"I was interning at 26 and I was the oldest intern" – Yonas Beshawared Founder of StackShare

The grand finale of the eight-city Habeshas in Tech tour landed in Addis Ababa two weeks ago. ALX’s Capstone tech Hub around Lideta was home to several high-profile guests from Ethiopia’s tech community, including Ride CEO Samrawit Fikru, Kazana Group Chairman Addis Alemayehu, and managing partner of Precise Ethiopia Henok Assefa. 

Hundreds gathered to attend the series of engaging panel discussions keynote speeches and networking opportunities that went late into the night. 

Yonas Beshwared , founder and CEO of Stackshare, a company that reinvented how over 1.5 million developers worldwide discover and share technology offered humbling insights from his experiences at Silicon Valley. After kicking off his tech journey feeling like one of the "oldest" interns in the Valley, he managed to successfully exit the Company in August when it was acquired by FOSSA following a valuation of $20 million. 

Yonas sat down with Shega’s Etenat Awol for a one-on-one conversation on building, scaling, and exiting a technology startup.

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Shega: How did the decision to sell Stack Share come about, and what specific factors led to the exit?  

Yonas: We had a decision to make. We had to choose between scaling the company, which involved raising more money and hiring more people, or finding a home for the business. We had an initial customer base, but scaling revenue would require substantial resources. 

Ultimately, we decided to find a home for the company. After ten years of building it, I needed to reflect on whether I still had the drive to continue. There were also considerations regarding our investors and employees. We found a great fit with the company that acquired us; I had a solid relationship with their CEO, and we believed we could continue our work within this larger organization.  

The timing also played a crucial role. The macro-environment for fundraising in the startup market shifted significantly, especially with AI becoming a dominant focus around mid-last year. We realized that building an AI offering was essential, but it wasn't something I wanted to pursue further. It made more sense to find a home for Stack Share and integrate into a larger organization.

Shega: So, what are you up to now? 

Yonas: Now, I'm the head of product for Stack Share at FOSSA, which is focused on compliance. While I’m building out the Stack Share product, I also spend considerable time in the Habesha in tech tour project that I initiated. This project has allowed me to connect with various communities across the U.S. and Ethiopia, something I've been passionate about for a long time.  

Shega: Stack Share had 1.5 million users before it got acquired by FOSSA. What was your revenue model? Was selling part of the plan from the beginning?  

Yonas: Selling was not part of the original plan. Typically, when you take venture capital, the goal is to go public. 

We had nearly reached $1 million in annual revenue and were contemplating how to scale that to $10 million. Achieving that required more resources and building a larger team capable of selling to big enterprises a very different sales model than we were accustomed to. Given these challenges and my decade-long tenure running the company, it made sense to seek out an acquisition.  

Fortunately, we found a company interested in our enterprise capabilities, which complemented their existing security and compliance products. This synergy made our acquisition appealing. 

Shega: Can you elaborate on the monetization method? Stack Share was an open-source software; how were you generating revenue?

Yonas: We adopted a model similar to GitHub’s. Our platform allows users to share their code publicly for free. However, if they want their code private or wish to understand what technologies are being used within their organization, especially large companies they need to pay for that data. Many large companies lack insight into their technology usage across software engineering teams; they often don't know what databases are in use or what vulnerabilities exist. We provided this data by integrating with their code bases for a subscription fee. 

Shega: Before the acquisition, Stack Share raised $2 million from investors. What was that fundraising process like? 

Yonas: Overall, we raised $12 million over several rounds. Fundraising is essentially a sales process: you identify potential investors who align with your vision and pitch to as many as possible in a short timeframe.

Being based in Silicon Valley helped significantly due to its vast network of capital and connections. In our first round in 2016, we were fortunate that an angel investor connected us with a venture capital firm interested in our work. 

In subsequent rounds, as we demonstrated growth through increased traffic, investors approached us with preemptive offers based on proprietary data they had about our performance. This edited version maintains clarity while ensuring that key points are emphasized, and repetitive elements are minimized for better readability. 

Shega: Stack Share has users all over the world, what does it take to build an international tech company? 

Yonas: Well, we operated as an international tech company, but we never fully expanded beyond the U.S. We had customers in different countries and an office in San Francisco. Therefore, I can't claim to have extensive experience in building a truly global company. 

However, I believe that understanding the problem you're solving is crucial, along with the ability to charge for that solution. Initially, we offered a free platform that resembled a social network. Over time, we identified a related problem that people were willing to pay for, which led to our enterprise product and data platform.

Shega: So, identifying a market need was key for your success? 

Yonas: Absolutely. The most important factor is the market you're serving. If our platform hadn't been tailored for software developers, I doubt we would have achieved our current level of success or even raised capital. Software developers represent a lucrative market; they are often the highest-paid roles in companies and frequently purchase software. This attractiveness of the market was instrumental in our growth.

Shega: That's an interesting take. Can you elaborate on how market selection impacts startup success? 

Yonas: Certainly! Choosing the right market can significantly influence your trajectory. For instance, if you think about a ride-sharing service like Ride, its market is vast, essentially everyone who needs transportation. However, if a service only targeted commuters, it wouldn't attract as much investor interest due to its limited scope. The lesson here is clear: selecting a large and promising market can compensate for many other missteps. 

Shega: If you had the chance to start over, what would you do differently?

Yonas: Hmm…I would prioritize revenue generation within the first six months of starting the company. The funding landscape has changed; investors are now more interested in startups with proven revenue rather than just good ideas. Ideally, startups should aim for profitability before seeking investment. 

Shega: Speaking of trends, how do you view the role of AI in startups today? 

Yonas: While not every startup needs to focus solely on AI, leveraging AI technology is essential for building any startup today similar to how cloud computing transformed business operations. Nowadays, companies don’t invest in their own servers; they utilize services like Amazon Web Services or Google Cloud. In the future, I expect startups will integrate AI seamlessly into their operations rather than positioning themselves solely as "AI companies."

Shega: Shifting gears to local contexts, particularly in Ethiopia: how can local startups foster growth amidst challenges like limited investment?

Yonas: Startups should concentrate on increasing their user base and revenue streams. Profitability makes them attractive to investors. However, achieving profitability without initial funding can be challenging. This is where incubators and organizations like Ice Addis come into play, they provide essential support at the earliest stages before startups secure funding. 

Shega: What advice would you give to Ethiopian startups looking to attract more investment? 

Yonas: Joining incubators and accelerators is crucial. That’s what we did; participating in a leading Silicon Valley accelerator helped us gain traction and raise funds. Startups should aim for profitability while targeting large markets and articulating a compelling vision like aspiring to be "the Uber of Ethiopia." Investors want to see big ambitions coupled with execution capabilities.

Shega: Any final thoughts or advice for aspiring entrepreneurs? 

Yonas: Collaboration is key. There are many talented individuals working in tech outside the U.S., including Ethiopia and Eritrea. During the Habesha in Tech event in LA, one panelist was Nami Russom, a director at Google who leads a group with over 300 members internally. Another panelist was Mary Healy, who has initiated multiple groups at Facebook and Pinterest. These connections highlight the wealth of talent and expertise available; what’s missing is a structured way to bring these resources together for mutual benefit.