Most founder advice treats the big decisions as growth decisions. Raise the round. Hold out for the big exit. Stay until the end.
Justin Beck and Matt Howard have made every one of those calls, and their stories keep landing somewhere else. The decision that mattered was turning down an offer. Or selling the hit and keeping the team. Or walking away from the company you started.
They're the first two guests on Lasting Growth, a new series inside the Startup Wisconsin Podcast hosted by Laura Strong, Co-founder and CEO of Valency Fund. Laura sits down with Wisconsin founders about the big calls behind companies that last: when to raise, when to sell, and when to let go.
Both guests started companies as UW-Madison students. Justin co-founded PerBlue in 2008, built hit mobile games including Dragon Soul and Disney Heroes, and later started Playback Rewards. Matt started EatStreet in 2010 as a junior, grew it to 350 full-time employees plus 4,000 W-2 delivery drivers, and now runs SeriesUp, a fractional CFO and COO firm for early-stage companies.
When should you raise money?
Neither of them started by raising. Matt didn't know it was an option.
“We didn't even know that venture capital was a thing. We legitimately thought that that's how you did companies.”
- Matt Howard, CEO, SeriesUp
His dad had started a machine shop and grown it without outside money, so that was the model. EatStreet bootstrapped for about two and a half years, faxing orders to restaurants and taking cash on delivery. Then Scott Button judged a business plan competition EatStreet won and told Matt he should look at venture capital. A lunch table conversation at a startup conference led to the first outside check, from gener8tor.
Justin's early funding was a patchwork. A roughly $20,000 grant from Google after an Android developer competition. About $40,000 to $50,000 from family. And a server tucked into a student org closet on campus. PerBlue's first game, Parallel Kingdom, was a location-based game built for the brand new smartphone GPS. The team added a revenue model right after graduation, and it started making money.
Then Zynga offered an acqui-hire worth a few million dollars, with a move to San Francisco attached. Justin said no and raised about $800,000 instead, led by the Golden Angels out of Milwaukee. The offer he turned down made that round easier to raise.
“That's the best way to engineer the round for your success, is just to have so much going for your favor and being able to just not need the money.”
- Justin Beck, Co-Founder, PerBlue
Once EatStreet raised, Matt stopped treating outside money as a risk and started treating it as math. The next round was $10 million for roughly 20% of the company.
“Yes, I personally now own 20% less of the company, but can I make my smaller portion worth more in the end? And if the answer's yes, then why wouldn't I take the money?”
- Matt Howard, CEO, SeriesUp
The math only works when the money speeds up something that's already working. Laura made that point on the episode, and EatStreet's Series C shows it. Before raising $30 million to bring delivery in-house, the team ran last-mile delivery as a test in Madison and grew its restaurant list from about 150 to over 600. The board still didn't want to do it and told Matt his job was on the line. The data won.
Matt also has a gripe with how the Midwest funds early companies. At his $2.5 million Series A, investors wanted every number. He thinks that level of scrutiny belongs at Series B, and that a Series A should still be a bet on the founder and the plan.
If you're weighing the same question, start with whether your company actually wants venture money, then browse the investors, funds, and grants in Wisconsin. Laura's own earlier episode covers funding alternatives and growth capital for Wisconsin startups if venture isn't the fit.
When should you sell?
By 2016, PerBlue had gone about eight years without a return to investors. Justin could feel a tiredness in the cap table. They hired a banker and shopped the whole company. Nothing came back that was exceptionally compelling.
The deal that worked came out of a side conversation at a conference with a US operator from Gree. Gree wanted Dragon Soul, the hit game, and not the team. Dragon Soul launched in October 2015 and sold in October 2016, when it was doing about $3 million a month and made up roughly 95% of PerBlue's revenue. PerBlue kept the team, the core technology, and its other projects, spun them into a new company, and kept going. That company went on to build Disney Heroes.
Laura pointed out the part that's easy to miss. A sale like that gives investors cash they can put into the next company, instead of waiting another few years.
Selling also runs on a clock. Justin turned down a strong offer during the Disney Heroes run and still thinks about it. Years later, a whole-company sale got all the way to a signed LOI and fell apart one week before closing, with no explanation. PerBlue went from 90 people to 30 through three layoffs. Looking back, he thinks they negotiated that LOI about six weeks too long. Time kills all deals.
EatStreet never got its sale. Matt tried multiple times. Then DoorDash raised close to $2 billion from SoftBank and flooded EatStreet's markets, and the more than $55 million EatStreet had raised couldn't keep pace. Every full-time EatStreet employee had stock, and that's the part that stuck with him.
“The thing that really drove me was knowing that if I put a million dollars into an early employee's bank account, the good that they would do with that.”
- Matt Howard, CEO, SeriesUp
He thinks that's why Silicon Valley works the way it does. Early employees get paid out, then take the next risk themselves. Wisconsin needs more of those exits. For a closer look at one that did happen, Nick Myers walked through selling RedFox AI, a Madison healthcare AI company.
When should you let go?
Both founders wish they'd made this call sooner.
EatStreet went from 350 full-time employees to 100 over about two and a half years. Matt calls it the worst stretch of his life. He stayed because he wanted to be there when the company sold, and because EatStreet had become his identity. Eventually he told the board, “In six months, I'm done.”
“Leaving EatStreet was the hardest thing I've ever done, but also the best thing I've ever done.”
- Matt Howard, CEO, SeriesUp
Now he tells the founders he works with what he wishes someone had told him: you don't have to run this company. He sees the opposite as the bigger warning sign. A founder putting expenses on a personal credit card after raising a couple million dollars should probably call it.
Justin stepped back to executive chairman of PerBlue after about three years of running a 90-person company mostly through deals and middle management. He was burning out.
“If I were to go back in time, I would've fired myself probably four years earlier.”
- Justin Beck, Co-Founder, PerBlue
His other regret is not shrinking sooner. Disney Heroes was running at around $50 million a year and was still profitable when growth stalled. Instead of cutting back, paying down debt, and building up cash, PerBlue launched more products to keep the venture story going up and to the right. A family business, he pointed out, wouldn't keep putting millions in with its head in the sand.
“If you're retooling from a cash positive perspective, your brain cells, your IQ is a lot higher than when you're retooling and you're burning cash.”
- Justin Beck, Co-Founder, PerBlue
His next company, Playback Rewards, raised $2 million up front, then couldn't close another round once AI soaked up investor attention. The team sold the platform to AdAwake, tried a pivot, and wound the company down when the new direction didn't get far enough. Justin thinks making the pivot call a few months earlier might have been enough. Either way, he tried to end it well.
“I want really good last days. Everyone has good first days.”
- Justin Beck, Co-Founder, PerBlue
If you're the founder who can't picture stepping back, Michael Ceely's episode on helping founders get out of their own way is a good next listen.
Why build all this in Madison?
Both founders were told to move. Zynga's offer came with a San Francisco relocation. Silicon Valley VCs told Matt they liked EatStreet but wanted the company out there first, without putting a term sheet on the table.
Both stayed, and both think it was the right call. Justin says PerBlue would not have survived its rough patches in San Francisco, because the team would have been poached. Matt points to lower costs, and to the EatStreet alumni now building companies and helping founders at places like StartingBlock in Madison.
Wisconsin founders make these calls with fewer people around who've made them before. Lasting Growth puts those stories on the record.
Where can you listen?
Start with Justin Beck on how PerBlue sold the game and kept the company, then Matt Howard on building EatStreet, raising $55M, and learning to let go. Both live on the Lasting Growth series page, and more conversations with Wisconsin founders are on the way.
