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My Unlikely Techstars Adventure: How to Be a Co-Founder For a Month At A Hot Tech Startup

by Nathan Johnson

It started, like many things do, with an unexpected Facebook message. “Hey, will you be in NYC anytime soon? I’d love to catch up on things.” It was a college buddy I hadn’t spoken to in 6 years. Soon, through the magic of Facebook, we were video chatting. The conversation began with the expected “wow, it’s been a while” chitchat. But soon, it turned to business. I explained the adventure I was on, recapping my first 30 days. Then he described his own journey. He had started a company with another friend of mine a year or so ago. A recent set of events, though, had dramatically changed their velocity. Their team had been a winner at something called a “TechCrunch Disrupt NYC Hackathon” and now their company was in a program called Techstars. And that was just the beginning…

As he explained his story, I was covertly searching Google in the background. Terms like Techstars and TechCrunch and Hackathons were all new to me. Admitting that may be the equivalent of heresy in the tech start-up world, but it’s true. I had no clue what he was talking about, just as I suspect he would be lost if I were talking about the finer points of, say, the OTC analgesic category. As I pieced together my multiple queries, the picture became clear. He was on the verge of something big. The “hackathon” they won put them in the top echelon of web developers in New York City. And getting accepted into Techstars is the start-up equivalent of being accepted into Harvard Business School. Each year, thousands of teams apply, and only 12 get in. The program is essentially a three-month “boot-camp” for technology startups. They provide seed money, an office space in Midtown Manhattan, and perhaps most importantly, access to some of the top investors and mentors in the world. The culmination of the program is something called demo day, where each company gives its pitch to 500 high-value tech investors. It was the opportunity of a lifetime.

As the story wrapped up, he said they were looking to add a “business generalist” to the team and thought I may be a good fit. I wasn’t expecting that at all. I had a lot of questions. First, how many people were already on the team? It turned out there were four co-founders already, so I would be the fifth co-founder. That seemed high. Second, how far along was the product? It was still very much in its infancy and needed a lot of development work. My joining would free up his time to work more on the product. I wondered if what they really needed was another product guy. Third, how would we manage the location differences? It would be pretty flexible. For the next two months, I would need to be in New York most of the work week, but eventually I may be able to work almost entirely from Philly.

It was an intriguing and completely unexpected proposition. As I discussed it with my wife, Kim, later that evening, we laid out the positives and the negatives. The positives were ridiculously positive, but the negatives were really negative. