Wondering how many people use the consolidators who promise to manage down your debt by acting as midddlemen between you and collectors? What advantages (if any) does Ready for Zero offer over this method?
It took me 11 years to pay off 2 credit cards, and I'm still petrified to go into CC debt again. Will Ready for Zero also eventually offer planning tools for saving up for a big ticket item like a new MacBook Air so that I don't have to pull out a CC to purchase it?
A startup lives in a perpetual state of 'about to fall apart.'
Sometimes you just feel it more acutely than others, based on circumstances and how emotionally volatile you are at the time, in addition to other factors like how important the issue is in terms of actual survival (yours, the startups - which are two different issues, although codependent variables).
Many more issues surface in your short post.
1. You're only 1.5 months in and you've attracted the interest of a prominent angel investor AND your cofounder is meeting his deliverables? That's doing well, not falling apart.
2. You're beginning to feel the strain. That is under your control, and only your control. Look at how you're managing yourself and your energy levels instead of just looking at the business and reaching out to potentially inflate other issues into 'startup ending' crises upon which you could then heap blame when you quit.
If it seems too tough, that's because it IS.
What you have to figure out is whether or not it is too tough for you. Do you want this kind of stress/strain/doubt to surface almost every day for the next 2-7 years?
Are you willing to continue to take on this kind of risk?
Because that's what your startup will require.
Granted, if you're lucky, passionate, and good, and you work your ass off, those will be intermittently interspersed with such blinding moments of success that you'll wonder how you could have possibly considered quitting at any point.
3. Your cofounder relationship seems to be a big potential issue for you. I take it your cofounder is perhaps slightly 'more' technical than you - but could be wrong since you don't state this explicitly.
His risk tolerance is also lower than yours, it seems, as he's maintaining a 'safety' net with the consulting gig on the side.
This can mean many things, but you should perhaps be most worried about this if you're in the CEO/#1 role, as it can indicate a cofounder's lack of trust in your ability to 'drive.'
Falling off the map can happen (I've been guilty of it), but it usually means either you're frantically busy trying to sell, raise funds, etc. or that you've got a life on the other side of the startup which would suffer if you left it, and which you're not quite ready to give up.
It's your job to find out which is going on with your cofounder, preferably before you accept funding. If he's not committed and leaves after funding, and you're nontechnical, you're in a very tricky spot.
You also don't mention the equity split, but if it's 50/50, you've got bigger issues. Maybe the cofounder wants more, maybe he or she thinks she's got 50 % of nothing. If so, it's your job to communicate (and then actually hit deliverables like sales, funding money in the bank, etc) that make the point.
4. Who is going to recruit the CTO? Does the angel know 'a few people?' Does he have a specific person in mind? If so, has he named them, shared the name and a few sentences of this person's experience, and said he'd email or call them by X?
If not, and assurances are vague at best, he's probably relying on you to find someone.
Do not discount the tremendous time, energy, and effort it takes to find this kind of executive as a first time entrepreneur.
Given the other issues, it's challenging but not impossible for you to find a CTO at this point in the company history.
5. Going solo with the project? When you're fearful of him doing the same? Not a great idea. It's a worse indicator that you don't know if he'd pursue the same project independently. That should be what you focus on tomorrow - figuring out who would keep the kids if you divorce.
6. "Another full-time project" will not help you answer whether or not the life of a startup founder is for you. Nothing you've named here (although we're operating on not much data) is a disastrous issue that would require jumping ship.
Reading through the text it sounds like you're feeling itchy, scared, and looking for justification for moving on to the next big thing, before you've even figured out if this one can work.
Side note: Don't assume success in both cases. Assume failure. Your investors will, while hoping you're different.
Not until you've explored the myriad of ways in which you can fail, and confronted these head on with users, competitors, and investors during pitch meetings (ie post launch), will you have any idea of what success and failure will mean for this company.
Work your ass off to learn what you can while working on the one you choose, and you might find a different definition of success than the one with which you began.
And you might be one of the lucky ones with 1x, 3x, etc. exits.
Vision - 5 years: Want to see an activity commerce market grow out of existing social commerce/health site models + activity data + geolocation, other data.
