NUOPTIMA > SaaS Podcast > The Dangers of VC Funding in SaaS

The Dangers of VC Funding in SaaS

July 12, 2024

Interviewee Introduction: Matteo Grassi

Matteo Grassi is a five-time founder. His fifth business, Popup, was an innovative content management system (CMS) and competitor of Shopify. The business scaled to over 40 people in the team, and it successfully raised $3.5 million from many backers including Accel, 20VC, and Seedcamp. Interestingly, earlier in his career, Matteo actually worked in Shopify’s support team and worked at Shopify Plus for a couple of years too.

Prior to founding Popup, Matteo had a portfolio company of various e-commerce brands, and after noticing issues while running his own stores, decided to create Popup to propose a fresh approach to how commerce is made and created a new no-code e-commerce platform. He wanted to build a company that empowers other people to create things. After bootstrapping the business for several months, Matteo decided to raise venture capital.  Unfortunately, the business encountered difficulties, such as with venture capital, and, in January 2024, Popup was shut down. 

Now, Matteo works as a mentor and advisor for startups. He also has built an app called Baseline that is designed to help people with bipolar disorder, a condition Matteo himself has, and this venture is being assisted by King’s College London and Bipolar UK. Matteo has a BSc (Hons) in Clinical Psychology from the University of Bologna.


In this episode with Matteo Grassi, you’ll learn:

  • Why Matteo decided to shut down his business Popup 
  • The founding story of Popup, what pain point the business aimed to solve, and the challenges of raising venture capital as opposed to bootstrapping 
  • Why Matteo decided to go into software from e-commerce in the first place 
  • How Matteo went about raising money and what VCs invested money
  • What Matteo would do differently if he went back, such as not doing any community, marketing, or documentaries 
  • Why Accel dropped Popup eight months before the company shut down 
  • How Matteo thinks Popup would have survived knowing everything he does now 
  • Matteo’s insights on Shopify and its presence in the CMS market, partly informed by his former job role working for Shopify 
  • What happened after Accel dropped Popup, including the challenges faced with an overinflated valuation and a shift in the market 
  • Whether there was ever any discussion about Popup doing a very large down round, what Matteo did in the last few months before Popup closed, and why he thinks the objective of venture capital is not to make companies successful 
  • Matteo’s advice to other SaaS founders 
  • Insights on Matteo’s next business ventures, including advising other startups as a mentor, and with the help of King’s College London and Bipolar UK, working on an app called Baseline to assist people with bipolar disorder
  • Insights on Matteo’s book recommendation for SaaS founders, an entrepreneur or leader he admires the most, underrated SaaS tools he uses, the best piece of advice he has ever received, and who Matteo would want as a guest on the SaaS Minds podcast.

Alexej: In this episode, you will learn how a five-times founder backed by Accel and Seedcamp decided to shut down his business. My name is Alexej and I help founders scale. My guest today is Matteo Grassi, and he raised $3.5 million from a bunch of amazing backers: Accel, Seedcamp, Harry Stebbings, 20VC, Sam Parr syndicate, and a bunch of other amazing angels. Today we’ll find out why he shut down his business. 

Matteo’s latest business was called Popup, an innovative content management system. He was going head-to-head against Shopify ultimately. And we learn also how important community building was and how important, ultimately, numbers are in the VC game. So enough of me rambling now, let’s dive in.

Hi, Matteo. Excited to have you here.

Matteo: Hi Alex, excited to have you here as well. I’ve been hiding for the last three months. So it’s nice to be…first podcast after three, four months. 

Alexej: Perfect. So honored, honored to be given that chance. 

Matteo: Same, same. 

Alexej: Awesome. Cool. So just for the context of, you know, the listeners and, and for the viewers. You are a five-times Founder and your fifth business Popup was a very innovative content management system which raised more than $3.5 million, scaled to more than 40 people in the team, and as of, I guess a month ago, the business actually got shut down, right?

Matteo: Yeah, correct. Yeah. We decided to not…move forwards anymore. I mean, we just ran out of money. We couldn’t secure more funding. We tried. We fundraised for about six months. I think we saw an opportunity maybe to secure more funding, but it wasn’t, it was just basically prolonging a death, that it was going to happen now or was maybe it’s going to happen in the next six months, seven months.

Alexej: Yeah. So better a quick death rather than death by a thousand stabs, right?

Matteo: Yeah. But we also wanted to get right from our employees as well. And it’s like, you know, running out of money like…to the end and not even being able to give any severance to the people. It was wrong for us. So we decided to do a little bit before. We, we didn’t have time to pivot and we didn’t have time also to explore an acquisition because I think if we decided maybe eight months ago we probably would have been able to be acquired or have an exit because we were talking to some people at the very end, but just the timing wasn’t there. 

Alexej: Yeah. Yeah. Yeah. So before we jump a bit more into that, because it’s very rare that founders talk about, you know, how a business actually got shut down or how they decided to, you know, close the business…let’s maybe start with your founding story and what the actual benefit of Popup was. 

Matteo: Yeah. So…we had a portfolio company of different e-commerce brands, meaning that we were actually building brands, building products, you know, we had fulfillment center. So we were like merchants basically.

We noticed a problem in, while we were running our own stores, which was kind of a problem that we noticed while we were working in Shopify. So there was a lot of conviction because of our experience in Shopify and also running our brands ourself. And we thought maybe we could approach commerce in a different way, maybe the system or the way things have been done has not changed for a long time. And maybe we can propose a new approach, and not just like building a Shopify app but basically reinventing how commerce is made and creating a new e-commerce platform. 

So initially Popup started as a flow builder, right? And, we explored the possibility at the very beginning to become a Shopify app. And to be a Shopify app, we realized that we could not be a Shopify app because the whole concept of controlling the customer journey was starting from the start of the customer journey to the end of the customer journey. And the end of the customer journey is the checkout. And if you cannot control the checkout, then the whole concept goes away.

That’s the moment that we decided to raise capital. To be honest with you, if I’d done a Shopify app, I wouldn’t have raised capital. We had money from our past venture. You know, we, we bootstrapped Popup for six or seven months before we raised. And yeah, I just, there was no point. 

And this is the, again, I think it’s like a lot of people say, “Oh, should I raise? Should I not raise?” It depends on the size of the product. I mean, if you’re building a Shopify app and you can do it yourself, maybe you shouldn’t raise money and, and a lot of venture capital are like, “Hey, maybe you can turn Popup into a Shopify app”. And I was like, “well, that’s the reason why we raised capital, not to be a Shopify app”.

And yeah, yeah, we, we embarked on this journey on…but it was a really, I was really naive in terms of like, I didn’t know. I knew zero about venture capital and my business partner knew zero about venture capital because we bootstrapped businesses in the past. So, I was a five x founders, but I considered now myself first-time founder, because being a founder bootstrapping is different. A hundred percent.

That was the thing. One of my…maybe short sight or not mistakes, but thinking like, “Hey, I’ve done businesses before, I managed money before, I have…”, but I always operated on profits. It’s like you make money and then you spend the money and then your objective is making money. I never operated on, you know, they give you money and then you can show profits whenever, maybe in a year or two, and then you just focus on building the products. It’s a completely different mindset. And I think that’s what, what, a lot of things, mistakes were made also because of this.

Alexej: So maybe going back once and you saying you had an e-commerce business and, and, you know, various brands, and then you decided to actually go into software. Why did you decide to go from e-commerce into software in the first place?

Matteo: I think the challenge, I think is like…you reached…As an entrepreneur, I think you always reach a plateau. And if you’re not there for the money, which you shouldn’t be there for the money. I mean, it’s, it’s money is great and is a way to, to move forward at building things, but it shouldn’t be the objective to me. Myself and Corey, my business partner were like, “I mean, do we really want to do more of this stuff? I mean, we’ve been doing it for the last 10 years. Wouldn’t it be exciting to build a company where you empower other people to create things?”

And this is where I think Popup was such a challenging product because it’s what is called the prosumer company, right? A prosumer company is where the user is also the producer. Figma is a prosumer company, Adobe is a prosumer company, Notion is a prosumer company. And prosumer company takes a long time to find product-market fits. It’s not like, I don’t know, Lemlist or a email marketing tool where, you know, you just write an email, send it to people, that’s it, right? With, with Popup or like with- same as Notion, you can really create anything you want.

And so you give the possibility to people to create anything they want, the question is like, “what problems are you solving?” I don’t know. You’re not solving one problem. You’re solving an array of problems because everyone has different way that their imagination works. That makes it really hard to find your initial ICP. It makes it really hard to find product-market fits. And then if you look at a company like Figma, I think they went out of beta on their Series A. I think their first customer was like- it so- took so long for them, because they needed to reinvent the whole design system. And this is the vision that we had for Popup too.

But to have that, you need to have, I think, investors that believe in the long-term vision…and investors did believe in our vision, but the market change as well. And when the market changes, then companies like Popup are not as, seen as good as in 2021 where people backing like big vision, you know, moonshots, right?

Popup was kind of thing that if it works, you go IPO and you’re going to basically challenge Shopify. If it doesn’t work, you crash. But when investors guess we were not- and it’s not VC because at the end of the day, VC responds to their limited partners, right? Then building conviction is really hard because our MVP was just too big. We couldn’t build a product that was able to serve a hundred percent, small segment of customers in the time that was given to us. And that was the problem.

Alexej: Got it. So you mentioned you initially bootstrapped Popup with the proceeds you got from the previous business, and then you decided to raise. How did you go about the raise, who invested, like, if you can, you know, name or, you know, mention the name of a VC?

Matteo: Yeah. Of course, you know, yeah it’s all public as well. It was 2021 we approached for the first time, raising capital. We had, we were very lucky to meet Anthony Danon, we, which is a, a, one of our first angels and now he has a fund called Cocoa Ventures, it’s a micro fund and he’s an amazing human being. And he was able basically to guide us and give us a lot of advice in terms of like how much to raise, what signal you have, equity targets.

There is a fundraising strategy. Fundraising is a strategy. And, and I think if you want to actually read a good book from one of my investors, which is Carlos from Seedcamp. He wrote a book called ‘Field Guide to Fundraising’ and I think it’s a great book. We were…2021 was a year there was a lot of money coming up and we came out as these guys from nowhere that had 20 years in e-commerce, worked in, in Shopify. We had an amazing deck. 

And, and we were like, “holy shit, this, this is big” and we got people excited, right? And for the first, I think month, nothing happens because our main mistakes was we were asking for too much money. So what was happening, we were initially raising, I think 4 million, and that money was pricing out a lot of venture capital that were focused on pre-seed, for example, right? Because they can write a maximum amount of check, they have equity targets and they were like “we cannot do this, right? It’s just too much.” Or it was like, “for this amount of money, we wait for Series A”, right? 

