SF Founders Struggle to Determine What Profitable Ohio Startup Is a Front For

SAN FRANCISCO—Growing increasingly unsettled as each follow-up question failed to reveal a second business underneath the first, attendees at a founders’ dinner Thursday struggled to determine what visiting Ohio CEO Mark Feldman’s profitable startup was a front for.

“He says they sell scheduling software,” said founder Adrian Chen, who had spent twenty minutes attempting to establish how the Columbus-based business actually worked. “But then you ask what the long-term play is, and he says better scheduling software.”

According to attendees, Feldman described a company that charged commercial HVAC contractors a monthly fee to coordinate technicians, appointments, and invoices. Revenue exceeded expenses, customers generally renewed, and the business was growing.

The group waited for him to finish.

He had finished.

“We understand what it does,” Chen said. “We’re asking what the business is.”

Feldman, who had been invited by a former college roommate, initially assumed the confusion concerned the subscription tiers. He explained that larger contractors paid more because they had more technicians.

This raised additional questions.

“So your best customers pay you the most?” asked one founder, carefully reconstructing the arrangement on a napkin.

Feldman said that was generally how it worked.

An attendee familiar with enterprise software suggested the company might be accumulating valuable operational data. Feldman acknowledged that it stored appointment information, but said customers could export it whenever they wanted.

The attendee crossed something off the napkin.

Suspicions deepened when Feldman disclosed that the startup had been profitable for six years.

“That long?” asked founder Priya Desai, lowering her voice.

Feldman said the early years had been harder, but that things had become more predictable once the company understood its costs.

Desai asked whether he had tried hiring ahead of revenue.

“We hire another person when there’s enough work for another person,” Feldman explained.

The group asked how he expected to get ahead of that.

Over the next course, attendees attempted to place the visitor within a familiar category. He was not a technical co-founder waiting for a business co-founder. He was not preparing to pivot. The company had not quietly become a consulting firm. When asked whether the software was merely a wedge into something larger, he said they had recently added a dispatch map.

“Because customers asked for it,” he added.

Several founders exchanged glances.

One asked how he prevented customer requests from distracting the company from its vision. Feldman said they declined requests that would make the product worse for other customers.

The founder clarified that she meant the vision.

Feldman repeated that the software scheduled HVAC technicians.

Desai asked where he wrote.

Feldman said most of the documentation was on their website.

She clarified that she meant Substack, or at least Twitter.

“Our customers aren’t really on there,” he said.

Desai explained that the audience didn’t have to be customers. After six years building a successful business, surely he had developed a broader thesis.

Feldman considered this.

“You need to leave more time between appointments than you think.”

She asked whether that applied beyond HVAC.

He said he wouldn’t know.

At this point, an investor at the table offered to help by asking a standard set of questions.

What was the startup’s burn rate?

It didn’t have one.

How much runway did it have?

Feldman said they had renewed the office lease in March.

The investor explained that he meant how long the company could continue operating before it ran out of money.

“Well, more comes in,” Feldman said.

After a brief silence, the investor asked him to assume that it didn’t.

The atmosphere briefly improved when Feldman mentioned that he wanted to double revenue over the next five years. Attendees recognized the ambition, though several encouraged him to shorten the timeline and remove the dependency on revenue.

Feldman said the company could probably grow faster, but that onboarding new contractors required support staff and he didn’t want service to deteriorate.

“Have you considered automating that?” Chen asked.

They had automated parts of it, Feldman said. Other parts worked better when someone answered the phone.

Chen asked whether investors were aware.

Feldman said he didn’t have any.

By dessert, attendees were asking increasingly basic questions about the visitor’s daily life. He usually left work around five-thirty. Most employees had been with the company for years. His house was fifteen minutes from the office, which was also near his children’s school.

Desai said it sounded as though he had found a comfortable stopping point.

Feldman reminded her that the company was growing.

“Yes,” she said. “But do you still want something?”

Asked about his exit strategy, Feldman said he liked running the business and intended to keep doing it.

His former roommate attempted to ease the tension by mentioning that Feldman had always been a little different.

The group ultimately agreed that the startup might be a lifestyle business, although its revenue, employee count, and growth rate made the classification difficult to apply consistently. One founder suggested the more precise term “regional,” which was accepted without further questions.

At press time, attendees had learned that Feldman owned 82 percent of the startup and finally identified the problem.

“Nobody’s helping this guy,” the investor said.