Like many others, DoLeaf applied to TechStars this year with the hope that we would be inducted into the inner circle of blessed seed stage startups. Alas, it was not to be. As David Cohen puts it, we’re not rejects, we’re just non-selected. From our perspective, it’s a bit of semantic gymnastics, but oh well.
In any case, while applying, we read Foodzie’s Act Like an Underdog post and found it very helpful from a perspective of what they did to get into TechStars. In the interest of providing a control group, here’s what we did to NOT get into Techstars.
Note: While this is geared at TechStars in particular, we’ve also been rejected by Y-Combinator, so we’ve got experience with rejection and can therefore make a few generalizations. 
Note 2: There may be a little sarcasm sprinkled here and there, but by and large, this post is intended to seriously be a guide that others can use when determining how to approach applying to a seed stage program. This is our way of giving back what we can to the startup community. I’m following in the footsteps of someone I admire greatly, Failed Startup Guy (my name for him, given with the utmost respect). He gave it a shot, failed, and then was honest and brutal about what went wrong. That takes real guts.
The idea and the team
Essentially, DoLeaf is a marketplace for people to find and buy plants from independent garden centers and nurseries. There are a lot of smaller growers out there that want to sell over the web, but don’t want to deal with managing their own website. So, DoLeaf allows them to easily set up branded storefronts and begin selling immediately.
Yes, we’re similar to Etsy. Yes, we’ve heard of Foodzie. In fact, the people from Foodzie have been incredibly helpful.
The DoLeaf team is composed of Ryan, Me (Micah), and my wife Sarah. In case you’ve missed our previous postings, Ryan and I have successfully collaborated on our first startup, Obsidian Portal, for about 3 years now. Obsidian Portal is profitable, growing, and a lot of fun. We’re actually quite popular in our niche. Sarah is an avid gardener and able to speak the lingo and engage with the sellers to bring them in. She has been managing DoLeaf’s Twitter account, blog, and our outreach efforts, with a lot of success.
Our team has a proven track record of success. We’ve got the technical skill, the domain knowledge, and the grit to work nights and weekends while holding down day jobs. Our idea has a simple and obvious business model and will generate revenue from day one. In short, I think our team and idea are a perfect fit for a seed-stage entrepreneur program.
Pre-Techstars for a Day
Before TS4AD, we applied early (about a month before the deadline) and then exchanged a handful of emails to David. At this point, DoLeaf was a beta site with user accounts, stores, and the absolute basics. Still, it was a working site and not just an idea on the back of a napkin.
We also exchanged some emails with Emily of Foodzie. She was very helpful (and continues to be), and we asked her to send a letter of introduction on our behalf to David. We wanted to do everything possible to get the inside track.
Finally, we researched several of the TechStars mentors and picked one or two that we thought would be a good fit for us. We followed them on Twitter, started reading their blogs, and determined to meet them at TS4AD, if we got invited.
The culmination of this was an invitation to TechStars for a Day (TS4AD).
Techstars for a Day
We decided that we would all go to TS4AD, in order to show how committed we were. Plus, we have a great team and we wanted to get that across in person.
At TS4AD, we brought great business cards. To spice them up, Sarah made packets of Money Plant seeds and attached them to the cards. It was quite clever, if I do say so myself.
We talked to David twice, Brad once, and a handful of others, making a hard sell for DoLeaf. We handed out a dozen cards and mingled somewhat with the other teams. We tried very hard to make sure that David and Brad had heard our name several times. Repetition is simple, but surprisingly effective.
In the evening, we went to the Boulder New Tech Meetup, but left early to meet with our graphics designer in Fort Collins, CO. If you’re trying to get noticed for TechStars, there’s not much opportunity at the Boulder New Tech Meetup, although it was cool to see how much support there is for the Boulder startup community. Similar events in Atlanta wouldn’t be near the same size.
March – Deadline
Following TS4AD, we decided to give 110% to our TechStars application. That took the form of constant updates and emails to David and Brad. We averaged about one every two days, with follow ups to every email they sent.
We also moved DoLeaf into a closed beta where we invited some potential sellers to sign up, create a test store, and give us feedback. We got about three sellers to sign up, and their feedback continues to be invaluable. We made sure to notify David every time we got some feedback from a tester. We wanted to show that we were making progress on the promotional front, and not just on the technical aspects.
