Misadventures in VC Funding: The $24 Million Moz Almost Raised

Gross margin is revenue minus expenses directly relating to providing those good/services and usually scales with revenue.

If they are trying to grow really fast, then they might be spending a lot on other expenses to increase this growth. These expenses aren't directly related to the sales.

You've demonstrated that SEOmoz can get through tough times and grow organically. You've even grown SEOMoz to a reasonable size and are now able to layer on team members almost as fast as you can hire them. Next year you'll be much bigger, and it's going to be even easier.

As you say the fund raising process distracted you from the main customer cause, and I suspect that having those funds would most likely have done serious damage.

So it's good to see you are sticking to your guns and moving away from fund raising to keep building the business. There seems to be no reason to give any of it away for the sake of a few bucks a year or two earlier than otherwise expected.

Perhaps you could also slow growth just a fraction and take some more cash out to ensure that the shareholders are comfortable along the way. While it might take a year longer to get to $100 million, you'll be a lot happier along the way.

The contrarian VCs of old would be writing checks, but by the time SEO is cool with many of the current crop you'll be starting your own fund.

Great stuff.

If Rand wanted the world to know he would have said so. And guess what -- if we were to successfully guess, I'd imagine the next time someone like Rand decides to share fundraising experiences with the world instead of just his close friends, he or someone else in his position will think twice. So please, since I think it's better for everyone instead of just those in entrepreneurs' networks to hear stories like this, don't be a dick.

He explains their motivations quite thoroughly (talent is currently available, so for now, cash is their major bottleneck, not scouting).

They've also been in business for 30 years (founded 1981). Somehow I don't think they are ignorant of how to run a business.

There isn't a moral "right" answer for VC. Taking it isn't a weakness, and funding isn't a sign of giving up. It's a business tool like any other, and it's ridiculous to be sitting spectator to a very healthy business and condemning their choices.

SEOMoz has been in business since 1981? Wow.. what did they optimize for back then - library catalogs?