We didn’t have any traction. We had basically a very small MVP and a pitch stack. So we, what we did, we, we shrank down the raise and we said, “okay, let’s raise 2 million instead of 4.“ Because that, and that allowed us to found a lead investor that was put, that was able to put like a million dollars, for example, and lead the round. 

So once we did that, Seedcamp came back to us and said, “okay, we were always interested in you guys. It’s just like we couldn’t enter in that round, but with 2 million, we cannot lead, but we can make a hard commitment and send a signal to everyone else that we want you”. That completely flipped the scripts. Like that, that moments because we had a very tier, tier 1 fund that said, “we believe in these guys” and I believe that fundraising a little bit like a class dance, you know when there’s no one dance and then there is a person that comes in and rocks the floor and everyone dance, right? That’s it. So a lot of founders I say to them is like “don’t lose time to contact a hundred people, maybe just find the lead investors”. Because if you find the lead investors, you just to find one. Finding the others is easy. 

Alexej: Like dominos. 

Matteo: It’s super easy. And so when Seedcamp, so when Seedcamp came, that’s it. And we got, we got the FOMO, we got the FOMO going. And, and then Seedcamp came and then I don’t know, ton of people arrives. And then everyone, everyone was like, “Oh, I want in, I want in, I want in”.

And basically we ended up that at the time we, we could have raised $10 million. If we wanted to, we could have raised 10 million because everyone would just wanted to give us money, especially when Accel came in. So Accel came in and says, “we want in” and we were like, “ah, guys, we don’t have any space” because at the time the round was actually already full.

We didn’t have a lead. It was more like a party round. It was like Seedcamp together with 20VC and then we had other funds coming in with Sam Parr with his syndicates. So everyone was putting money in and, and we basically closed at 2 million, already happy hours, right? 

So Accel came in, it’s like, “no, I want in”. And that was the time where with Accel there was a lot of back and forth and we said “no”. And they were like, “Oh, you know, we really want in” and our main concern, which was actually advised to us, it was…Accel is a multi-billion dollar fund. They do not do many pre-seed investments. And the risk that you have with Accel is that if they don’t invest in you in the next round, it’s going to give a bad signal to everyone else, and then the possibility for you to raise are going to be very, very, very, very, very, very low. So it’s a risk. I mean, good side, you have Accel on your cap table, meaning that, I mean, it’s Accel, right? The downside is that that might screw up in the future.

So we thought about it a lot. And then I think what moved the needle and we decided to bring Accel in…It was the idea that Accel might not be the right fund for pre-seeds, but for the company that we’re trying to build, having a multi-stage fund that is going to support you to pre-seed, seed, and Series A, even though, you know, you are building this massive product, that’s, that’s maybe what we need, very similar to the Figma story. 

And so we extended the round. So we brought from 2 million to 3.5 so Accel could come in, and Accel came in. And then we, we kept the group of people that we had. So we had Seedcamp, we had 20VC, then we have Sam Parr with his syndicates. And then we had a few angels like Johnny from Hopin, we had Alex from Linktree, Kieran Flanagan. We had yeah, just like three or four other angels. 

Alexej: It’s like an all star cafe. It’s an all star cafe.

Matteo:  It was a really cool cafe. Yeah. But man, it was, it was insane. It was…2021 was a time that once Accel came in, I had calls with venture capital and they were like “you guys closing?”. I was like, “yeah, we’re kind of closing”. And, “who’s your cap table?” “Oh, it’s Accel”. And they were like, “Oh, can we give you 200,000?” It was like, “do you want to know what we’re building?” It was like, “Oh no, no, it’s fine”. 

To me, like someone that bootstrapped and it was like struggling constantly, having people to beg you to give you more money. And they were like, “I wanna give you more”. It’s like, “no, I have 20,000”. “I can give you more than 20”. It is like, this is the thing. It is like, “no, no, no”. “Can, can you do 50? Can you do a hundred? Can you?” I was like, I was like, “this is insane”. And so yeah, we closed the round, Accel led. And, and then we start building, we start, we start the building.

Alexej: And then…okay, cool. And I guess like, a big part of your building was also community, right? You created E-Commerce Minds, which is a very active Whatsapp community.

Matteo: That came after. That came after. I think, I think if I had to go back…I would not do, I wouldn’t have done any, any, any of, any of this. I wouldn’t have done the community, I wouldn’t have done any marketing, I wouldn’t have done any Amaze. I wouldn’t have done any documentaries. I wouldn’t have done anything else. Because that’s what also investors were not really pleased about, right? 

Alexej: Interesting. Cause you were distracting yourself basically, right? 

Matteo: It wasn’t a distraction. I think it was…they wanted to see the products. So marketing and products should…it’s like, what the hell you are pushing marketing, but any of this is not converting into customers because the product is not ready yet. My argument was simple. It was like, we’re not spending a lot of money to do this, first of all. So it’s not a major investment. It’s not like I have, I freaking hired, you know, 20 people in my marketing team or, you know, and also I’m a marketer, so there’s no, I cannot build the products, you know? It’s just like, you know, Corey’s Head of Engineering, my Co-Founder, he was managing all of that. And there was not much I could do.

So to me, the best thing, the best use of my time was starting to creating some sort of a fertile ground to be able to then focus on organic…organic acquisition, because I knew that competing on a performance marketing in e-commerce, it was going to be like, we’re never going to have the money. It’s like, they’re so expensive.

