With smoke filling the cockpit, by early 2014, Backplane and it CEO Michelsen knew the company had to change course. He opened a $10 million convertible note, and convinced investors to put half of it in the bank and commit to the other. That money would fund Backplane’s metamorphisis into Place.
Everything possible was done to slash the burn rate. The San Diego and Palo Alto offices were shuttered, and a consolidated team moved to San Francisco. “That process did entail losing some people, but it included getting to a better place” Harrison said. “We were like 34 people. We’re now 22 people. We’re right-sized and very efficient now.”
Backplane’s new CEO Scott Harrison
Most importantly, Michelsen took a chairman role and handed the reigns to Harrison. The two had worked together on companies in the past, and both knew Harrison was the better manager. Morale started to lift. One source said Harrison “knows what he’s doing” and another tells me “this new CEO provides a bit of a rudder.”
Harrison describes the defining flaw of Backplane, saying “We treated it like a SAAS model,” where it did the unscalable work of managing networks for the brands for a fee. “That’s what’s going to change.”
Most people have a very skewed view of how startups work. Everyone knows they’re a little chaotic at the beginning, but sometimes the assumption is that the ones that succeed are all smooth sailing. In reality, startups are usually messy until they work, and sometimes after too. Backplane may have had more turbulence than most, but just because it stalled a few times doesn’t make it a failure yet.
