Tag: Entrepreneurship

My Entrepreneurial Journey

Note: I wrote this post back in May 2010 for a guest post on a large tech blog, but it never got used.  I found it today while going through my inbox and decided it was too good to not post.  This is my entrepreneurial journey from 2004 until May 2010.

As I made my way from Milwaukee, WI to Madison, WI for my freshman year of college in fall 2004, I had no idea what I wanted to do with my life.  I’d know for awhile that I liked working for myself: I’d been a soccer referee since I was 12, which allowed me to make my own hours and make more money than any 12 year old should be able to earn.  I’d been fairly bored with high school because we learned boring theories instead of practical ideas that would help me later in life.  My biggest take away from high school was “more practice, less theory.”

All of these thoughts took a backseat in my 18 year old mind when I received a letter from the University of Wisconsin notifying me that I’d lost the student football ticket lottery.  I was devastated.

After moving in, I’d been thinking about how to find tickets, but I didn’t have to look very far.  One of my friends invited me to a party my first night at college.  I was about ready to call it a night and walk home when I heard a guy screaming into his cell phone.  He hung up and was so mad that he slammed his phone on the ground, breaking it.  He got even angrier because he said he didn’t have the money to get a new cell phone.

Something in my brain just clicked and I said, “hey, do you have football tickets?”  He looked at me really strangely, but said he did.  I responded, “well I don’t have them, but I’d buy you a new phone for your tickets.”  I wasn’t really expecting anything, other than maybe some choice words, but to my surprise, he got excited.   The next day, I tracked the broken cell phone guy down via a friend in the frat, bought him the money for the phone and made the exchange.

I was pretty excited.  It only took me one night to get my football tickets.  All was right in the world.  I told my story to some of my new friends and quickly realized that there were a ton of kids who were in my same predicament.  I agreed to help them find tickets.  It pays to be in the right place at the right time.

Enter Exchangehut.  I first remember seeing flyers and spray paint stencils for the site a week into my freshman year.  I checked it out, signed up and was user number 1117.  Exchangehut was a ticket exchange that worked like the stock market.  Buyers could input a bid price and sellers could put in an ask price, creating the market.  When the prices matched up, a sale happened and both parties were contacted.  I used the site to help 4-5 friends buy tickets and quickly saw how useful the site was.

As the year went on, I became one of the more active users, I realized that the site had limitations and thought about creating a competitor.  I wrote up a simple business plan, but got discouraged because I was having trouble finding a programmer to write the new site.  I put the project on the back burner and went on with my summer.

I was in the right place at the right time again a month later.  The owner of Exchangehut was selling the site via an auction because he was graduating.  I quickly shot an email back, did my research and put in a bid.  I excitedly talked with my friends about how I was buying a business and to my surprise, one of my best friends from high school said he was too.  I said “what business” and we both said “exchangehut” at the same time.  He was a computer engineering major and we decided to merge our bids.  A month later, we were the proud owners of a 2000 person tickets and textbooks website at age 19.

We ran the site until 2008, growing the site to 150k users across 8 college campuses.  We learned a ton and needless to say, I was hooked.  I loved coming up with ideas for the site, promoting the brand and working my own hours.  I was making more money each week working on average 8 hours per week than my roommates were making bartending and waiting tables full time.  I loved the freedom that came with being able to work from anywhere.  I got to travel places and meet interesting, creative people.  I enjoyed meeting people who though “how can we fix a problem” not “why can’t we.” We sold the business to our ad network in summer 2008, but I knew I was going to start a new business.  This isn’t to say it was easy.  We put in long hours, answered angry customer emails and calls and continued to go to class.

Like many entrepreneurs I know, I keep a business idea list.  I had over 200 ideas on my list and after selling, worked on cutting them down to 10 that I thought were promising and would be fun to work on.  All that stopped when three professors I had gotten to know independently told me that I had to meet a student named Jesse Davis.  At the same time, two of my friends said that Jesse was working on something cool and needed a partner.

I met Jesse in one of the libraries on campus and he pitched me his idea.  Jesse’s pitch went something like this:

“I just read Thomas Friedman’s The World is Flat and couldn’t get through it when I got to US Marine Justin Ellsworth’s story.  He was killed in action in Iraq and his family wanted access to his Yahoo! email account.  Yahoo said no.

