By Foundora Monday, November 1, 2010

Foundora LogoDavid Hauser, is the co-founder of Grasshopper Group – a company that serves and empowers entrepreneurs via its powerful tools like Grasshopper and Chargify. Grasshopper Group was listed by Inc. Magazine among the 500 Fastest-Growing Private Companies in America; in fact there are many such accomplishments that it got.

David has had an inspirational journey with quite a few amazing recognitions such as Young People Who Rock by CNN, Among Top 5 Entrepreneurs Under 25 by BusinessWeek, and 40 Under 40 Business Leaders by Boston Business Journal and many more, under his belt. Working on his own company is not the only thing he does; his strong entrepreneurial spirit has allowed him to serve as a consultant for various companies as well as a mentor to emerging entrepreneurs. In other words he lives by his motto “Empowering Entrepreneurs to Succeed.”

Our thanks to Jonathan Kay, the ambassador of Buzz at Grasshopper Group, for arranging an interview of David with us on Foundora. In this interview, David speaks about his background and journey from GotVMail to Grasshopper Group, and speaks about the re-branding, his lessons learnt and much more. Read On…

**Hi David, Tell us something about your backgr**ound and how you started as an entrepreneur and your journey till Grasshopper?

Lots of entrepreneurs say they were always going to be an entrepreneur and were selling lemonade on the side of the road when they were 2 years old and while I knew from an early age I wanted to be an entrepreneur I was not selling lemonade growing up in Manhattan. Very early on I was more interested in creating and ultimately selling things than I was playing video games. My parents were very supportive of all the different things I tried, from selling stickers to other kids to starting a web design business. To this day I remember a lesson my Dad taught me when I wanted to start a web design business and needed an very expensive Dell computer (when Dell was just starting), he said told me he loved the idea of starting my own business and he would loan me the money for the computer but I must pay him back. It was not a gift or something that was my right, but the first investment in my business and it was not free.

From there I started all types of businesses but most had some technology component which interested me the most so I stuck with that. Prior to graduating high school I was involved in starting a company, Return Path, which is still very successful today. At Babson College my business partner and I met and GotVMail, now Grasshopper was born.

So how did the concept of Grasshopper (formerly known as GotVMail) come across? What were the initial challenges and how did things get started from there?

The concept for Grasshopper came from our own need for a service to sound more professional, stay connected and present that image we wanted. After being involved in many startups and our own ventures we were looking for a service like this and could not find something truly design and made for entrepreneurs, so we created it. The market said we were right and we created an industry around virtual phone systems and have since served hundreds of thousands of entrepreneurs.

When we started there was not even a name for what we were doing, so there was market confusion and a lot of talk about VoIP. It took a lot to stay away from that, make a clear message and help the market understand exactly what it was that we do.

We have grown tremendously from our original concept and product to fully realize our core purpose of empowering entrepreneurs to succeed. At Grasshopper Group we have launched Chargify and Spreadable as part of the beginning of a suite of products and services for entrepreneurs.

You have never raised any funds till date yet you have been profitable since the beginning. How did you manage to bootstrap so successfully? What practices in terms of development, marketing and hiring helped you to stay lean on costs?

Starting with almost nothing and no backing was challenging for sure and made us very good at selling our story. From day one we had to sell our story to vendors and partners to get the payment terms needed to allow us to conserve cash. Another important thing about not having funding was we only purchased what was required, hired for exactly what was needed and could be paid for and always made decisions that helped us grow organically. We did every job before we hired for it, so we had a great idea of what was needed for that job. Unlike today we had a huge challenge in infrastructure costs, we have real data centers, servers, and telecom equipment that today could be outsourced during the startup phase.

When bootstrapping a company there are no best practices for development or marketing to keep it “lean”, you just have to. What is more difficult is continuing those same actions that made you successful when you have more money to play with and are profitable, that is when you can make big mistakes.

Startups often opt for free and open-source software to cut down costs. But, you mentioned in some previous interviews that you incurred costs on the Oracle database when you started. What was the database choice based upon and why didn’t you go with an open-source, free alternative MySQL back then?

Having used MySQL for many projects in the past the decision to purchase Oracle for the database was a large one and continues to be expensive today. Operating in a 24/7 telephone environment is very different than a web environment and that is the reason we went the direction we did. A one or two second delay in some web application is nothing, that same delay on the phone is very noticeable and most people would say very bad, so speed was one factor. When your phone does not work that is different than a 15 minute downtime for your photo sharing application and could mean losing a big client or not getting the call you need, so reliability and uptime was another factor.

Looking at the available options Oracle was the most mature and proven database for very fast and reliable applications. Take for example that until recently MySQL could not handle multiple nodes very well or replication to a read only slave. Oracle had been running RAC or Real Application Clusters with cluster of 10+ nodes for many years and MySQL had just started to test this functionality at an enterprise level.

The question I would ask is, if we were starting today would we make the same decision? Since I have not had to do all the research based on current market conditions I cannot say 100% and I would need to take the time to review newer entries after MySQL, my hunch would be yes, we would purchase Oracle again for the database side of the business. When you have to run large clusters of highly available databases with small data sets it is still the best option.

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