Intrinsic incentives for behavior change work less than 10% of the time, but current rewards are cheesy. I idealistically hoped 'social proof' and motivation using your existing social networks would be enough to incentivize not just a 1x healthier act, but repeated and routinized behavior change.
Unfortunately learned over a year of getupandmove/imoveyou this doesn't work well, and even the most motivated users drop off. Lots of room for problem-solving here, but hard to not lose first mover advantage or be cloned.
Goal: Your action should be able to provide currency, literally and figuratively (points earned for calories burned converted to rewards/reductions in insurance premiums, which lots of new folks are working on).
Business model was this:
1. Sponsored campaigns for hospitals, health insurers, etc. (more social media than action - quant measurement of success was impressions). Enterprise model w/campaigns between 15-250k (we hit the low end but not the high end).
2. It was "Evite for healthy actions."
3. It was easy but time intensive to sell here given connections/experience in the space, but we spent a lot of time and human capital working on a glorified consulting model, even though we were successfully able to sell/close enterprise partnerships quickly (less than 12 weeks). Not scalable. Also, we found out we sucked at user acquisition with the direct-to-user model, and never 'went viral.' Our growth graph has a nice steady up and slightly to the right trend with no hockey stick in sight. Enter pivot.
Business model post-pivot:
1. Verify activity. Become middleware layer for 'proving' someone has done action or challenge using different types of data (example: geolocation, social proof/logins, accelerometer/fitness devices like FitBit).
2. Offer the verification to partners with potential for big distribution rather than go straight direct-to-consumer. Use founder strengths in this area.
3. It "will be" Paypal for verified health/wellness activities (individual and group).
Business model includes percentages of these factors which evolve over 2-3 years:
1. Sponsorship/campaigns (50% first year)
2. Lead gen (% cut; 25% first year)
3. With verification, conversions/cut of per action market completion + purchase, especially where actions include purchase of item.
Totally agree with znt after starting a co without learning to code (now working on Zed Shaw's Python guide, which is awesome).
Learn to code. IF you don't, and even if you successfully find a tech cofounder/lead engineer, you'll know so little about dev that you'll be wasting everyone's time during project management meetings and/or have no idea what's going on at your startup.
I looked for a tech cofounder for 9 mos. I could have/should have been learning to code at that time. It establishes basic cred you'll need.
And if you're not willing to learn to do that, ask yourself if you're really ready to do a startup, where you'll have to learn painful new skills on a near-daily basis.
A few observations from the trenches (in the last 6 mos having raised $, TechCrunch+ BBC launched, been through YC Summer 10, lost a cofounder, continuing to work with pivot)...
1. The ugly adolescent stage also includes significant pressure from early investors testing founders/founding teams considering early 'talent acquisitions' as a potential out. If you're considering this, and it seems tempting, don't immediately run from that realization.
Sit down, take time to think about why it's attractive, and whether or not you're the type to take it or stick things out. Do you want comfort and some security at this stage or more risk? Are you willing to change painful parts of yourself? In short, are you willing to do anything to make it work? This is a vital question that will only become amplified as the stakes get higher if you succeed and the company grows instead of closes up shop.
2. If you've got pros investing in your seed/angel round - and hopefully you do -chances are they already consider that money gone, so if things go south in the terrible teen phase, unless they see serious potential/saving grace you're not likely to get an inside round. You've got to be showing serious gains, stamina, or ideally both to secure this support.
3. This means the biggest asset in the startup at this phase is probably you - the founder or founding team - unless you've got some amazingly patentable/defensible tech, which, let's face it, we're not seeing much of in today's startup world. Not many VCs are funding crazy-big concepts either...they feel burned by the lack of returns in the consumer internet space, and who could blame them? Think of yourself and your cofounders this way. Stay healthy. Stay sane. Get more sleep. Drink less of every substance but water.
4. Investors will use this stage generally to feel you out and figure out what you'll do, how you'll evolve (or not) when you really begin to show the strain of this phase.
