New Entrepreneurs, Old Industries

Energy entrepreneurs, especially those in energy production, don’t enjoy the luxury of having numerous possible routes to market—because it is almost always the case (even though they try to avoid it if they can and a few succeed) that they must deal with the existing hierarchy, which controls the infrastructure.

The paragraph comes from a 2007 blog post by Bill Aulet, titled “What’s wrong with energy investing?”  The last three lines tell you the whole story of why it is so difficult to be an entrepreneur in mature industries.  Energy–where your technology almost always has to integrate with the grid–may be the clearest example but the same can be said for education (must get school districts to pay … ), or healthcare (insurance companies must play ball…), or a dozen other industries where old companies enjoy the power of size and the legal framework that often protects them from new entrants.

Put differently, an entrepreneur that wants to enter an old industry often has no choice but to placate large institutional interests–government, or otherwise–that tend to be wary of change.  If you’re building an energy storage company, you’ll have to convince a state and/or federal regulator to allow you to participate in the energy markets.   Even when the entrepreneur can get the blessings, he or she may also have to deal with the third-party payer problem, where convincing the end-user is not enough.

Over the past three years, I’ve seen at least two 3DS companies attempt to disrupt industries with incredibly strong hierarchies.  Tamyca, one of our companies from 3DS Aachen, has built a car-sharing service for the German market.  Hoot.me, a company from 3DS Austin, is building tutoring and educational collaboration tools on Facebook.  In both cases, the companies faced a problem that seemed intractable.

For our car-sharing company, it was a big question of how to convince an insurance company to provide the legally required insurance for the person driving a borrowed car. This perceived difficulty of jumping the regulatory barrier was raised often by mentors and other participants.  (As an attorney, I’ve been guilty of telling students to shy away from innovation in areas that have substantial legal barriers … )  Some even suggested that they try something more pedestrian (pun intended!).  After all, photo-sharing apps don’t face such regulatory hurdles or the need to convince insurance companies.  But often, to build a product that disrupts an industry you have to temporarily ignore the elephant in the room.

For our education company, they’ve built a product that was immediately embraced by students because it offered a superior way to collaborate and study.  But convincing the students isn’t enough because the gatekeepers–department heads, and university administrators–are ultimately the ones that are most likely to pay for the product.

In sum, the new entrepreneur faces two immense challenges: (1) payment, and (2) blessings. But for the entrepreneur that dares to take these on, the opportunities are great, and the rewards even greater.

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3 Day Startup Alumni Spotlight: Tim Kern and Chris Allen of Wawadoo

Lauren Johnson was a rockstar intern at 3 Day Startup. She spent 8 weeks tracking down 3DS alumni and interviewing them about their experience during and after 3DS. 

Go to 3 Day Startup, go build a prototype, find some marketing guys if you’re a developer, find some developers if you’re a business guy and go actually do it. And I think 3 Day Startup is perfect for framing your mind into that. Just like an incubator would be a perfect next step for framing your mind further into it. And then, the final thing to frame your mind into it is being poor and wanting to eat tasty foods. That’s a pretty good motivation. –Tim Kern

Tim Kern and Chris Allen

With Wawadoo co-founders, Tim Kern and Chris Allen, everything is tongue-in-cheek hilarity. Best friends since freshman year of high school, they finish each other’s sentences, talk over each other, and finish off any topic with a joke or a laugh. When introducing himself to me, Tim stroked his hairy chin and asked if there would be a video portion of the interview, saying, “I really should’ve shaved my homeless man beard. Or at least filled it in with a pencil.” He and Chris later revealed that their company theme song was Rick Ross’s “9 Piece,” and they sang along with a rap song that blared from a nearby car during the interview.

Both are major idea guys. They come up with ideas for companies all of the time, together and separately. Chris is a big picture guy and Tim handles the details.

According to Tim, “I’m usually the business guy is the big picture thinker and the technical guy fills out the dots. I think it works for us that the big picture guy is the programmer and the business guy is a little bit more detailed oriented.”

