Full Transcript

Jason Kirby: Hey everyone, welcome back to fundraising demystify. Today we have Dan Reich, serial founder, exited founder, and investor joining us on the show today. Dan, welcome to the show.

Dan Reich: Hey Jason, good to be here. Thanks for having me.

Jason Kirby: I'm excited to have you. You have an impressive story of multiple ventures, multiple exits, raising across over a decade of experience. Can you just give the audience a little bit of background on your first entrepreneurial effort and what that's evolved to over the last 15, 20 years?

Dan Reich: Yeah, certainly. For me, it all started in high school. That's really when I started my first company. What happened was I got really into the internet and technology, tinkering with AOL and all of the things from that period of time. And this company called eBay popped up. So I went down a rabbit hole trying to figure out what I could buy and sell. I ended up buying bouncy balls wholesale off of eBay and I would bring them to school and sell them at retail to my friends and people I didn't even know. Big bouncy balls were 50 cents, little ones were quarters, and I made a good amount of money. I was selling them out of my backpack and locker. Eventually I made a good amount of money for a kid in high school, got tired of doing it, gave them all away, created massive chaos in the hallways with bouncy balls flying everywhere—ended up getting suspended for that—but that was my first foray into hustling, for lack of a better word.

Dan Reich: A friend of mine saw this and said, well, Dan, you know this thing called the internet pretty well—what we now call e‑commerce in particular. He said, my dad knows a guy that has urban apparel he sells wholesale. Maybe we meet with him and maybe there's a world in which you can do what you did with bouncy balls, sell them, but we use him as a partner to get the product. I said, sure. Let's take a trip to meet him at the Jersey Shore—which is foreshadowing where the story ends. We hop in my car, drive down, and get into this warehouse. Folding tables everywhere with clothing: Rocawear jeans, Apple Bottom, Sean John, etc. He says, look, I've got all this product. I know how to do fulfillment and drop shipping, but I don't know the internet thing—and you do. Why don't you build a website, handle sales and marketing, and I'll handle the rest. Great. So we create a partnership. I built the website. I set up a computer and a credit card processing machine at my house. I hired a customer service rep—by which I mean my mom.

Dan Reich: I'd get up at six in the morning, run Yahoo and Google ads, go to school. While I was at school, my mom handled orders and customer service. I'd come home and reconcile orders and ads. Rinse and repeat. It was going really well until we started getting a bunch of customer complaints and issues. After enough of them, I went back down to meet my partner—“what is going on?” He reassured me it was circumstantial and would be better. So back to work I went. Play it forward a little more: the complaints kept coming in, to the point I got a very specific threat—essentially “do right by us, we know where you live,” with specific details. At that point I shut the business down. We lost around $2,000 my parents had invested.

Dan Reich: A few months later, my father comes home with a local newspaper: “look at page six.” I open it and there’s my partner in a giant photograph getting arrested by the FBI for grand theft—stealing goods off the back of trucks, like The Sopranos. That was my first lesson in business. Two key takeaways: first, building businesses is incredibly fun—addicting. Second, the most important business lesson is to choose your partners wisely. I was fortunate to learn that early. Every business since then I optimize for partners, co‑founders, colleagues. Get that equation right and you're set up for success and also to avoid failure—you also optimize for fun and avoid misery at work.

Dan Reich: Fast forward: I graduate high school and study electrical and computer engineering in college. I joined a frat. Our frat got kicked off campus after a huge Halloween party. College‑me was super sad with nowhere to go on weekends. I went to a local restaurant that let 18+ in, whereas most venues were 21+. I said, I'd love to throw a party here. We'll sell tickets and donate proceeds to the Red Cross. He agreed. We threw the party, it was a huge hit. The next day: “When's the next one?” I talked with my engineering friend: “We should do more and turn it into a company—and my father’s an attorney; he can help the legal stuff.” Game on. We started Runaway Productions: started as a party company and evolved into an events and marketing company. We'd throw parties and bring in local and national advertisers to pay for the events and promote their brands to the college demographic. We did a handful at our college and others—we franchised it. It was a ton of fun.

