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eFounders Letter #4 — Time to touch base

Thibaud Elziere
Thibaud is the founder of Hexa. An entrepreneur at heart, Thibaud has co-founded over 30 companies through Hexa, many of which have become huge successes. He knows what makes a good idea and how to kickstart it. Previous to Hexa, Thibaud exited his first company Fotolia to Adobe.

5 years in the life of a startup studio


Before starting, let me quickly remind you what we do at eFounders. We are a startup studio that generates business ideas. After validating them, we hunt out brilliant entrepreneurs to transform this inspiration into (hopefully) successful and (definitely) independent companies. It takes around 18 months for the company to fly the nest — just enough time to reach a first product market fit, generate early traction, build a team and raise some money. Basically, we match amazing entrepreneurs with ambitious ideas and, for 18 months, provide the energy, passion and rhythm to help the company stand on its own two feet. This requires a dedicated team, stable product, strong go-to-market strategy and source of financing.


We often find ourselves head down, hurtling towards the future. But, every now and then, it’s refreshing to sit back, take a deep breath and look around at what you’ve achieved. For eFounders, this means the launch of 5 independent companies in our first 4 years. Since setting out in 2011, we’ve learnt a lot about making a startup studio more effective. We’ve also understood what kind of businesses we’re good at building, which resources can be pooled and the importance of rhythm. More than anything though, we now know what kind of co-founders we want to work with and the best way to work with them. With this knowledge and experience, almost 2 years ago, we decided to go one step further and increase the size of our core team from a handful to 15 people. The aim? To launch 4 projects in parallel, every year! The first batch of products were released a few months ago. And, 4 shiny new projects are already being developed ready for 2017.

A few figures

It’s rather perilous to take stock of 5 years of intense labour. It’s a long period, but still too short to be truly impressive when it comes to the numbers. Surrounded by staggering fundraising successes and hyper-talented unicorns, we can have trouble assessing more modest achievements. For the following (approximate) figures, we’ve therefore only taken our first five companies — Mailjet, Mention, Textmaster, Aircall and Front) into consideration.

Today, more than 250 people are currently employed by these 5 companies, mostly in Paris, New York and San Francisco. They have a combined value of more than $125M, taking into account last-round valuation for 4 of them and a fair multiple of MRR for Mention, which last raised money a couple of years ago now and has grown alot since. Total MRR (Monthly Recurring Revenue) for the 5 companies is $1.5M. Textmaster is the only non-subscription based company and I empirically discounted its revenue by 25% to get a sense of its MRR as repeat is very high. Collectively, they have raised around $50M (Mailjet: $17.5M, Textmaster: $8M, Mention: $0.8M, Front: $13.1M and Aircall: $11.5M) from French VCs like Alven, Seventure, Serena and Iris Capital; European VCs like Point9 and Balderton; and more recently also in the US with Social Capital, FJLabs or FundersClub.

I think it’s also worth mentioning that these figures have more than doubled every year since eFounders was founded in 2011. For example, last year at the same date, the companies were worth $60M, raised about $30M (Mailjet $17.5M, TextMaster: $8M; Front: $3.1M; Aircall: $0.8M; Mention: $0.8M) and had a monthly recurring revenue of around $800,000. Let’s just hope the growth spurts continue!

Rubbing shoulders with the VCs

This year, we’ve got to know every inch and corner of the VC community. We’ve met and developed strong relationships with many of the top VCs in Europe. Although we aren’t meeting VCs to pitch projects, it is important for us to evangelise the “startup studio” model and explain who owns 50% of the company they’ll invest in. Let’s be honest, our model isn’t always initially well received or fully understood.

The first concern is usually about the entrepreneurial mindset of our founders. The second is whether the founders have enough incentive. And, last, but by no means least, the question of eFounders’ equity. I will try to address these three points as clearly as possible, but I have to confess that VCs behave rather irrationally. They are reticent because the model is new and differs from the norm. But, in the end, good VCs want to invest in good companies. Period.

VCs often say that our founders aren’t “real” entrepreneurs because they didn’t generate the idea themselves. But, the idea always comes from someone in a founding team. The person with the bright idea is no more entrepreneurial than the other founders. Ownership is what matters.

The second problem is a lack of incentive for our founders. If you do the maths, you will see that two founders get exactly the same amount of equity at eFounders as they would with 3 founders and an honorable pre-seed round. If not, we wouldn’t be able to attract the best talents.