Chris agreed, “We get stuff done faster because of the way we work.”

Wawadoo is an event recommendation engine for local events, and what started out as a site geared toward consumers has transformed several times due to customer feedback and valuable mentor advice. Based on that advice, the co-founders found another way to bring in revenue by marketing to event promoters who were having trouble getting their events noticed. They created a software program called “Get Promotd,” which “helps event promoters post their event online to all the major event discovery sources.”

Tim and Chris attended 3 Day Startup in fall of 2010, and they were extremely excited to have been accepted. According to Chris, the most important thing about 3 Day Startup is that it “completely crystallized my belief in my knowledge that I wanted to do startups for the rest of my life. I couldn’t see myself doing anything else because we hung out with really cool people, we talked about things that we were all interested in and it just happened so organically. It wasn’t forced…I love 3DS. It put me in touch with all of these people who I never would’ve met.”  

At this point, they had already prototyped and begun the validation process with Wawadoo. While at 3 Day Startup, they focused intently on customer discovery, and they felt that the three day process was very close to the real life world of startups.

“Honestly, it’s pretty accurate to what you actually do when you’re running a business. It’s like, wake up at too damn early in the morning, you drink like 5 Red Bulls, and then you’re like ‘Alright, well what do I need to be doing?’ and you collaborate with your team and you do it for a while and then you realize that that was a stupid idea. And then you go realize what you need to do from doing that stupid idea, and then you go do that for the rest of the time…it’s like running a bunch of experiments, so it was cool to have that laboratory to run experiments in.”

They applied to several incubators at the same time they applied to 3 Day Startup and got accepted into Alpha Lab, a Pittsburgh based accelerator which specializes in technology startups. The co-founders agree that attending 3 Day Startup proved they had experience and a product, and was hugely influential to their acceptance into the incubator. According to Tim, their biggest lesson from Alpha Lab was, “You’re not doing anything valuable unless you’re talking to customers all the time…asking high level questions all the time…and then drilling deeper down into those specific questions. And that lesson from 3 Day Startup carried over.”

When I asked if they had ever wanted to quit or if they had ever thought that their company was in trouble, they both burst out laughing. “Is every day a way to say that? Seriously, every single day…,” was Tim’s answer.

But, Chris disagreed. Apparently, the co-founders have a VC mentor who had really shaken their confidence at one point.

“He came in one day, and he’s one of those very high level guys, and he asked us several questions that made us completely think that we were stupid. And we just didn’t have answers for any of the questions…It was the lowest point ever, and I seriously thought, man, what am I doing?! I can’t believe I quit my job…so he kinda crushed us, but after that, we spent all week in a state of limbo and then found some answers and then things have definitely gone up and up from there.”

I wondered if they still thought their mentor’s questions were valuable even though they made them question themselves. Tim replied, “It was probably the most valuable thing we did.” So, what has stopped them from quitting?

“We have no other options in our lives! We would have to rebuild our lives! Using me as an example, all the Internet marketing that I did was for this business and I was doing enough to barely survive and get this business going. So, I haven’t been in the career world after I graduated college. I have nothing else other than this. And I would find something else, don’t get me wrong. I’m a resourceful person. But, it’s an awesome motivation,” Tim said.

Chris had a different perspective. “This was just the one thing that I had the most fun doing, so I could never probably go back to a regular job. I would just start another one, you know. I would just live with my mom and eat Ramen until I could program something else to make money and then I’d do it again. I would never work for anyone else at this point…Yesterday, for example, we went out to Mozart’s and we just worked from the lake. I would do that. I was working and I was at the lake. I can’t do that working for a newspaper.”

Their motivations vary, and as they’re both very young guys with no families to provide for, they’re not strictly driven by a need to make lots of money fast.

“I don’t like being told what to do…I don’t even like Tim telling me what to do. And I work way harder for myself than I would’ve ever worked for anyone else,” Chris revealed.