Dan Reich: Every year I'd go to CES with my boss—I was building computers in high school. I stumbled into a booth making speakers and headphones—crazy cool. The founder said, “Dan, work for me.” I said I couldn't drop out, but I’d love to work together. I said, “I have this events company—send me product and I'll promote it and give it away at a party.” He said, “We haven't done that. What else?” I asked for a banner to hang behind the artists. He agreed. I get a box of headphones and a banner—we throw a huge party. That was the first live event Skullcandy had ever done. Years later at a big concert I saw huge Skullcandy banners—I remember day zero. That was my second company. It got to the point my roommates helping promote events wanted to compete with me—which would be awkward in a shared room. I said, become partners: I'll give you half the company; you do the heavy lifting; I'm going to build another company with my engineering friends. We started TheCampusAtlas.com—a student portal with everything in one place: class schedules, professor ratings, drink specials, weather, email—rolled out to ~8 campuses. We started fundraising—this was the Facebook era: “we can be Mark.” Graduation approached. I connected with someone building in online advertising—he'd helped build Advertising.com (sold to AOL for $535M) and was building a next‑gen version with others—one partner was Yahoo’s first sales guy. Too intriguing to ignore. I put Campus Atlas on hold and became an intern at Lotame. We grew from ~10 employees to over 100 and from single‑digit revenue to many tens of millions. I saw a high-growth venture‑backed company up close. Incredible. Then I wanted to build my own company again.

Dan Reich: I reconnected with two buddies from college and started Spinback. This was the Facebook era. Every brand knew they needed social, but didn’t know how, what it meant, or how much money they made. We solved that: we helped online retailers measure how much money they were making from Facebook. We raised a convertible note from friends and family—embarrassingly little; effectively bootstrapped—got it to the point of raising venture capital. Crazy story: we pitched First Round Capital—the firm we wanted. Feedback: “You’re too young for B2B enterprise sales; you need a real enterprise sales expert (they named someone), and you don’t have enterprise customers.” Over the next month or two, we did the things they said we couldn’t. We flew that sales expert out, got him excited—he even told the investors we didn’t need him. We also signed enterprise customers like QVC. And we got another term sheet. We showed up at First Round’s office: “We did the things; we have another term sheet; we still want you.” Hours later: “We’re in.” We signed it.

Dan Reich: In parallel we had partnership conversations with complementary players, particularly Buddy Media—the leading Facebook B2B platform with massive distribution and publishing tools. They didn’t have our hardcore ROI analytics. Obvious 1+1=3. But we’d just signed First Round’s term sheet. Mike Lazerow at Buddy Media said, forget the financing—come partner with us; we’ll lock in value now and add fuel to the rocket ship. We had two term sheets. We locked ourselves in a room for ~two days. We concluded: Facebook would likely go public soon at a massive valuation; the market would ask who’s the leading B2B platform on Facebook—it would be Buddy Media. Through that lens, Buddy Media’s upside looked big. We ripped up First Round’s term sheet (they were cool about it) and merged with Buddy Media. Thirteen months later, Buddy Media sold to Salesforce for ~\$725M. Amazing ride. Mike and Kass built an incredible company. We were fortunate to be part of it.

Dan Reich: As the deal approached closing, I realized I still hadn’t built my company. Staying at Salesforce—a great company—might lead to promotions and money, but that scared me more than leaving. I left the day we closed and spent ~a year and a half figuring out what to build next. I thought we had so much white space left with Spinback. I reconnected with many old customers—L’Occitane, Under Armour, QVC and more—pitched a new software idea. Most were in; QVC was especially excited. They asked my thoughts on a strategic initiative: the world was moving from TV/radio/print to digital; their on-air shelf space is finite, but the internet’s shelf space is infinite, and they hadn’t done that before; beauty was the fastest-growing category. “What about launching a beauty company as a digitally native launch?” For them: prove a business model. For me: build a brand. I knew digital and their business, but not beauty. I knew someone who did.

