What up founder fan club! <— [still working on this]
Back again with another edition of The Founder Newsletter - this is Episode 3. If you’re new here, my goal is to give you a quick synopsis of what got me thinking from this week’s episode of The Founder Podcast in 5 minutes or less. (If you missed them, check out the previous episodes on cookie dough and boots).
(But what’s The Founder Podcast?)
The Founder Podcast is a weekly show where I sit down founders and have real-talk chats about the highs and lows of their entrepreneurial journeys. We cover things from where the spark for their idea/company came from and making prototypes to marketing tactics, tips from investors and their morning routine. Basically, it’s me going head to head with Guy Raz in the podcast octagon (just kidding Guy, you’re awesome and welcome for the backlink).
I’ve found the conversations really helpful for motivation, inspiration and just generally fascinating to learn more about my favorite brands - I think you might too.
Alright, to get this out of the way - Here’s the podcast show link, here’s our website (mission control), here’s our Instagram (where I spend way too much time making quotes and audiogram content), here are all the discount codes we’ve gotten from the companies we’ve had on the show.
(And who are you?)
I’m Kallaway - a future founder trying to get some answers before I jump in the ball pit myself. Let’s get it.
This Week’s Episode (Ep 3) ✈️
Michael Schneider, Founder and CEO of Service.
Listen to the episode on Apple Podcasts, Spotify, or Google
Summary 🔍
What’s the business?
Service was designed as an automated solution to save you time and money as you travel. It takes 1 minute to setup and it couldn’t be easier to use.
Service monitors your inbox for emails from hotels and airlines while you go about your day. If the hotel or airline messages you about a travel disturbance or change in your reservation, Service will automatically contact the hotel or airline and get you points, vouchers or cash. It’s that simple and there’s no catch - they even offer a plan that requires no payment up front, they just keep 30% of whatever compensation they get back for you.
This was a super interesting episode in the fact that just a week before we recorded (March 2020), Michael announced he was shutting down Service. Not only do we touch on how he built the business, but also, what went wrong and why his last efforts to save the company didn’t work.
Who’s Michael?
Michael is as pure bred entrepreneur as they come. He got his start building and selling custom websites at USC and has spent the past two decades as a serial entrepreneur.
In 1998, he founded Fluidesign, an award winning interactive digital agency. He proceeded to launch nesting.com, a Facebook style site for moms to keep track of their busy lives and then Mobile Roadie, a Wordpress style platform that enabled users to inexpensively build and maintain mobile apps. With Mobile Roadie, he focused on the music industry and powered the apps for Taylor Swift, Katy Perry, Drake and many others. In 2015, he started Service.
He currently lives in LA with his family and is an avid cycler. He also spends time supporting his non-profit, Streets For All, with a mission to transform transportation in Los Angeles.
Michael’s Startup Manifesto 🗣️
What’s a Startup Manifesto?
At the end of every episode, I ask my founder guests the same question:
If you had to write a Startup Manifesto with 5 of the most important key lessons or pitfalls to avoid when starting out, what would they be?
Here’s what Michael had to say:
Startup Manifesto 📜
Make sure you really like the idea and you wanna do it. The problem with starting something that you’re not super passionate about is that you won’t have the stamina to get through the really hard times.
Don’t think small. I see a common mistake with people that think things like, “I could never get a celebrity. How could we possibly do that.” People limit their thinking in terms of “crazy” ideas vs “not crazy” ideas. There’s nothing unique about the people that get things done with major personalities/business except that they ask. Don’t limit your thinking based on what you think is possible.
Hiring is so important. Everyone that’s really good in this world has a job, but people do leave companies. You never know where someone is at in their life. Maybe they’re bored. Maybe they’re ready for a new challenge. You could be hitting them right at the right time. Find someone who is doing a great job at a great company already and then try to get them.
Focus on a path to profitability or if you’re not profitable, the underlying base of the business needs to be growing so quickly that you could change some things and be profitable quickly if you had to. Amazon did this for years and consistently told people they weren’t going to be profitable. Now it seems like we’re all going to be working for Amazon.
Don’t ignore monetization for too long.
What Got Me Thinking From the Episode 🤔
After reflecting on my conversation with Michael, there were a couple of things that really got my wheels spinning:
1. When to Turn On Monetization 💵
After hearing Michael’s story and how he scrambled for cash in last few weeks of runway, it made me reflect on just how important revenue and profit generation is.
After the iPhone first came out in 2008, I remember how over the next few years it seemed like there were so many app-based startups popping up that were just chasing users. They had no clear path to monetization, let alone profitability, but as long as their user and usage numbers were up and to the right, they were increasing in value.
Overtime, as things have become more saturated and competition for a user’s attention is as difficult as ever, there is a greater emphasis on revenue and profitability. I’ve always thought that for the next company I start, I want to be revenue generating from day 1 with a clear path to profitability. It’s okay to reinvest all profits back into the business early on, but there’s got to be an immediate revenue stream.
I think this is important for a couple of reasons. First, it helps validate the true product market fit for your product/service. If people are willing to pay for what you’re selling, that’s a much better indicator for product market fit than giving it away for free. Second, it gets you closer to the ultimate goal - controlling your own destiny. It seems to me that one of the goals of a startup founder is to not need to fundraise. Sure, pouring gas on the fire to grow as fast as possible to take advantage of a market opportunity is always on the table, but being at the mercy of a constant fundraising cycle seems less than ideal. Thoughts?
2. Pure-bred Entrepreneurs 🙋♂️
As I started exploring entrepreneurship, I quickly became fascinated with the way founders were seemingly able to create something out of nothing - literally building companies out of an idea in their heads. I’ve always thought that I would be at my best as a founder and helping lead a team to bring something to life.
What I’ve heard consistently from people like Gary Vee and other loud voices in the startup/media space, is that the best entrepreneurs are pure-bred and would never do anything other than be their own boss. After talking with Michael, someone who has literally founded 4 companies and been an entrepreneur his whole life, I get the notion. He’s trained himself to not limit his thinking and to dream big when trying to solve a problem.
But I’d challenge the notion that the best entrepreneurs are only entrepreneurs and have never been good at working a traditional job for someone else. For me, I think I’ve done a great job at the company I work for, but I’ve never been fully satisfied where the reward wasn’t directly tied to the effort. That idea hasn’t satt well with me and has propelled me to always have at least one side project in the works. But, I don’t think the fact that I could excel in a role working for someone else limits my ability to be a great founder should that opportunity present itself in the future.
I think where pure-bred entrepreneurs have the advantage is reps and their unwillingness to fail. As serial entrepreneurs, these people have sometimes dozens of reps chasing and vetting ideas, launching companies, etc. It’s easier to see patterns for what might and might not work and know how to avoid pitfalls. Someone who’s had a more traditional job, might not have been exposed to those patterns and may be more likely to fail when operating a business. What do you think?
Wrapping it Up 📕
I hope you found this semi-interesting and inspiring/helpful in any way. If so and you want to help support The Founder, here’s a couple things that would be valuable to me and the show:
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Till next time ✌️
Kallaway