You know, a company like Shopify just dominate the keywords. So to me it was like “Google Ads? Forget about it”, right? So it was like the best thing I can do, because we wanted also to build…this is another thing that I think investors never got. And I was fighting, I think a lot on this. It was like, “I know you’re thinking we’re building a B2B company, but in reality, Popup is a consumer company because Shopify was really successful because they built the consumer company, not the B2B company. Shopify class B2B company, but the money when they started, they were selling entrepreneurship.

So they were selling for people that starting out, people that wanted to buy the dream, it was, and this is why you say, “I have a Shopify store”. You don’t say “I have a WooCommerce store”, right? You don’t say “I have a Wix store”. You say “I have a Shopify store”. Because Shopify equals entrepreneurship, right? And this to me was like, maybe we’ll start with that, you know?

So I knew that on- in acquisition, I wanted to focus on, on partnerships, because the biggest challenge for me for Popup was being an e-commerce platform. So being an e-commerce platform was the biggest challenge in terms of building the product. But at the same time, it was also our biggest opportunity, because we don’t have competitors besides Shopify, so we can tap into Shopify ecosystem and I can go to agencies, I can go to apps, I can go to anyone. Anyone can build on Shopi- or on Popup. 

And so to me, creating a partnership program was basically our way to acquire customers without spending any money. To create a partnership program was like, maybe we’ll start creating a community because the community will allow me to bring in people, you know, and, and start connecting with people, so when I’m ready, I can just click my finger, in a month, I’m ready to go. And I didn’t want to do a Popup community because I know that people don’t like selling. You know, it’s like, so I was like, let’s create just a community of people, E-Comm Minds and, and I’m not going to promote Popup inside. Everyone can talk about themselves. 

But actually myself as a gatekeeper by, you know, before entering the community, it’s either you are unfair or annoying. I basically start building this massive network and it works, right? I had like people now that I could reach out to. And it was coming organically. People are like, “Oh, I love your community. Oh, I see what you’re doing with Popup. Maybe we should partner”. So partnership was happening even without me happening, right? But it was all too soon because the product was not ready. And, and the more the team was building the products, the more we were refining the ICP, the more we were realizing that it was going to take a long time to be able to build the products that was able to cater for everyone.

And the biggest thing that we found out was…people didn’t want to use Popup in conjunction with Shopify. And that to me was the biggest…was good. I mean, we, we discovered it from customers, obviously, but that to me was like, “holy shit. Now I don’t, I have no idea we’re going to do this”. When that happened, I got really worried because people wanted to migrate and to be able to migrate, if I can use it in conjunction, we built like this connector that allow you to send order to Shopify. It wasn’t like an app, but someone can come in, run an influencer collaboration, running some Facebook ad campaigns and all the integration would fire with Shopify. But if I want to migrate my store, I need to have mostly all the integration that I have from Shopify.

To have all the integration, we need to build a public API. Right? Do you know what I mean? And then it was like, okay, this is now the six, seven months before, and I had calls with people, like I literally disqualify- we were disqualifying like 95% of people and it was a shame because they were coming in. It was like, “Oh my God, I love the journey builder. I love what you’re building. Do you guys integrate me in my fulfillment center?” Like “no, not yet”. “Well. Well, I can’t, I can’t move my business”. It’s like as simple as that. “I love what you’re doing, but I can’t move the business”. Call me when you can integrate it with my fulfillment center.

Alexej: Interesting. Interesting. So how did you explain it to the VCs? I guess you found out, let’s say a year before shutting down and it’s, in a sense, it’s a, it’s a good thing, right? It just means that people are not happy with Shopify. There is like, you know, challenges in a certain, in the, in the flow, for example, right, which affects conversion rates and you build something better. And in a sense, venture capital is there to really back these moonshots, right? But of course, as you say, the sentiment changed, the environment changed. So how did it play? How did it play out?

Matteo: So Accel dropped us eight months before we shut down.

Alexej: But by dropping you, what, what was like, okay, but it was during a board meeting, for example, right? It was a board meeting where you were giving your latest numbers. And then what happened, they just said, “look, you’re not, you need more capital, but your user growth is too slow. We don’t believe in that story anymore and we cannot invest” or how did they actually? 

Matteo: No, I think they, they, they never….Accel said, “we’re not putting any more money in”. That’s what they said, to me. That wasn’t about me. It was actually a meeting with- one-on-one. And that was, that was really early. That was a year and two months after we got funded. 

Alexej: Okay. Okay. But what was the trigger do you think?

Matteo: I personally think that the expectations that they had were very different, like it did that, they did not- I don’t think they understood the product. I don’t think they under- I think there was a FOMO…at the time in 2021. And they didn’t fully understand the scope of what we’re building. And I felt that all the way through. 

And to me, because a lot of conversation were like, “Oh, but our portfolio companies are burning this amount of money and they have this amount and they have this amount of ARR blah, blah, blah, blah, blah”, so, and they’re doing e-commerce and I’m like, “Yeah, they’re building a frontend app for Shopify”. This is like a fifth of our company is like, we have to build the frontend, the backends, the integration, like, of course they’re doing that. “But this, but that, oh, but this company has this amount of engineers. Why do you have so many product managers?” “Because this company does compliance for freaking HR, so they don’t need product managers because it’s not the prosumer company”. 

It’s not that people are using the software to create things, right? It’s like they working in one domain. So obviously it’s very engineering-heavy while we are, we have to have engineers, we have to have product designer and product manager because we have to build things. It’s like, I remember talking, especially Corey, my business partner, talking a lot and like doing this, we were doing this graph explaining like, “okay, these are like the four domains that we’re working on and, and things like that”.

