Midnight Oil

In Part 1 of DoLeaf’s TechStars story, I covered “the facts.” I tried to dispassionately catalog what we did during the application process, in order to provide some comparisons for teams that are considering applying. In this installment, I’m going to examine whether or not it was good for us to apply, and why.

There are a few ways to look at this, and I’m going to try and be brutally honest and not take the “It was a fun learning experience” way out. I don’t want to offend the powers-that-be, but at the same time, I want there to be more honest info out there for confused entrepreneurs like myself.

Random Thoughts

I can’t figure out how to organize this post, so I’m just going to toss a bullet list out and let you figure it out for yourself. Some are examples of things we did wrong. When I say “wrong,” I mean wrong for our team, not wrong for the application process. They might have increased our chances of acceptance, but obviously not enough to get in. Other points are pieces of advice that I would give to anyone applying.

Techstars for a Day

I think it was a mistake for all of us (or any of us) to go to TS4AD. It was fun to meet up and go to Boulder, and I got to meet Drew (who has done so much for us), but it was pretty expensive. I guess we all have day jobs so we can afford it. However, if you’re a struggling bootstrapper reading this and trying to decide whether or not to go to TS4AD, just realize that even if you go, the odds are still stacked against you. In addition to the expense, we also lost several days worth of productivity. As always, I recommend focusing on your project and keeping your head down into your work.

Sweating the small stuff

We quibbled and fought sometimes over the emails that we were going to send to David or Brad. We’d edit them a couple times to put our best foot forward. I’m a nitpicky editor, and Sarah got tired of my harping on small issues in the emails. Time spent on this was not time spent working on DoLeaf, and it caused friction in the team. What did we get for it? Nothing.

Invest your time wisely

As a startup, time is your most precious resource. If you’re a bootstrapper like we are, then you’ve only got a precious few hours each night and on the weekend to do your work. It’s amazing what you can do, but it still takes time.

We didn’t track how much time we spent on TechStars related work, but I would guess that all the emails, discussion, and planning took a lot of time. Further, TS4AD took two days for each of us, totaling six work days. That’s a pretty big time investment. In two days of straight work I could have probably added 2-3 big features, like integrated shipping controls or an intra-site messaging service. Plus, I wouldn’t be writing this jaded blog post right now and would be working, instead

The illusion of progress

David strongly suggested sending him and all the mentors regular updates regarding our progress. When we initially posted our application we already had a working demo. In the final month of the application process we completed several major milestones. However, these features were often subtle and not frontpage eye popping changes. Hence, after submitting our application, we never had major dramatic changes that jump out at you. We assume the TechStars folks had hundreds of applications to sort through and little time to do a daily checkup on progress. So, since ours looked the same time after time, it probably gave the impression that we were doing nothing.

There are two options when dealing with this: organize your work to show new zazz on the frontend every few days, or work like hell on what you think needs it and hope it shows. Option one is better for your TechStars application, while option two is better for your company. Guess which one I recommend?

Never compromise your vision!

If you do apply, and give it 110% like we did, you’ll probably end up getting some advice from David or the other Techstars people. In our case, none of the advice was contrary to our vision, so we went ahead and followed some of it. However, if you’re unsure about any of the advice, discard it. At the application stage, they’re just not invested enough in your idea, so their advice has to be weighted as such. Well intentioned, sure, but not to be taken as gospel.

You can’t get them excited

Don’t go out of your way to get the mentors excited. We tried hard to keep them in the loop and get them excited, but I don’t think it worked all that well. My advice would be to let your work speak for itself. If your idea is exciting to them, they’ll seek you out for more info. If they don’t find your idea or team exciting, then there’s probably nothing you can do to change that.

Read the responses (or lack thereof) to get a clue as to their excitement level. We should have picked up on this early on, but we were blinded by our own excitement. See David’s comments below and you’ll see that he and the others didn’t go nuts over a plant marketplace. There is really no way for us to change that. No sense trying.

The cost in morale of rejection

There are no units to measure here, but this is probably the second highest cost, next to time. When you’re doing a nights-and-weekends project for no money (yet), the only thing you have to keep you going is your excitement. Anything that endangers team morale should be considered a big threat.

We did our best to keep expectations low, but we inevitably started to make plans around TechStars. We daydreamed about what it would be like to hang out in Boulder. I thought about the envy my fellow startup guys in Atlanta would feel when DoLeaf got selected. Sarah and I discussed what we would do with our house during the summer. Looking back now, I remember having some of these same sorts of thoughts when buying a lottery ticket.

So, when the rejection letter came, it was a kick in the nuts. All of us were very disappointed, and it’s hard to work when you’re sad. We’ve recovered now, but there’s always the danger that you just quit working. I’m not afraid of that for our team, but I’ve seen it happen to others.

Actively plan your life as if you won’t get in

Hopefully, it should go without saying that you shouldn’t plan your life as if you’ll get in. Don’t quit your job, sell your house, give away your dog, or anything like that. But, more than that, you should actively plan as if you won’t get in. This means signing up for things and making plans that conflict with TechStars. In my case, I signed up for a 200 mile AIDS charity bike ride and a yearly 10k run. If accepted to TechStars, I would have had to pull out of both. But, we didn’t get in, and chances are that we wouldn’t, so I’m glad I didn’t put the rest of my life on hold. Think of it as hedging your bets. If you get accepted, it will be a happy occasion to cancel your conflicting events. If you get rejected, you didn’t leave a big gaping hole in your schedule.

Meeting with Drew

On a happy note, my favorite part of the whole process was meeting with Drew of Fifth Street Creative. Drew and Ryan have been friends for a long time, and Drew has done some great work on Obsidian Portal as well as DoLeaf. He happens to live near Boulder, so we got to go see him when we went to TS4AD. I had meant to thank him somehow for all his work, but my thanks ended up being sleeping in his guest room and drinking his beer. I’m a real gentleman, aren’t I?

