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Founder's Story
The Hidden Pain Behind Building a $300M Tech Company | Ep 274 with Dan Novaes Founder of Mode Mobile
00:18:00
In this episode of Founder's Story, Daniel Robbins interviews Dan Novaes, Co-Founder & CEO of Mode Mobile, a company now valued at over $300 million. Novaes shares the story of starting with just $1,000 at age fifteen, building through countless pivots, and nearly losing everything when major clients collapsed. He opens up about the mental toll of leadership, the discipline needed to survive downturns, and how raising over $60 million from 57,000 investors through crowdfunding reshaped his company’s future. His journey is a testament to adaptability, mindset, and building movements—not just startups.
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- [00:00]
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Interviewer Dan
Dan always great to one have another Dan on the show and I appreciate that we share. One common thing that we share is the name. I don't share the success that you've had. It's incredible. Like Mode Mobile. You and I have been talking for like many a months, which is amazing. And I've been following along and watching even before that because crowdfunding. I've always been fascinated with even how crowdfunding works. And you've built a company now valued over 300 million. Going back to when you were 15 years old with $1,000, did you ever think this would be where you'd be right now?
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Dan from Mode Mobile
Yeah, if you asked my 15 year old son self probably would've been like why didn't you do this by the time you were 18? You know. But no, I think like it's been an amazing journey and it's not as you do it, you notice like how hard these things are. You know, it seems really easy when you're a kid and anything is possible. But then when you actually go and do it and then learn that scaling is way different than just like I would say you know, hustling and like kind of your one to one entrepreneurial stuff like scaling is really, really difficult. And so, yeah, I mean, we've been super excited and blessed I think over the last few years to, you know, kind of get to where we are now and hasn't been without the trials and tribulations for sure.
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Interviewer Dan
So what have some of those been? Since you've been scaling? What is something that you didn't expect to happen that you just, boom, hit the wall? Like you said, entrepreneurship is so damn hard for many people.
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Dan from Mode Mobile
Yeah, I mean, I think that, that 0 to 1 is really difficult. And I think that there's like, there's a really interesting formula that happens. It's kind of like sometimes you do something and it just hits like, you know, it comes out. And I've, I've probably had that happen two or three times in my life where it just hits in a way that you just can't explain. It's, it's just that you hit product market fit. And there's been times where that could be sustainable long time. Other times, like it might be a fad, it might be a bright point in time, like, you know, and, and, and you want to continue growing that. But I think the times that, you know, really teach you as an entrepreneur. The times where it's like, you know, you get to a certain level, maybe you had that initial product market fit, and then once you hit like say a million dollars or you hit, you know, 30 people, things change. Like your way, the way that you are as an entrepreneur needs to change. And if you don't adapt, typically it'll fade away or you'll stagnate and because the industry is constantly changing and you have to be really versatile and be able to pivot. So for us in particular, I'll give you an example of that, you know, of like where I was like, man, entrepreneurship's hard. Even after you see great success is like, you know, for mode in 2019, we came with the concept of Mode after so many different pivots, to be honest with you. And I thought I was like actually very sick of pivoting. And we had these, all these like little mini successes along the way. And we kind of had this app studio model and you know, I really just wanted to work on something that was sustainable in terms of, could be very large scale, have a big impact and, and then we built this entire product, spent like a year and a half on it and like no one was using it. And then I was like, wow, what a Waste of my time, you know what I mean? But then we had this like one cohort of people that was using it and so we learned about them and turns out they were like budget conscious users that didn't want to pay for music streaming. And so we eventually focused in on that and we're like, well, what if we paid you for that? And then they were like really interested. And so we put like a, just a fake paywall that was, or not a paywall but like a sign up that was like, hey, we're going to launch this like if you're interested. And we had like 250,000 people sign up. So that was like an example of like product market fit that someone wants that. But then we were like trying to actually make money off that and it was so hard because the music streaming happens in the background and we have to make money. And like where do you pull the money from? Like, it's, it's, it's very difficult. And then that ultimately led to us then moving into things like gaming and news and all these other things that people do on the phone. And that started to work really well, especially during the COVID kind of like lockdowns where people are like at home. And, and we had that Covid growth, like you know, some businesses like shattered during COVID Digital businesses thrived. And then