This 34-year-old went from a six-figure corporate salary to $100,000 in debt running his start-up — here’s what he learned
Rodney Williams left a cushy corporate gig with a six-figure salary to build a start-up that sunk him six figures in debt. Now, that business, Lisnr, has raised millions of dollars in funding, has almost 40 employees and counts the likes of the NFL's Dallas Cowboys and NBC as clients.
The journey taught Williams, 34, a lot about success.
In 2010, Williams was working in the marketing department for consumer product giant Procter & Gamble selling Pampers online. He had graduated from West Virginia University in 2006 and had gotten his MBA at Howard University in 2009, according to his LinkedIn account. From there, Williams was a financial analyst at Lockheed Martin until he landed the job he didn’t know he was looking for at P&G.
“I wasn't actually looking for a marketing job. I was actually looking for a finance job,” Williams tells CNBC Make It about how he ended up hawking diapers in Cincinnati. “But [Procter & Gamble] felt that I had an opportunity be a great marketer and to lead the thinking from a digital aspect. When I got there, I focused on what I did well, which is technology. I wrote patents. I launched brands on social. I led e-commerce. I led a lot of the digital activities.”
Being on the corporate track was stable. And Williams was excelling.
“It was extremely comfortable to work at P&G. You know, I had a savings plan. I had a salary. I had a process. I knew when I had a performance review. I knew when I got promoted — there was a track, right? And I just could just coast — drive my BMW, live a great life,” he says.
Except he was uninspired. And Williams couldn’t stomach that.
“I was bored at P&G. I was absolutely bored. And I kind of don't understand being bored — doing the same thing over and over,” Williams tells CNBC Make It.
So after almost four years at P&G, he took on a new challenge. He launched a technology company.
In March 2012, while he was still working his corporate job, Williams co-founded Lisnr, a start-up that created proprietary software to improve the connectivity between electronic devices with speakers or a microphone — anything from phones to laptops to smart speakers to smart refrigerators to cars. Lisnr's software sends data over near ultrasonic (inaudible) sound waves instead of via Wi-Fi or Bluetooth. It also eliminates the need for hardware like antenna or transmitters.
That gives Lisnr's brand of data transmission great flexibility. For example, it can be used to validate a ticket at an event or to send all the attendees of a sports game or concert notifications at the same time without being connected to the internet. “When would come outside and make a dunk, you would get a LeBron card on your phone," says Williams, referring to the NBA star.
It can also be used for mobile payments, in place of QR code systems, and for access — Lisnr technology can get you into a building or your car with just your phone, Williams tells CNBC Make It. The technology can validate your identity by transmitting via sound the credentials typically held within a digital key.
“We use that sound bandwidth as at tunnel to transmit data," explains Williams. "The invention was applying it in that bandwidth, applying the algorithms that we created and applying the software — coming out with a commercial product.”
Williams had the initial vision for the technology for Lisnr, but he wasn't working alone. Williams met co-founder Chris Ostoich at P&G. Then, in the March 2012, they took the idea for Lisnr to The Startup Bus — a competition where entrepreneurs are challenged to develop a business idea during a 72-hour road trip. That's where they met third co-founder Josh Glick.
The Startup Bus was going from Cincinnati to Austin, Texas, culminating at the South by Southwest tech and entertainment festival there. The presentation at SXSW at the end of the competition was good early exposure for Lisnr: “When we got off the stage, we got handed a card from Pepsi, we got handed a card from Disney," says Williams, referring to the business people assembled to watch the start-ups pitch. "And an investor took us out that night for dinner and that investor became [Lisnr's] first investor.”
The co-founders’ first team member, Williams Knauer, was also critical to the invention phase of the product, according to Williams.
The group had an early hunch they were onto something big with Lisnr — Williams said everyone he told about the idea became excited. Williams would talk to business people, investors, engineers, technology enthusiasts, co-workers — anyone who might have reason to be interested in the technology.
“I pretty much told any smart person that I came across,” says Williams.
Encouragement from friends is one thing, but getting effusive encouragement from people he didn’t know was really what inspired Williams. “If a stranger actually acknowledges that something that you're doing has potential, I think you need to go out and do it. And that's what I kept hearing and that's what kept me going," he says.
In August 2012, Williams left P&G to work full-time on Lisnr and the first version of the product launched in March 2013.
Lisnr raised $850,000 in seed funding in the summer of 2013 according to public fundraising database Crunchbase, but it barely carried the company to its next round of funding. At the end of 2013, facing a cash shortfall, Williams started paying the salaries of his 12-member team with savings he had collected from his time working at P&G. At the time, he says, he was paying north of $30,000 a month in payroll.
