Startup Mixology

by Frank Gruber

  Chapter 3

  Action

  The way to get started is to quit talking and begin doing.

  —Walt Disney

  I've launched many products over the past 15 years, some being my own initiatives, others for the companies I've worked with. Through it all, the part that gets me most excited is the beginning—those first steps where you have no limitations. You've got your idea, and now it's time to dive in! You get to start dreaming about the future, filling in the details, and laying the foundation for what can be a fulfilling, creative, wild ride.

  When ideas are new, the sky's the limit, which can also be overwhelming and stop people in their tracks. As I've traveled from city to city across the United States, I've talked to thousands of people who have ideas. Some people have started working on them; others haven't. I've often wondered what separates the two.

  Jessica Kim is one of the starters I met. She refused to let inexperience hold her back with BabbaCo, a lifestyle brand that she hoped would become the “Martha Stewart of baby.” She started out with an idea for a simple cover for a baby's car seat called the BabbaCover, but immediately realized she did not know how to sew to build a prototype!

  For a lot of people, this dream would have been dead. But not for Kim. She taught herself to sew by watching YouTube videos—and in a pinch, glue and staples came in handy to finish areas where she ran into sewing problems. In short, she hacked it.

  With a prototype in hand, she pulled in a partner she knew well from her previous venture. Together they were able to commercialize the product, getting it into a thousand locations within a year. They also got accepted into a Chicago-based startup accelerator currently run by Troy Henikoff called Excelerate Labs (now rebranded as Techstars Chicago), which provided mentorship, advice, and encouragement as they turned this single-product company into a monthly subscription service for children's activities.

  You can become a starter as well. To help, here are some of the things I've done when I've come up with a new idea:

  Whiteboard it or do a brain dump. Start by writing it all out, sketching it, getting it out of your head, and giving it life.

  Start talking to trusted friends and family about it. Ideas locked in your mind have no room to expand.

  Give it a name. Even though it may be premature, even coming up with a code name for the project will give it momentum.

  Do research around it. Look for anything that comes close to being a competitor. Finding competitors is a good thing because it helps validate that your idea has a market and give you ideas for differentiation!

  While you're taking these first steps, you'll also want to start thinking about a few important questions.

  Who Are Your Customers?

  Chapter 5 will focus in-depth on the importance and how-tos of customer development and finding product-market fit, the fundamental building block of any company. As a new mom, Kim knew her customers well—and that's what helped her engage them and create community.

  What Would a Simple Prototype Look Like?

  You can think big, but it's good to start small. In the product-market fit chapter, we'll get more into how to start lean, test your concept, and keep steering in the right direction. Kim's first BabbaCover was hand-sewn and not the most professional-looking product in the world—but people still wanted it.

  How Much Personal Investment Do You Want to Make?

  A startup business is a risky investment, so another way to phrase this question is: How much can you afford to lose? Your initial costs might include things such as hosting, acquisition of domain names, design, legal, and marketing. Over time, these costs will only grow.

  If you're married or financially connected with someone else, consult with that person before you start investing in the company to avoid uncomfortable discussions later and the possibility of sleeping on the couch. Cash flow keeps the business afloat, so as a startup founder you have to manage your expenses. If you're daring enough, you could do as some entrepreneurs have done and go live in a country with a low cost of living (for example, somewhere in Southeast Asia or Central America) while building your initial product. Domestically, look at places such as downtown Las Vegas, Detroit, Kansas City, Des Moines, San Antonio, St. Louis, or Indianapolis as other low-cost living options. Or downsize or move in with parents or friends. We've seen many entrepreneurs make large and small life changes to pursue their ideas.

  Do You Want to Quit Your Job?

  Do you have a full-time job and plan to work nights and weekends on your idea? Can you work a part-time job? Or are you going all-in from the beginning as a full-time entrepreneur? Only you can decide which approach is the one for you.

  There is an ongoing debate on whether you can succeed while you still have a full-time job. They can take up valuable mind space, so even if you have enough time for your startup, you may not have enough mental and emotional capacity.

  On the plus side, a full-time job gives you income, so there's less risk. Putting pressure on your startup to start paying the bills immediately is distracting and may cause you to make the wrong decisions, focusing on short-term money and not on long-term success or satisfaction.

  Tech Cocktail started as a passion project. Both myself and my cofounder were working full-time and kept Tech Cocktail going in our free time. Luckily, my employer, AOL, realized the value of Tech Cocktail as a way to keep an ear to the rail on the latest early-stage startups and the tech startup community. Every employer is different.

  There have been many successful companies that started as side projects. BabyList, a baby registry, was built as a side project when Natalie Gordon was pregnant with her son. They got into the 500 Startups accelerator in 2012, raised $620,000, and saw 10,000 registries created in the first half of 2013. The global marketplace Craigslist grew from group e-mails that Craig Newmark was sending to his friends about San Francisco events. Eventually he quit his job but still freelanced while continuing to build Craigslist on the side. Today, Craigslist hovers around the eleventh most popular site in the United States (according to Alexa), attracting millions of monthly visitors.

