Discover more from Startup Pirate by Alex Alexakis
Startup to Exit: Advice for Founders
Stories and lessons from leading Transifex, 10 funding rounds, new products from Greeks in tech, challenges as a female founder, equity culture, jobs, and more
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Startup to Exit: Advice for Founders
Startup stories from a founder that started in 2009, raised money from a top Silicon Valley VC in 2014 and built a company from Patras to Athens to Silicon Valley with a localisation product that’s used by over 1,400 customers in 70 countries. The company got acquired last year.
how Transifex started and got its first customers
raising money from a top Silicon Valley VC from Greece in 2014
why external capital should not be the only way a company can survive – optionality is the name of the game
how the current macro conditions will create more resilient companies
why the #1 priority of a CEO is not to let the company die
problems companies face when they are not focused
growing as a leader
and many of the hard things about running a startup
Let’s get to it!
Dimitri, great to talk to you! I’m a big fan of your work and what you built with Transifex. So I’m excited about today’s chat. Let’s start from the beginning. Why did you pursue Transifex? What was the inspiration and pain point you were solving for?
DG: Thanks for having me, Alex! In 2008, while pursuing my PhD in Computer Science in the UK, I was involved with open-source projects and the Linux community in my spare time. Then, I realised that many communities were struggling with translating their projects into different languages — let’s say the technical part: the developer shared the texts with a translator, the translator did the translation, and then sent this back to the developer. Yet, this process had multiple moving parts that could easily break. There were several back and forths, and the translation had to be appropriate for the UX of the app, etc. Imagine that the Fedora Project (a Linux-based operating system), where I was a member, had 2,000 translators and 120 apps. Hence, the whole process was very burdensome and prone to errors. I developed Transifex as an open-source project to address these pain points.
And how did you get your first customers?
DG: The open-source community showed genuine interest in what I was building. I was invited to conferences, multiple projects adopted it, and after a few months, the first enterprise customers came in. These were enterprises with community projects, think Intel and Nokia. So then, I decided to offer consulting services (development, support, etc.) on top of the open source project, similar to the business model of Red Hat. Those early adopters quickly became paid customers. A year later, we built our instance at transifex.com. As soon as we had enough revenue, we decided to discontinue the consulting and custom development services and focus on offering the product as SaaS. This pure subscription-based SaaS play has been the company's business model. Focusing on customers from day one allowed the company to bootstrap by being profitable very early.
Transifex had large enterprises and small businesses using the platform. How did you balance your focus between the two?
DG: To give you a bit of a background, Transifex initially targeted larger customers. We realised early on (upgrade behaviour, NPS scores, customer and prospect feedback) that this customer segment found the product robust and valuable and that the customer (and ARR) retention was low, even as we kept increasing prices. We raised prices by about 70% at some point, and the churn rate didn’t blink!
At some point, we created an entry-level package for smaller companies at $19/mo, but customers in that segment didn’t upgrade often and churned more. So eventually decided to focus our efforts on the company type we knew would get high value from Transifex based on their revenue, size, or funding. Our sweet spot was companies with 200 to 2,000 employees and revenues of $3m to $20m. Although we also had smaller and larger companies, we targeted our efforts mostly at this customer profile.
Products should have a clear focus and message towards the users. There are many ways to tell your user, “you are a great fit for this product!” through UX, marketing, correct pricing, customer logos you showcase, case studies, etc. Product positioning and company focus matter a lot in that regard. These choices should also inform and align with how your sales team and sales compensation are structured. I’ve seen many companies fail because they were not focused or were going after multiple customer segments. My face involuntarily scrunches up when I hear things like “we’re focusing on five things”.
Switching gears now to fundraising. In a past interview, you mentioned that, before raising VC money, Transifex was making $1m in annual revenues. Why did you decide to raise external capital instead of staying bootstrapped?
DG: A little after switching to SaaS, we signed some big names in our clientele, such as Dropbox, Pinterest, and Eventbrite. Then, top US VCs started knocking on our door, discussing the option of fundraising to accelerate our growth. We wanted to get Transifex into the hands of many more companies as quickly as possible, so we eventually decided to raise a seed round from NEA, which was, and still is, a very successful fund (260 of their portfolio companies have IPO’d). Hence, we raised external capital to grow faster.
Back in 2014, I felt I had to be in Silicon Valley to learn how to run a startup. There wasn’t as much available information online on startups or available VC capital in countries such as Greece as today.
If I had to decide again, I’d have remained bootstrapped, given our revenue figures. Why? The localisation market didn’t grow explosively back then. So, progressing in a more controlled way wouldn’t be a considerable opportunity cost. But, well, hindsight is always 20/20, right?
If you were a CEO fundraising again today, what would you do differently compared to your prior experience?
