scheduler in React. This isolation can be difficult to handle, even for comparative loners like me who were perfectly comfortable eating lunch alone everyday at the office to get back to work faster.
The Most Valuable Work Is Rarely Coding
As a startup founder with an engineering background, it's easy to get caught up in the day-to-day of improving your product, but it's important to remember that once you've reached your minimum viable product, the most valuable work you can do for your business is probably not new features.
In fact, at this stage, building new features is very rarely going to be the most productive use of your time anymore. Instead, work like building your web or social media presence, building a sales team, attracting an audience, content creation, constructing a sales funnel, and other activities that will attract potential customers and build trust in your brand are far more critical. While it may seem like the technical work is more enticing, keep in mind that those are just a small part of the larger goal of building your business. Yes, your email marketing drip campaign is not the core product, but it is essential for the success of your company.
For founders with an engineering background, focusing on building an audience and brand may not come as naturally as building features or writing code. I know for me it was a lot less fun, and it can be challenging to shift gears all day from a technical mindset to a marketing mindset, but as a founder, it's essential to recognize the value in doing so. This may mean seeking out advice from other experts, learning new skills yourself, or even bringing on a marketing or branding specialist to your team. While it may be uncomfortable or less enjoyable at first, investing time and resources into building your breadth will pay off in the long run, and it's a non-negotiable part of building a successful business.
Selling a Product You Built Is Emotionally Draining
Selling a product that you built can be an incredibly emotionally draining experience. When you're a founder, you've dedicated your life to your vision, and you want nothing more than to see that come to fruition. But as you start selling, you quickly encounter swaths of people who don't share that vision (and people who hate your vision), and that rejection can be doubly challening when you're the engineer who built it.
In almost every tech company on Earth, sales and engineering are different functions for a reason. Selling a product takes a different set of skills than building it. Sales requires thick skin and the ability to handle routine rejection, as well as the ability to communicate the value of the product in a way that resonates with potential customers.
Even for those with a background in sales, selling a product that you yourself built is a unique experience. Having worked sales jobs that involved a lot of cold calling and fiesty rejections, I thought I'd be much better at the sales half of the equation than I ended up being. Every criticism, every complaint, every bug and missing feature hits you in a different way when you were the one who poured your heart and soul into building the product. It's hard not to take these things personally and feel like every flaw is a reflection on you as an engineer and an entrepreneur.
In a larger company, the level of abstraction between feedback from the customer and engineering that sales offers can be valuable. It provides a buffer between the harsh realities of customer feedback and the engineering team, who can work on solutions to problems without feeling personally attacked. However, as a solo founder, this buffer is just gone, and it can be tough to handle direct criticism of something you've built with your own hands.
While it's important to take feedback seriously and work to improve your product, it's also important to remember that rejection and criticism are not personal attacks. It's okay to take a step back and prioritize your mental health when selling your product. Remember that rejection is a normal part of the sales process, and with persistence, you'll find the right fit, whether that's changing your audience or your product!
I'm Ready to Get Hurt Again (Kinda 😅)
Taking the entire experience in, I'm so incredibly thankful, proud, and relieved to have brought Optyx to a satisfying conclusion. True, this wasn't the multi-mullionaire-making exit I dreamed about as a kid, but I'm genuinely happy with the outcome. I built something that helped thousands of photographers, was used millions of times, and valued by someone else enough to put their C-suite through a few months of meetings and sign a decently sized check at the end.
Before Optyx I felt like every day that I spent working at someone else's company was a day wasted. I don't feel that way anymore. I absolutely scratched my founder itch and could finally sleep soundly at night without the drive to push "just one more feature."
The experience of building and selling a product has been an eye-opening one for me. While I'm happy with the journey, I can't say that I'm ready to get hurt again (yet). Building a product from scratch and investing so much time, effort, and passion is an emotionally exhausting experience. The highs and lows of startup life can be taxing, and after seeing both ends of the spectrum, I'm in no rush to return to that life just yet. One thing is for sure though, the next time around, I want to focus exclusively on the product and engineering side, and I'd need a business-focused CEO co-founder to balance out my laser focus.
Despite the challenges, building something from nothing and being knee-deep in code for 14 hour days will honestly be one of my most cherished memories, and I expect to look back fondly on this time for the rest of my life.
As for what the future holds, only time will tell. But for now, I'm content to take a step back, enjoy the journey as an individual engineer, and let someone else take the business management headache again.