Tim doesn’t fully buy into the idea that running a startup is equivalent to working for yourself. An entrepreneur always has to answer to someone, whether it’s an investor or a consumer. That’s not to say that he’s not interested in making money. Tim counts making a profit among his incentives, as well as the gamble of working for a startup.

“The motivation was just that the reward would be mine to take and there would be nothing limiting me…having no limitations to my success is probably the greatest motivation…In this place, I’m passionate about what I do, which is helping people find really interesting events and helping event marketers get the word out for their events.”  

The advice they offer to future entrepreneurs who want to attend a 3 Day Startup is similarly varied. Tim continually returned to the idea of customer discovery.

“Go talk to whoever you think your user or customer is. That’s the easy answer for me…Going and talking to customers and figuring out what exactly their budget is, what their pains are. What your system does for them, how they act when they use it.”
Chris gave a different, more internalized piece of advice. “Figure out what your key metric of success is. Have a goal of creating something to test. Get one user, or one consumer and have a test to see if the business is real.”

According to Tim, “The hardest part is letting go of your ego and accepting the real world….For us it was like, well how do we actually go through the real world to survive? And the answer to that was find something that we could actually sell a customer that didn’t really take too much scaling to get us to salaries, and I think that now that we found that there are no major problems, there are just a trillion minor problems.”

When I was wrapping up the interview, Tim asked if we could include some random association questions or Rorschach Ink Blot tests into the interview. “Tomato Rufus” was the result of that line of questioning, a name we decided we’d donate to some lucky Austin band. You’re welcome, Austin.        


Tim and Chris officially formed their company in January of 2011 and launched their third version of the website shortly thereafter. They currently have 1000 users in beta phase testing.

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Nixter Raises $100k from Chilean Angel Investors | AndesBeat

Congratulations to 3 Day Startup Santiago company Nixter on their recent round of seed funding!

Their team brings a top notch 16 year old programmer.

They have a great eye for design (check out their promo video)…

Nixter CEO Francisco Sáez has confirmed with AndesBeat that they have successfully raised $100k USD in funding. This funding will help Nixter to test its mobile platform which allows consumers to have the ultimate nightlife experience with their mobile VIP access card.

via Nixter Raises $100k from Chilean Angel Investors | AndesBeat.

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3 Day Startup Germany trailer

Official 3 Day Startup 2011 Teaser from 3DayStartupGermany on Vimeo.

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The Next Big Thing: 3DS – WCJB TV-20

Rather than the bottom line, Rezaei says he’s focusing on creating something useful.

“There’s different ways in the back of my mind how to monetize it, but right now, I’m trying to like, make it good,” he said.

If his start-up isn’t the next big idea, Rezaei has a fall-back.

“Initially the plan was to go to medical school, but I’m kinda doing this to make sure I don’t go there,” he said.

via The Next Big Thing: 3DS – WCJB TV-20.

 

 

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Cornell Chronicle: 3 Day Startup generates six startup ideas

“I was completely blown away by the participants and their presentations on Sunday,” Jain said, adding that one team, AdPear, created a mobile phone app and had participants test it on their own phones during Sunday’s pitch session.

Along with AdPear, which pairs ads to increase interest and purchases, the final businesses included a software application to improve athletes’ training; an application to turn three iPhones into a three-camera TV studio for multi-angle videos; a gaming platform that allows game developers to personalize products; a crowd-sourced mobile jukebox; and a system to provide customer information to businesses at the start of a cell phone call.

The next step for these businesses? Most, Jain said, are working to solidify teams, build prototypes and determine the best way to move their project forward.

“In past 3DS events, there is at least one company that’s gone on, either to be part of an incubator, raise revenue or bootstrapped itself,” said Jain. “That will take a lot of time beyond this weekend, but we’re giving people the tools they need to succeed.”

 

 

via Cornell Chronicle: 3 Day Startup generates six startup ideas.

