31-year-old CEO: My business spent six weeks on the edge of collapse—how I built it into a $2.5 billion company

CNBC

a day ago

Four years after dropping out of college to launch the shopping rewards startup Fetch, CEO Wes Schroll spent an agonizing six weeks working around the clock to fix a fatal flaw.
Schroll wasn't alone: Most of the Madison, Wisconsin-based company's roughly 25 employees tediously entered data by hand from more than 150,000 user-submitted receipts. The company had recently launched a smartphone app feature that scanned shoppers' receipts and automatically assigned them rewards — gaining 50,000 new users in just a few months.
But the feature depended on a third-party company's digital receipt-processing technology, and Schroll soon discovered that Fetch's contractor wasn't up for the task. That left Fetch with thousands of unprocessed receipts and two options: cancel the feature and never deliver rewards to all those new members, or somehow process all the receipts manually while finding a new tech solution.Fearing the collapse of Fetch's user base and reputation — potentially a death knell for the startup — Schroll chose the latter option. Most of Fetch's employees toiled away at menial spreadsheet work, while its engineers worked with a new third-party contractor to build a technological infrastructure that actually processed users' receipts in real time.
"It was do or die for us," says Schroll, 31.
After six weeks of late nights and regular emails to Fetch's patient users, Schroll and his team put a fix in place that impressed users and investors alike. 30,000 of the new users stayed active, says Schroll, and the company soon raised a new $9.6 million funding round that paved the way for rapid expansion.
Fetch now processes millions of receipts per day from its 12.5 million monthly active users, the company said in March. It was most recently valued at $2.5 billion, it announced in 2022.
Here, Schroll discusses how he and the Fetch team tried to stay optimistic while working until 2 a.m. every night for weeks on end to keep the company afloat during an existential crisis.
CNBC Make It: How confident were you that pivoting to a new business model would work out?
Schroll: I thought we could keep chugging along and hope to get acquired by a [bigger] company, or — as I told the team — we could take a bigger bet and really swing for what we think is possible. We knew consumers were interested, but our model was just too slow.
I called all 22 team members into a room, and everyone had to agree. "We've got, like, six months of money left," I said. And they were like, "OK, go for it." We were just super ambitious. We'd rather end up with nothing and have gone for it.
I didn't have full confidence that it was going to work, at all. We just thought it was the right bet to make.
After you retooled the app and launched the new version, when did you realize you had a major problem?
That morning, I remember us high-fiving as we watched signups skyrocket. It was like 10,000 in an hour, wild to watch this huge spike happening. Then we watched the number of receipts being submitted. That number was climbing really rapidly, too. Very exciting.
In the afternoon, though, we started to look at receipts processed. It was flat. We're like, "Wait a second, what's going on here?" We're calling this partner in Seattle, and they're screening our calls. We didn't get [through] to them until that night: "The system fell over. We're working on fixing it." Blah, blah, blah.
Through that weekend, [the backlog of receipts] was just building, building, building. We're calling them. Nothing is happening.
So I sent out some developers to Seattle to sit in the room with them. They call me, like four hours after they land, and they go: "Wes, it's not real." The receipt-reading wasn't being done by machine. They were using humans [who couldn't process the receipts fast enough].
What did you do from there?
[For] six weeks, my job was to have everyone who wasn't a developer focusing on getting the queue [of submitted receipts] down — manually typing in receipts until 2 a.m. every night — freeing up the developers to actually fix the problem.
We were calling friends from high school: "Hey, I'll give you 10 bucks an hour [to manually process receipts]." People were using their kids, like, "Hey, fun game night tonight! We're going to type in receipts."
We were just running on caffeine and adrenaline.
At that point, did you consider pausing the rollout or reverting to your previous business model? Were those realistic options?
Oh, man. It definitely crossed my head. The reason why we didn't was because we were like, "[Customers] keep using [the app]." That's the product-market fit we'd been fighting for years to find. We knew we had it.
At that point, we only had like two months' worth of money left. So we just had to believe in our tech team to be able to solve this problem, and do everything to give them a shot.
Your company could've gone under. Did you keep yourself from doubting, or were you scared?
Those were the late-night conversations myself and my COO were having. He's a three-time entrepreneur with successful exits. He would always say, "We're not going to talk like that." That carried over to our team, because we always came in with so much energy and optimism. I think that's what helped us the most.
We had the motto: Failure is not an option. I think some of that was us being oblivious, but also a belief in our team.
How did you communicate the problem to your users?
I filmed videos to email to our users, saying, "We love all of the support. Thank you guys. Here's the team. We're real. We're based here in Madison, Wisconsin. We're so sorry [the system has] fallen over. We're working to get to it. Bear with us."
We did an update every two days. My CMO was the one who came up with that. I don't think we knew how it would be received, it was a desperation Hail Mary.
We weren't expecting to hear back from anyone, and we were shocked at the amount of responses we got. I don't think we got a single angry one. They were, like, "Keep it up. We appreciate it." We would show those encouraging words to the team, and I think that definitely helped us keep going.
I think us being a Midwest company was very helpful. Our consumers love that there's a company of good old Midwest folks — not an elitist tech company, or anything like that — who are trying to save me a little bit [of money] on something that's a pain point already. I think that drove such empathy.
Were you surprised by your team's resilience, or your own resilience?
I don't think we would've even been around at that point if resilience wasn't baked into the DNA of the founding team. It took four years of grinding to launch in stores, to get to the point where we made that pivot, [and] then have this happen.
I think that's why all of us were like, "Are you kidding me? We're not going to let this be what finally takes us down."
I think resilience is one of the most underestimated qualities of a founding team. Very few rare [startups] are overnight successes. The vast majority of large, successful companies came on the back of 10 years of quietly grinding, trying to find product-market fit, trying to find the right team, waiting for the right macro trend to happen.
Everyone says [success requires] a huge amount of luck. That's 100% true. But the thing that you can control is: Hard work gives you more shots at being lucky.