The third perceived obstacle is the amount of equity we own as a passive shareholder. However, rightly or wrongly, I think that a huge amount of value is created by incepting a project, gathering a team and providing the right rhythm and reflexes over a period of 18 months. For me, this justifies the first 25% and the remaining 25% corresponds to the money invested. That said, I also think that shares are a reward for the future. We want to boost and support our companies in the long term by not only providing strategic advice and helping with recruitment (this comes as standard), but also bringing real, actionable value to bridge the talent gap.

Talent Gap

You’ve all heard about the equity gap, the difference between the capital that should be invested in a company and the capital actually invested. Well, the talent gap is exactly the same but for human capital. It is the difference between the team a startup should have and the team it actually has. This usually appears just after the first round of financing. The company has the funds, but it doesn’t have the reputation or the structure to recruit the best talent.

Our companies become fully independent after 18 months at eFounders. This is a fundamental part of our philosophy and vital if the company is to develop its own culture (and success). The company flies the eFounders nest after some serious fundraising, usually via a generous seed round. At this point, the company enters into a talent gap, which can last for more than a year.

This gaps opens up when a company needs to hire a lot of talent, but doesn’t have the right processes or flow of candidates. And, it can have disastrous results including ineffective operations, wasted time and lost money. Part of the problem can be solved relatively quickly by putting someone in charge of hiring. Personally, I think that fast-growing startups with teams of more than 20 people need an in-house recruitment manager. Sadly, the remaining bulk of the problem requires patience. It takes time, and promising results, to attract strong candidates.

We’re currently mulling over the idea of offering “shared services” to our independent startups. This would be kind of an agency exclusively available for our startups and billed at cost price. Marketing, sales and PR would be the first services on offer on a time-limited basis. Although we want to offer unfair advantages to enable our startups can go faster and further, we also want them to become fully fledged and independent. Imagine a world where you have your own SaaS PR specialist rather than opting for a low-budget agency candidate.

VCs often ask us what we will bring to the table in future to merit so much equity. I often wonder what the value of “bringing into existence” is for them. Then I remember that we also have a duty to always do our best for our companies. Now that we have a larger portfolio, we can envisage bigger, better and more amazing extras like Shared Services.

The Great Communication Challenge

We’ve been hidden under the radar for the last 5 years. Because, if you want to create something big, you need to focus on what is most relevant for you. For us, this meant being 100% involved in building our startups. Now that we’ve built a strong team, we can also dedicate bags of time and energy to the vital task of promoting and communicating about eFounders.

Being visible is vital for eFounders as the single most efficient way to attract the best talent. From now on, we will be shouting out about studio more loudly and more often with the help of lots of fresh news. With a wider portfolio, we’ll be naturally generating a growing amount of eFounders-related news about everything from new services to fundraisings and, hopefully, exits!

We also believe in being transparent — this yearly letter is a prime example. This means sharing everything and communicating openly, with the exception of new projects we want to keep under wraps until they are ready to hatch.

When launching a new concept, you often feel that everyone is copying you. This feeling is explained by two phenomenons. The first is called Multiple Discovery and explains why inventions arrive at the same time. The second comes from the confirmation bias and explains why when you discover something new, you start seeing it everywhere. That said, they are also a fair number of eFounders copycats around. It’s great to have friends sharing the same passion, but this can get a little too claustrophobic. For example, our Spendesk product, started in 2015, has been a great source of inspiration for others.

While we’ll be communicating more about eFounders, we’ll also be doing our best to be more discrete about our fledgling projects. You’ll have to wait a few months before finding out all the details, apart from the project code names e.g. NoteX and BrowserX.

Fresh inspiration

Often people ask us how we come up with fresh, original ideas. The truth is it’s much easier to find something when you know what you’re looking for. We build software for companies with between 20 and 2000 employees. And, although this is still a huge market, but the search scope is automatically reduced. Above all, we’re hunting out software that companies will use on a day-to-day basis. The stickiness generated by this type of product creates a lot of value and is a good indicator of business profitability.

Slack is, without doubt, one of the best example of this kind of tool and also our biggest regret. Back in 2005, I used Skype from day one at Fotolia to manage my team. We were all working remotely and most of the company activity was conducted via skype, either through one-to-one conversation or dedicated rooms. With eFounders, we replicated the same working processes on Skype, then Hipchat and now, of course, Slack. When I discovered HipChat, I realised that we missed a huge business opportunity, Skype was doing the job, but wasn’t really designed for team use. I was rather dubious when Slack arrived and it took me few days to switch everything over. Something I certainly don’t regret today. Hipchat understood very early on, in 2010, that there was an opportunity to create a more sophisticated business chat solution. 5 years later, Slack transform this opportunity into a new category of software. Slack didn’t only bring chat to businesses, but also managed to create a new kind of ecosystem through bots and an open API.

