Adam McFarland

Hulu has done it again: the TV section has introduced me to another show I never would have known about otherwise. The show is called Start-Up Junkies. On TV it can be found on the HD only channel MOJO, which to be honest I’m not even sure if I get or not…let me run out and check…yup, channel 1855 for anyone subscribed to Time Warner HD service here in Albany. Huh, never had any clue it was there.

The show follows the startup adventurs of Earth Class Mail, a company that receives, sorts, and scans your snail mail for you to view online or on your phone. It is a fascinating watch for anyone interested in startup life, particularly anyone interested in a large startup that requires quite a bit of Angel/VC investment. I highly recommend watching all of the episodes over on Hulu. There are only eight twenty-minute episodes as of this writing, so it’ll take less than three hours. I just finished watching them all and recorded my personal thoughts as I was watching. My notes are below the graphic, but I think it would be more beneficial to watch without my bias in mind, make your own observations, then come back to the rest of this post (and comment of course). I am interested to see if people pick up on the same things that I do.

• Startups take after their founders. CEO Ron Weiner loves to talk about how this is a “billion dollar idea” and how he would be lying if he said he wasn’t in it for the money. Consequently it seems like when they ask employees why they are involved in such a risky career you get two answers: the money and the love of startup life. Nothing wrong with that per-se, but Earth Class Mail can literally change the world. It can improve lives in major, major ways. Just would have been nice for one of them to say that they wanted to be a part of something that makes the world a better place. Maybe I’m naive, but I thought all entrepreneurs had a little of that “change the world” attitude in them.
• They changed their company name and their domain to Earth Class Mail (formerly known as Document Command and Remote Control Mail). First off, changing your name that many times is crazy. Second, they didn’t initiate the DNS changes until the night before a major convention. They are flipping out that the domain hasn’t propagated, they can’t demo the site, and that the press release has already gone out. They make a big deal about how stressful it is. They celebrate like they won the Super Bowl when it finally does propagate. Everyone knows it takes up to 48 hrs to propagate fully - you caused that stress yourself. Stop acting like this major unforeseen error occurred and by the grace of God everything worked at the exact second you needed it to. You f*cked up, why doesn’t that get mentioned?
• Phil, a sales executive who is by all accounts very important to the team, is totally left in the dark about the financial situation. It seems as if Ron and Chief Marketing Officer Natalee are totally secretive about when funding is coming and how much. He says “when I started, I was under the understanding that funding was a month a way and that it was all locked and loaded and ready to close. I guess there are some hiccups there that I’m not quite aware of”. Not the way I’d run a company. Transparency - especially to critical employees - is key.
• Going to that RV rally was absolutely stupid. They didn’t have permission. They didn’t have a plan. The people really aren’t their target market. What an absolute total waste of time for three important people to kill a day doing that.
• Let’s be real here: all startups are stressful for their own reasons, but 99% of the stress this company is enduring is related to Angel and VC funding. It seems like all of their resources are poured into securing tens of millions of dollars. I understand why, but it’s also the #1 reason why I plan on always self-funding my ventures. How is the company supposed to grow when everyone - marketing, sales, accounting, executives - spends all day long scrambling to prepare numbers or presentations for VC pitches?
• Natalee “Our lawyers wrote the website and engineers built it so now we have to create a marketing website”. Oh boy. That’s how a web company fails. How can all these smart people allow such a thing? You’re trying to raise millions of dollars and you HAVEN’T built a site with the customer in mind?
• I disagree with Ron when he says you need to acquire customers “not like the company you are, but like the company you intend to be”. Fortune 500 client “Cheetah” essentially re-writes their business plan and puts immense stress on the entire team. You can grow too fast, and as I’m watching this it seems like taking on this client could do that to ECM. If it destroys your systems by forcing them to scale before they are ready to do so, it’s a bad move.