  Another example is LivingSocial, which started out as Hungry Machine, a hybrid consultancy/startup with four cofounders: Tim O'Shaughnessy, Aaron Batalion, Eddie Frederick, and Val Aleksenko. At any given time, to pay the bills, at least two of them were working on consulting gigs and one was working on a Hungry Machine app. When a consulting job ended, they rotated so no one got bored. “Life didn't suck entirely; it just sucked most of the time,” Batalion jokes. They built lots of apps, including Visual Bookshelf and something called Pick Your 5, where you could list five things you cared about. But when it became clear that the daily deals opportunity could be huge, they set aside their other projects and went all in.

  If you decide to burn the midnight oil, too, here are some tips that might help you.

  Check your employment contract to make sure you're allowed to work on side projects, because it could legally belong to your employer.

  Plan. If you plan well, you'll always know what the next task on your to-do list is so you can dive in if you have a free half hour.

  Set expectations with friends and family so they know you're busy even after work hours while you're embarking on your startup journey.

  Don't use company resources on your startup. The last thing you want is to create an amazing business and have your company come after you because you were using their printer or computer. It's not worth the stress or time.

  And here are the last two questions to keep in mind:

  What Would Your Dream Team Look Like?

  Put yourself in the future—imagine you've built something with legs that has taken off and you now have the resources to build your dream team. Who would be on it? Do you know people you would love to eventually hire? Even if it's years away, it's helpful to keep a list of rockstars who might someday be part of your team. Future chapters will look at team building and company culture, which starts at the
very beginning.

  Who Else Can Help You?

  Whether this is your first startup or not, it's wise to find mentors and advisors who can help you. Mentors can act as sounding boards, help you through issues they've experienced before, and connect you to their industry contacts. Start thinking about the people you look up to who could give you guidance. Chapter 11 talks more about the importance of building relationships.

  Starting Simple

  After I had the initial idea for Tech Cocktail, I was in search of a cofounder. One of the last things I had done at Tribune was work with a company called FeedBurner, a hot startup at the time led by Dick Costolo, now the chief executive officer (CEO) of Twitter. Through my contact on the publisher development team, Rick Klau, I was introduced to one of FeedBurner's new hires, a guy named Eric Olson. Klau thought we might get along, as Eric and his girlfriend had just left Boston to move into a sight-unseen Chicago apartment from Craigslist, to work at a startup. I knew I had to meet this guy. Aside from a mutual interest in startups, Eric was also a baseball fan. He loved the Boston Red Sox, and we commiserated about the Red Sox and Cubs' long pennant-less drought. Needless to say, we hit it off. Finding a cofounder is kind of like dating, and this first date was off the charts.

  Eric had seen the growing Boston tech startup community and participated in local events up and down the East Coast. So when he got to Chicago, he was in search of similar opportunities to connect with the community and was considering starting something himself. It seemed like a great match. I decided to share my ideas with him about starting a company of some kind to better connect and amplify the local tech startup scene in Chicago, and Eric—working for one of the hottest startups in the city—was excited. We decided to team up and fill the void together.

  We started by hosting an event that showcased local tech startups and invited the rest of the Chicago tech community to join us. But we needed a name. I'd registered a number of domains a few weeks earlier and shared them with Eric. Tech Cocktail didn't resonate at first, but as you can see from the e-mail that follows, it started to grow on us.

  Hey Frank,

  The logos look great. I like the second one best (just the oversized martini glass rather than the person w/ the glass). Its super simple and gets the point across. I like the name Tech Cocktail more and more. The cocktail part not only represents that fact that drinks are involved but it also represents the mix of people in the room (VCs, techies, entrepreneurs, etc.). I think this could be big.:-)

  —Eric

  The rest is history. We set a date of July 6, 2006, picked a venue, and, through e-mail and word of mouth, invited the community. At this first event, we showcased six early-stage tech startup companies and attracted close to 250 attendees. People from larger corporations attended, along with press, investors, developers, designers, entrepreneurs, hackers, and creatives. The energy that day was amazing. Attendees were truly excited to meet up and see that there were others like themselves bringing new products to life in the city.

  But first steps are first steps. The first Tech Cocktail event didn't make any money. It was pulled together with $500 from a local hosting company and donated wine from artist Hugh MacLeod of Gaping Void fame. The venue we had selected was so new, it didn't even have its liquor license yet, so we had to rely on an army of family and friends to help make sure everyone's glasses were full. We quickly learned a lot about hosting events, and eventually were able to figure out the offline and online business of Tech Cocktail, which relied on sponsors, advertisers, and ticket sales like most media companies do.