it was a low interest rate environment. We had advertisers like literally handing us money like you know, hand over fist. And it was great times. Like, you know, and in 2022, the very beginning of 2022, it seemed like the world was like unstoppable for like tech companies. Everyone's going public, you know, valuations are extremely inflated. Zero rate interest environment. And all the while Mode had seen this crazy growth from like effectively $100,000 in revenue in 2019 or so, like just under to well over 25 million in 24 months, right? And you grow and you scale and you hire a bunch of people and then the bottom fell. Like all of These advertisers, the FTXs and Voyagers, which Voyager was our biggest client at the time and all these like Fintechs, you know, capitulated, right? And then suddenly you're basically in a very difficult situation because now we're not getting paid for advertising that we thought was coming in. We have 100 people on our payroll. And that, you know, over almost killed the business, you know, because essentially, you know, you would need to then make very fast decisions. And ultimately that led to us building a much stronger company. But it was a year or two of pain that we had to basically, you know, have a lot more discipline on how we ran the business, like, how long are we willing to wait for payback periods? And ultimately is what got us into crowdfunding, which, you know, you. You had talked about here, which has been extremely successful for us. And so I think, like, a lesson, you know, to just go back to answering your question, like a lesson of entrepreneurship is even if you hit great success, like, without question, headwinds will surely come your way, and then those headlines will seem so drastic, especially when the more you scale. And then for us, I think those difficult times actually created some of the best things that I'm most excited about now, because if you asked me in 2022, I felt like I was like, dude, like, why is this happening to me? You know, 2022, 23 was, like, a really difficult time. And I thought, like, you know, I was like, no, like, this might kill the company. And then, you know, it was like sheer will and then pivoting and then, you know, being able to kind of get to the next stage and. And eventually, you know, it unlocked this completely different world to us. And a lot of things that are going well in our business now are because of that discipline or because of that, like, way of thinking. And now I feel like the company's in, like, the strongest position it's ever been, and we're seeing that crazy growth again, you know, and so I think that that's just the story of it. You know, you kind of have to have the mindset for it, but you're not going to lie. Like, there was, like, two or three months of darkness there for sure that, you know, I had to get through, you know, read a lot of gratitude books, you know, during that time and kind of developed a lot of, like, more mindfulness practice of kind of how to think about things, which in itself, like, allows you to grow. And that was helpful.
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Interviewer Dan
Yeah. It's amazing how you could be flying high and then, boom. It's like somebody just smacks you in the face fall. The. Your ground just falls off from underneath you, and you're just like, how did I go from being, you know, top of the world to being, like, bottom of the bottom?
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- [10:03]
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Commercial Narrator
What do you think makes the perfect snack?
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Dan from Mode Mobile
Hmm, it's gotta be when I'm really craving it and it's convenient.
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Commercial Narrator
Could you be more specific when it's cravinient?
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Interviewer Dan
Okay.
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Dan from Mode Mobile
Like a freshly baked cookie made with real butter available right down the street at am pm. Or a savory breakfast sandwich I can grab in just a second at a.m. pM.
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Commercial Narrator
I'm seeing a pattern here.
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Dan from Mode Mobile
Well, yeah, we're talking about what I.
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Commercial Narrator
Crave, which is anything from am, pm.
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Dan from Mode Mobile
What more could you want?
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Lowe's Advertiser
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Interviewer Dan
And that's like business and entrepreneurship. That's like the definition, right? And then you go back up and it's fascinating that you're saying during those times though you learn. I think I've been there where I focused a lot of my business on one thing, but that also stopped me from doing other things I should have been doing because I was comfortable with the revenue I was making. And when that revenue stopped, I realized, oh crap, I should have actually been diversifying doing other things. But I want to go back to the crowdfunding. I remember maybe 10 some odd years ago, crowdfunding was like the thing. I remember it was like the thing like everyone's going on Republic and all these sites. I feel like it kind of like ebbs and flows. But you. I mean over $60 million raised is insane. I don't even know anyone that's Raised like maybe more than $2 million. So what was that, like, the journey of getting here and the fact that it's not coming from like two or three, four investors. You know, you're talking what could be thousands of people.