After a long court battle, a judge ordered Yahoo! to turn over the contents of his email accounts to his parents.   It shouldn’t take months to gain access to a deceased person’s email account.  Also, what if I don’t want my parents looking into my Facebook account or other sites I might have? Friedman ends the passage by saying “someone sort this out.”  Let’s create a system for people to store their last wishes for their digital assets, which are any online account or file on their computer, and let’s allow them to input their passwords so that their survivors have access.

I immediately thought back to ExchangeHut.  In 2005, we hired a programmer to help us make improvements with the site and at one point, I realized that our programmer has all of the usernames and passwords to the server, database, credit card processing, affiliate programs and everything else that was necessary to run the site.   Like programmers like to do, he used a random password generator, so there would be no way we’d be able to guess his passwords if he were to get hit by the proverbial bus.  We ended up having our programmer write down every password on a piece of paper and I stored it in our safe deposit box, just in case.  Jesse’s idea would have solved this problem.

I was looking for a project, Jesse was looking for a cofounder with some experience and we hit it off.  Two months later, we founded Entrustet.

I was sold on Entrustet because we had a chance to create a solution a real life problem.  The death of a loved one is an incredibly stressful time and we thought we could help give people peace of mind that their digital assets would be dealt with according to their wishes, and that survivors wouldn’t have the burden of having to guess what the deceased person wanted done with their online accounts.

We’ve been working on Entrustet since November of 2008 and launched in March 2010.  In our first year, we spent under $20k starting the business.  We were able to spend so little because we hustled and were located in Madison.  We’ve stayed in Madison, even though we’ve had opportunities to move to Silicon Valley, New York, Boston or Austin.  Being located in the Midwest has given us some advantages that are often overlooked by people on the coasts.

It’s incredibly cheap to live and work in Madison.  Our office is located across the street from the state capital and we pay $200 per month.  I pay $400 per month to live in a nice apartment four blocks from the office.  On the coasts, we’d have had to pay 5-10x more.  While the talent pool is not as deep, we’ve found talented employees who cost a fraction of what they would on the coasts.

Madison is small enough that we’re able to get in contact with anyone we want to relatively easily and Madison has groups like MERLIN Mentors that help new startups by pairing founders with successful entrepreneurs who server as in informal board of advisers. Everyone in our company walks to work and we’ve become active in the startup community by starting Capital Entrepreneurs, a founders group with over 60 tech companies in the Madison area.

I’m a huge believer is pursing your passion and starting starups has allowed me to pursue mine.

Punishing Failure, Stifling Innovation: How Culture Affects Who Goes into Entrepreneurship

I wrote a post last week about some of challenges facing Chilean would-be entrepreneurs because of the culture.  Overall, Chilean culture punishes failure, which stifles innovation.

It got me thinking and I realized that it seems to me that a fixed percentage of people in the world are entrepreneurial.  I’m not sure what the exact number is but if I had to guess, it’s probably around 10% and I’d be willing to bet that percentage is fairly static across the world.  I believe that these 10% have the skills, desire and entrepreneurial spirit to start a business and succeed.  10% of Americans, Saudis, Chileans, Spaniards and South Africans all have the desire to start businesses, so why do some places have lots of entrepreneurship and others don’t?

Why does the US have a higher percentage of entrepreneurs than Chile, Saudi Arabia or other places around the world.  And in the US why do Silicon Valley, NYC, Austin, Boulder and Boston have a higher percentage of entrepreneurs compared to Des Moines, Tallahassee and Phoenix?

I believe that certain cultural values free up the entrepreneurial 10% to actually start businesses and succeed.  For example, in the United States, we reward risk taking, business ownership and making money.  On average, we also love innovation, learning and trying new things.  We love rags to riches stories, even if they are only partly true.  If someone’s business fails, it’s seen as experience, not a black mark.  In the US, these values are stronger in San Francisco and Austin than in Cleveland and Memphis.

In other parts of the world, there are many different cultural pressures that stifle innovation: punishing failure, punishing innovation, closed culture.  Some places even look down on successful people.

In Silicon Valley, I bet 20% of the people are entrepreneurs in some way shape or form.  In Austin, maybe 8%.  In Chile it’s .01%.  I believe that all cultures start out with the same 10% who can start businesses, but some cultures push people who may not have started businesses to do it, while others push people who would have otherwise started a business to shy away.  The most important thing entrepreneurs, government and academics can do is to try to free the people who would start a business, but don’t because of cultural pressures.

