As kids, brothers Ben and Mosey Uretsky moved from Russia to Brooklyn. Since finding a love for computers the pair of entrepreneurs have gone on to raise $123M for their startup from top investors. Here’s how they did it, and their inside tips for success as a founder.
Ben and Mosey were the first duo I’ve interviewed on the DealMakers Show so far. It was a great experience, learning how they’ve managed to build a business with family members, found product market fit, and have built a $200M a year business.
Immigrating from Russia in early elementary school the Uretsky brothers didn’t have a home computer. They soon found a love for them. Ben would copy games at friends homes and shuffle them over to others’ houses, as well as helping troubleshoot their problems.
He majored in mathematics. Though despite not feeling that was the greatest advice, says it did help with entrepreneurial thinking. He told the DealMakers podcast audience that “once you get past the really simple mathematics like calculus, you get into really abstract math, and that was very interesting because it really shifts how your mind thinks. I think that really understanding how to prove something from the ground up when you can't even say 1 is 1, but actually, what is 1 to begin with? That is a valuable skill when you think about product-market fit and really understanding when is something actually true versus when something is an opinion?”
Ben and Mosey have one other brother. Who is currently the Director of Infrastructure at DigitalOcean.
Product market is critical to startups. Mosey says “if you have to question whether or not you have product/market fit, then you don't have it.” At DigitalOcean, that became pretty clear. After about six months of development work Ben, who was the CEO said, "Why are you guys still coding? Can you ship something?" They did. Basically, no one showed up. Finally in January 2013 they did hit our product/market fit. It was pretty much like everything was on fire. Mosey says “We went from signing up five customers a day to basically 200 customers a day every single day.”
When you have it, there's no question whether or not you have it because literally it's just like the ball has rolled down the hill and the momentum is so huge that you're just trying to stay on top of it.
They also saw how dangerous lack of product market fit is. Their previous startup ServerStack was born out of the failure of a managed hosting provider who just wasted too much money and time on software development that didn’t have any product-market fit. The result was the Uretsky’s launching their own venture from the ground up, and being able to take on all the customers from that other entrepreneur’s failed enterprise. They were essentially profitable from the first month.
I built my previous startup with my wife. There are clear challenges to that, and extra questions and demands you’ll get from investors. Though we were really fortunate in it working out really well. It doesn’t end that well for everyone. Yet, the more hyper-successful founders and M&A experts I interview, the more I hear that the best co-founding relationships are built on previous relationships.
The Uretsky’s believe when it comes to family members or even close friends that start a business, usually whatever relationship you have prior to the business gets carried over into the business. It basically increases both the highs and the lows. They’ve ridden the roller coaster of both. Though were super-thrilled that they were able to find an executive coach to get them through it.
Ben and Mosey add that in business, in general, one of the main things for any founder is you're probably not facing a unique challenge. You're probably facing a challenge that numerous companies and numerous individuals have faced before, so get advisors, build your network, and get the experience that somebody else has already learned through their mistakes and learn from theirs instead of doing it all over again and making the same mistakes over and over again.
Ben and Mosey ultimately combined their two passions of a love of building out infrastructure, and a love of developing software. They were able to build a product that customers absolutely loved. DigitalOcean was born.
They applied to Techstars NY. They didn’t get in on the first try. Though they were intent on learning to build a company for truly massive scale.
They assumed they would need some additional outside capital to help fund the project. They had no network inside of the venture community. So, it looked like TechStars was a great environment in which they could build those connections and really learn about venture funding, venture backed startups, and have not only a great set of mentors, but also a great set of peer companies that are going through the same building process.
When it came to the Techstars application, one of the questions is "What's your differentiator?" They we put down “love”. At first, Nicole Glaros, who was the Managing Director of TechStars in Boulder looked at them like they were crazy.
It’s true that they were getting a lot of love from users and customer feedback did show way more love for the company than competitors like AWS. That’s powerful.
Unfortunately, love by itself is actually not enough. Despite finding product-market fit and getting great feedback, the founders realized they were lacking on the marketing side. They did not have enough awareness. They experimented a lot with that trying different forms of advertising and so forth, but that was difficult to scale and very expensive. They knew that the only way to basically grow this company was to get organic awareness. As well as to have somebody who was going to really focus on marketing.
They made great hires but also got into Techcrunch and Hacker News with some key content marketing. They basically overnight went from five signups a day to several hundred every single day.
So far, Digital Ocean has raised $123M from investors like Andreessen Horowitz and IA Ventures.
The founders put a lot of that down to a cold email and sending regular investor updates until top investors caved in. If you’re thinking of trying this strategy check out these free email templates for pitching investors . Check out this Forbes article for how to do investor updates .
If you go asking for money, you won't get it. If you ask for advice, you might get some money. · Don’t try to raise on Thanksgiving when everyone's already starting to go on vacation. · Make sure you look up the background of investors before your meeting. · Remove your self-interest out of the equation and really think on behalf of the company.
Today, DigitalOcean has 500 people and over 200 million dollars in revenue. A lot of growth from starting with five individuals and zero dollars in revenue.
Listen in to the full episode for more on how Ben and Mosey grew their businesses and their advice for new founders, including book recommendations.
