Interview with Jérémie Romand, a French entrepreneur living and working in San Francisco. He talks about seven areas which have marked his business adventure in Silicon Valley.
Jérémie Romand co-founded Wingz in 2012. This pioneering startup, which sees itself as a competitor to Uber and Lyft, enables airline passengers to book rides to and from the airport with private drivers via a mobile app. The service is currently available in six cities in the United States, including San Francisco, Los Angeles and, more recently Seattle.
In the Wingz launch publicity, we saw Jérémie Romand at the wheel of a car, playing the role of a private driver. Since then he has faced legal battles and administrative nightmares, but has also experienced a few happier episodes more worthy of a US-type ‘success story’, such as clinching decisive deals and raising some $13 million in funding. In this interview with L’Atelier, he highlights from his journey as Wingz co-founder six key issues which almost every fledgling entrepreneur is bound to come up against, at the same time giving the lie to some of the current myths and received ideas about Silicon Valley.
Cliché n°1: "It’s much easier to set up a company in the United States!”
Jérémie Romand: In 2012 we launched our peer-to-peer transport service, which puts people who need to get from one place to another in touch with those who have cars. Uber was already in business but with an on-demand premium limousine service. Lyft and – now defunct – Sidecar were also launched around the same period. The same year all four of us received an injunction from the California Public Utilities Commission (CPUC) – the organisation that regulates, inter alia, private transport companies in the state of California – ordering us to cease our activities. That was a real blow. The letter even threatened that a prison sentence might be imposed if we didn’t immediately comply with what was being asked of us! Very soon after, the CPUC launched a major consultation process with all the stakeholders concerned, including our four companies, the taxi and limousine firms, plus also local residents. The aim was to draw up regulation for these new services from scratch. The process took a year. One year of legal battles to get through! Each of the players put forward a regulation blueprint. Driver remuneration was a thorny point in the discussions, and some parties suggested using the word ‘compensation’ instead. Wingz presented an alternative approach: to limit driver remuneration to around $8,000 a year, which corresponded at that time to the official average cost of running a private car.
During these rather out-of-the-ordinary – and even more so for a young startup – months, we were happily surprised to be able to count Willie Brown, a former mayor of San Francisco and a well-known figure in the Bay Area, among our supporters. He argued in our favour in public. However the CPUC Commissioners ended up passing regulation which corresponded line-for-line with an initiative put forward by Lyft, including vehicle insurance, checks on driver backgrounds, car inspections, etc. As a result we had to change course in order to comply with the new legislation. Not many people know about what really happened. But it is this legislation that has enabled our industry, as it is today, to exist. Without it, I doubt that we would be in business and I’m not sure that Uber, in its current form, would exist either. In fact, California has been a real pioneer in this field, opening the way for all the other states in the Union that have since enacted similar legislation.
Cliché n°2: “It’s easier for a startup to raise funds in Silicon Valley” (part 1)
Raising capital is a real adventure. As far as Wingz is concerned, there are four main stories which serve to mark the phases we had to go through. Firstly, we were lucky enough to raise funds through Kima Ventures, an ‘early stage’ venture capital fund. Our collaboration was extremely valuable, with Kima Ventures adapting very fast to our needs. In the second phase however we endured some of the difficulties of raising funds in the United States. Our company profile was somewhat atypical for Silicon Valley. None of the co-founders, myself included, had been to Stanford or Berkeley or had worked for one of the US tech giants. We were also somewhat older than the average entrepreneur and, being foreign, we didn’t have a wide network in Silicon Valley. We had dozens and dozens of meetings with everybody we could find to meet up with. Basically it’s all about networking. It’s a very time-consuming long-term job, a bit like door-to-door selling!
Then followed a series of episodes, one after the other, some more promising than others. One of the less successful was an unusual meeting with a group of business angels in a small town in Nevada. We had the weird feeling that we just didn’t know what we were doing there and, sure enough, in the end none of them invested in Wingz!
