Look, if you had one shot, or one opportunity
To seize everything you ever wanted-One moment
Would you capture it or just let it slip?
…The soul’s escaping, through this hole that it’s gaping
This world is mine for the taking
-Emimem “Lose Yourself”
About a year ago Chad and I were sitting on a beach in Panama. I was there for a retail bank acquisition and Chad had come for a long weekend to explore Panama. It had been another 100 hour work week and I was exhausted.
To forget about work, we decided on a weekend surfing trip to a remote island called Isla Cebaco with my Panamanian friends. We spoke about how we’d both realized that we did not want to be executives at GE and that we had always wanted to be entrepreneurs. We had climbed the ladder and saw clearly where we’d end up. The people who had the jobs we’d inherit were not living a life we’d enjoy. To be happy we’d need more freedom see our ideas for a better world come to fruition. Life needs to be an adventure, filled with the passion and excitement of chasing your dreams. Is there any better way to live?
A lot of people have that realization, acting on it is a lot tougher. In the moment of clarity that only a remote tropical beach offers, we saw our life in a different light. We realized that we had an opportunity. With no girlfriends, mortgages, children or debt we had little downside if we failed. With our pedigrees, the GE jobs would always be there. We started to plan the Split Our Tab business model with the hopes of having it up and running before leaving our jobs. In the ensuing months we were both offered promotions. We knew that if we took them, we wouldn’t be able to leave easily and our dream might become a low priority.
Would we let the opportunity slip? Hell no! We turned down the new positions and left GE 2 weeks later in late February. About 4 weeks after that we realized that Split Our Tab wasn’t a good model and pivoted to Nudgems.com which we’re super excited about.
Last night, an old friend of mine said “what you guys are doing is so awesome” to which I responded “let’s see if we’re successful first” and Chad immediately commented “no, it’s awesome anyway, we’re living the life we always wanted and having fun” I couldn’t agree more.
I’m not the biggest soccer fan in the world, but I did watch this morning’s match between the United States and Slovenia. It seems Boulder is on fire with World Cup fever and it’s contagious. The second half was thrilling, the United States rallied from a 2 goal deficit to tie the match. With the US playing fantastically, the stage was set for the win, but a beautiful US go-ahead goal in the final minutes of the match was mistakenly disallowed by a referee. Due to the scoring style of the World Cup, a tie instead of a win may impact US advancement in the tournament.
As everything these days does, it got me thinking about correlations to our startup. Clearly earning a win doesn’t mean you win. In the startup world, “success” ratios are measured in single digits, so the thrill has to come from more than the end-game, it must be rooted in passion and enjoyment for the playing the game. The game is incredibly difficult, with a steep learning curve and tons of obstacles. Most founders have a defiant streak, and their drive to succeed only increases with the size of the obstacles and number of naysayers. At GE if an exec told you they didn’t like an idea, it instantly died, and this never sat well with me. It’s nice to be part of a community that thoroughly embraces succeeding in the face of adversity.
My own adversity has been learning to code and this week has been especially challenging as I’ve taken a larger role in developing the front-end and Chad focusing more on the back-end. Two days ago, in the midst of a CSS headache I cursed pretty loudly and Chad respond “you should be loving this man.”
He was right, of course, and his little aside snapped me back to the big picture. It does feels great to pick up a new skill and feel like it’s something you can eventually master. This past week I went from knowing nothing about CSS, HTML and AJAX to creating a new Nudgems landing page. Check it out, what do you think?
The soccer players today aren’t out for the count, they’ll get over the injustice, and come out swinging against their next opponents to salvage a berth to the next round. They are playing to win and they’ll be disappointed if they lose, but they’re surely enjoying the World Cup experience regardless. It’s the same for us. We started this business to win, but as our closest confidants already know, we are enjoying one hell of a ride!
About a week ago, my Aunt and Uncle sent me the book “Zen, and the art of motorcycle maintenance” as a gift. To me, it has been a treatise on the power of mastering a skill to free yourself from dependence on others and improving work quality.
Chad and I have both been trained to buy services when we are not familiar with how to do something professionally. At GE, our goal was to create the product as fast as possible by making a plan and getting a team to execute. In a lean startup, our goal has shifted from product completion speed to product definition and adoption speed. Of course we have a vision of our product, but the focus is not on developing the product we imagine but using a less than optimal product, that’s quick to produce, to start testing our assumptions and learning about our customers. We evaluate the success of our actions by whether they help determine what our customers will pay for, what features they need, and what revenue model they’ll accept.
Others can offer advice and perspective, but the only way for us to really answer these questions is to do the grunt work ourselves. In the process, we not only learn about our customers but about ourselves, our capabilities and the true effort it will take to build new features and get massive user adoption.
It has not been easy, in fact the last two months have been incredibly painful from a development perspective. We’ve had to learn how to code, design, market and create legal documents. Finally, this week, we’re starting to feel comfortable in these new roles and progress is starting to show.
Our ultimate goal is to build a sustainable, large scale business, so we will need to hire tons of people way smarter than ourselves to get it there. When the time comes to start scaling up the business, our hard work should give us the clarity to hire, manage and mentor our employees much more effectively than if we hadn’t put in the effort to be “one” with our product and customers.
We are often asked how much money we have raised and it seems that our success and capabilities are sometimes judged on that metric. To be sure, having a vote of confidence from a VC is a badge of honor and may even increase your chances of success, but the decision is a lot more complicated than that. We decided not to seek outside investment despite having access to wealthy friends, colleagues and professional investors.
Before we dive into the reasons why we chose this path, I must disclose that I’m a sucker for prestige. It hurts when others don’t see me as successful or doubt my capabilities. Luckily, Chad is well grounded and reminds me that making the right decision to build an enduring long term business is more important than my ego.
With that in mind, there are plenty of reasons to get investors, in fact getting adequate capital is sometimes necessary to make a technology business model viable. Certainly this is true for businesses that want to keep growing but must float significant costs for inventory, development or user acquisition while they’re recouping the customer’s lifetime value. It’s also true if the founders don’t have personal savings, they need at least some money to live. There are, of course, also soft benefits like access to an investor’s contacts, prestige, great advisors and being able to hire outside help instead of learning to do something yourself.
With this line of thinking in our heads, we decided against an investor because we didn’t see any need to trade equity for money to grow the business. We can build the site ourselves, the business model doesn’t requires floating a lot of user acquisition costs and we both saved diligently for years so we’re not starving without a paycheck. The soft benefits like PR and great advisors was the one benefit we needed most. To fill the gap, we’ve been identifying strong mentors. We’ve been treating this as a core part of our strategy, and have had a lot of success. On average, we’re meeting with 3 new mentors a week and identified a lot of absolutely phenomenal ones. We’ll continue to grow our network, but are committed to concentrating on developing deep relationships with a select few that are passionate about helping us succeed by introducing us to their network and being brutally honest with their feedback. Is it the same as board meetings with investors, no, but so far it’s been pretty effective. The true test will be whether we can get the corporate partnership and PR contacts we’ll need in a couple months.
The guys at Everlater thought the same way and ultimately changed their opinion and got funding from with what I understand is a great VC partner. We’ve talked with them at length about that decision, so if anyone else is interested in getting in on this discussion, feel free to jump in.