Daniel Bilbao has experienced the startup world from all angles—co-founder, engineer, board member, and investor. He considers valuation an over-valued metric for evaluating startup success, and says founders need to sell their own product and try to kill their own deals as a stress test.
With $8 million USD in ARR (annual recurring revenue), $14 million in revenue, and strong presence across the LATAM region, he must be doing something right. Bilbao joined the Sit Down Startup podcast to talk about his work with Frubana, for which he served as founding engineer and now on its Board of Directors, and as co-founder and CEO of Truora, an authentication startup.
During Truora’s first year, the company didn’t raise any money. Four years later, this customer-engagement and WhatsApp-first startup has come a long way. It started as a background-checks company similar to Checkr. But the a-ha moment was realizing that emerging markets needed support for everything from onboarding to customer engagement to point-of-sale—and the widely used WhatsApp was the platform they banked on. As Bilbao says, if you want to buy shares on WhatsApp, Truora supports your ability to do that.
Good recruiting never fails
Bilbao says building a solid early team is the “highest-leverage” action you can take in terms of company growth. It might not feel tactical, but hiring the best people can make the biggest difference. Even if they don’t have a big enough team, the best people will have the skills to problem-solve and get the team to the next level. Furthermore, he advises against hiring friends—unless they also have serious credentials.
Why “valuation is B.S.”
Spoken like a true investor, Bilbao stands firm, citing revenue over valuation when asked about the company’s financials.
“I’ll tell you what the fundamentals are: we burn less than $150K a month, and we’ve got $14 million in the bank, so we’re sitting pretty in the market.”
In my experience as a VC and founder, those numbers are unique and celebration-worthy. In San Francisco, where Zendesk is based, $1 million in ARR is still celebrated.
Learn to sell your own product
Another piece of advice for founders: learn to sell your own product. Founders pitch to VCs and other investors all the time; but selling the actual product is another story. Bilbao says he and his co-founder Maite Muniz Telleria were the primary salespeople for the first $2 million. Though it’s common for founders to consider filling a VP of Sales roles to start, Bilbao maintains that “you need to learn how to sell your own product because now one will do a better job than you.”
Beware the pitfalls of the freemium model
In my own founder experience, people were biased to give positive feedback on the product if they already knew us or were introduced–a “warm intro–through a respected acquaintance. The freemium model–providing free, limited features to start–has long sparked debate among founders. Bilbao says the antidote is charging from the start. Citing the book, The Mom Test: How to Talk to Customers & Learn If Your Business Is a Good Idea When Everyone Is Lying to You, it’s better in the long run to say up front that the product or service may be expensive, but the problem will be solved in a way that is worth the cost.
Try killing the deal as the ultimate stress test
When pitching, Bilbao suggests trying to kill the deal. You read that right.
After hearing all the negatives and they’re still interested, there’s a high likelihood it will work out.
“Trying to kill the deal requires grit. You’re facing the worst case scenario, but it can be very effective.”
Do fundraising homework–not while you’re talking to VCs
Admitting that he made many mistakes in the past, Bilbao says he decided to become a “connoisseur of fundraising.” His words of wisdom: you do not learn proper fundraising techniques by talking to big-name funds or incubators.
“It’s like trying to learn poker at a poker tournament with professionals,” he says, advising founders to talk to other founders, angel investors, or a trusted VC friend. Even if you secure a round of funding, each subsequent round will be harder, minus the foundational learnings. I’m personally a big fan of this idea–which is why Pitch Deck Teardown is one of my favorite projects with startups in the Zendesk ecosystem.
Watch the full podcast episode and don’t forget to like and subscribe wherever you get your podcasts.