Keep in touch. Do NOT drop off their radar. Continue to plug away at the product road map as much as you can. Show adjustments. Openly voice lessons learned, realizations, but careful about doing the same with doubts. They should be voiced to your reflection in the mirror, your priest/rabbi, your counselor, and maybe your dog, not your funders.
If you DO make the mistake of falling off the radar or voicing doubts, the good news is you can still recover if you have the kind of relationship with your investors where you're on a first name basis and they'll meet you for a drink or dinner anytime they're in town. Don't give up if you've gotten this far, feel burned out, but still can't countenance giving up.
Once you've started down this road, no one who has invested in you wants to see a young company in trouble fail, except maybe your competitors. Use your investors as assets, not just piggybanks.
5. Prepare to field inquiries about how you'd feel about being replaced or bringing in 'more experienced executives' with 'more credibility.' These questions will come from family, mentors, investors, advisors, friends, and your own psyche.
Sometimes this means your funders think you can't do it alone and you're not evolving fast enough as a founder. Often they're right. Often they're not. It's sort of a crapshoot figuring out which scenario you're in.
Again, this is something vital to examine about yourself. If you put the company first, you'll be willing to do almost anything to save it, including bringing in another CEO. This is another thing you must know about yourself as a founder at this stage in order to move forward.
If you want to stick it out and evolve, consider making a list of your pluses and minuses, your daily habits, your work + success metrics, and renovate the hell out of them. I'm now learning Photoshop, Python, and taking Stanford's CS106 class as non-coding founder. I'm also sticking to a new daily schedule that will enable me to get through 6 mega goals (3 personal, 3 professional/product) in 30 days.
If you are not willing to go through this kind of effort as a founder, you probably won't survive this phase and should look for a 'safe' landing.
6. Shuffling of cofounders also often occurs here, when the founding team is replaced by 'experienced' managers, or b-school friends of someone at the VC firm, or even someone within the VC firm who likes the market space.
Your cofounder might also leave. YOU might be the cofounder who leaves and goes back to grad school, gets married, doesn't move to the Valley, etc.
Try not to fault your cofounder - or yourself - overmuch if one of you leaves. I wrote up a long essay on how to handle this if anyone's interested. The situation sucks. Successful cofounder breakups are rare, but they do happen.
The good news? You can get through it. So can they. So can the company. Stay in CLOSE touch with investors during this period. Always have a plan, even if the plan is changing day by day. Communicate monthly at minimum.
7. If you don't think you'll make it through (and this feeling occurs often EVEN if you decide to keep plugging away), the founders who are relieved to some sort of dissolution or replacement occur at this early stage have many options open.
After a period where you might feel disillusioned by the startup world and go to work within another company you can still do another startup. Even if you fail, and a VC/angel likes you, they may fund your next effort. I've been amazed to see this happen with friends who drove a first or even multiple startups into the ground after early successes.
Don't burn bridges to good people with self-indulgent behavior like feeling sorry for yourself about fcking up. If you have to wallow, take a week, or a month, or a quarter, straighten yourself out, and then get back to work.
8. Even if you fail here, you're still an asset as an experienced founder who got something to market and got some money in the bank.
So it also pays for VCs and investors to track these founders as they leave and go to work on other startups or within organizations, because if they stuck it out to that stage they may be valuable to 'recycle' back within the ecosystem at some point in the future.
9. Your fellow founders/entrepreneurs may also be watching you like hawks at this point with a strange mix of emotions.
First, some of them probably don't like you, consider your skills beneath theirs, or never thought your product was that great. These founders are few and far between, but they can be incredibly useful. Ignore these folks until you can talk with them rationally about your failure. Then meet and get really* harsh and honest criticism about the product, danger signs, outcomes, and their opinion. Hopefully they don't feel too sorry for you and dump really good data that will help if you want to start again. In the best case scenario you convert them to supporters. In the worst case you remain frenemies.
There's another class of idealistic founders who really, really do NOT want to entertain the thought of failure. They will be praying you succeed and pull through, especially if they supported you, because to entertain the thought of YOU failing means they might - at least tangentially - entertain the possibility that they might fail, even if their companies are further along.
