Customers, Investors, and Friends of Capshare:

A few days ago, I received a powerful, two-sentence email from Tim Draper. Tim has been an amazing investor in Capshare and a critical support but it’s not every day I get an email from him.

Here’s the slightly redacted email:

As you probably guessed, Capshare is joining another larger company (Solium) and we couldn’t be more excited. But Tim wanted to know why. It’s a very important question and one we took seriously especially for our clients.

(I edited out a second short question Tim asked that would elicit a warm laugh from every VC and entrepreneur I know. But I’ll have to save that question for another day.)

As a former philosophy major, I couldn’t help but chuckle at the subject line: “Why?” Like so many things in life and business, there is always a short answer and a long answer to the deceptively simple “Why?”

For this post, I’ll stick to the short answer.

Why Is Capshare Joining Solium?

Like most startups, the Capshare team had put in herculean efforts, scaling our company to 10,000+ companies on our system on a ~$2M investment. The hardest part was the last 18 months before profitability. We tripled our client base and actually decreased our headcount by one.

Over the summer, Capshare received no less than 4 acquisition offers. If you had told me at the beginning of the summer that we would get the best offer I could imagine within three months, I would have laughed.

We weren’t planning on selling and we didn’t seek it out. In fact, we just hit profitability in May. We were planning on adding two or more people per month for the foreseeable future by managing costs to breakeven.

But by the end of the summer, we ended up getting the perfect offer to join Solium.
It exceeded all expectations we had for our customers and ourselves:

  1. Capshare will remain independent with the same management team
  2. The management team is heavily incented to grow the business for many years
  3. Capshare’s product won’t get consolidated into another larger product
  4. Capshare will have the backing, funding, and stability of a public company
  5. Solium is investing to allow Capshare to grow much more rapidly (we’ve already tripled our dev team)
  6. We get to work with an incredibly high-integrity team that is a perfect cultural fit for us
  7. And yes, it will be great financially for the team over the next 3 years as we continue to execute

What does this mean for our clients? It means that our product that will get better faster and we now have a solution for you as reach the largest scale or go public. As always, don’t hesitate to contact us at any time if you have any questions.

Thank You

One of Capshare’s core values is the belief in the idea of repeated games. We try to manage every interaction we have with others as if we will always be in a long-term relationship with them.

As such, we don’t view this as an “exit.” As I mentioned above, the management team is excited to continue to realize our long-term vision for Capshare’s product for many years.

But it’s an important milestone, so I’d like to thank a few groups for creating this amazing experience for us:

  1. Clients. Love isn’t too strong a word. In a very real sense, you keep us alive every day. We won’t forget that. A special thanks to our first client ever (L2C Communications) and the first law firms that took a big risk on us (thanks Tim Harris at MoFo! and Noralyn Danielle at DWT).
  2. Team. I’ll thank you in the final section. But I want to add that spouses, significant others and loved ones count in our definition of team.
  3. Investors. I couldn’t imagine better investors: Jeremy Andrus, Gavin at Kickstart, Tim Draper, Joel at Pipeline, Warren Osborn, Bob and Clint at Standish, Brendan Wallace, and nearly every Capshare employee (thanks to our cost-cutting salary for stock plan)

The Anna Karenina Principle

I’d like to end with a thought for those young, fresh-faced startups on the trail. Here’s a little thought to keep in mind for the difficult times ahead. There’s an interesting concept called the Anna Karenina Principle.  I first heard about this as applied to startups from Tom Tunguz.

Is there a similar concept for startups? Are all successful startups alike in that they have avoided every possible deficiency?

In our hardest times at Capshare, I have learned two truths–one hard and one inspiring.

Here’s the hard truth. At your darkest times, you will desperately want to know “Will we ultimately succeed or fail?” Since I put my entire family’s finances at risk, I spent almost two years agonizing over this question in the early days of Capshare.

But there is only one answer: No one knows.

Here’s the inspirational truth: I have learned that all successful startups are similar in one way. You ultimately have control over your destiny. If you don’t give up, you will succeed.

But…I believe it’s just short of impossible to succeed in a startup alone. So when I said “if you don’t give up, you will succeed” I was referring to your startup team (especially the founders).

Your real risk for failure ultimately hinges on your team’s appetite to continue to fight.

That’s why so many battle and military analogies apply to startups. Here’s one from Shakespeare:

That he which hath no stomach for this fight,
Let him depart; his passport shall be made,
And crowns for convoy put in his purse;
We would not die in that man’s company
That fears his fellowship to die with us.

That leads to a hopeful paradox: The team that is willing to endure all amounts of failure together will ultimately succeed.

I consider it the defining highlight of my career to have found that team at Capshare and now at Solium. I’m convinced you’ll see the results of that team for years to come. And I look forward to hearing about your team successes as well.

P.S. Music has always helped me through the tough times at Capshare. Here’s a startup-themed playlist. If you’re a Spotify user, feel free to add your suggestions.