I’ve seen it first hand in Madison.  When I was 19 and just starting with ExchangeHut, there were not many young entrepreneurs.  I only knew 4-5 students and recent grads who were starting businesses.  After JellyFish sold to Microsoft, Networked Insights started to have some success and young entrepreneurs like those in the Burrill Business Plan Competition started to get press in national publications and have some success, other people started to see that they too could start a business.  Capital Entrepreneurs has accelerated the process, along with all sorts of cool initiatives from the startup community like barcamp, forward tech festival, high tech happy hour and more.  I think Madison went from a 1% to a 3% city in the last five years.  We still have a long way to go, but by unlocking the pent up entrepreneurial talent, we’ve seen an explosion in entrepreneurship.  Just wait until we see what Madison looks like at 5%!

In Chile, I’d estimate that we’re at .1%: for every 1000 people who are entrepreneurs at heart, only 1 starts a business.  That’s 1/1000!  In Silicon Valley, it’s probably 200/1000, Austin 80/1000 and so on.

Part of Start-Up Chile‘s mission is to introduce entrepreneurs from all over the world into Chile’s culture to try to break the cultural pressures that punish failure and stifle innovation.  I believe that we should be focusing on the other 9.9% of Chileans who might start a business if they were not afraid of being punished for their failure.  If we can double the amount of entrepreneurs who start businesses, it will be a huge win for Chile.  I see similar parallels to Madison and the entrepreneurial community is starting to take shape.  People just need the entrepreneurial push!

What do you think?  Are entrepreneurs distributed equally across the world or are more entrepreneurs born in one country compared to another?  What can you do to help free up the rest of the entrepreneurs who are scared to make the leap?

How to Make an Introduction

I get asked to connect people all the time.  I also ask others to connect me to people every single day.  Getting introductions is an incredibly powerful way to get to know people who can help you with your business or in your personal life.  It’s also great to be able to give an introduction to two people who will mutually benefit from knowing each other.  Email introductions are the most common intros these days, so it’s important to know how to both introduce two people and respond to introductions.

Introducing Two People

I like to keep it really simple.  Here’s a mock introduction between my business partner Jesse Davis and our friend/Madison entrepreneur Steve Faulkner of Real Time Txts.

To: Jesse Davis, Steve Faulkner

From: Nathan Lustig

Subject: Introducing You

Jesse, meet Steve Faulkner.  Steve is, among other entrepreneurial endeavors, the founder of Real Time Txts, a service that texts subscribers free drink offers at local bars in real time.  He also wrote an awesome article about Madison entrepreneurship that was featured in Techcrunch.

Steve, meet Jesse Davis.  Jesse is the cofounder of Entrustet, a website that allows you to decide if you’d like your digital assets transferred to heirs or deleted when you die.  He is also active in the Madison startup scene and Capital Entrepreneurs and writes a great entrepreneurship blog.  Jesse is interested in connecting with you to see if there is a potential partnership for Real Time Txts and Entrustet.

I wanted to connect you guys so you could figure out how to make it happen.  I’ll let you take it from here.

Thanks,
Nathan

Key Points to Remember

  1. Use the format above to introduce both people to each other
  2. Include links to each person’s business, unless the person is well known
  3. Include a sentence at the end to say why you’re connecting both people to each other
  4. Include a sentence that tells the two people you’ve just introduced that it’s up to them to take it farther

Responding to an Introduction

It’s fairly straight forward.  Click reply all and thank the introducer for making the intro.  Introduce yourself to the other person and go from there.  It’s important to include the introducer in the first reply so that they know that you’ve actually responded.  If I’ve taken the time to introduce two people, I want to know that they’ve actually taken the next step to connect.  After the first email, feel free to leave the introducer off further conversations.  Here’s a sample reply:

To: Jesse Davis, Nathan Lustig

From: Steve Faulkner

Nathan, Thanks for intro.

Jesse, many people have told me that we should meet as well.  As Nate said, I’m the founder of Real Time Txts, a service that sends people texts about free drinks at Madison area bars.  Do you have some time this week to chat via phone or meet up for coffee so we can discuss a potential partnership?

Thanks,

Steve

I hope this helps!  What do you think?  Do you use this format or do you have a different format that works well for you?

Forward Technology Conference 2010

On the flight back from Austin after SXSW last March, I was taking with Jesse about how much fun it would be to have something like it in Madison.  We thought it would be cool to try to set something up for the summer.  When I got back, I pitched the idea to my friend Matt Younkle, who really liked the idea.  In May, over some beers, we decided to try to make a go of it.  As the summer rolled along, Matt, Bryan Chan and I continued to plan Madison’s tech conference.