DG: A LOT. As an advisor and investor, I discuss this with many fundraising founders. What you need, as the CEO, during a fundraising process is optionality — having the freedom to follow different routes. Fundraising should not be the only way your company can survive. When you have optionality, you have higher confidence to raise money and meet VCs on your terms. In addition, if I were fundraising again today, I’d try to timebox meetings within one month, dedicate myself fully to the process, meet as many VCs and angels as possible, and continuously improve my pitch deck with the feedback received. Founder time outside the company is precious. Unfortunately, more often than not, fundraising often drags on and on for months — I know first-hand.
There’s another thing I want to point out. A random VC might invest in twenty companies but “only” need three to succeed in a big way to be successful. In a fund that invests in 300 companies, it could be “ok” for 250 of those to fail. But founders and startup employees only have one company. That’s it. They’re all in with this one. Their dreams, purpose, and their family’s livelihood depend on this one company's health and success. The risk that startups and investors are willing to take or their desired growth trajectory is not necessarily the same.
To some extent, founders and investors have misaligned incentives. I made many mistakes due to committing to the “VC route” and blitzscaling. One year, we burned $1m that didn’t move the needle. I think this is also why several second or third-time founders grow their companies more sustainably and are more careful about which VC they partner with.
In the past, you said during a conference presentation that the #1 priority of a CEO is not to let the company die. How can companies maximise their chances of surviving in today’s economic environment?
DG: Companies need cash, right? You must have good revenue, operating expenses, and cash flow, even if the company has the best product, or it will shut down. Especially in today’s challenging economic environment, many founders and CEOs face challenges when operating their companies in a way that maximises cash flow. Company financials should be healthy, and that should be the #1 priority.
When you fundraise, you tell a story and sell a promise about the company's future state. The company is a “product” of its own, with a roadmap. When available capital is in excess, the gap between the current and the (potentially) future state of the company can be broad (and so is speculation, of course). Revenue multiples are high. Companies raise big funding rounds with no product and sometimes burn money so fast that turning profitable without disrupting things is nearly impossible. But when there’s a market downturn like we see these days, the money you raise is frequently a more accurate reflection of the company’s status quo today: churn rates in the present day, unit economics, product strategy, etc. The macro conditions will create more resilient companies that don’t rely entirely on VC money to survive.
Here’s a story from Transifex: after we raised our Series A, there was a time when we considered raising a Series B. But I wasn’t entirely sure this was the right path for the company, although my investors were pushing for it. So it took me a while to think this through, which led us to a position where we only had six months of runway. Such circumstances can negatively impact the culture and resilience of a company as you take crucial decisions at a disadvantage. I’d strongly recommend any founder against doing that (having 12-18 months of runway is ideal, I think). And this goes back to the point of optionality I said before.
Eventually, we decided to turn profitable, but because I did it so late, with so few months of runway, it was a painful process. There was a disruption in the way we operated. We had to let some super-talented team members go, and people from the founding team had to take significant pay cuts for months. In a way, a part of the company “died”. It was a grave mistake of mine as the CEO.
But the company not only survived but thrived after that, right?
DG: Yeah! After Transifex turned profitable, we continued our steady growth but with much lower operating expenses. We brought in 20% more New ARR with a smaller team than the year before. What the remaining team could succeed in was impressive, proving how a well-empowered team can perform. Culture eats strategy for breakfast, as they say.
That moment truly tested our team’s culture and cohesion. As a leader, you work hard to cultivate trust and empowerment between you, your direct team, and also the wider team. This is the moment when you’ll reap the rewards. Do you want your team (and your board) to believe you in that critical meeting when you tell them, “I believe we will get over this”? You need to run all your previous all-hand meetings with transparency and vulnerability. Do you want them to ask the hard questions and believe your answers to them? You need to invest more than half of your all–hands’ time as an open floor and celebrate the hard questions every single time.
You led a company for 13 years, starting from Patras, then Athens, and finally Silicon Valley. What’s an example where you had to grow as a leader, and what was the impact on the company?
DG: Well, for the company's first years, I struggled with giving direct feedback to others and wanted to change this. I remember a meeting with my leadership team where I asked them to rate me (openly in the meeting) in two pillars. One, “how much I care about you as an individual?”. And two, “how direct I can be, like telling you ‘you handled that discussion badly and the customer was visibly frustrated”. I got a high score on how much I care about them but low on how direct I can be. When you’re not direct, you’re also not clear. And people need clarity to operate, especially in a fast-paced environment. So I committed to increasing my directness level and asked the team to do the same and to hold me accountable for this progress.