- [11:49]
Dan from Mode Mobile
Yeah, I mean, to be. Yeah, to be. Yeah. We have over 57,000 shareholders in our business, so quite significant. Yeah. And I like, you know, we. The way to think about it for us, I think there's two types of crowdfunding companies. There's like the kind of startup, like super startups, like really small seed stage, you know, they're going to raise a couple hundred K or a million bucks, two million bucks. And then there's like kind of what I'll call like moonshot businesses. And moonshot businesses tend to be able to actually raise at really high, like a really high amount of capital. It's. It's very few companies we're talking about less than like maybe 10 a year that can kind of like magne new ones at least. And then there's a growing pool of maybe like 20 or 30 issuers that can do that. And typically it's like these very big ideas or companies that have just like really passionate followings. So an example is like Newsmax, like, you know, really big audience that really loves what they do in terms of conservative news and whatnot. And if you're conservative, like, you want to invest in Newsmax, and then they IPO'd, right? They sold out $75 million in five days. So with the exception of Newsmax this year, Mode is one of the biggest crowdfunds, crowdfunders in America.
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Interviewer Dan
Right.
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Dan from Mode Mobile
Because we sold out our $75 million raise and that's inclusive of some bonus shares that we did. But, you know, I think that anytime that you're able to tap into the retail audience and you know, see, hey, do people believe in what you believe? And if you're a good marketer, you can align value. And I think the best public companies are the ones that have great financials and then also have that kind of like, you know, not necessarily like a cult in a bad way, but like a cult like following. Right. An ambassadorship. And so I had examples of that in like, that are crowdfunding companies is like Tesla, like Elon Musk is very polarizing, but the guy has a crazy following. You even see other companies like, you know, like, like Berkshire Hathaway, like, Warren Buffett is one of the greatest investors of all time, but he literally sells out a stadium. You know, he's not like, you Know, a musician, right? The guy people go to Omaha to go to his conference. You even have, like, funnier kind of examples, like GameStop, right? Like, you know, that company literally was like the meme central. And again, that goes back to having a follower base. And so anytime people believe in kind of like your mission and then you can have good financials behind it, I think it's a great candidate for crowdfunding. But, yeah, you have to be willing to be a marketer and kind of like, think about, like, how you're going to talk to your audience. Like your investor updates. Like, we do webinars, you know, before we got on the call here. Like, you know, we have amazing guests that come on hours, you know, like, for our audience, you know, like Steve Wozniak, co founder of Apple. We give like, earnings calls. Like, even though we're not a publicly traded company yet, we do earnings calls for our investor base. And we'll have five or 10,000 people log into this stuff and we'll raise several millions of dollars from those updates. And so you have to be like, thinking in that way. And for us, I look at it as kind of like the training wheels of being like a publicly traded company, because that's my ultimate goal, is to kind of get to that point. And this is like me playing, like, in the, you know, the, like my college ball, you know what I mean, before I, you know, we go into the NFL, you know, so that's kind of like how, you know, we think about it and have approached it.
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Interviewer Dan
Oh, I'm sure one day you will ipo. I mean, no doubt about that. I see that you're a part of ypo. And how has organizations like ypo. I've been involved with EO for a long time. How have you seen these organizations? And by the way, everyone I know in YPO is like, they have the best parties. Like, they're incredible parties and hanging out. So one day, that's my goal. It's the one day get to ipo. But how has that impacted you?