  During this early startup period, my connections with Eric and FeedBurner led me to an amazing new opportunity in Washington, DC. In September 2006, I moved from my beloved Chicago to take on product development for the masses at the original Internet juggernaut, AOL. This opened up the door for Tech Cocktail events and coverage in DC, which we tackled with the help of DC native Nick O'Neill, who later went on to start the popular AllFacebook blog. Our first DC event was made even more memorable by a certain New Yorker in the wine business who reached out to support the event with free wine and sponsorship dollars. His e-mail follows:

  I would love to be involved as a sponsor of the DC Cocktail.

  I can offer FREE wine and would love to promo my WINE LIBRARY TV gig.:)

  Let me know of any details and if we can make this happen, and if we could do anything else or you have any other needs, but I think this can be really cool!

  Frank, I really think you and Eric are doing great stuff and WLTV would love to be doing some cool shizz with u guys!

  Gary Vaynerchuk

  Winelibrary.com

  Director of Operations

  Gary Vaynerchuk, then of Wine Library TV, is now a New York Times best-selling author, investor, and cofounder of VaynerMedia, a digital agency. Tech Cocktail in Washington, DC, in the spring of 2007, was the first tech event he ever attended along with his brother AJ.

  Brad Feld

  Brad Feld has been an investor and entrepreneur since the late 1980s. A leader in the Boulder startup scene, he cofounded the Techstars accelerator in 2006. Since then, Techstars has expanded to seven cities and has partnered with companies such as Nike, Sprint, and Kaplan to power its accelerators. As of this writing, the core Techstars programs have funded nearly 300 companies, of which 90 percent are either active or acquired.

  Feld also cofounded and is now managing director of the venture capitalist firm Foundry Group. To share his knowledge, he is heading up a series of books called Startup Revolution, including Startup Communities, Startup Life (with his wife, Amy Batchelor), and Startup Boards (with Mahendra Ramsinghani).

  To stay true to Eric's roots, next came Boston. Then, a new accelerator called Techstars in Boulder reached out to see how we could work together, so we visited Brad Feld and David Cohen to host an event around their first batch of startups. Eric and I were hosting quarterly events in Chicago and traveling to each city to make events happen. We started blogging about the startups that participated, attracting even more attention. Other cities saw what we were doing and reached out, inviting us to bring Tech Cocktail to their area. For more than three years we both continued working full-time jobs while working nights and weekends to keep Tech Cocktail going as a passion side project. But as social media channels grew, the events grew—at one point the Chicago event grew to 1,000 people! It was too much.

  In late 2009, the day came where Eric and I had to decide whether to take Tech Cocktail on full-time or move on. With AOL spinning out of Time Warner into its own company again, I had an opportunity to volunteer for a separation package, which I took. But it was not clear I would be able to safely jump into Tech Cocktail full-time and keep it afloat. I was leaving behind a six-figure salary, benefits, and the comfort of working for a large company. So I did like any reasonable human would do when placed squarely on the end of a diving board: I curled my toes on the edge, didn't look down, and jumped. It was a scary feeling to free fall for a while, but after a few months, I adjusted to full-time self-employment and found the business.

  David Cohen

  David Cohen is the cofounder, managing partner, and CEO of Techstars. He got his experience as a serial entrepreneur, selling his companies Pinpoint Technologies and earFeeder.com. Today, he's an advisor and board member, works with the University of Colorado's entrepreneurship programs, and runs the Colorado chapter of the Open Angel Forum. He's the coauthor of Do More Faster (with Brad Feld).

  Eric had a different vision for his future and bigger opportunities on the immediate horizon. Thankfully, he saw my excitement for continuing to push Tech Cocktail ahead full-time with the goal of turning it into a world-class news and events company and agreed to let me go after it. Knowing the workload was too much to take on alone, I pulled a new partner into Tech Cocktail, Jen Consalvo, who had spent over a decade building community products for millions and managing teams at AOL. Together we relaunched the site, found more partners, advertisers
and sponsors, added team members, tested new parts of the business, and bootstrapped our growth for another three years. It wasn't nearly as easy to do as we thought it would be, and there were many moments of uncertainty and sleepless nights, but we were both passionate about the vision and committed to enjoying the journey.

  How Do You Find a Cofounder?

  The ideal cofounder shares your values and is trustworthy. You need to be able to speak your mind without having to sugarcoat it, and know that your cofounder won't betray your confidence. A cofounder needs to have passion for your idea and the drive to tackle it. The last thing you want is someone who doesn't truly believe in what you're striving for. As you search, look for someone who has complementary skills and is open to dealing with conflict and disagreements.

  Timothy Chi of WeddingWire advises you to find people who have a similar tolerance for risk and work well with you. Chi started three companies and has found three cofounders: one was his former colleague at Blackboard, the other was a peer of his wife's from business school, and the third was referred by a friend.

  “The questions of risk profile and whether you will work well together are the toughest to assess,” says Chi. “These are the types of issues that can cause significant risk to the business. That's why, to whatever extent possible, I recommend getting to know your potential cofounders early. Meet for lunches and dinners, and work on small projects together. Do whatever it is you need to take a ‘test-drive’ before you all commit to quitting your full-time jobs.”