When we started Catchoftheday we were content to go it alone and we weren't actually looking for an investor. We had built a good‐looking business, won a bunch of awards and shown enough entrepreneurial talent for people to become interested in us. By early 2010, we'd started receiving a lot of interest from local and international venture capitalists, private and public companies, high net worth families and wealthy individuals. Companies such as Insight Venture Partners, Sequoia, Yahoo7, Level Equity, Bessemer, Intel Capital and others lined up to court us, valuing our business at $50 million one day, $80 million a month later. Wait! Do I hear $120 million? Is $150 million your final offer? Going, going … It was going nuts. We dated a lot of suitors. It was an honour to be invited for lunches and coffees with some very influential parties that we had only read about in magazines.
However, as the meetings progressed, we became more confused about why we were on the investor dating market in the first place. Our business was quite profitable, and we had the funds required for our projected growth. What were we actually wanting?
Still, we kept our minds open and were flattered that this little business, which had started just five years earlier, was now being courted by companies that had invested in Facebook, Apple and other unicorns. The upshot? We turned them all down and waited for our Prince Charming to arrive.
To be honest, despite the fact we had doubled sales every eight months and were fielding sophisticated investment offers from some experienced investors, we were not experts in finance at all and these fancy Sand Hill Road types were incredibly intimidating. Hand on heart, we didn't even know what CFO meant! We're not kidding. At this stage, we still had one book‐keeper and a part‐time accountant (Hi Vitalyi!). It was a lean operation. Looking back, we should have hired professional advisers earlier. We're big believers now in hiring the best advice you can, but back then, we didn't know enough to know what we were missing out on. These days, there's so much support for start‐ups: incubators, accelerators, angel investors, mentors, grants and more. We had none of that, but we didn't know any different.
The pressure was intensifying. We were being inundated with financial offers from the world's smartest money people at one of the busiest times in the history of Catch—with Groupon, the Goliath of group deals, breathing down our neck. We needed help to sift through the offers, and we went searching for it.
Here's a snippet of the email we sent to the smartest adviser we knew at the time:
We need your help. Our weakest link right now is on the financial side of the business. We're getting a lot of approaches and hearing terms like floating, board of directors, CFO, P/E ratio, and lots of other terms and would like someone external to come in help us make sense of it all and guide us to the next level. Is this something you can help us with?
We needed his advice because when it came to big business, all is not what it seems and without careful guidance you can make mistakes. Costly ones. We nearly made one by underestimating a young man called Lee Fixel from Tiger Global. He was one of the many venture capitalists who contacted us. We checked to see if he had an online presence (he didn't), so we basically ignored him.
The Tiger who came to tea
We made contact with Lee again, invited him to Melbourne and organised to have dinner at Rockpool at Melbourne's Crown Casino, the first time we'd stepped foot in this flashy establishment. We brought Anees with us, who was by now well and truly an integral member of our team. He balanced us out and often cast the final vote if we couldn't agree on something.
We knew what figure we were looking for from Lee. One hundred and fifty million dollars had been the top valuation we'd received from other investors, so we plucked $200 million out of the air as our desired valuation and decided that if we got that, we'd sign, and if we didn't, we wouldn't. The worst‐case scenario? We'd get a nice $200 steak dinner courtesy of Tiger Global.
Lee turned out to be the nicest, and smartest, 31‐year‐old guy we'd ever met. During dinner, he tossed us a question that we hesitated to answer truthfully for fear it would kill the deal. The question? ‘Tell me guys, if Gabby and Hezi got run over by a bus tomorrow, what would happen to Catchoftheday?’ We answered it the only way we knew how—honestly—and admitted that without us, there would be no business. He appreciated our candour, and then proceeded to ask us what price we were seeking. We were so nervous we couldn't even bring ourselves to verbalise the words. Fortunately, we had Anees there and his job was to deliver the news. Anees dropped the magic figure: two hundred million.
We watched Lee like a hawk, trying to stay calm and nonchalant. Lee put down his steak knife, took a sip of his red wine, looked at each one of us, smiled and replied with one word:
We hugged, ordered another bottle of wine and celebrated into the night.
Life at Catchoftheday was never going to be the same again.
Life, in fact, was never going to be the same again.