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Dan from Mode Mobile
Yeah, I mean, I. I've always been really. I've always made like, the investment to either be a part of masterminds or certain groups, even when I sometimes didn't even have the capital to do it. Like, when it was like a stretch. And I would always kind of look at it as like, this might not work out. But I had an example one time where I spent $20,000 in a donation, and maybe I think my entire net worth at the time was maybe a hundred. So I mean, significant, but I knew that people that were going to, that were all ultra high net worth angel investors and it was going to be a really small group and I was going to be the youngest guy there. So I was like, okay, maybe it'll turn into this thing where I'll be able to find some mentors and maybe some people invest. And I ended up raising like 300k from that trip. And so it was a great ROI, you know what I mean, in that sense, but it wasn't a risk. I didn't know I was going to do that. But nonetheless, I think your proximity is power. And at the end of the day, if you find other entrepreneurs, other people that have that same kind of mindset, it's going to rub off on you and you're ultimately going to learn a lot. And I think the things like specifically with YPO organizations like that is, you know, you're finding a space of other founders and other business owners that are dealing with a lot of the same stuff that you are. Like, I can't always go just to, you know, my friends or other people that aren't in the same position as me. That same type of like, you know, hey, have you dealt with, you know, adding two independent board members to your board? Have you dealt with like, what do you think about your liquidity? Or like, how did I get screwed by, you know, like an investor of some in some mechanic. So I think like there's all these things that those networks give you, but ultimately it also unlocks a bunch of access because typically these are people that are well to do and you know, think in the same way as you and that'll open up doors in many places in other parts of your life that could be in leisure parts of your life, that could be opened up in capital parts of your life. It could be like, you know, how to get a lower interest rate on your mortgage. Like it could be anything like that. And so for me, like it's been an extremely valuable organization. And you know, I, you know, I have a lot of friends in EO and think EO is also an excellent organization. You know, for any entrepreneur that's doing, I believe over a million dollars a year is their criteria. But you know, if you can get into ipo, you know, I definitely would recommend joining, you know, a year core chapter. And you're going to meet a lot of great people.
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Interviewer Dan
So my final question for you is in 60 seconds or less, what is one lesson learning that you've had in business? Like it could be, you know, have an attorney for this, or it could be, you know, make sure that you, like you said, have a mentor that can explain to you. Xyz, is there any one lesson that you've learned that's really quick, simple, really quick and simple?
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Dan from Mode Mobile
Yeah, I think. Well, I think I gave one, so I'll get another one. That was just. That's something I've, like, put into my schedule. I think when you're running your business, you're always working in the business, or most people work in the business as opposed to working, like, on the business. And typically that involves kind of operational nonsense that you're kind of doing. And they don't leave enough time for thinking. Like, just strategic level thinking. It sounds so simple. Like, it really does. But, like, I just see people just kind of like, automate on automation mode. It's almost like an AI, like an agent. It's, like, not really thinking very intelligently. And for me, like, I have found that there's, like, two times where I do a lot of deep thinking, but I have to set them out in my schedule. So now I float every week, for example. So I float in a float tank and it's just complete darkness and silence. And I can really think, like, very deeply at a different level because all my other senses are being shut off. And then I do a lot, like when I run or go on walks, and I do a lot of those a given day, and those have literally unlocked tens of millions of dollars worth of ideas, worth of business opportunities, worth of problem solving. I honestly cannot, you know, tell you the ROI that I've gotten from just having this. Something so simple just put into my calendar.
- [19:48]
Interviewer Dan
You're right. We're not thinking. We're reacting. That's the problem, right? We're reacting to everything around us. This happens. That happens. We're always caught in the reaction mode versus the stopping. You reminds me of the E. Myth book. That old book, it was like a baker goes into it to bake, but realizes she has to do 50 other things and then is miserable and can't really focus on the business because she's doing so many different things and tasks and learning. But you're right. We're so. We're too reactionary without really thinking. But I'm glad you brought that up. I want to try floating one day. That is definitely on my list to try. I've heard great things about floating. But, Dan, if people want to get in touch with you, how can they do so?
- [20:31]
Dan from Mode Mobile
Yeah, I mean, they could reach out to me. My email is danmodemobile.com or I me on LinkedIn or Twitter via AI danodemobile.
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Interviewer Dan
But mode Mobile, I've been following along for many, many years. I've actually been in the wireless industry, mobile industry since 2002. And so when I saw Mode Mobile back when you first started, I'm like wow, this is a very, very unique and fascinating in the mobile space and I'm glad that you've had the success we had. Can't wait. Let's when you ring that bell I want to go and visit you when you ring that bell so I can help cheer you on. But Dan, this has been a great conversation and thanks for joining us today on Founders Story.
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Dan from Mode Mobile
Thanks for having me, man. Appreciate it.
- [21:17]
Capella University Promoter
A Cappelli University Learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the courseroom to the workplace. A different future is closer than you think with Capella University. Learn more at Capella. Eduardo.