Professor and CEO/Managing Director of FirstMark Capital, Lawrence D. Lenihan, invited Danny Wen and me to guest lecture this past Wednesday at his NYU class "Entrepreneurship For The New Economy" aka Ready, FIRE! Aim. Other guest lecturers include Seth Besmertnik (Conductor), Alexis Maybank (Gilt Groupe), David S. Kidder (Clickable), Marc Cenedella (TheLadders), and others. We were in esteemed company to say the least. Embedded below are the slides I prepared, graciously designed my business partner Dave, with explanations following.
The least interesting of all presentations — the opening "Who am I?" slide — but also necessary when talking to any group that doesn't already know the answer to the question. Here I briefly touched on having recently graduated from college, how I was always interested in entrepreneurship and started my first major company when I was a sophomore, called TypeFrag, and won first place and $75,000 in a business plan competition during my senior year. Basically, that's everything you can find on my CrunchBase profile.
TypeFrag, Uncover, Carbonmade
Leading into this slide I give a bit more background on the three larger companies I started. Beginning with TypeFrag, I mentioned how during 2001 I noticed a need in online video gaming when people were beginning to shift from typing to their teammates to using voice communication. To address that need, TypeFrag was built and marketed.
It's all about finding needs and building out products around that need. Having sold TypeFrag in 2007 and having just moved to New York City, I found it difficult to find and share good restaurants, bars, and clubs with your friends, so I built Uncover. This was before Yelp really made it big. But in the process of building Uncover, I met Dave and Jason — who were also designing and developing Uncover for me — we clicked, and I joined them to take Carbonmade from a side project to our sole focus.
I talked about the story of Carbonmade here. Most of that can be found in my 100,000 Users and So Can You article, our About page, and the recent coverage we received from Carsonified. The story in a nutshell: Dave built a basic custom CMS for himself, his friends bugged him to let them use it, we added user registration, and then started building up the product slowly and thoughtfully. We then started making enough money through Carbonmade to stop taking on new consulting gigs.
This was a simple run-through of Carbonmade's numbers.
This slide is an abstraction of an earlier article I wrote entitled Three's Company, where I talk about why I think three co-founders is the best group. The simple reasons are: (1) with three people it's easier to mediate situations, (2) you have three people who are masters of their own domain (design, code, and business) and take leadership in it, (3) and you delay hiring, which is the hardest thing any successful company can do, but obviously a good thing as long as it's possible.
I pulled the quote: "If you're not working on your best idea right now, you're doing it wrong" from a recent debate between DHH and Jason Calacanis on This Week in Startups. DHH argued that 37signals is the best idea he has, and he'd only sell and move on to something else if he came up with a better idea. I think it's less about the idea and more about how you execute on the idea, so I go to discuss:
You can have a great idea, but if you execute poorly on it then you won't get anywhere. There are plenty of people that come up with great ideas, but can't get past that. It's far better to have a decent idea and execute really well on it. You can then branch out from there and turn a decent idea into a great one.
Being human, friendly, and genuine are all easy things to do and often overlooked. Somehow people have it in their heads that they need to be "professional" and speak to their users like a robot to launch a real business. Customers these days want to feel as if you could be their friend. Simply look at Zappos' success in branding and marketing if you need an example of why this is true.
If you do make a mistake, you need to own up to it. We made a mistake in January, 2008, when we lost 5,000 user accounts because of a faulty database writing to a corrupt backup. Egads! We created a specific page documenting exactly what had happened, apologized profusely, and gave the affected users extra space to compensate for their loss. We didn't try to sugar coat anything. We fucked up and we admitted it.
I love Alan Shugart's quote "Cash flow is more important than your mother." It's beyond true. Cash is the lifeblood of any company and if you run out of cash then you're simply forced to shut down your company and move on. Running out of cash is the last thing you want to do. But revenue is not the only thing, you need to turn your revenue into profits, and have reserves in the bank for rainy days.
Like any other startup out there, we've made mistakes that weren't just the kind of customer turn-off I mentioned before. Our biggest mistake was that we lost an entire year on Carbonmade because we spent it working on a second product in 2008. It was only at the end of 2008 that we realized we should be focusing on Carbonmade full-time. Also, we were too overreaching in our goals for the new version of our app and since have had to drastically reduce its scope. Both of those factors together have led us to being too slow to get new things out.
Always distill your product, copy, and marketing down to the barebones. Your product should never be muddled with features, your marketing message should be clear, and less is always more. We've severely limited our users' features, because although we may lose a few people who want more customization, we've gained far more who just want something that gets their work online quickly, with no quirks and complications.
Uncover's Silver Lining
You should never be afraid of failing, because out of most failures there's a silver lining. Be it lessons learned, mistakes you won't repeat, or, in my case, people you meet along the way. I met Dave and Jason through working on Uncover, and although I lost nearly $100,000 in its development, Carbonmade would not be around today if I hadn't started Uncover.