They will not like doing this. They might stop responding to your communications. This is a pretty terrible feeling, but also pretty good sign that you're deep in the trenches and people are waiting to see if you sink or swim.
The last class of founders will be watching to see if you fail because they might want to snap you up. These folks will usually respond enthusiastically to your requests to meet up, or they may want to meet you.
This will occur if you're awesome, regardless of whether you're an engineering or design or biz founder. Be prepared. Feel these folks out and ask about 'opportunities.' Usually they'll let slip they're looking (or they have a buddy that's looking) for someone like you. You know, "if things don't work out."
If an opportunity sounds awesome to you, consider it. Even if you turn it down you'll know more about what you want and what you don't want, which makes you a stronger founder.
10. I can't say this enough...Founder talent is rare, and VCs keep an eye on this as a developing market. Successful founder talent (in terms of winning big exits, etc) is far rarer, but sometimes a decent or 'ok' founder can be placed with a different co-founding group and be more successful the next time.
Even founders who flat out fail at this stage and drive their companies into the ground by failing to 'save' them may succeed again at different startups, or they may welcome the separation as a chance to renovate their original existing idea and start hacking away at the same problem integrating lessons learned from failure.
The mess, however, is also where founders who decide to stick it out learn invaluable things about themselves, their cofounders (if they make it through together), and their business, whether they ever secure another round for that company or not.
You're absolutely right about our initial business model. We marketed 'activity campaigns' as an adjunct to traditional online 'ad campaigns.'
Instead of providing CPMS, we sold to Cabot based on a "CPA" model (clicks per activity).
We saw early that this pseudo-ad model would provide us with a nice small chunk of change, but would be mostly a biz-dev company and challenging to scale.
As a result, we're pivoting and moving towards a CPA2 model, where CPA = completions per action (this is where verifying the user has completed an action becomes vital).
Actually, neither Andrey (my cofounder) nor I (Jen) graduated from any of those schools.
I am an English major (with a minor in Women, Gender, and Sexuality Studies of all things), and Andrey graduated with a CS degree from UToronto (he's Canadian, eh).
We started by bootstrapping the company for 6 months.
You bring up an interesting point about our current reliance on Facebook and Twitter.
We recently added email functionality to help with that, but if you've got ideas about how we might improve we'd love to hear them.
The first, prototypical YC TechCrunch launch article doesn't always tell the whole story behind a company's history and founding (in our case there wouldn't be room ;).
Actually I'm pretty sure PG hates me (jk). As a female, non-tech biz/dev founder, I don't fit the typical YC mold.
Andrey (my cofounder) is the amazing developer behind the entire product, and before we accepted YC money we bootstrapped the company for 6 months. I'd bootstrapped the company as an LLC for a year before that.
As our rate of growth started to accelerate, and we had more opportunities for revenue-generating deals (phenomenal as a 2 person team) we saw YC as the perfect opportunity to expand more quickly.
Could we do Contagion successfully as a bootstrapped firm? Sure. But we were also in a unique position to go after a larger opportunity.
We analyzed the 37signals approach, weighed the risks, benefits, and resources at hand, and decided to go with YC, a TechCrunch launch, and raising a seed round.
As for those ice cream related pounds, Andrey and I would be happy to help you move them off :).
No worries, we don't view this as belittling. I actually bootstrapped the company for a year, did the go into debt thing, give up possessions etc. before my cofounder Andrey joined up.
We also closed our first revenue deal at 600 users, pre YCombinator.
We discussed the benefits of YC in great detail before applying, and again before accepting the invite. In between, I met with 10 of the YC alum founders to learn what value they extracted from/redistributed into the program.
We went through a similar values clarification session before we accepted angel/seed money. The funding we've taken to date is convertible debt and will allow us to grow at a faster rate than a smaller, bootstrapped, 2 person 'lifestyle' business.
Pre TC launch, we were growing at a steady rate month/month with no effort/cost to acquire users, but we decided we'd like to catalyze the company with the adrenaline shot you mention.
As you said, the network effect is very challenging to generate with bootstrapped resources. When we saw the opportunity to grow at a faster rate, we went for it, and it's been a great ride so far.
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