Keith Jacobs and I had known each other and worked together fairly closely for about 5 years when he wrote a check for $16,000 so I could quit my job and start Sifter. What’s more interesting is that after writing the check, he didn’t look at the results of his investment until Sifter launched. Imagine writing a check for $16,000 and not looking at the results for 11 months. That kind of trust is incredibly important. The way Keith looks at it, he wasn’t investing in Sifter so much as he was investing in me.
Keith isn’t just an investor in Sifter. He also handled and continues to handle most of our legal, accounting, and non-technical operational business matters. Keith’s investment combined with his experience and willingness to handle the logistical stuff was key in freeing me from worrying about some of the facets of building a business that are necessary but less than exciting. All I had to do was worry about the product.
Ultimately, we only spent about $10,000 of that initial amount prior to launch. It paid for our incorporation, business insurance, identity design, and initial infrastructure costs like hosting and SSL. Fortunately, Sifter was profitable from day one, so we never had to dip into the other $6,000. However, it ended up being important after launch as it provided us the cushion that we needed to do some early advertising and help get Sifter’s name out there.
There’s no one way to launch a company. I’m pretty sure that I could have launched Sifter on my own without Keith’s investment or help, but it would have been painful. Maybe too painful. There’s no perfect formula for a co-founder or investment amount. It all depends on what works for you. In my experience, all you need are a solid respect and trust for each other combined with a situation where everyone has enough skin in the game. In our case, Keith put up his cash, and I quit my job. Admittedly, Keith probably had a little more risk, but I was certainly doing more than dipping my toes in the water.
Probably the only other relevant tidbit from founding Sifter was that we knew from the beginning that I’d retain the controlling interest and be responsible for curating the product. Fortunately for us, we both recognized the importance of this decision. At some point, somebody has to always have the definitive answer. In our case, while I discuss everything with Keith, I’m ultimately responsible for the decisions.
It’s not the perfect founding story, and there hasn’t been any drama to make it interesting, but it’s worked great for us. It may not be particularly fascinating, but hopefully it helps provide some context to others looking to start their company.