• Maybe I’m overstepping my boundaries here, but when Natalee gets into a car accident and is sidelined with whiplash all she does is bitch and whine about how “unfair” it is and how she should be in meetings. She doesn’t seem thankful that she’s OK at all. No one likes getting in a car accident, but there are far worse things in life than getting hit up with whiplash and being sidelined for a few days. She comes across as a five year old who throws a tantrum because their work at a startup is more important than everything else in the world. All the fellow employees also just blab about how much her getting injured has cost the company. No one at all seems grateful that she’s OK or mentions that an injury like that puts things back in perspective and makes them realize that her health is more important than her day-to-day tasks. A bit saddening.
• I HATE when people say “9 out of 10 startups fail”. They say it at the beginning of each episode, and each time I cringe just a little bit more. It’s a total myth. “Using Census Bureau microdata of firms started from 1989 to 1992 and tracked through 1996, Headd found, among other things, that about half of new employer firms survive beyond four years, and about one-third of closed businesses were a success at closure.”
• Watching the marketing team review their PPC results is interesting. They have outsourced their campaigns and seem to only review them monthly. They get frustrated at the results, but don’t have enough time or know-how to dig deeper as to why they aren’t optimal. Sounds like every single company I’ve ever known. PPC is one of those things that seems simple, but is absurdly complex. It requires a lot of keyword research, time to write ads, and a whole lot of split-testing. When you’re relying on PPC results as much as Earth Class Mail seems to be, reviewing and tweaking the campaign needs to be a daily task (whether done internally or outsourced). I learned this the hard way.
• They also mention how frustrating PPC can be in the beginning: you don’t know what works, but you have a fixed budget to figure out what works. If something seems to be working, you can pour more money into it, however you don’t get an opportunity to test for something that could potentially work even better.
• If I ever start a VC backed company, I will need a partner with experience raising money. Ron seems to be VERY good at schmoozing VC’s and Angel’s. I would need a mentor to follow around and learn from before I could ever get to that point. I know the bootstrapping world, not this stuff. It’s basically a full time job for Ron to constantly secure more funding.
• Mid-stream they switch from developing on an open-source platform (maybe LAMP or Ruby on Rails?) to .NET because they are an official partner with Microsoft at a conference. Ballsy. They must have some hella good programmers.
• I thought Ron was a bit of a douche in the beginning, but he’s really grown on me. He knows his shit. He loves what he does. He will do ANYTHING for his company to succeed. Hard not to get on board with a guy like that. Hell, seems like he handles the stress better than I would (or better than the rest of his team does for that matter).
• They’re meeting with Venture Debt Bankers to get more funding without giving up more stock. Pretty interesting - I didn’t know this was possible. Apparently they come in after the VC’s have done their due diligence and will give you a business loan. It seems like the assumption is that they know the VC firms and how much work they put into researching the company, so they feel like they are backing more solid companies than just any company off the street. One interesting thing: they prefer the money be spent on capital equipment like buildings and machinery as opposed to marketing or software because if the business fails they can recoup some of their investment. They even state that you get lower rates when you use the money for those things.
• Honestly, there are SO many business processes and contributing factors to success in a company like this that I would find it tough be be CEO or even a VP. As of now I can’t really see myself being involved in something of this magnitude with this many people involved. Just doesn’t seem like much fun. I think I’ll always be a small startup guy with relatively simple business solutions that meet one specific niche need.
• Ah, they did develop on PHP. Holy f*&@! that’s a lot of work to re-build everything from scratch and deploy it on .NET!
• Love the Red Bull’s on all of the developer’s desks. They are really pushing these programmers hard, almost to the point where you wonder if they can possibly be productive.
• Wow, looks like all of the crazy gambles have paid off so far. Ron is the shit - dude pushes everything to the limit and definitely wins more than he loses.
• The last two minutes are nuts - almost every member of the senior staff leaves for one reason or another. Makes you wonder if they just pushed this thing too hard too fast.