M&A, IPOs & Exits

The Workday IPO and ‘F You Money


Jason Lemkin

The other day, a VC asked me about a founder he was thinking of investing in.  He asked me if this founder had, quote, ‘F You Money.  {I learned how this was spelled when a Businessweek article this week used the term, btw}.

I wasn’t really sure if he meant this as a negative, but I assume so. I assume the assumption was that if the founder had made too much money in his last start-up, he’d somehow be uncontrollable or disaligned from the investors’ interest.

And also, intuitively we all want to root for the young kids doing the scrappy start-up.  It worked at Facebook.  It worked at Yahoo!  It worked at Google.  It worked at Microsoft even.  At all the winners of consumer web.  With only ramen to eat, a borrowed laptop here, an AWS instance there, out come the best consumer internet companies.

But with Workday going public at an epic $4 billion valuation, it’s time to step back for a minute, and note that many of the most successful SaaS companies were actually started not only by “old” people — but by rich people:

  • Salesforce: Marc Benioff was already plenty rich as a very successful Oracle VP and protege of Larry Ellison.
  • Workday: co-founded by a billionaire and a super-rich VC.
  • Yammer: a big success as an exit, founded by ex-COO of PayPal.

Why?  I think to do a true, pure enterprise SaaS play from Day One, you really have to go big the whole way.  You need an enterprise salesforce, and field reps, and field offices, and client success reps, and user conferences, and boots in the street.  You need product marketing and a marketing budget.  You need an engagement team and sales engineers and a pro serv team.

Certainly there are other ways to go.  The freemium-or-SMB-migrates-to-enterprise (i.e., tilt upstream) can be a way to defer some of these expenses.

But true success with true enterprise from day one requires going big from day one.  It’s hard to do that on ramen.

Published on October 1, 2012


  1. YES. thank you. The economics are clear – the bigger the initial investment, the bigger the return. And the issue is that few startups can get access to capital, and not all products are slated to be the next Facebook. We cannot find anyone interested in our product because it won’t go “big” enough (and we haven’t found the right Angel investor). Since we are building the product on weekend/evenings (since we also need to pay our mortgage), yes, it is languishing. That is the power of capital…

  2. Tom Siebel was already flush when I interviewed to be (potentially) employee #30 at Siebel systems. There are many examples. It isn’t so much a question of whether they have F You Money as it is whether their egos are bent on world domination at any cost. Those guys will endure any amount of pain to succeed no matter how crazy. Tom was in that latter category so I didn’t take the gig.

    Hey, there’s more to life than money, LOL!



  3. Having “F You Money” ensures the founder won’t chase small ideas, or compromise on principles of design, execution, or customer value, so I think most VCs like to see a founder who has it, actually.

  4. I would love to have F you money to tell my less brilliant potential investors I don’t need their advice, nor their money. However, I have SO enjoyed this journey, and met so many great people I would not have met had I started with $20M from some previous life. Also, some humility is necessary even when the founder starts with mucho dinero in his coffers. I tried to give Workday some well intentioned and genuine feedback when I was a customer in 2009. As a direct result of that experience, I have vowed never again to be a Workday customer.

  5. “It’s hard to do that on ramen.”

    Yes – but possible – Bootstrapping and “f you” have one thing in common – they stand on their own feet from birth.

    B2B may be an incremental sale via apps or BYOD etc

    But to be big often takes a central strategic sale: (the rare-eggs)

    I believe with there is some pattern in game-changing b2b disruption :
    – it involves trust and must initially be sold face-to face
    – possibly needs years of credible domain experience
    – relies on really strong networks
    – clients will evaluate what is on offer based on understanding – not whim (true 10x differentiation required)

    These speak to older teams and a long hard grind without funding (unless your own) until you hatch as a “live one”

    Such eggs don’t “incubate” or “accelerate” happily, are not seen in run-of-the-mill deal flow, don’t travel well and initially grow stepwise rather than with smooth SaaS metrics. They are rarely “laid” within the neat walls of a traditional start-up eco-system, be it in The Valley, Near Union Square or even Boulder (hat tip to Brad)

    They are often eventually funded by trade/strategic investors (rather than generic VC)

    Perhaps some may (just may) prove to be unicorn eggs.

    The collector of such rarities is not the typical VC or Angel and does not believe “follow investment” is the place to be, they may even be somewhat contrarian.

    Finding unhatched Unicorn Eggs requires visionary super-power even on the path least trod!

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