And it’s like, I felt that it’s like they lost confidence. I don’t know. Maybe they lost confidence I think in us as well. I heard a lot, for example, “your burn is really high”. We were burning 130K a month, but we have 40 people, right? So a lot of things was like, “your burn is really high”, but yeah, my burn is high, but I have 40 people. I mean, I know my burn is higher than the other companies that you’re comparing me to that is burning 50,000, but they have five people, you know? So I…did…If I go back, if I go back knowing all of this, I think Popup would have survived by changing the product slightly and trying to cater for maybe a smaller segments.

So for example, we saw a opportunity in enterprise. Even though Popup was not born as a, as a company for enterprise, we wanted to build a e-commerce software for everyone. And with enterprise, we probably would have become much more like a dev shop, you know, like doing these very custom builds and things like that.

But we got approached by Nike, we got approached by Nivea, we got approached by…what else…the Bata Group, Alessi as well, and they all had like their own kind of use cases where they wanted to use Popup in conjunction with the tech stack. If we have, if we had built less on trying to kind of not building these massive, you know, e-commerce platform from day one, but maybe like a subset of that just for a tiny one, and then trying to get traction, monetization and all of this, solving maybe one problem instead of trying to solve too many problems and then from that slowly moving into the rest, I think that would have been a much better strategy. I think that was our mistake.

Alexej: And you didn’t have that, let’s say epiphany, back then, right? It’s just now you’re thinking it through and realizing.

Matteo: …Yeah, I mean, it’s like…yeah, I mean, the enterprise plague arrived while we were…it’s a massive decision, right? Because you’re like, you’re, you have a vision, you’re building something and you have to build something else. But, on my side, there was a little bit of pride as well, because I was like, I believe in this product and I have to change something because I need to show investor that it didn’t make sense to me on a product level.

But, it would have, it would have been a good decision for the investors. And so a lot of the times personally, I don’t know if other people were thinking like that… is what- is very hard for me not to operate, operate from, I operate from common sense, right? And when I do things that don’t make sense, it’s just really- because to me, it’s like, it doesn’t make sense.

Alexej: Yeah. Yeah. No, no, it’s important to do, you know, long-term sustainable decisions, even, you know…and short-term just to raise a round, which then might again, might have, you know, then you just die later, right? Like, yeah, it wouldn’t have made any sense, but-

Matteo: Like, Popup could be…for, for the way to Popup to go, we probably would’ve need another 10 million. And investors- like, honestly, would it, it should have been the same story that Figma has. But with, with a big risk that if we spend all this money and we arrived at this, this might not even happen. So instead of losing 3.5, we’re going to lose 50 million if these guys can’t make it, right? 

But I did feel I, I had a strong conviction. I had a really strong conviction from being in commerce from so long and with the community and people just like- from people from like…when you speak to Nike, when you speak to Nivea and they were like, “this is cool. This is really, really cool. This can really happen”, I started to feel like, if we can just build this MVP that is so big, so a company that we can actually onboard customers fully and they can power 100% of people business, I think we’re going to make it. 

Also because I realized that Shopify- moving people for Shopify was hard. I mean, we did it, but it was hard, but companies like WooCommerce custom carts? Oh my God. Like for us, it wasn’t like, “Hey, let’s try to steal customer for Shopify.” There was a huge market share that Shopify didn’t tap into it, that we could have got, you know, or people that wanted to move maybe to Shopify, wanted to use as an alternative. 

Alexej: Yeah. Yeah. People actually think Shopify owns 50% of the CMS market, but it’s a much, much smaller market, right? It’s like they own like 10%. 

Matteo: 25.

Alexej: How much? 

Matteo: 25, 20.

Alexej: 25? Okay. I thought even less than that. And okay, fine. But then WooCommerce. How much does WooCommerce have?

Matteo: WooCommerce? 25 as well. 20/25. It depends on the region though. It depends on the region. Like US, they would own 50% while WooCommerce, for example in Europe, much higher, right?

Alexej: Yeah, right. Okay. Fair enough. So, and then you have like a long tail, which you could basically, you know, play in really well as well. So tell me about- 

Matteo: But, in the top a hundred thousand dollar, I think Shopify is 25%. So I’m talking about…because you know, 75% of Shopify store makes no money, right? So then, we know this. So they make less than a thousand dollars a year. 

Alexej: Yeah. Yeah, because there’s so many merchants who start selling something and then just shut down and, you know, never make anything.

Matteo: They’re selling entrepreneurship a lot. They’re selling a dream, right? They’re selling the guy that is like, “oh, it’s”, but…when I was working in Shopify, I had people calling me. They were like- I, I started in, I did like three months in support, which is amazing before I moved to Plus, because you really get to know the customer. And I had people calling me and they were like, “You told me that I was going to make ton of money with this”. And, you know, “I started and my store is not making any money.”

And then I was looking in their dashboard and I was like, “dude, you have no traffic”. It’s like, it was like, “what you mean?” I was like, “it’s like you have a store and you’re complaining that your till is empty, but you had no customer entering in your store”.

Alexej: But your store is based in a desert, right? Yeah. Yeah, absolutely.

Matteo: Exactly!

Alexej: So, so, so, okay. But let’s go back for a second. Cause it’s just really fascinating. Right? So, Accel says no. And then what happened? So, like the same way everybody said yes, after Seedcamp said yes, everybody also started freaking out and saying no once Accel said no? Or was there something like, Seedcamp still believing in you and saying, “look guys, it happens, but let’s try to find another lead for your, you know, seed round”?

