Insights | Insights

The First Million: Ryan Denehy of Electric

MB Headshot 2

Michael Brown

January 29, 2024
NYC scaled
"I almost threw up in our third selling month. We had closed our first few paying customers. I did the math on how many emails, calls, and demos we would need in order to get to $1M in ARR. I was blown away. The numbers were huge. I felt sick and lightheaded. I stared out the window for a bit and just said screw it, we'll find a way."
The First Million Electric

On the Bowery Capital blog in the coming weeks we present "The First Million," a series focused on the tactics and tips as founders scaled their business from zero to one. We talk revenue generation, product pricing, sales, marketing, and product related matters that supported the growth of these companies. Check out our first interview this week with Ryan Denehy of Electric.

What are the 3-4 key things that you did (product, sales, marketing) to go from zero to one?

  • We launched our MVP in 6 weeks. We could have easily spent a whole year and millions writing code on a more elegant Beta but it wouldn't have proven anything beyond what our embarrassingly minimal MVP enabled us to prove.
  • No design partners! Design partners wasted so much time at my previous company. We could only move as fast as they moved, which was generally not fast. We easily cut 3-6 months out of the zero to one process by going straight to buyers.
  • We went after an existing budget category (outsourced IT) and were maniacally focused on a product that made us a no-brainer compared to alternatives.
  • We sent 275,000 emails and made 10,000 phone calls in our first year to get to our first $1M in ARR (with a ~$20K ACV).

Did you do founder led selling from the outset? How did you orient your day to day so that you could really focus on pipeline generation and working deals?

  • 100% founder-led from the start, but with some help. I had a colleague who would send all the marketing emails and help set up calls. Then we would do 2-4 customer pitches per day. Over time as we closed more deals and our pitch got better he did more and more of the sales until we eventually hired our first AE. I am not aware of any successful B2B startup that did zero to one without founder led sales.

What were some of your assumptions going in that you thought “this is definitely going to work” that ended up totally flopping?

  • Don't do free trials! Initially our sales win rate doubled but this was ultimately horrendous for us. We were selling a $20-$50K ACV product with a fairly involved implementation process. You cannot do free trials with this type of offering. Our churn went through the roof. We would often find that our buyer did not get the proper approvals internally, the budget wasn't actually there, or people would get annoyed during implementation and just disappear. Bad bad bad.

Talk to us about some of the tactics to generate more leads. Top of funnel stuff. How did you do it on the marketing and sales side?

  • We sent interns around the city to take pictures of the directories in various office buildings. Once we knew who was in the building we'd email every prospect and tell them we were going to be "down the hall next week" and would be stopping by to give them something, like a free IT security assessment. These leads converted at a really high rate.
  • We would generate our own lead lists. We found that certain providers had really high quality email addresses but low quality phone numbers, other had up to date employee info (name or title) but lousy contact info. We hired interns to create a lead generation team who built super high quality contact lists for us to go after.

Talk to us about the bottom of the funnel. It is always so tough to close these deals. How were you able to get stuff over the line?

  • We had a buyer who loved the roast beef sandwiches from Eataly. We showed up there every week for a month to take him to lunch. Bought these huge sandwiches every time. He would insist on getting an affogato (espresso and ice cream) after. It was insane. You'd just be sick. But we closed the deal. It was like $12K ACV. Nothing. But they were our fifth or sixth customer so it was a huge for our momentum.
  • At one point I found myself installing a Cisco phone system at 5am by myself in the office of a PR firm. Why? Because we threw in a phone system setup for free to win the deal and there was nobody else to do it. We would do big discounts, flexible payment terms, better SLAs. Anything. As time went on we won deals on the merits of the offering but in the early days we didn't have that luxury. What do you want? OK fine we'll do it. We had to set the tone internally that we would put points on the board every single week. No excuses.

What is the strangest or most stressful thing that happened going zero to one?

  • We were physically threatened by members of a construction union. In 2017 any startup that got funded moved into a new office. This seemed like a good lead generation opportunity so we briefly hired people to do office move jobs (like setting up your phones and conference rooms) and then we would throw in a free month of our offering. One day our on-site tech called me, clearly scared and distraught. Some union guys in the building didn't like that he was there. While he was up on a ladder running cables and listening to music on his headphones they painted 2,000 square feet of the floor around him. It was really thick wet paint. So he was basically stuck. Then they hid all of his equipment in a closet and said if he ever came back they would throw him down the elevator shaft. Very stressful.
  • Outside of that I almost threw up in our third selling month. We had closed our first few paying customers so I did the math on how many emails, calls and demos we would need in order to get to $1M in ARR. I was blown away. The numbers were just so huge. I sat there going "WTF, this is literally never going to happen" I felt so sick and lightheaded. I stared out the window for a bit and just said screw it, we'll find a way. We found a way and closed our Series A exactly one year later.