AdDuplex Post-Mortem. Part 2: AdDuplex Inc.
This is the second part of my attempt to review the events in life of my most significant attempt to build a by-the-book startup and distill some lessons learned. The first part is here.
By mid-2011 AdDuplex has seen initial success and recognition in the developer community and the overall Windows Phone ecosystem. It was clear that this wasn’t a fad and the only way in the nearest term was up. At the same time, I was overstretched being the developer (from ad serving, to ad controls, to self-service area UI), the marketeer, the salesperson, the biz dev, etc. It was clear I needed help.
As I mentioned in the first part, I failed at convincing anyone I know to become my co-founder. As an introvert I didn’t even consider going on a “co-founder dating” spree. The only reasonable way forward seemed to be to hire someone to help me with some of these responsibilities.
Theoretically, as I was a developer all my life, it would make a lot of sense to hire a businessperson and concentrate on the technical part. In reality, however, big part of the AdDuplex’ initial success was due to me coming from the industry I was serving and my ability to address our potential customers and other stakeholders more or less directly. Sure, I could probably try to find someone with a similar profile but leaning towards the business side. But this would likely mean hiring someone in the US which, to be honest, was inconceivable for me at that stage. Actually, I came up with this train of thought just now — it didn’t even occur to me at the time.
I concluded that my unique skillset in this particular case was, as strange as it may sound, on the business side. Finding someone to cover at least a part of the technical side should be an order of magnitude easier. How do I de-risk this decision, though?
At the time AdDuplex started bringing in money and at some point in 2011 it was more or less enough to cover my personal needs. It wasn’t enough to build a safety net or just to be sure that we would have money to pay another person’s salary every month.
Angels
Now I don’t remember the exact sequence of events here but they either happened in parallel or one came very quickly after the other. It doesn’t really matter in the big picture.
My friend Antanas (of the amCharts fame) offered to invest some money. At the same time AdDuplex and me personally got on the radar of Microsoft Lithuania, who at the time had a person (“technical evangelist” was the term in that era, DevRel nowadays) and a mandate to help and court developers and startups in the country. Unfortunately, these days are long gone, as far as I know. Anyway, Microsoft’s technical evangelist Tautvydas contacted me, and we started talking periodically about the Windows Phone ecosystem, AdDuplex, and all things in-between. At some point he introduced me to Justinas and Donatas who were trying to establish some kind of startup incubator or something. After a couple of meetings, they in turn introduced me to Donatas Keras and Mantas Mikuckas who would later co-found Practica Capital (and Mantas would go on to become a co-founder and COO of Vinted). In mid-2011 Donatas and Mantas had their own personal investment firm.
Once we started talking, I realized I needed a crash-course in getting funding. I read blogs (Fred Wilson’s AVC comes to mind), listened to podcasts (This Week in Startups) and read books (Brad Feld’s Venture Deals was invaluable). After going through all of this I realized that what Donatas and Mantas were offering wasn’t exactly a “Silicon Valley style” investment. As the startup movement was catching steam in Lithuania as well, I guess, they got on the same page fairly quickly and went on to become probably the most knowledgeable people in this area in the Lithuanian ecosystem. So, after a couple of false starts we came to a high-level agreement and moved on to the details stage.
Remember I told you about my friend, Antanas, who agreed to be my angel investor? What he offered in terms of money was comparable to what we talked about with Donatas and Mantas. And in terms of, well, terms it was obviously way more relaxed. Naturally, you may ask, why didn’t I just take Antanas’ money and spent all this energy talking to other investors?
Basically, this comes down to my own personal quirks:
- Taking friend’s money and potentially losing it feels way more uncomfortable than losing some professional investor’s money.
- I’m not a very disciplined person and I felt like having someone “serious” to report to would instill discipline.
- I did some interesting things in my life, but I was never “prominent” (if you will) in any community. Even while talking to investors, I met so many people and felt so much attention that this was likely some sort of an “ego trip”.
Anyway, our negotiations on the details dragged on, as in 2011 both sides plus all the lawyers in the country were quite clueless on this type of deal. We were figuring it out as we went and at some point, were pretty close to the finish line. In the end we couldn’t agree on one detail and I’m sure we were both leaning towards other options. I went on to take that angel investment from my friend. Mantas ended up angel investing and then joining what would become Vinted — a wise choice and something my stubbornness may have contributed to 😂. So, in a way, me not getting that investment may have resulted in the first unicorn in Lithuania’s history (of which I wasn’t a part).
Lesson learned 2.1: Where you are in your life will cloud your judgement.
In a way these few months were highly influenced by my FOMO and other mental struggles. Not exactly a mid-life crisis situation but not far off. It’s important to pinch yourself once in a while and ask if what you are doing is rational or is it motivated by something else going on in your life. Quite often you may still make the same irrational decision, but it helps to be honest with yourself about the real reasons behind your actions.
First employee
With the initial funding sorted, UAB AdDuplex was formed in November 2011. It was time to proceed with the main reason for this whole unnecessarily prolonged process — hiring my first employee.
As previously outlined, I decided to hire a developer. I concluded that the actual ad network and client area part was what required the most and constant attention. So that was who I was looking for. I would keep the SDK development and the business side to myself.
Luckily, 2011 was not too far from the financial crisis of 2008 (more like 2009 in Lithuania) so attracting some candidates for the employee number one in a formally unfunded startup wasn’t as hopeless as it would become just a few years later. I don’t remember how many candidates I had in total, but I distinctly remember three in-person interviews I had.
First was a guy who worked in a company owned by a good acquaintance. During the interview we figured that he was fine with his current job, and I was offering only 10% more money. When asked why he would leave a job he liked for a 10% higher salary the answer was that, and I quote, “cigs got way more expensive recently.” Hard pass, buddy!
Then there was a guy with reasonably solid experience and I’m sure he would have been a great employee number five. But he just didn’t have the passion. And that’s totally fine for most jobs. Just not the first employee of a startup.
And then we had Paulius Norkus. He was in his early twenties with a naturally short resume. And the only thing googleable about him was some negative feedback from a customer he had freelancing in high school. The feedback was funny in a way that it was fairly clear it didn’t come from a very… ermm… grounded(?) person. Still, it gave me pause, unfortunately. Later that review stuck as Paulius’ tagline in the company and an insider meme 😅 Fortunately though, he already knew what AdDuplex was (and not just from preparing for the interview) and it was clear that he was both interested in all the “right” technology aspects and the AdDuplex’ mission, if you will.
While in retrospect my choice should’ve been clear right away, I was struggling with placing a bet on someone with a very limited formal experience. Luckily, it was quite clear that I would need to babysit and motivate the other “more experienced” guy, and that wasn’t something I was excited about.
Lesson learned 2.2: The first hire is your informal co-founder.
You can’t have a co-founder who is just a passionless professional — it just doesn’t work. And the same goes for the first employee. Especially if you are a solo founder.
I got lucky with Paulius who was both my first and my last-to-leave employee, and a friend. I still hope that one day I’m in a position where we end up working together. He is in his thirties though and as you may remember from part 1 it is hard to convince young parents to place risky bets. So, we will see.
Lesson learned 2.3: Promoting your business affects your potential employees as much as your potential customers.
The reason Paulius knew about AdDuplex was not only his curiosity and interest in the technology and the ecosystem, but also me promoting AdDuplex in that ecosystem and my [reluctant introvert] participation in some local Microsoft events. Convincing someone you don’t know to join your one-person startup is not an easy task. Having that name recognition definitely helps.
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In the next part I talk about how we ended up going to Finnish startup accelerator which also took us on a tour of Silicon Valley VCs.