Dan Reich: I worked out of Great Oaks Capital’s office; another person there had started and sold Bobbi Brown Cosmetics. We looped him in. Lunch became several meetings with QVC’s execs. We realized: we had the third-largest retailer saying they must make this successful, and we had the pieces. I shelved software and became a beauty entrepreneur. We started a beauty company (TULA). Unlike tech, it’s CPG; we didn’t want venture capital or tech valuations—we aimed for profitable growth and financing accordingly. We self‑financed; each co‑founder (Ken Landis, Dr. Roshini Raj, and me) put in money for product development; then a bit more; then a bit more. We needed working capital—physical products require cash up front. We did a friends-and-family convertible note at an embarrassingly low valuation—this was risky and I wanted them to get a great deal. We launched with QVC, turned on DTC, it went well, built a team. In a product meeting staring at eight lab samples deciding citrus vs lavender, I thought, “What am I doing?” Despite traction, I needed to get back to software. Julia Strauss would become CEO; I stepped back to build software. The business worked; we needed growth capital to roll out to Ulta. L Catterton invested and led growth. That was the last round—we built profitably and scaled. At exit, it’s reported we did about \$150M in sales when we sold to Procter & Gamble.

Dan Reich: Then I started Troops.ai with Scott, Greg, and Will. Salespeople build relationships but end up doing data entry in CRM. At the time, six of the top ten most-used apps were messaging. What if you could talk to your CRM—like texting your mom—or like Jarvis from Iron Man for sales? We took a contrarian view on database UX and started on Salesforce, the 800‑lb gorilla. We saw another startup building a similar chat product. In a week, they (Slack) announced an open API, eye‑popping user growth, and an \$80M fund. It looked like Facebook but for the enterprise. We went all‑in on Slack. We raised from First Round (finally got to work with them), plus Slack Fund (their first Series A and B checks), and others. We worked with amazing companies—Slack, Salesforce, Shopify, Spotify, Twilio and more. For most of the journey it felt like chewing glass—convincing the world to use CRM in a new modality. Then Salesforce bought Slack for nearly \$30B; the tide turned. Shortly after, Troops was acquired by Salesforce and Slack to add fuel and de‑risk integration.

Jason Kirby: Good question here—coming back to Salesforce after the Buddy Media sale, then selling again: what was that like?

Dan Reich: When it became obvious the Salesforce–Slack deal was happening—and our posture might shift from “keep people out of Salesforce” to “aid the new vision”—I reconnected with former colleagues from Buddy Media, especially Patrick Stokes (then running platform at Salesforce). We discussed partnership scenarios—this was publicly a priority. After Slack’s direct listing (we were invited to the NYSE—amazing), Stuart Butterfield often mentioned Troops in earnings calls as exhibit A for Slack’s platform powering mission‑critical processes beyond dev/IT into revenue teams. Both Salesforce and Slack knew we could play a role. Partnership talks evolved naturally into “let’s do this together.” By then, Slack was an investor and customer; we powered their global revenue team for four years. Salesforce was also a customer and channel partner. The acquisition was a natural progression, not a cold start.

Jason Kirby: And post‑exit—your tenure at Salesforce thereafter?

Dan Reich: It was incredibly validating—people thought we were crazy for years, then the Salesforce–Slack deal proved the thesis. I wanted to roll up my sleeves with Salesforce and Slack leadership, but there was massive change; key leaders at both companies left. Opportunities presented to me were bigger in title but less fulfilling than the Troops mission. I made it clear I didn’t want a bigger role—just to focus on product. They did layoffs; I was included—amicable and honestly thankful. I can’t sit on my hands; I love building. I had already funded and incubated another beauty company (DIBS Beauty, with L Catterton as investor). Now I’m trying to build and start more companies with amazing people—acting like turbo fuel to the co‑founder/CEO.

Jason Kirby: That’s an incredible journey—from bouncy balls to SaaS and CPG exits. Since the show focuses on fundraising: across the businesses you've built, how much have you raised in aggregate?

Dan Reich: Spinback: a few hundreds of thousands before exiting to Buddy Media. TULA: north of \$10M. Troops.ai: about \$23–24M. DIBS Beauty—confidential, but L Catterton invested. I’m launching another beauty company this year with a seed round of a few million. For companies where I wasn’t the primary operator: Buddy Media raised on the order of \$100M; Lotame had raised \$30–40M around that time. I’ve seen and lived the fundraising arc.