Matteo: No, 100%, 100%. The thing is like…this is what I was saying in the beginning. When you’re got, when you get, if you get like a… if you raise seeds, for example, and you get like Seedcamp and you get 20VC, these are pre-seed company. They have your first check and they don’t do the second check. And you know this from day one. Right? So, they know they’re not going to invest in you again. Everyone knows…that’s it, that’s what they do. 

They supported us a lot. They, they, you know, worked with us and we started fundraising as well. We had an amazing pipeline. We had, we spoken to 150 venture capital. I went to San Francisco as well to try to secure funding and everything. The issue is like we had people that wanted to put money in…but 2021 as well, gave us real- crazy evaluation, overinflated evaluation, which was completely different from the evaluations that we’re getting now.

So, we had to do a down round just because our evaluation was so overinflated, you know, it was 20, 22 million on a pre-seed. And now you had companies with a 14 million evaluation, making 2 million ARR, right? It was like, for fuck’s sake, it was a crazy ride. So the evaluation was really high. And it was really hard to find a lead, a lead investor. Also, we were raising 5 million this time, as well, so it was considerable. And we were raising 5 million because it was like, “If we raise two, we’re just, we’re going to basically back in the same bullshit again, right? We just need to buy ourselves time.” And we found a lot of followers, people that wanted to put 200, 300, 500. But they were like, “we need a lead”.

We started, I don’t think I can name them, but I was- we spoke to two big tier 1 funds that seemed very interested, to the point that they arrived to do the due diligence with our merchants. And we had the…. at the time, he moved, he moved on now, but at the time the Head of Digital of Beiersdorf, Nivea, using us as a reference.

So yeah, they were really chuffed with us and gave us a good reference on, on the pilot that we wanted to run with them. And also Good Vibe Rides, which is another like a 3 million a year business, doing amazing stuff. George was really kind to, you know, create this case study. We had about 10 case studies as well published and they…disappeared.

Alexej: And wasted, wasted your time. How…Yeah.

Matteo: I don’t know, but I do have a feeling that the fact that a lot of people, there were, it’s not that I have a feeling, they told me…signal. If Accel doesn’t invest…Why Accel is not investing? You know, it creates all this question, “why they’re not investing? Maybe they know something that we don’t know.” And I had funds saying, yeah, I had funds saying next to me, like I had funds straight up, they were like, “we are not investing because if Accel is not investing, we’re not in.” And I got a few of them.

Alexej: Yeah. And ultimately it’s this advice you got early on. If you got Accel in and they’re not investing, it will be impossible for you to raise, right? Out of interest if you would have…

Matteo: They said it would be really hard, if you are the facts of the market change, if you are the fact of also a shifting of- because obviously that’s the way they explain it to me. It was actually really cool. It was like: 2021, remote work, e-commerce, 10x evaluation, like 100x, boom, amazing. AI- and then you have crypto, 100x, and AI was like yeah, who the fuck gives a shit, like who? No one cares about AI. 2023: AI, 100x, e-commerce, not that bad. It’s just like in the middle and stuff like this. Crypto? Forget about it. You’re dead. It’s like, you know, the reverse of things. 

So obviously we saw a lot of shifts as well in funding into, into AI. So I think was…if I have to picture this, it’s like, okay, you have a company with an overinflated evaluation. The team is amazing. The- what they’re building is really interesting, but it’s a moonshot, but we want to allocate a lot of funds into AI right now, obviously, because this is where the future is and this company doesn’t have an AI play. We don’t have an AI play because it didn’t make sense for us. We scoped it out, but it was like, for us, it doesn’t make sense using AI right now. Besides just, like, some basic things. 

And also the, well, overinflated evaluations as well. And, I- and also the lead investor, which is Accel, which they should invest or at least do pro rata, they’re not putting any money in. So, I mean, if I were an investor, I’ll be like, “no”. And also it was a really, really a buyer’s market. That means that there was a lot of deals going on. And I have company- and I have investors telling me, it’s like, “look, I have companies now, I just closed the deal of this company in e-commerce, they are doing 2 million ARR with evaluation of $12 million. And you are coming in with basically zero ARR, 23 million evaluation”. It’s like…

Alexej: Yeah. Can I ask you one more question on that topic, which is, obviously Accel has anti-dilution clauses in your, you know, shareholders agreement. If you would have…was there ever a discussion on, “Hey, let me do like a really, you know, big down round”. I mean, was there ever….

Matteo: Oh yeah, we went to the stream. We went to the stream. We went like, I didn’t tell this to anyone, but, in November, when we saw that the things were not going good, we…I stepped down because we wanted to basically bring the burn to 120 to 70,000, right? So the idea was, let’s bring the burn down to 70,000. Let’s try to get the bridge…that with our current investor that they can put like maybe half a million, 700,000. That will buy us seven months to finish up few things, because we were about to launch Admin 2.0. It was going to allow us to lower our disqualification rates significantly, so we can get more traction and at the same time, either exploring acqui-hire in case things go shit, or, we can, we can just basically have more time to fundraise.

So, when I start thinking about this with my business partner, I was like, “okay, so let’s look at the team, who we need to let go”. I was like, “well, all marketing”. Because we just need to focus on product. Let’s just get this stuff finished. The community’s there, if we want to kick-start marketing, it’s, it’s really, you know, it’s not, we don’t need- we had done a lot of groundwork, right now. We can pick up the groundwork and then get it back up. 