And, we want to transform other industries in same way Slack did internal communications. We started putting this in practise a few years with Front and Aircall, which are both good examples of products that employees spend a lot of time using. Support teams spend hours everyday answering tickets and calls.

The same applies to Spendesk, which was inspired by the huge amount of time companies spend on processing payments. Our admin interface product, ForestAdmin, is another example of an everyday product and now serves as the backoffice for all our new businesses.

Our latest projects take this philosophy even further with services that can be used by any kind of company, every day of the week. It’s really exciting to work on this kind of product, but also risky as alternatives and ingrained habits often already exist. To enter these markets, you need to bring a serious amount of added value and differentiate yourself to stand a chance of succeeding.

A model employer

Great ideas are nothing without a great team. Year after year, we realize just how important it is to find the right people. Not only the best entrepreneurs to lead projects, but also the first employees to join the team during the 18 months before the company is fully independant. Today, the quality and quantity of tops talents reaches us has skyrocketed.

In total, we receive more than 150 applications a month including founders, hackers-in-residence and associates either via our website or referral. It sounds like a lot, but it’s still not enough. This year, we’re focusing on our employer brand. Our goal is to be considered an exciting job alternative by every top-tier candidate. The idea is to attract the best talent by returning an image of excellence. This image has grown naturally, but rather chaotically, over the years and the challenge is now to make it more visible.

Startup Studios are becoming a real alternative for young graduates. Times are changing, young people don’t necessarily strive to work for international corporations, the big four or the financial industry anymore. Graduates from top engineering school now consider working for startups even in developer roles. They are right, they know what is good for them. Working for a start-up and getting your hands dirty is an excellent way to discover the “world of work”. However, we mustn’t get carried away, eFounders isn’t the only alternative. They are other studios and types of structure than can offer amazing possibilities too. That’s why it’s so important to define what makes us different.

The new generation of workers isn’t only looking for a job as a way to make money, but also to fulfil their potential and enrich their lives. They genuinely want the world to be a better place and believe that it is possible. Increasingly during job interviews, candidates ask us about our values and what we are trying to achieve with eFounders.

To be or not to be a startup studio?

People are often ask me why I decided to build a startup studio, instead of launching a more “classic” startup. And, my answer is always two-fold. Firstly, the content of the job and secondly the beauty of the model. Both are obviously closely linked.

My vision may be rather simplistic, but launching a software startup is about building the best product for as many people as possible. This involves developing the right product, raising money with the right people, boosting your visibility, structuring the company and eventually selling it. This is exactly what I did with Fotolia. Yes, there was room for improvement and I could definitely have learnt a lot more by doing it all again. But, although I was keen to stay in the software industry, I wanted to test a different approach. The startup studio model is new and largely untested. The rules for structuring the studio, convincing people to join the venture, performing day-to-day operations, pooling resources and financing the structure are yet to be invented. And, this is exactly the kind of human adventure I wanted to embark on with my business partner Quentin.

The second reason is the virtuosity of the model. When the first company you created at 24 years old is sold for $850 million, you feel obliged to demonstrate the famous quote, and title of Sarah Lacy’s Book, “Once you’re lucky, twice you’re good”. How to build something even more valuable with the highest chance of success? We all know that luck and timing are big success factors. Quentin and I dreamed of creating a model that was as scalable as a software company, as diversified as a VC Firm and as agile as a startup.

Scalable as a software companies because eFounders comprises the aggregated value of a collection of other software companies. This value creation is significant because we have founder shares in our portfolio companies, which cost us much less than they would an investor.

Diversified as Venture Firm because eFounders is a portfolio company. We have built 9 startups so far, but should have more than 20 in our portfolio within the next 5 years. The risk is definitely limited by not putting all our eggs in the same basket.

Agile as a startup because eFounders is structurally built to stay small. Even software companies require hundreds of employees to create high revenues. Whereas, in our model, newborn startups leave the nest after 18 months. This means that whatever the market value of the studio, there will never be more than a few dozen employees.


It took us about 5 years to fit what it means to build a startup studio into a nutshell: matching the best people with the right ideas and providing energy, rhythm and unfair advantages. The biggest challenge? Without doubt, picking the people. This year, we’re continuing to focus on recruiting talent to provide our companies with the highest chance of success. As for inspiration, don’t worry, we’re as ambitious, daring and crazy as ever, although we’ll be a more guarded in future. Stay tuned to find out what’s in store.