The story of our journey
What started out as a stealth project in March 2019 has now evolved into one of the worst kept secrets amongst my friends, customers and partners. Today, on our anniversary, I’d like to share about this journey and a bit about what we launched.
In March of 2019, my co-founder, Tony Sun, started building Sprout to help companies digitally transition the world toward digital governance and economic empowerment. My 20 year-long journey as a tech banker, venture investor, corporate and startup entrepreneur formed my conviction that tomorrow’s successful companies will be those that let their employees, investors and other stakeholders transparently participate in their growth and success. As a fellow entrepreneur, Sprout exists to give people the opportunity to learn, simplify and manage their stakeholder information and turn equity into their most powerful engagement tool.
Today, on our anniversary, I am very proud to share with you the story of how we launched Sprout.
Project “NewCo”
Back in early 2019, my co-founder Tony Sun and I left our last startup and discussed the development of our own project. It all started with a folder on my laptop which I called “Project NewCo”. Tony and I have always thought about launching a service that addresses the noticeable service, knowledge and culture gaps in how companies outside of the US manage and communicate stakeholder and equity information, particularly with employee share ownership. We were not happy with current market offerings and thought there had to be a better solution, a more impactful one.
Be an Owner, Not a Renter
My experience at Uber was an amazing ride (pun intended) and through it I received a lifetime of learnings (to be shared at another time). One key learning stemmed from our first batch of company values. For better or worse, these values represented the pillars of what Uber represented in the early days. One of my favorites was “Be an Owner, Not a Renter.” This principle really resonated with how we all hustled to take extreme ownership. Not only did it profoundly impact my time at Uber but also beyond. Today, this attitude is one of the key tenets behind why we created Sprout.
“Be an owner, not a renter” – key tenet behind Sprout
Sprouting Sprout
When it comes to building a business, the dream would be like one that Mailchimp recently realized: bootstrap the company to scale and eventually profitability. The reality, of course, is that this self-funded path to profitability is extremely difficult, and our individual savings are no match for the budget of a successful startup. External financing early on therefore would be key to speed and scale. We entered into Cyberport’s Incubation program in Hong Kong as it represented a small, but timely injection of funds to get things moving. The program needed a name for our company in order to submit our application. Putting my head down for a week, I thought about the name of the entity and what the preliminary product name was.
At the end of the week, Project Newco became a Hong Kong incorporated company called Roots Technologies and our product was called Sprout.
Runways
Pre-COVID, most of us had a very different life that likely involved airports, hotels and frequent travel. Remember those days? Nowadays, the closest thing to a runway for me is the financial and mental one at this startup.
The very beginning stages of our new equity management SaaS startup, we needed to plan how the venture would be funded. It’s important to take scope of both your cash runway and mental runway, especially in terms of those important relationships (aka stakeholders) in your life. For example, how long can you work and dedicate your time to getting your startup off the ground before you have to be rational and find a job to sustain yourself and your family?
You quickly learn from these types of experiences. We first started with Cyberport, which had an incubation program and some beneficial soft benefits. We then looked at the government and other grant funding, which was quite interesting and could creatively keep us going too.
Burning cash hurts more than just about anything else during the early stages of a startup so after 17 months of bootstrapping and taking stock of our government grants, we eventually arrived at the next juncture. Fundraise via early stage investors would buy into our story.
Fundraising
My best advice when making the rounds to raise cash is to be humble, seek advice, and listen. Luckily, Tony and I had spent the majority of our professional careers in positions which allowed us to learn some of the ins and outs of fundraising and make a lot of friends, which I have distilled into the following early fundraising takeaways (and ideas for future blogs):
- Build a network of mentors and advisors early. Don’t go it alone.
- “Keep me posted”: Along the same vein of the popular startup meme, Let me know how I can be helpful, if I had a dollar for every time someone said that to me… (perhaps a topic for a future blog). The key message is to keep on hustling, ignore the noise and play the long game.
- Timing: Time kills all deals and it’s about “mo-mentum”. Now also make sure you also put a deadline or else this can keep dragging out (as I have personally witnessed).
- Optimize for time / terms, not valuation. For example, don’t give up half your business too early. (another blog to come)
Giving Birth …2021
So after a quick first raise, we had a working product, we had a website, and we had a stealth business strategy. Now was the time to go to market.
I’m a proud father of three so forgive me in advance with all the parenting analogies: before launching, we kept asking ourselves if we were mentally or operationally ready. Honestly speaking, you never are. Like having kids, you will never be ready and if you keep waiting, you may lose the window. It was time to draw a line in the sand and go. And similar to an expectant father, I wasn’t the one doing the actual work and in this case it was Tony and our team of talented coders so there were periods of waiting for me in between the incessant 996-style march with daily check ups.
One thing that is hard to predict is an unforeseen drastic impact on your business. In this case it was Covid. If you look at our company timeline, you’ll notice that we stealth-launched Sprout before a global pandemic. This meant we had to adapt to a non-physical working environment with team members spread out in different places. We utilized coworking spaces, remote work, contractors, and part-time employees given the macro situation to skirt around the in-person obstacles.
You Don’t Know What You Don’t Know
Find an object in your daily life (a ball point pen, earphones, a stapler) and try to describe how it works. You’re likely to discover unexpected gaps in your knowledge. In psychology, we call this cognitive barrier the illusion of explanatory depth. It means you think you fully understand something but in actual fact, you don’t.
I spoke to a lot of people to learn about their journeys and one of the key parts of building and launching is managing risks and assumptions, balancing the certainty with the unknown. There are essentially three key areas you should establish at the onset and continue to revisit and refine:
- What you know
- What you don’t know
- Not knowing what you don’t know
While it may be difficult to pin the third concept down given its inherent ambiguity, it is important to be comfortable when identifying it, as it will no doubt be larger than expected. As daunting as it sounds, with an open, inquisitive and experimental mind, we were able to mentally let go of the pressure to know everything and do our best to design a company and a mindset to be open on the upcoming twists, turns and pivots.
What next for Sprout?
2021 was a very interesting journey of learning. Watch this space for how we are evolving our business for 2022 and beyond. We have exciting news and exciting things to share.
While our journey is just getting started and since inception we’ve continued to crank and pump out over 1,000 updates to the platform. I can look back today and be grateful for the journey so far. These past two and a half years have been a labor of love for both me and Tony. Looking back, we have come a long way from ideas on a white board to how our platform and team can help.
We can’t wait to show you.
Andy and Tony