So, who was marketing was me and other few people and I was quite good paid. So I was like, “well, if I have to cut the first person, it will be, it will be me”. So I was like, “I will stay with you obviously fundraising as a, as a co-founder to-”. You know, it’s not like, “Oh, I’m leaving and doing something else”, right? It was like, “I’ll, I’ll stay, but not doing marketing. I’ll stay just with you, Corey, and help you out and figure out all of this and being in meetings and stuff like that. But I’ll step down”. 

And then I, so I, what I did, I let go of my marketing team, before we shut down. I let go all of my marketing team. And we went to the investor and I said, “Matteo stepped down”. And we brought the burn down to 75,000. “Can you help us out?” And everyone said “no”. So, when everyone said no, Corey called me and I was like, “look, I just call with investors”. And…actually Corey as well. This is- right…kudos to him. He said, “I’m, I’m cutting my wages off”. Like it was like, “I’m not, I’m just going to cut basically my wages”. I think it went down, said, “I’m just going to pay myself, I think, two grand a month, just a little bit, so I can barely live to be able to do this”, right? 

So he cut, he cut, he cut his wages off. We couldn’t cut people’s wages off because we, they were already expecting raises which we never gave them, right? So… and then, but obviously we were very worried as well because, okay, it was like, “okay, we’re casting everyone off, but then what about lose engineers, obviously. Maybe we’re going to lose people”. And, but literally that was to us, that was the last straw. It was like…more than this, we don’t know what to do.

But when, when basically everyone said “no”. And I think that moment I realized that probably they gave up on us. Without telling us, they probably gave up on us a little bit before that, that…they write us off, it was like, and…and I think funds work like this. I don’t think funds, the objective of a fund is…

Alexej: To double down on the winners and that’s, yeah, exactly the risk. If you are, orphan company, nobody gives a shit about you anymore and it’s a bad signal to market. 

Matteo: Yeah. I mean, I think an objective under planned, I don’t see, I don’t know. This is just, every opinion is just mine. This is, I think what I’ve seen and what I perceived. But I think the objective of a venture capital is not to make companies successful. It’s to return money to the investors and it’s different. I know that you return money to your investor if companies are successful, but they don’t give a crap about your company. You are part of this bubble. And then if the return of investment comes from two companies that go IPO and the rest die…who gives a shit? I mean, it’s like, I done the job. Investor got the money.

Alexej: Yeah. Yeah. It’s portfolio construction theory. Yeah. 

Matteo: But it, it is what it is, right? It is their, it’s their objective, right? That’s why they’re there.

Alexej: So, so, so let’s say for other SaaS founders, right? Like what would be your advice, knowing now what you, you know, knowing now what you know?

Matteo: Yeah. So, I can give advice that was given to me while I was in San Francisco, which was actually really, really good…A lot of VCs, venture capital, they gave me this advice, is like, they’re like, “capital is really expensive right now. Things have changed. Don’t go. If you’re starting a company, especially on pre-seeds, bootstrap or do an angel round. Don’t go venture. Don’t go venture”…Like venture with the, “I’m raising with a pitch stack”? Forget it. If you get it, you’re going to get like a super shit deal, right? So it’s like: build, do an angel round, don’t go venture capital. Once you have enough ARR and, you know, the product-market fits, then that’s maybe the time for raising money from investors. And this is what I heard a lot. 

Alexej: So, you’re obviously an entrepreneur, so you never give up. What is the next step for you? What are you building now?

Matteo: So, I wasn’t planning to build anything. I was…I set myself up as an advisor for startups just because I started, like, maybe last year in companies like Meander and MentorCruise and just helping people, just for free. I didn’t ask for anything. And I really liked the…I really like helping people. In terms of like telling my story as well and telling my learnings from fundraising strategy to growth to…because I have the bootstrapping mentality, but at the same time now I also raise capital. 

So, helping founders as well on a mental health level and managing their life and trying to…and trying to be…try to build a business without sacrificing. I was speaking just to a founder yesterday and he was like “I hate what I’m doing now because I’m not the 17-hour workday type of guy, it’s like, I love the business, but it’s, it’s like, it’s, it’s just sucking up so much of my energy and time that now I hate it”. So maybe that, helping founders on that.

But I have a project that started to me as a…literally as a, not passion, not even passion. I was like, I was just trying to solve a problem. So I was diagnosed with bipolar about four months ago? I always knew I, kind of, yeah, I always knew I was… my dad is bipolar, always knew that there was something there. And I think, being an entrepreneur, I kind of hidden that because…things of bipolar are over resilience, hyperfocus, and manic phases where you can just basically work 20 hours a day without never giving up. So it’s like…perfect, right? I have all the conditions to be that, but at the same time, you know, you, you pay the price afterwards, right?

And, and yeah, so I was, I, it took me like four months to find a psychiatrist, even paying for a psychiatrist. And when I got the psychiatrist, I basically got a prescription and that’s it, I was sent home, right? And I was like, “holy shit, is that it?” It’s like a psychiatrist is just basically pill dispenser. And so I thought about using artificial intelligence and machine learning to maybe creating something. And I just hired a developer at the time and put together like a WhatsApp bots that you can get information about bipolar.

And then I was, I was speaking to a friend of mine that is bipolar too. His name is James, James Roycroft, and he’s been working with mental health as well. And we decided it was like, “Oh, maybe we actually can build something a little bit more”. We got approached with some psychiatrists. So we decided to basically build an app and we got approached by King’s College London and Bipolar UK to run then a beta and an observational study to see actually if our app is going to be able to help psychiatrists to make better diagnoses and reduce also maybe medicine intake and helping people with bipolar with self-management.