It worked! There was a fundamental transformation in how I worked, and the whole company operated too. The culture of the company changed. People in the leadership team started giving more direct feedback. It became clear what types of employees we wanted to hire. We became less tolerant of human behaviours that were not aligned with our values and made team members more respectful of others. Transparency, trust, and respect rose. As the founder, you’re the one responsible for the culture of the company. If there’s a culture problem, ultimately, it’s on you, right? What you did or what you didn’t do. Culture can change dramatically when you, as the leader, do the work needed and walk the path of changing your behaviour — something I noticed times again and again at Transifex.
A year ago, Transifex was acquired. Can you share more about this decision?
DG: In 2021, Transifex’s annual recurring revenue was growing 35%, and it was the fifth year in a row we were profitable. We were healthy and happy, and we decided to evaluate different options with our board to get our company to the next level: acquiring or merging with another company or even getting acquired ourselves. I even contemplated buying back our investors. I hired an experienced investment banker to help me explore such options. We found an opportunity with a search fund looking for a company to acquire and operate itself.
With the acquisition, all shareholders sold their shares in the company — including all our team members (and some past team members who exercised their options). Apart from myself, the rest of the team is still with the company and thriving. Transifex continues to be the best solution for localising software and digital content globally — at least according to my view and the view of our customers. 😉
Before we wrap things up, what’s keeping you busy nowadays?
DG: I’m currently in a phase in life where I invest most of my time with my family and friends. I travel and rock climb a lot. I sincerely appreciate and feel fortunate to experience this kind of sabbatical from work, enjoying things that mean a lot to me.
In parallel, I work closely with a few founders discussing strategy, challenges they’re facing, and team empowerment, and I invest in early-stage startups.
I’m always amazed to hear founders dishing up the hard truths about running a startup, so thank you so much for being willing to share these with me, Dimitri.
DG: Thank you, Alex!
Looking for your next career move? Check out job openings from Greek startups hiring in Greece, abroad, and remotely.
This is a new section with a curation of new product launches from Greeks in tech. Any launch is a fair game: startups, products, side projects. Still experimenting with this, so please reach out with ideas on how to improve and hit me up with suggestions on what should be included in the next issue.
Brain-computer interface company Precision Neuroscience raised $41m in Series B.
Edge infrastructure company, Sunlight.io, raised a Series A investment round, bringing its total funding to $20m.
Kewazo announced a $10m Series A to automate on-site construction logistics through robotics and data analytics.
Quantum computing infrastructure startup Welinq raised €5m in pre-seed.
Prosperty announced a €2.6m round from Velocity Partners, Metavallon, BigPi and other investors, raising the total investment to date to €7m.
BibeCoffee raised €2.1m for its plug-and-play solution for the coffee industry to enhance coffee quality for consumers and brands alike.
Deep Neuron Lab which develops AI-based financial report processing solutions, announced a €2m round.
Koios Care, a company that builds digital biomarkers towards the progression of neurodegenerative diseases, secured €350k in pre-seed.
CaptainBook, a B2B marketplace for travel experiences, raised €250k in pre-seed.
Logistics company BOX NOW, which offers parcel delivery solutions, raised funding.
Orfium acquired cue sheet reporting and audio recognition service Soundmouse to help its customers unlock more value across the entertainment landscape.
€10m for innovative Cyprus businesses from the Research and Innovation Foundation. (link)
Genesis Ventures accepts applications for the 2nd cohort of its Day One accelerator program.
Interesting Reads & Podcasts
Nicky Goulimis, co-founder of Nova Credit, on her entrepreneurial journey, learning how to say ‘no’, challenges being a female founder, and more. (link)
Fotis Fotiadis, co-founder & CEO of Better Origin, discusses how Better Origin fixes the broken food chain. (link)
Konstantine Buhler, Partner at Sequoia Capital, on generative AI in the workplace. (link)
Dimitris Nikolaou, co-founder of Moonshot, wrote about their wild ride through Y Combinator. (link)
Ethereum scaling solutions from Ekin Burak, VC at LAUNCHub Ventures. (link)
Goal setting, planning, and OKRs from Manos Kyriakakis, Head of Product & Growth at Simpler. (link)
Paul Anton, CEO & co-founder of Huupe, talks about how they built the first smart hoop at the intersection of AI and basketball. (link)
And a short thread on equity culture:
We’ll be in Zurich next week for Greeks in Tech on Feb 2
“Open Coffee Athens #111” by Open Coffee Athens on Feb 10
“Effective Data Communication through Visualisation & Storytelling” by Business Intelligence and Analytics Athens on Feb 2
“30th Thessaloniki WordPress Meetup” by Thessaloniki WordPress Meetup on Feb 4
“Camino Blockchain” by Blockchain and Web3 Greece Meetup on Feb 7
“Athens UX meetup no41” by Athens UX on Feb 9
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