My Big Break: New Relic's Lew Cirne on how he raised his first $35k, and thought it would last forever
The dozens of billboards all over San Francisco alone will tell you that software analytics firm New Relic is on fire these days. And if the ads weren’t proof, the company has raised some $215 million to date to fuel it all -- including a whopping $80 million earlier this year.
New Relic was started by Lew Cirne, and as a serial entrepreneur with a decent exit under his belt, he didn’t struggle to raise funds. But back in 1997, Cirne was just a kid from Ontario who’d moved to Silicon Valley to write code and had an idea. Money was flowing in the Valley back then, but not for ideas like this and not to nobodies like Cirne.
It took a small village… in Canada, but here’s how Cirne got his big break. It’s an inspiring tale to anyone on the fringes of the Valley, unconnected to VCs, with little more than a dream and a willingness to eat a lot of Ramen.
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Sarah Lacy: Tell me about your big break.
Lew Cirne: Well it was back in December of 1997, and I had an idea to start a new company called Wiley Technology. I was so excited about the idea. I was driving through the Santa Cruz mountains, and I was so excited that I almost drove off the road.
SL: That is a super treacherous road.
LC: That would have been a bad start to the company.
SL: That is not a good brainstorming road.
LC: So anyway I get home and I’m convinced I’m gonna start a company. The only problem is I have absolutely no money and no contacts and I don’t come from a family of means.
SL: And this is a very different era of Silicon Valley, right?
LC: Well the bubble had started, but my idea wasn’t consumer Internet at all, so it was very uninteresting to most investors at the time, as was I. But my parents had seven friends who had a little bit of money. Some of them went to Vegas pretty regularly. They called them up and each of them scared up $5,000 and so in aggregate $35,000. One of the guys actually shamed his friends into investing in Wily Technology. He thought of it as, “I can drop $5,000 at the poker or blackjack table pretty easily so why not this kid in Santa Cruz, California?”
So $35,000 to me… I was like, “I can live forever on $35,000! Of course, I’ll quit my day job and start a company! That’s an infinite amount of capital!” It’s amazing when you are 28 how much you think you can live on ramen noodles.
So [my parents' friends] and ultimately the headmaster of my high school all chipped in money, and that got my company started so they gave me my big break and I’m forever grateful.
SL: How long did that money actually last you?
LC: (A long sigh...) Well I turned it into about $100,000 and that lasted me a little over a year. raised another $100,000 to hire my first employee so we didn’t get a series A until late 1999 nearly two years after that initial round.
SL: So when you guys sold to CA for $375 million did you make them all fabulously wealthy?
LC: They bought for $.75 a share and sold for $13.70 a share, so they made a nice return.
SL: What was it that convinced them to put the money in? Was it other people vouching for you? Your crazy enthusiasm?
LC: Maybe I was the only one who knew how to fix their computers. I was the kid who went to Silicon Valley to write code. I’d worked at Apple, they knew who I was, so maybe they saw an opportunity to participate in the gold rush of the first bubble. I don’t know but it meant a lot to me that they put their own money behind me.
SL: Did that put a lot of pressure on you?
LC: I think statute of limitations is now OK, so I can say this, but none of these were qualified investors. There was more investor management of “What’s going on with the company?” and “When will there be liquidity?” but they were very supportive investors. It was fun doing my investor meetings, because it was in a little pub in my hometown of Southern Ontario, where we’d have a Guinness, and we’d talk about what was going on with Wiley Technology.
SL: Did you ever do a deck for them?
LC: I did a deck in January of 1998 shortly after the first money at that pub, and I’m sure it was some of my finest Powerpoint work ever.
SL: So, last question, is there anyone you have paid that forward with? Is there anyone that you have believed in who you had no real reason to believe in?
LC: Well let’s see, one of my board members is a guy by the name of Dan Scholnick. Dan was my intern in the summer of 1999. I pulled him out of college, and he could have taken a job at Microsoft or Sun, and instead he stayed on my futon and made next to nothing. I couldn’t afford a full time employee, but I could afford a college intern who I basically didn’t pay.
I don’t know if it was paying it forward, but I did write his references into Harvard Business School and then when he was looking to come out to Silicon Valley and talking to Trinity Ventures, I told them “This is the kind of guy you make room for even if you aren’t looking to hire a new investment professional.” So he led my series B round and is the fastest general partner in the history of Trinity. And the lesson is be nice to your interns, because one day they might be on your board.
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