As instructed, we sent beta invite codes to Brad and David. They both signed up and played with the site at least once, and sent along some feedback. David went through the entire workflow to verify that our payment processing actually existed. For feedback, David said the images were loading slowly, so I went ahead and moved us to a CDN (Amazon CloudFront) to speed up load times. In addition, I made an addition to attachment_fu and got the patch accepted. We made sure to notify David, in order to show that we were supporters of open source (which we are!)
Finally, we discussed incorporation options with David. We asked about the differences between LLC, S, and C corporations. Plus, we mentioned our decision to implement a vesting schedule for all the founders, which David wholeheartedly supported.
By the end of the application period, we had gone from a basic site with some browsing to a closed beta with three test sellers, payment processing, a CDN, much better browsing, and a much better design. So, in my opinion, we made a crap-ton of progress over the course of the application period. Unfortunately, much of this was backend plumbing and didn’t involve a lot of zazz on the front end. I think that may have given a false impression that we were cooling our heels, when in fact we were busting our asses.
The decision
As I said before, the outcome of all of this was a “non-selection” for TechStars. On March 30, we received a letter from TechStars breaking the bad news to us. It was a major disappointment. We’re definitely continuing with the idea and are still very excited, but rejection is hard, plain and simple.
The point?
My whole point in writing this post was to give a comparison for a TechStars non-selection. There are plenty of selected companies to compare yourself to (although little information about their applications or status prior to acceptance), but precious little info on the companies that applied but got turned down.
So, when deciding whether or not to apply, and what to do (or not do), please use our experience as a guideline. The TechStars application process is extremely competitive, and it’s best to realize that up front. Don’t kid yourself that just because your friends tell you your idea is awesome, it is automatically better than 500 other awesome ideas. You’re running with the Big Dogs, and chances are you’ll get left behind. It’s just statistics. Plain, simple, brutal statistics.
Next: The Analysis
I’ve tried to be careful to keep this post as objective as possible. It is meant to be a catalog of what we did. In the follow up, I dive into the critical analysis of whether or not it was a good idea for us. I do my best to adhere to my New Year’s Resolution, but I’m still a little disappointed from being rejected, so you’ll have to be the judge. So, go read part 2!
April 6th, 2009 at 6:36 am
Hi Micah,
You mentioned you were rejected by Y-Combinator. I thought the notifications did not go until this evening. You have already heard?
April 6th, 2009 at 6:38 am
John,
We were previously rejected by YC. I assume we’ll also be re-rejected in the current round.
Sorry if this got your hopes up that one of your competitors had been knocked out already
April 6th, 2009 at 6:47 am
First of all, thanks for sharing. There’s not enough data out there about the other half of the companies.
I think it seems like you did a lot of things right:
1) You have an idea that your team is passionate about.
2) You release early and often.
3) You’ve got experience making profitable businesses online.
Now one point of (hopefully) constructive criticism:
1) The market size for this idea seems very, very small. It could be large, I don’t know, but I wouldn’t predict it to be large unless you provided some hard facts. It seems like your goal is for a successful lifestyle business. While this is an awesome goal to have, most investors that I know would rather fund 10 startups with a 5% chance of becoming $1B companies and a 95% chance of failing than funding 1 startup with a 95% chance of becoming a profitable company but a <1% chance of becoming a billion dollar company.
April 6th, 2009 at 7:07 am
I don’t know anything about you or about TechStars.
But reading this I got the impression that you are more interested in David than in your business.
Emailing the judges a lot and checking in open-source patches do not a business make.
Cheeky of me to ask. But do you think things would have been different if you’d emailed him half as much, but had had twice as many customers?
April 6th, 2009 at 7:43 am
I hope you do keep in mind that being accepted into one of these programs does not equal success, just like getting into a college doesn’t equal success in life. It sure makes you feel good and potentially makes life easier by putting you on a faster track, but being not-selected doesn’t mean anything other than a few people saying no at a particular point of time.
April 6th, 2009 at 7:47 am
Remember folks, this is supposed to be a just-the-facts post. I have a lot of theories about what we coulda/shoulda/woulda done, and those are coming in Part 2.
