Startup chaos, and Crashing our way into 500 Startups

Everything changed when Dave McClure checked-in on Foursquare three blocks from our apartment…

My co-founder Geoff and I began our start-up adventure with nothing more than blind ambition, a passion for tech, a friendship going back to college (when we were roomates) and $30,000 of my personal savings.  I had just quit a high-power finance job, which seemed like a ridiculous decision at the time, and convinced Geoff to move to Chicago, hardly the hotbed of startup activity, to build a company.  We had nebulous ideas about small business, daily deals (“lol”), and building…something.  Anything.  It was March, 2011, and all Techcrunch could talk about was bubble 2.0.  We were going to ride that bubble.

Geoff was decent with Ruby on Rails, and I was the “business guy” with a light background in circa-1998 web development.  I would play the visionary, and Geoff would develop the ideas.  Our hypothesis was that 9/10 startups fail, but if we incubated 10 different products, one of them was bound to succeed.  Geoff moved into my apartment, which became a live/work loft; living frugally, and cooking our own meals, 30k would last us all the way to traction.  To cement our experimental mindset, we set up a cheap LLC and called ourselves Chattr Labs, emphasis on the laboratory part.

Our first product was something along the lines of About.me for Merchants; small-businesses could set up a webpage, list its menu, interact with customers (which didn’t really occur with Yelp), and offer daily deals and such.  It looked like shit.  We hired a web designer off Craigslist, increasing our burn rate, and adding another layer of communication to the development process.  Every two days I would propose a new must-have feature (based on intuition and not, actually, speaking with merchants), and Geoff would race to build it.  Practice must make perfect, because his development speed was increasing daily.  With all of my free-time as the business founder, I was reading every possible entrepreneurship/vc/tech blog, and inferred that the right course was to “launch early”.  However both Geoff and I were scared shitless of pounding pavement and selling this product.  We never considered founder-product fit, we were just building “cool stuff”.  As our arbitrary launch date approached, we increasingly expressed fear of the next step.  Was the point to commit to a project, or keep on experimenting?

25 days into our laboratory, we took the easy way out; we decided to pull a 24-hour hackathon based on a hair-brained idea to build something “we wanted”.  It was a Friday at 9pm, and we headed to 7-11 to purchase 8 red bulls, chips, and cookies (healthy living), and set out to build an HTML5 location-based hookup app.  You read that right.  Now, the process of building an HTML5 mobile app in 24 hours, with no experience, is akin to getting drunk and stealing a bumper-car.  There’s a lot of hitting obstacles and whiplash, but its ridiculously fun.  To make the process work (sans lousy craigslist designer), I was our front-end developer, learning on the fly.  The last time I had touched HTML, tables were all the rage, there was actually a <marquee> tag, and CSS was seldom used.

We quickly reached a development sync where we’d be coding the back and front-end in parallel, with a spoken and unspoken knowledge of the exact syntax the other was using.  Sure, my design work sucked, but it was the best we had.  By 9pm the next evening, our location-based hookup app was live; you logged in with Facebook, and could see nearby users.  You could send messages, and ‘propose a date’, whereby the app would pick a location (we scraped all of Yelp Chicago) algorithmically based on distance, stars, and # of reviews for you to meet at.  We posted some spam on craigslist telling people to use our app (lean distribution!) and headed to a bar with friends to test out our creation.  We texted everyone we knew, encouraging them to use the app, and waited.  And all of 3 people logged in.  When we asked what the problem was, everyone pointed to the same issue; connecting with Facebook, for a hook-up app, was downright creepy.

It hit us like a ton of bricks; talking to users was awesome.  And so we took the iteration cycle of feedback, design, and development to its irrational extreme.  Every two days we’d head to the local bar and pitch our product and feature-set to everyone possible.  I’ll spare you the details, but the general timeline over the next 5 months goes something like this:

Hookup app —> Find friends app —> Find friends for events app —> Location based event app —> Event app & website —> Event management website —> Event management & ticketing platform

Without ever actually pivoting (a pivot starts with a clean code base, right?), we somehow found ourselves building a full-service platform to rival Eventbrite.  It was massive.  And it was beautiful.  And it had more features than you could possibly imagine.  Working 18 hour days, 7 days a week, with short breaks for entrepreneur meetups, we had evolved into a commando 2-person product team.  Yet somehow, we found ourselves right back where we started; with a product we had to sell.  Sure, we had hustled up 1,000 (mostly just curious) users, but nobody was lining up to pay us money.  We had built an amazing proprietary analytics/ split testing system as the back-end of our product; and the results all read: 0.  Our burn rate was higher than we had originally intended, there was no revenue coming in, and we had invested 5 months in a long, iterative experiment.

This time, we hired a salesperson on commission, and I hit the pavement.  The going was rough.  Looking out the horizon, we had 3 months of runway left, and a product nobody wanted to pay for.  For the first time, conversations began to get heated, and the gut-sure confidence that we’d succeed began to wane.  It was time to get real.

At 4am, August 3rd, after working a 19-hour workday, the lightning-bolt of entrepreneurship hit us once again.  The top post on reddit.com was a list of people-search/background-check websites, and how to opt-out and remove your personal info.  And the process sucked.  Each site has its own privacy policy, and different mechanics for opting out.  Some required a fax, some required snail-mail, some required web forms, it was a mess.  We would automate as much of that crappy technology as we could in 24 hours; for the second time, we headed to 7-11, and stocked up on energy drinks and junk food.  22 hours later, we emailed our friends a link to our new privacy tool, and crashed.

