Shocked Subbu Wouldn’t Accept my $10M Offer after Raising $1M This Year

Subbu Rama

Summary:
In Episode #282 Nathan interviews Subbu Rama, co-founder of BitFusion, a service that gathers unused processing power to create a decentralised supercomputer. Subbu’s hoping to create something as big as VMware. Listen as Subbu answers the hard questions about splitting equity, raising capital, and building sales at the beginning of a big idea.

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Famous Five:

  • Favorite Book? – Steve Jobs
  • What CEO do you follow? — Steve Jobs,
  • Favourite online tool? — Slack
  • Do you get 8 hours of sleep?— Yes
  • If you could let your 20 year old self know one thing, what would it be?—I wish I’d started a company

Time Stamped Show Notes:

  • 01:45 – Nathan’s introduction
  • 01:50 – Welcoming Subbu to the show
  • 02:35 – BitFusion grabs unused processing power to speed up clients’ processing
  • 03:23 – Started in February 2015
  • 03:36 – Based in Austin, Texas
  • 03:50 – Subbu gave up a $250k salary at Dell to create BitFusion
  • 04:20 – “The world is moving beyond CPUs…big computation is becoming more complex”
  • 04:30 – “I thought – how do we bring hypercomputing to the normals?”
  • 04:45 – Subbu’s co-founders quit Samsung and Intel
  • 05:15 – The co-founders split their equity equally – 33% each
  • 06:01 – “People don’t put the same energy in all the time…but in the end it all evens out”
  • 06:45 – “I would recommend doing whatever you’re comfortable with”
  • 07:26 – Raised $1.5 million in a seed round
  • 07:42 – Went through the TechStars incubator
  • 08:00 – Debt round via convertible note
  • 08:40 – Nathan: “Are you making sales?”
  • 09:05 – Have around 6 customers
  • 09:40 – Customers pay $10-100k per year
  • 09:55 – Looked for customers they could close with in 1-3 months
  • 10:20 – Gained 6 customers in 2 months
  • 10:40 – Revenue in the last year has been $100-500k
  • 11:11 – Losing less than $100k per month in salaries – team of 9 people
  • 11:50 – Hope to have enough customers in 2016 to run a Series A
  • 12:25 – “I look at strategic investors, not valuation”
  • 12:55 – “We want investors who will help us”
  • 13:29 – Subbu wouldn’t sell for $20 million right now
  • 13:50 – “We think this could be as big as VMWare”
  • 14:18 – Connect with Subbu on Twitter
  • 15:45 – The Famous Five

3 Key Points:

  1. Look for strategic investment partners who’ll bring something besides money to the table
  2. Sales are everything. Start bringing in customers as quickly as you can.
  3. Computation is becoming more complex: services that capitalise on super-fast processing are going to succeed

Resources Mentioned:

  • Freshbooks – The site Nathan uses to manage his invoices and accounts.
  • Host Gator – The site Nathan uses to buy his domain names and hosting for cheapest price possible.
  • Leadpages – The drag and drop tool Nathan uses to quickly create his webinar landing pages which convert at 35%+
  • Audible – Nathan uses Audible when he’s driving from Austin to San Antonio (1.5 hour drive) to listen to audio books.