Friday October 2, 2015 0 comments
DENVER -- Revealing mistakes made in founding new companies -- along with the ups and downs of investing in them -- was part of the entrepreneurial learning experience Thursday during the fourth day of Denver Startup Week, which concludes today.
Brad Feld, partner in the Boulder-based Foundry Group investment partnership, sat down with friends and long-time colleagues Tom Higley and Rajat Bhargava to recall their company-founding and investment experiences over the last 20-plus years.
Feld, Higley and Bhargava related some of their adventures in investing and creating startup companies to a raptly entranced audience at the DSW Basecamp provided by Chase Bank in downtown Denver.
In addition to relating how they all met and developed their mutual relationships along with fellow investor Neil Robertson, the three friends told the story of founding and selling a company called Service Metrics, now considered one of the greatest success stories in Colorado startup history.
Bhargava, now CEO of Boulder-based JumpCloud, said Service Metrics was an idea that crystalized in the late 1990s as a way to measure how websites were performing.
It was a time when interest in the Internet was exploding, and new companies’ values were skyrocketing.
Service Metrics was soon purchased by red-hot Exodus Communications, and in only 18 months, the value of the company went from zero to more than $200 million.
Ironically, Exodus was bankrupt by 2001, another casualty of the dot.com bubble burst.
“Underneath it there wasn’t anything that was a sustainable business,” Feld recalled.
“It was amazing that the company we formed – Service Metrics – has disappeared,” said Higley, now CEO of 10.10.10. “This thing we worked so hard to create was no more.”
Founding new companies can also result in the founders committing huge mistakes along the way, especially in their earliest days.
In another panel session at Galvanize called “Founder F*uck-Ups,” six founders of local startups related some of their bonehead moves that revealed their human -- and occasionally fallible – side.
Pete Jokisch, CEO of Teakoe Tea, said his new company was seduced early by a potentially huge client with national reach. He said he spent a year and a half courting the client, who ultimately stole his tea recipes “and left us high and dry.”
“It got us sidetracked and really set us back,” he said.
Scott Maloney, CEO of BowTie, said early success “really went to our heads, and we started writing massive contracts.”
“We spent millions only to find out our board was talking about it just as an idea and they really didn’t want us to do it.”
Erik Mitisek, CEO of Colorado Technology Association, said his biggest bonehead moment came when he closed a $1.5 million investment round and then wired the money to the wrong place.
“Fortunately, we got it back, but at the time you feel like crawling into a cave to die.”
Ensuring success in the marketplace was the focus of a session at Swiftpage called “How to Let the Market Develop Your Product,” which focused on the company’s continuing efforts to get useful feedback from customers on how to improve its emarketing products for businesses.
CEO John Oechsle and CTO Allen Duet described the various methods the company uses to get the best data from a variety of research techniques, including focus groups and online community forums.
“We don’t always know the pain points of our customers because there’s too many,” said Duet. “When you understand their problems, you can figure out how to help them.”
Oechsle said there were “two key takeaways” from the Swiftpage session.
“No. 1, don’t just think you know your customers – KNOW your customers,” he said.
“And No. 2 – data, data, data. You’ve got to get data to drive your products.”
Duet said one important lesson learned through Swiftpage’s market research is to not hold back on product improvements.
“Don’t wait for it to be perfect, because it never will be,” he said.
Denver Startup Week, which is setting new attendance records this week, concludes today with another full slate of activities, speakers and panel discussions. To view the schedule, click here.