The Forward Technology Conference took place at the Memorial Union on the UW campus on Friday and was a huge success.  Over 120 Madison entrepreneurs, techies, investors and other tech savvy Madisonians attended the inaugural FTC2010 to hear from some of the most interesting people in the Madison technology scene.

FTC2010 was only a small part of the 10 day long Forward Technology Festival, which was sort of a “taste of Madison” but for all of the tech and entrepreneur focused groups in town.  The Forward Technology Festival was the brainchild of Preston Austin, who had the foresight to try to bring all of the different tech groups in town together in a week long celebration.  FTF2010 included High Tech Happy Hour, Capital Entrepreneurs, Sector67, BarCamp and other tech focused events.

FTC Highlights

The Forward Technology Conference kicked off with a panel called Entrepreneur 101, which featured four successful Madison entrepreneurs: Greg Tracy (Sharendipity), Dan Voell (GoBuzz), Chad Sorenson (Flamedisk) and Roy Elkins (Broadjam) and was moderated by Bryan Chan (Supranet).  The panelists talked about their successes and lessons they’ve learned over their careers in the startup game.  All of the entrepreneurs talked about staying focused as one of they keys to their success.

Next up was All About LLCs featuring attorney Joseph Boucher of Neider and Boucher and Kevin Kelbel an accountant from Smith & Gesteland LLP moderated by Matt Younkle (Y-Innovation).  Boucher and Kelbel talked about the different types of business entities and shared stories about why different companies should choose LLCs, S or C corps.

After a quick lunch break, we did an hour of breakout sessions with topics proposed from the attendees.  We ended up with a wide range of topics and settled on four.  First was how to run an intern program led by Jesse Davis of Entrustet.  The second group was about what a shared hackerspace in Madison should look like, led by Chris Meyer of Sector67.  Another session was about biomimicry, with the last session focusing on the future of the web and HTML5 (hosted by Momenta’s Dan Gordon).

The final panel of the day was all about design, branding and identity.  It featured John Besmer (Planet Propaganda), Wesley Grubbs (Pitch Interactive), Andy Wallman (Knupp & Watson & Wallman), Gage Mitchell (Gage Mitchell Design) and was moderated by Dan Merfeld, (TheoryThree Interactive).  This was one of the more fun panels of the day and featured spirited discussion on the pros and cons of large and small design shops.  The panelists stressed that brands need consistent messaging across all platforms or their marketing won’t work.  My favorite quote of the day came from Besmer “If you’re thinking about your marketing when its time to do marketing, its way too late.”

We rolled on into my favorite part of the day: Pitch Your Biz.  5 startups had 5 minutes each to present their ideas to the crowd and then the crowd had 5 minutes to provide feedback, ideas and ways to improve the business.  Biz Pitchers included Heidi Allstop (Student Spill), Derek Swoboda (Golf Links Cafe), Joseph Beck (Loacsys), Justin Beck (PerBlue) and Mudit Tyagi (Open ADC).

I love this format because it keeps the participants and the audience on their toes.  The audience can’t fall asleep, since the pitches come fast and furious and there’s a new one every five minutes.  All of the startups did a great job, as did the audience.  My personal favorites were Student Spill, which I think has the potential to be a game changer by bringing support groups online, but with a tweak and PerBlue.  Justin Beck from PerBlue is always an entertaining speaker because he is right to the point, provides compelling stats and doesn’t mince words.  All five startups did a great job and Laurie Benson (Innacom) was a phenomenal MC.

Fred Foster of Electronic Theater Controls was the keynote speaker and told the story of how he founded ETC while he was still in school at UW.  He told war story after war story about his battles growing the company into what it is today: $200m in revenue and 700+ employees.  Foster had the audience laughing every few minutes and I could have listened to him tell stories for as long as he wanted to talk.  I thought it was awesome that when he started the company, he wanted to sell theater controls to The Met and 20 years later, he actually did it.  Talk about perseverance!

After the keynote, we put on a reception above the union terrace, right on the lake.  The weather was perfect and I enjoyed talking with all of the attendees and learning about their current projects.

I really enjoyed FTC2010 and am hoping to make it an annual event.  I know that with a full year to prepare, we can do an even better job and get more people in town to attend.  Madison is turning into a startup hub in the Midwest.  TechCrunch noticedForbes noticed and the local media is starting to take note.  The Forward Tech Conference is another step in the right direction and one that I hope continues to put Madison on the map!

Did you attend FTC2010?  What was your favorite part of the festival? Do you have any suggestions or feedback?