“As a start-up, as a technology company, as an entrepreneur … there comes a point in time where the success that you know is coming is delayed. And sometimes that delay is a monetary delay. And at the end of 2013, getting into 2014, we had a monetary delay,” Williams tells CNBC Make It. “I knew that we had revenue coming in; I knew that we were going to hit milestones, that were going to make this company extremely attractive to series A investors. But I knew there was a three- to four-month gap.”
So Williams stepped up.
“I kind of stayed home that Christmas . And I emptied the bank account. And I emptied the credit cards. And I just think it's one of those tales that all entrepreneurs and founders have, where you're going to go out and believe in this project or company so wholeheartedly that you should risk it all,” he says.
Both Williams and Glick did not take a salary during that time (Ostoich was not yet full time) and Williams' co-founders paid for other business expenses. "It was a team effort," Williams says.
As for whether paying the salaries put him in debt? “Definitely. Definitely I was in debt. I was in debt. I had depleted my savings, I depleted my — I didn't pay myself: I was behind on my bills, I maxed out every credit card that I could,” says Williams. He was “close to 100,000" dollars in debt, he says.
“And yeah, you know, you took a risk," he says. "It could have ended up really, really bad, right?”
But Williams had a reason to be hopeful. “I do also remember in those three to four months we actually closed over a half a million dollars worth of contracts, so I knew we were going to get funded. The business was still growing," says Williams. It's typical that a big client pays 90 days after a product is delivered, says Williams. “I think all founders, all entrepreneurs go through that. ... That’s just a part of believing in something that no one else does.”
Then, in April 2014, Lisnr raised a $3.5 million series A funding round that allowed the co-founders to stop paying expenses out of their personal savings and to pay themselves back.
Prior to the Series A raise, Lisnr was primarily being used as a marketing tool in the music and entertainment space. The series A funding allowed Lisnr to begin to build the technology for other applications. Also, Lisnr went through the advertising agency R/GA's accelerator program powered by Techstars from October 2014 to February 2015, which helped the company develop, says Williams.
Today, Lisnr has just shy of 40 employees across two offices, with management in Oakland, California, and engineering in Cincinnati. The tech start-up has raised $18.9 million so far.
Though Lisnr declines to share revenue or profit data, customers include NBC, Shawn “Jay-Z” Carter’s entertainment company ROC Nation, the Dallas Cowboys, Sony Music, Jaguar/Land Rover, Ticketmaster and the multinational software and services corporation Amdocs. Lisnr also has partnerships with Visa, Synchrony Financial, chipset maker DSP Group and Intel, Williams tells CNBC Make It.
Google has a similar data-transfer-over audio product, Google Nearby, but Williams says Lisnr is much faster. (Google Nearby transmits data at 66 bits per second where Lisnr transmits data at 1,000 bits per second, he says. Google did not respond to a request for comment.)
"We invented this solution and market. We are also leading the innovation around this technology," Williams tells CNBC Make It.
Williams says having competition from the likes of Google is good for Lisnr. “When we didn’t have competitors, it was very hard to sell this technology. It was very hard. Competitors are good. It validates the market, it validates the product and it validates the premise. We appreciate it,” he says.
In his journey from cushy corporate life to the uncertainty of start-up life, Williams says he learned to enjoy discomfort. He had to.
“If you asked me, ‘Do you enjoy discomfort?’ 10 years ago, I would have a different answer,” says Williams. Launching your own company is a whole new level of risk.
“Now, how I've gotten to where I am today, [which] is starting to embrace the things I don't know, starting to embrace the challenges within failure, starting to embrace the discomfort of that,” Williams says.
“Discomfort is not having that [career] track, not having that promise [of certainty, security, answers], not having that fallback. So when you think about a start up and doing something on your own, there isn't like a safety net that you drop on. If your idea is unsuccessful, your safety net is yourself. That's the first discomfort.”
Plus, when you are running a start-up, you are, ideally, running a company at a scale, which may be a new experience.
“Every decision is uncomfortable: Is it the right decision? Is that the thing that I'm supposed to do? Am I learning enough? And I think these are just things that, as you're leading a company, you need to be comfortable in that discomfort.
"It allows you to learn better though, it allows you to learn faster,” if you are able to really lean into that discomfort, says the CEO.
At this point in his journey, Williams says he actually enjoys being uncomfortable. “I love it. I am so obsessed with … being uncomfortable.”
Editor's note: This story has been revised to remove a valuation estimate for Lisnr that founder Rodney Williams says is inaccurate.
— Video by Andrea Kramar
Like this story? Subscribe to CNBC Make It on YouTube!
Disclosure: NBC and CNBC are divisions of NBCUniversal.