April 6th, 2009 at 7:47 am
My company (http://newaperio.com) also got rejected and we felt we did everything right. We went to TS4AD, showed huge commitment, worked with Shawn and constantly updated them (although we _never_ got a reply to anything we sent). I think it’s less about us than it is about them.
I wish you continued success with doLeaf.
April 6th, 2009 at 7:56 am
I rather agree with Breck on his point. Online marketplaces themselves have been around for quite a while, so it is safe to say that anyone could make a new niche one that would be truly disruptive to the industry and emerge as some heavyweight company is a rather slim chance.
That doesn’t mean this isn’t a good market — if there’s an untapped need that DoLeaf is providing, sure it can make money. But I think by the very fact that this market has yet to be tapped by now indicates that it is indeed a niche area, and generally VC type people don’t like niches.
I think DoLeaf is a great startup for 3 people to get rich. I don’t think its the kind of startup that SSVC’s go after, and I’ve thought all along that DoLeaf never needed seed money to begin with and was always rather curious why you pursued it so intensely. Would acceptance to TechStars have been beneficial to DoLeaf? Well sure, but so would finding a suitcase with a million dollars in it. In both cases, it would be surprising if you were disappointed by not getting it.
Will be interested to read the 2nd part of this series and hear your conclusions about whether it was worth it to go after TS (both fiscally and from an ‘experience’ standpoint).
April 6th, 2009 at 9:09 am
I agree with Brett and Brian. You guys don’t *need* Techstar and vice versa. In business, I’ve personally found that ‘a good fit’ is most important of all. It sounds to me like you guys should be in the Joel Spolsky bootstrap camp, not the Paul Graham chase-the-money camp, and that you have a good business for making decent revenue as a slow growing niche company with a small efficient team and no giant loans to pay off. Read Joel’s essays or listen to his podcast, VC’s don’t want companies like yours because you don’t really need their dough!
April 6th, 2009 at 9:20 am
I’m also in agreement with Breck that your startup does not really fit in the profile of companies that TC/YC see with huge potential for a good return.
Say for example if DoLeaf rake in $1M revenue per year, which I believe is already higher than what I think you’ll do in reality but that’s just not the magic amount that investors are typically looking at.
April 6th, 2009 at 9:28 am
A lot of people are commenting on the payoff potential, so I’ll respond with a quick question: Why did TechStars fund Foodzie, and YCombinator fund Foodoro? They have very similar business models to DoLeaf. Is the artisan food producer market really that much bigger than the specialty nursery business?
I guess a lot of you guys aren’t gardening fans, so you don’t know how much dough people drop on plants. Trust me, it’s a lot.
In any case, I do appreciate the criticism. We’d be quite happy to have a lifestyle business as opposed to the super-billion buyout. However, we still think we’d be a good fit for a seed-stage program, and our business model is at least as good as many of the previously selected companies.
April 6th, 2009 at 9:40 am
I think Deyan’s got it right. I would expand the point further by saying that the 100 percent focus of any startup should be to understand and serve the market they have chosen. If you get good at it organizations like techstars will be chasing after you. You won’t have to go chasing after them.
April 6th, 2009 at 9:51 am
@Micah, Here’s why I think TC/YC funded Foodzie and Foodoro. You are correct that DoLeaf would seem to fall within the market size of Foodzie/Foodoro but you also failed to realize that Foodzie/Foodoro are figuring out a model for indie sellers and food is just a vertical market. Their long term vision in my opinion would be to branch out to other verticals and sure, gardening would be a good choice once they’ve reached that stage.
So in a way, TS/YC would consider DoLeaf a potential competitor unless you did not see the potential of branching out to other verticals.
April 6th, 2009 at 10:13 am
Hey Micah, seems you guys are doing some good things at DoLeaf, keep it up! From an outside observers point of view, I would have to guess the market size of your business probably killed your application. The one thing a great idea, team, execution, etc can’t change is market size, and angels/VCs/incubators are generally hits-based businesses looking for that home run. Keep it lean, iterate, find customers, make sales and grow organically (pardon the pun).