However, we also experienced some scenarios which are very characteristic of Silicon Valley, for example during our most recent fund-raising drive. [US internet entrepreneur and founder of Salesforce] Mark Benioff sent us a one-liner email saying: “How about if I gave you $1 million?” A nice little anecdote, don’t you think? Lastly, we also experienced ‘corporate’ investment with Expedia [an American-based parent company to several global online travel brands]. Their approach to financing and their procedures are very different from that of a firm whose entire business is investment but this approach can be as worthwhile as the others.
Cliché n°2: “Being able to raise funds is proof of success in Silicon Valley” (part 2)
It’s high time that a number of clichés about raising funds from external investors were laid to rest. Some people think raising capital is something like winning the lottery. This needs to be put into perspective. Of course, entrepreneurs and startups will say that it isn’t too difficult to raise funds. However there’s certainly a common thread to all these experiences: they require a lot of attention and energy and are a source of major stress for the company co-founders. Moreover, you shouldn’t forget that when you’re focusing on raising funds, it’s hard to carry on running your company as you would in normal times, even when there are a number of co-founders on the team.
As the Spider Man character created by Stan Lee so aptly puts it: “with power comes responsibility”! People who invest in your company become members of the board. So you have to submit your accounts to them. They also expect your company to follow a given growth path. The ideal scenario would perhaps be simply not to have to look for outside capital at all, if your type of venture and your business model allows that. This is what happened for example to Jacques-Antoine Granjon, the founder of vente-privee.com, the French e-commerce company that pioneered online flash sales.
As a general rule, raising capital should never be an end in itself. On the other hand, consolidating your business model so that your company becomes profitable, succeeds in employing staff and managing its liquidity properly, that is a worthy goal! And if you do need to raise funds, you need to choose your partners well. Kima Ventures co-founder Jérémie Berrebi gave us his unstinting help and opened up the doors of his network to us, which is perhaps just as essential for a fledgling company as the actual amount of money the investor injects.
Cliché n°3: “An IPO gives a startup the seal of approval”
This is a real paradox. On the one hand an entrepreneur is set on long-term thinking, with a deep desire to see the company develop and post good figures. On the other hand I sometimes allow myself to dream of new ventures that I could start up tomorrow if someone made an offer to take over Wingz. Nowadays it’s very difficult – to say the least – to plan what might happen in the future, given that our industry is moving so fast. Don’t forget that we’re one of the competitors of the company that has achieved the strongest growth in the Internet era!
Cliché n°4: “The CEO must be one of the company founders”
In a startup, as in any working group, it’s important to have a team with complementary skillsets. Some months ago we realised that we were lacking certain skills on our team, especially on the finance side. So it seemed a good idea to bring in an external CEO who had a strong financial background. Making sure that liquidity is well-managed and also ensuring that our business model is working well – these are his responsibility today. But it was a long process. Finding the right person with the right profile at the right time is no easy task!
Cliché n°5: “The success of a startup stems from having the right idea”
A moment ago we talked about recruitment. This is another good example of what I was trying to say. A startup’s success depends to a large extent on timing, which is a factor that is not entirely under your control. At first we tried in France to build the equivalent of what is now Blablacar. We were probably too young and lacking in experience. It was also perhaps too soon…and we failed.
Cliché n°6: “As an entrepreneur in Silicon Valley you live the good life!”
In ten years of entrepreneurship, I haven’t earned very much for myself! From the first round of funding we raised, some dozens of thousands of euros, I invested everything in the company. However, the second round of funding allowed me to pay myself a small salary. At that time the idea was to have enough to live reasonably until the next funding round. So of course it’s important to have a good dose of endurance and passion. Without exaggerating too much, being an entrepreneur comes down to receiving ten pieces of bad news a day and one piece of good news a year! So having very strong support from your family – starting in my case with my wife – is an essential ingredient of success.