When I woke up in the late afternoon, my inbox was flooded with responses inquiring, demanding, that we build out the product.  The nonchalant encouragement that we were used to as entrepreneurs was replaced with rabid demand.  It felt great.  But our runway was still shrinking, and now we had two products to juggle; one we had invested 5 months of development into, with little traction, the other little more than an idea with a passionate response.  We began conversations for a friends and family round, and spent more development time on our privacy tool, which we randomly named MelonCard.  There are moments in a startup where you feel simultaneously at your best and worst; this was one of them.

That changed when Dave McClure checked-in on Foursquare three blocks from our apartment.

As a company, we sucked terribly at social media engagement; as a skill, it didn’t come naturally to either of us as founders.  However, as we were alpha-testing MelonCard, I was spending more time on twitter @mentioning our product to folks in the privacy space (which led to some incredible early interactions).  So anyway, Dave had configured his Foursquare to auto-tweet his check-ins; the tweet read ‘Lightbank BBQ @ Smokedaddy’, Lightbank being one of three VCs in Chicago (and the Groupon backers), Smokedaddy being an amazing BBQ joint.

“Geoff, get your shoes on, we’re going to stalk down and pitch Dave McClure”.

“Who?”

“He’s a baller.  He’s all about the metrics, AARRR, and being loud.  We like him.”

“Let’s do this like Leroy Jenkins.”

As we walked to the BBQ, Geoff asked which product we were going to pitch.  Clearly, the one we were passionate about; privacy.  We were anxious and giddy and calmed our nerves by saying “this is what old-school hustlers would do, what’s the worst that could happen?”.

When we got to the BBQ, it was in a roped-off area outside the restaurant.  Geoff chain-smoked cigarettes to look casual, while I did surveillance trying to spot Dave.  There were about 20 people eating and drinking.  I made a mental note, he’s the guy in the red Wildfire t-shirt.  We discussed the right approach, and realized we had no idea how to proceed.  Do we brazenly crash the party?  Do we sneak in?  Do we wait outside until he has to leave, and then pitch him outright?  We chose plan D, go across the street to a bar, and drink down some liquid courage while formulating a real plan.

Three drinks in, we agreed on a strategy; I would bee-line for Dave, and Geoff would play defense and hold back any analyst or intern that tried to bounce us.  We confidently walked across the street, walked right in…and couldn’t find Dave.

Caught off guard, my first instinct was to approach the first table I saw, and try to blend.

“Hi, I’m Robert Leshner”

“Who?”

“…I’m here for the BBQ”

“Who are you?”

“This is a gathering of…investors, correct?”

“Who told you about this event?”

“Dave McClure tweeted it out.  I’m here to pitch him.”

“YO, Dave, did you tweet this shit out?”

“Uhm yeah, I did”

“These guys are here to pitch you”

“Well come on over, boys, pull up a chair and pitch me!”

The entire party stopped, and circled the table.  We were the center of attention.  When you’re pulling up a chair to pitch a guy you’ve only seen on Techcrunch TV, you’ve been living in the startup desert of Chicago, and you’ve never actually pitched the company you’re about to pitch, you just have to wing it.

“Our company, MelonCard, removes your personal information from websites which sell it.”

“Melon cart?”

“No, MelonCarD”

“Ok, when you pitch your company, and the name is confusing, make sure you really accentuate the MELON and the CARD.  Maybe carry around a melon or something, and a card.”

“Uhm, ok, so MelonCarD removes your personal information from websites which sell it.  We want to centralize and streamline privacy, and be the destination where people go to manage their personal information online.”

“Are you live?”

“Yes, we’re currently in an alpha test”

“How do you define ‘alpha’ test?”

“We’ve told 100 people, and 98 creamed their pants.”

Genius.  He handed me his business card, and explained the process; find a few mentors in the 500 network which we like, which would add value to our business, and convince them that we’re a good fit.  If I needed help connecting with any of them, he’d make an introduction.  Seemed easy enough.  As George Costanza would do, we were about to bounce on a high note.

“Stick around, we’ll play a fun game”

“…..ok…we were going to leave now…”

“Its called Half Baked dot-com”

For the un-initiated, Half Baked dot-com is a game in which everyone is in a circle, the game proceeds clockwise, and the two people to your right each say a random word.  With no preparation, you have to pitch a tech company…named with those two words.  Dave demonstrated, and the two individuals to his right said “Duck” and “Umbrella”.  So, Dave pitched a hard-hat company that gave away free product on construction sites, loaded with advertisements around the hard-hat.  He made it look easy enough.  My words were “Paper” and “Candelabra” (thanks, Dave), so I pitched a subscription company that mails candles and disposable candelabras.  There was discussion of fire risk, but I was caught up in the moment.  As Geoff (to my left) was sweating bullets, Dave stood up, and announced that he had to catch a plane, sparing my co-founder his turn at Half Baked.  As an aside, if you’re a founder, and have never played, this is the game for you.

For the audacity of it, our stalking, crashing, and pitching proved to be a turning point in our company’s history.  A few weeks later we drove from Chicago to California, joined 500 Startups, and set in motion the creation of a real company.  More on that some other day.

-Robert (@rleshner)