April 6th, 2009 at 10:30 am
I may not be right about this but I think there is another whole world of start-ups that are more about applying some basic technology to start a new business. It may not be exciting in the the VC sense but that may be a mistake as well. Zappo’s isn’t doing anything really groundbreaking but they are doing it very well and now have a business many covet but I bet few would have been interested in for the first nearly 10 years of history.
Start-up come in so many shapes and sizes that programs are destined to be too narrow to be very useful.
I’m not a gardener but I know there’s a huge opportunity there and far less competition I’d expect. I have no idea if your team is any good or not but if it is you guys are in for a happy time of it.
April 6th, 2009 at 10:44 am
Mea culpa Logan. Apologies on the lack of email response. I had a few week period there that was flat-out 90+ hour weeks.
Great post Micah. You guys did a super job and I’m glad TechStars was able to help you guys along your path forward.
Of course the problem that “how to” posts like this create is that instead of having to choose 20 companies from a set of 50 who “did everything right” next year we’ll have to choose 20 companies from a set of 100!
Best,
Shawn (TechStars Boston)
April 6th, 2009 at 10:44 am
Micah – good to see you reflecting on this here. Just wanted to chime in and agree with some of your commenters that not getting into TechStars shouldn’t affect your course. We try to explain that a large component of our selection process is subjective – it just boils down to what we want to work on and what we get excited about. That’s why we call it non-selection as you point out. It’s more than just semantics. We’re far from omniscient – I’m sure fantastic companies will come out of those we don’t select. We have to be fine with that as investors – nobody is going to guess right about the entire field of applicants and magically pick only the “best”. Only time will tell, and I sincerely hope this is nothing more than motivation for you.
You guys are smart and will do well. Just keep on rocking. Don’t concern yourself with market size – just solve problems for your market. You will find ways to grow the business from there – I am sure.
April 6th, 2009 at 11:56 am
Do you sell those plants mentioned recently in that TED talk about three simple plants you can get to improve the air quality in any building? I watched that and the first thing I thought was, “Cool! Wonder where I could get those!”
April 6th, 2009 at 12:29 pm
“Is the artisan food producer market really that much bigger than the specialty nursery business?”
Yes. By at least an order of magnitude, if not 2 or 3 orders. I’m sure the primary concern anyone would have with DoLeaf is around how big it could be. Most of your energy should have been devoted to convincing people that it’s a big category. It sounds like little energy was spent on that.
April 6th, 2009 at 12:39 pm
@pwb
That’s a bold statement. The artisan food market is 10, 100, or 1000 times the size of the specialty nursery market? You have any numbers to back it up? I’ll admit that I don’t have much more to go on than my personal experience, but there are a lot of specialty nurseries dotting the landscape around the U.S. and a lot of people buying plants.
Still, I’m not trying to fight a Food vs Plants battle. I’m confident that our market is there and we’re on target to hit it.
April 6th, 2009 at 8:58 pm
Grocery stores and restaurants alone are $1 trillion. The nursery industry is maybe $10 or $20 billion.
April 7th, 2009 at 3:55 am
@pwd
Ok, I understand now. When I talk about artisan food producers, I’m referencing the kind of sellers that Foodzie and Foodoro have. Namely, small businesses that make specialty chocolates or muffins. I’m not talking about McDonalds or HyVee.
The same goes for the nurseries. I’m referencing Mom and Pop operations that grow a couple hundred plants for sale, not massive agri-businesses.
April 7th, 2009 at 4:39 am
I just posted Part 2: The Analysis
Check it out and tell me what you think.
May 22nd, 2009 at 5:40 am
Micah,
As a TS1 reject, all I can say is “Welcome to the family!” We did many of the things you did, and were rejected. However, I would like to say that David and Brad both remain very good resources for us. We have moved on past our first startup idea (www.Georneys.com) but we continue to keep in touch with both of them to gain input on ideas and get feedback. Just because you didn’t make it into the top 10 (or 20 this year) does not mean they don’t think you had a good idea, or that they are not willing to provide more information to you if they can. I am sure other Techstars mentors are the same – use them (appropriately) for all they are worth and you will all gain from the experience with any luck. You’ve got your foot in the door; it may not have produced investment at this point, but the advice is what Techstars is all about anyway, right?
June 10th, 2009 at 6:12 am
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