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University of New Orleans to host three-day entrepreneurship event | NOLA.com

Redmann is hoping the program will encourage graduates interested in working for or starting their own technology firms to do so and to do so in New Orleans.

“We’re really excited about what this can do for New Orleans and the technology community in New Orleans,” Redmann said. “So many students coming out of the technology programs in Louisiana feeling like they have to leave the state to find jobs. We’re hoping to change the mindset.”

via University of New Orleans to host three-day entrepreneurship event | NOLA.com.

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Students Develop Startups in 54 Hours | The Cornell Daily Sun

“[This summer] got me thinking because Cornell doesn’t really have that same kind of [entrepreneurial] culture when we look at our peers. We all want to get jobs in tech firms and investment banks … I wanted to bring back some of that culture here,” Jain said.

via Students Develop Startups in 54 Hours | The Cornell Daily Sun.

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3 Day Startup Alumni Spotlight: Nikhil Daftary of Moodfish.com

Lauren Johson interned at 3 Day Startup during the ridiculously hot Austin summer of 2011. She spent 8 weeks tracking down 3DS alumni and interviewing them about their experience during and after 3DS.

If you can get yourself away from what’s tried and true and discover something new, then you’re going to learn something about yourself and other people around you, and it’s just going to open up your horizons to whatever else is out there in the world. – Nikhil Daftary

When I was a kid, my friends and I lived for mood rings. We stalked the neighborhood stores and hassled the owners so that we could get the newest mood rings on the shelf. I found myself completely in awe of the ring’s magic–and it definitely was magic–as it changed from black to amber to pink on my sister’s finger. When experiencing mood rings for the first time, my best friend grinned and shrieked, “Oh my God! It knows that I’m happy right now!”

As we got older, we began to rationalize the magic of mood rings. Could it really tell what we were thinking? If yes, then why was the darn thing always blue-green on my finger? Contrary to the ring’s consistent “upbeat and motivated” coloring, I was not always a happy kiddo.

Luckily for us, the early mood ring fanatics, a site has come along that celebrates our moods. We might feel sunny in the morning, melancholy in the afternoon, and energetic at night.  We might simultaneously feel the need to go out and explore the thousands of entertainment options in our city. Unfortunately, our mood rings, bracelets, and best friend necklaces have long since gone the way of the Magic 8 Ball, disappearing into the mists of childhood. Enter Moodfish.com.

Moodfish is a “mood based” entertainment search engine. It helps users to find information on dining, movies, and other entertainment options depending on their mood. For instance, if you live in Austin and feel like going out on the town, choose the mood recipe “Hot & Sweaty Dance Night,” and Moodfish will make recommendations. Or, create your own combinations using their mood options: mellow, melancholy, sunny, intense, energetic, quirky, or sensual.

Some people are skeptical when they hear the idea behind Moodfish. “Mood based what?!” they say. But that doesn’t bother Nikhil Daftary, Moodfish’s CEO and cofounder. The site is already up and running in Austin, San Francisco, and Minneapolis, and he plans to bring Moodfish to every city in the U.S. with a major sports team and a dense entertainment center.

Nikhil, who describes himself as a passionate and stubborn dreamer, attended 3 Day Startup, which he refers to as “one of the most brilliant, shining examples of entrepreneurship I’ve ever seen,” in the spring of 2008.  It was a beautiful mix of personalities and people from your non-showering, Mountain Dew-chugging coders to the high energy, hypercreative advertising types. According to Nikhil, “I can’t think of any experience, even in the corporate world, where I was surrounded with that much personality.”

3 Day Startup’s biggest strength, according to Nikhil, is that it gives perspective and insight to the ideas you bring to the table, allowing you to more fully understand your own ideas. Also, he says, there is a “set of expertise built in,” through the many mentors onsite. He feels that the kinesthetic experience provided by 3 Day Startup, coupled with the fact that there are other people to collaborate with in the experience, helps participants move more quickly from an idea to an actual business.