Was it the right choice?

Any question like this has to be evaluated in the context of what you knew when you first started. Here’s what we knew:

• We have an excellent team.
• We have past execution experience. Obsidian Portal is a profitable startup and still growing.
• Our team is 2/3 technical, which is the exact ratio that Brad Feld recommended.
• We had an existing prototype, and were just entering a closed beta.
• Our idea has potential revenue from day one. It’s not earth-shattering, but it’s definitely something that can make money.
• Techstars had selected a similar team with similar idea in the past. This can be seen as both a positive and a negative.

In addition, we didn’t know the exact numbers (527 applications, 20 selections, <4% acceptance), but we did know the odds were stacked against us.

In short, we have all the markers of a TechStars selection. So, at the time, we thought our chances were at least as good as anyone else. We were not starting with any handicaps.

Starting with all the info we had, I think there is a clear answer to the “Was it right?” question. I think we did the right thing in applying, but that we handled the application poorly. We worked on it too hard. We should have invested less time in the application process and more time in our project. The morale hit would have been easier to bear and the project would be further along at this point.

Concluding Thoughts

Applying to a seed stage program can be useful, but can also be a big waste of time. In order to be seriously considered, it seems that you need to put in a lot of effort, at least for TechStars anyway. For us, we spent a lot of time, but didn’t get selected.

I could say it was a learning experience, but I really didn’t learn all that much. Plus, most of what I learned came from the people at Foodzie. They were (and continue to be) extremely helpful. This is not a dig on TechStars, it’s just my opinion that, as far as “learning experiences” go, the TechStars application process had a low return compared to the time investment. The same was true of our Y-Combinator application, although we spent much less time on that. What I did learn (or re-learn) is the main thrust of this blog post: Invest your time wisely!

Perhaps I’m just conservative, but I prefer to spend my time on things with a higher probability return. Coding, advertising, promotion, and customer interaction all have some sort of guaranteed benefit for the time you invest. With these seed stage programs, you can spend a lot of time (like we did) and come up empty handed (like we did). That kind of all-or-nothing activity is something I prefer to avoid. Granted, I do recognize that in the improbable chance we were selected by TechStars this would have been a completely different post about how the investment was worth every hour spent. Then again, I’m guessing most lottery winners will tell you it’s a good idea to buy lottery tickets.

The one main benefit to the process is the initial application form. Both the forms for YCombinator and TechStars force you to think about your idea in a little depth. From that perspective, filling out the form is useful, like writing a business plan. It will help you come up with a revenue model, elevator pitch, and competition evaluation. So, submitting the application is a great idea. However, after that, minimize your time investment on the application and instead spend that time working on your project.

Based on my experiences, here is what I would suggest as a way to maximize the benefit of an application:

1. Fill out the application form, and save it somewhere for access in the future. Think of it as a business plan. Plus, you can re-use the application in future rounds.
2. Get back to work and forget about the application.
3. If the program sponsors contact you with questions, answer them quickly and concisely. Don’t quibble. Then get back to work.
4. If the program sponsors invite you for an interview and offer to pay expenses, definitely go. They’re showing a lot of faith at this point. If they invite you to a meet-and-greet, go if it’s close, not if it’s far. Think hard before shelling our your bootstrap cash to buy a plane ticket, hotel, etc. After the interview/meeting, get back to work.
5. Work some more.

If you get selected, that’s great. If not, that’s OK too, since your investment is minimal. Instead, you spent that time working on your project and are that much closer to a release / new feature / milestone / whatever.

Above all, remember that your startup is what defines your success, not acceptance into a program. In the end, if you can break free of the dayjob world and work for yourself on your own project, who cares if you’re a Y-Combinator / TechStars / Whatever company? The goal of all this is not to be associated with any particular seed stage program, the goal is to love what you do and work on something you’re passionate about. So go do that!

Addendum: David’s Feedback

Once we became one of the Non-Selected TechStar Applicants we followed up with David asking for some feedback on what we were lacking. Below are the questions we asked and David’s responses (reproduced with his permission):

Micah: The team – Do we look good on paper (in our application)? In person? By email? Do we have a good skillset? Where do we compare to other teams?

David: The team looked good on paper and better in person.

M: Past experience – We think this is one of our best areas, as we’re very proud of what we’ve done with Obsidian Portal, our other startup. Did this come across well? What are we missing? Does it count against us that we’re running one startup while pitching a second?

D: I had assumed that the first startup was not going to be your focus on you started on this, so I wouldn’t say it was a negative factor at all.

M: The idea – We’re afraid that our idea just isn’t that exciting. We think it’s definitely a good one, but not the sort of thing that gets most people jumping up and down. It appeals to a special niche, which
we think is a good thing. Was this a factor in the decision?

D: Exciting? Ecommerce for nurseries – yeah, maybe not the most exciting thing. But that doesn’t matter. Most investors I know (including us) look for markets over excitement – the old adage is “boring=revenue”.

M: Ability to execute – Again, we think our ability to go nose-to-the-grindstone and execute instead of blowing smoke is one of our strengths. Did that come across well? Did other teams do massively
more than us in the application time span?

D: You guys did a lot during our diligence process, which is why you scored highly. But yes, I would say other teams advanced their technology much more rapidly during this timeframe. Obviously, it’s hard to judge just be that – but it’s one component.

Comments

I’d love to hear what you think about all this. I especially welcome comments from other rejected-but-successful companies out there. The chosen few Accepted often come out in support of their seed stage program, but like I said, lottery winners encourage you to buy lottery tickets, too.