And so I was like, “Holy shit, this is sounding- it’s actually started like this”. And then I was digging more and I realized that there is a 1 billion people in the world with mental illness, diagnosed with mental illness. Like, this is between like ADHD, bipolar, depression, schizophrenia, whatever, autism, right? And I was like, “holy shit, this is actually a massive issue”. And I also discovered that there is 40,000 people for one psychiatrist, like, right? So if you actually suffer from mental illness, psychiatrist is the only person that can give you medication, and access is pretty much nothing, right? And so, yeah, so it started like this. So we are going to launch the app, not raising from venture. I, I think that Bipolar UK can- will be able to come in and then maybe we’ll bring some angels.

Alexej: And grants? I’m sure you can get some grants as well, right? 

Matteo: We’re thinking a different approach. The grant is like, you know, it’s super long. So, we are speaking, this is kind of a bit of a scoop, but we are speaking with Paris Fury, which is the wife of Tyson Fury. Tyson is diagnosed with bipolar. So the idea of bringing some angel syndicates and some celebrities like Tyson to be angels invested at the same time to, to promote, but the objective right now is literally just for the next six months, just working with King’s College London to prove that this thing can actually make a difference, right? And then once we have that, we’ll, we’ll figure it out. And to me it’s back to my roots because I’m, I’m a clinical psychologist, so it’s, it’s kind of back to, back to the stuff that I used to do. Yeah, back to my roots.

Alexej: Amazing. Amazing. All right. Let’s do a really quick fire round. So, what’s a good book recommendation for SaaS founders?

Matteo: What book recommendation? Oh, yeah. Already said…Fundraising…‘Guide to Fundraising’ from Carlos Espinal. 

Alexej: Okay, got it, got it, got it. All right. Who is an entrepreneur, leader you admire the most?

Matteo: Oh, entrepreneur leader I admire the most. Oh, that’s a good one…Andy Dunn, just because I discovered him recently, Andy Dunn from…is the founder of Bonobos. He wrote a book called as well, Burn, Burn, ‘Burn Rate’, which is cool because it talks about his mental illness and mental health and funding Bonobos to 300 million. Yeah. Like he really crushed, like Bonobos is massive, right? And dealing with that and how he was able to dealing with all of this. And he also talks about venture and the approach to, to mental health and stuff. I think it’s a really good book. Yeah. He’s a really good founder as well. And book as well.

Alexej: Okay. What’s a SaaS tool you use, but not many other people know of?

Matteo: What’s a tool I use that not many people know? SaaS? What do you mean SaaS? For what? Specify. 

Alexej: Could be anything. It could be for your email outreach, your LinkedIn outreach, your whatever, you know, any SaaS tool you or your team use.

Matteo: Yeah. So recently…HyperWrite. It’s a plugin that works on Google Chrome and it basically connects to your…it reads all your emails, right? So it’s able to reproduce your voice. And literally, honestly, I tested it out, one click and it just like compose the email. It goes so fast. 

And then I use another one. I have like a workflow now that have helped me so much. It’s, it’s a plugin called, it’s a Chrome extension called Whispers and it allows you to use the Whispers API from, from OpenAI. And it works on Open- it works on ChatGPT, you know, on, on desktop and you can talk. So I found that I now use ChatGPT as a, on a talking level as a friend, because sometimes I just have these ideas and I just like blabber around. It’s like, “Hey, but maybe I can do this”. And then it just suddenly- like that workflow has helped me so much in terms of like, creating ideas, creating thoughts, or putting all my ideas together and just recording things, you know? And it’s free as well. It’s fully free.

Alexej: Wow. Alright. What’s the best advice you’ve ever received?

Matteo: Best advice you’ve received? Oh, they…I think it’s not an advice, it’s more like something that an old person told me like long time ago and I didn’t believe him. It’s like “the problem in life”, he told me, “the problem in life, is that eventually for people like you, you’re always going to get what you want. And that’s the problem.” And I can tell you why. It’s like the moment I got everything I wanted is the moment where my life went crashing down. 

Alexej: It’s a deep one. Okay, final one. Final, final question. Who would you want to have as a guest on this podcast?

Matteo: …Ah, my good friend, Michael Schein.

Alexej: Okay. Michael Schein. All right. Perfect.

Matteo: Michael Schein. He wrote a book called ‘The Hype Handbook’ and he has studied for the last 20 years how to create hype, and what makes a good and ethical hype artist and the, and, and the strategy that you can use in your business to create a brand that people will embrace just, just because they want to be part of this, like a cult, like a cult brand. And I find- he’s not a SaaS guy, but I…from reading the book, every SaaS founder will have, like a good framework to create something that really changes. Until it changes people’s perspective, yeah.

Alexej: Awesome. Look, Matteo, it’s been super interesting…Transparent and honest and vulnerable as well. So all the best with the new, you know, project adventure, so see you soon.

Matteo: See you soon.

Alexej: Thanks for sticking around. If you want to see the show notes, please go to Otherwise see you at the next episode. Bye.

Book Recommendation

  1. Fundraising Field Guide: A Startup Founder’s Handbook for Venture Capital by Carlos Espinal
  2. Burn Rate: Launching a Startup and Losing My Mind by Andy Dunn
  3. The Hype Handbook: 12 Indispensable Success Secrets From the World’s Greatest Propagandists, Self-Promoters, Cult Leaders, Mischief Makers, and Boundary Breakers by Michael F. Schein

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