Nikhil also credits 3 Day Startup with giving him the experience and the push to make it in the startup world. “Had I not done [3 Day Startup], I probably would’ve gone back into the corporate world. As much as I wanted to go into a startup, I just didn’t see any real outlets for the startup world…My professional career began with 3 Day Startup. Had I not been there, I absolutely would not be here talking to you about…Moodfish.”
Has he ever questioned his ability to make it in the startup world? Has he ever thought that Moodfish could fail?  “It wasn’t ‘Was there ever a time.’ It’s, ‘I’ve forgotten how many times I’ve wanted to quit and just say f*** it…When is it all gonna pay off?’…But I also don’t see that as a bad thing…It’s a very resilient team…The more challenges that we face…just makes you want to try harder.”

Nikhil recommends researching the pitfalls of other companies who have gone through the program before attending 3 Day Startup. “Go to the info sessions,” he says, and ask the founders what made their company successful and what could have made it successful. It’s also extremely important, according to Nikhil, that participants know their own skill sets and how to apply those skills to issues that other companies have faced. He recommends trying to know ahead of time where you will fit in best so that you don’t get distracted away from your main focus.

One of 3 Day Startup’s other founders, Jason Davis, whose startup Adtuitive was acquired by Etsy, pitched the concept at 3 Day Startup that eventually became Moodfish. At the time, it was called Turn2Live, and was strictly a live concert search engine.  Through their market research, they found out that, “Live music, that’s much more recommendation driven than it is search driven…People loved the idea of mood based search, but it didn’t apply to live music because so many people just didn’t see it on a regular basis.”

So, when Nikhil and his team moved on from 3 Day Startup, they changed the company’s name to Moodfish and began to offer many other entertainment categories: movies, dining, music, art, active, and social. They started out intending to build a “kick ass search engine for things to do,” but along the way, their motivation became increasingly community driven.

“The longer term goal is, we get people out of their houses to go see local live entertainment. And when people get out and they see local, live music, when they see live theater, when they experience local dining…when they go out into bars where they’re happy, all of the sudden you’re getting people who are excited to see what makes their city great. They’re excited to get out and meet other people just like them…In the end, if you get more people to experience local culture and local arts, you’ll have a much better group of people living in that neighborhood.”

It’s true that, even though we have so many options in Austin, in some circles, there is a bit of ennui when it comes to figuring out what to do. It’s not that newspapers, blogs, and television ads aren’t continually telling us about the myriad of options in Austin. It’s due to the simple fact that sometimes, we’re just downright lazy.  We might know that we want to do something artsy, we just can’t be bothered to figure out what’s out there. The below is a sadly familiar conversation within my group of friends and family.

“What do you feel like doing?”

“Oh, I don’t know. What do you feel like doing?”

“Ehhhhh…I don’t know…I guess we should go to [insert Mexican restaurant here] and do the same thing we do every Friday night.”

“Try to take over the world?” [insert evil laugh here]

“This is not an episode of Pinky and the Brain. Obviously, I’m driving tonight. Le sigh.”

Notice the use of the word “feel.” We’re a society taught to rely on our thoughts and feelings, and we make decisions accordingly. My friends and I have often joked about creating a hundred sided die with all of the city’s options and just rolling it to cut out all of the hemming and hawing about what to do.

When it really comes down to it, moods are completely subjective. Can a ring really tell me what I’m feeling?! Heck, my moods change hourly, and I don’t think the ring could keep up. But Moodfish can. All I have to do is choose which mood I’m feeling right at that moment and I’m off to the races.

Feeling “sunny” and looking for something artistic to do? Moodfish recommends the Umlauf Sculpture Garden. Maybe you’re feeling “quirky” and looking for something social. Voila!  Spider House Bar & Patio Café! It’s such a freeing feeling, even…magical. Thanks for bringing back the magic, Moodfish.

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3 Day Startup New Orleans

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