Dan Reich: What many founders get wrong—myself included at times—is thinking fundraising is the end game. Raising a lot at a big valuation becomes the celebration, justified by X months of runway. Wrong framework. You raise to hit specific milestones that require outside capital. Historically: pre‑seed (idea → something tangible), seed (get into market), Series A (prove repeatable scaling to a finite group), B (scale), C (scale toward IPO), then maybe IPO or further. Those are milestone‑driven raises. When money was free, people optimized for dilution and vanity. The goal is not big rounds or valuations; it’s building a profitable company you can sell—privately or publicly. If you take outside capital, you must return it with gains—there are only a few ways to do that. You need a clean incentive structure so you and your investors can honestly decide when to sell or keep going. Getting ahead of your skis creates broken incentives and makes hiring and exits hard.

Dan Reich: Today I see two interesting camps in software: (1) teams that can go far with little capital—bootstrap/light seed to profitability (I’m an investor in some; their updates start with “we’re profitable”). (2) Deep tech that justifiably needs a lot of capital (semiconductors, fiber, humanoid robots, cars, genetics). Then there’s a middle bucket that’s easy to get wrong: raise a bunch for SaaS, spawn 30 copycats funded by other VCs, race to the bottom on price and features—hello zombie SaaS. It’s better to learn fast whether you’ll win or die, then move on, rather than float in between.

Jason Kirby: I wish founders would take advice sooner. Many keep going when signs are clear they should probably give up.

Dan Reich: It’s tough. Sometimes the signs also point the other way. Chris Fralic at First Round would remind me: Roblox was flat for ~8 years, then went parabolic. At Troops we felt that at times; we had clear indicators—net dollar retention/expansion, customer feedback—that this was the future. Timing matters. But broadly, too many founders optimize for the wrong things in financing and forget first principles of building a successful business.

Jason Kirby: Venture is sexy—validation and big paper valuations; that’s a false North Star. The best capital often chases the better built, profitable businesses. On First Round—you said no, then yes, then no, then worked with them later. How do you manage those relationships so money is there when you’re ready?

Dan Reich: The companies that worked did so because of great relationships across the team—investors included. With First Round, Chris is a good friend and great human—someone you want to keep in touch with regardless of deals. You can’t do that with everyone, but you keep a handful of great people in your life; some become point guards to your forward—investors to founders. If you’ve had a win together (e.g., TULA with L Catterton), they’ll want to work with you again.

Jason Kirby: Important to keep relationships vibrant for more than just asking for money. You’ve also invested—what’s it like on the other side, as an angel or LP?

Dan Reich: I remember wishing and praying for a yes when raising money—and usually hearing no. It’s exciting to give back and be the yes sometimes, to help founders chase their dream. Angel investing is less about money (these are lottery tickets) and more about staying part of the ecosystem and helping new startups lay a foundation to win.

Jason Kirby: If founders listening want to approach you as an advisor or investor, how should they do it?

Dan Reich: If you want money, ask for advice; if you want advice, ask for money. It’s about avoiding overly transactional dynamics—you don’t want a bad marriage. Ask for advice so both sides can “date” and see if there’s mutual value. With me, I love hyper‑personalized, thoughtful outreach with an interesting discussion. That’s how I know if I can bring unfair advantages—not just a check. Otherwise I’d keep money in public markets. Be personal in outreach—not just to me, to anyone. You can find me on social as @danreich.

Jason Kirby: We’ll put links in the show notes. If you acknowledge me rather than AI‑skim my LinkedIn, you’ll likely get a response—even if it’s a no. Broad, copy‑pasted asks are easy to ignore.

Dan Reich: I still get emails asking to invest in Troops—after the acquisition. Do your homework. Be thoughtful, engaging, and deliberate. It makes a huge difference.

Jason Kirby: Dan, this has been great—insightful stories and a unique, successful journey across multiple avenues. Appreciate you being on the show and sharing with our audience.

Dan Reich: Thanks Jason. Thanks for having me.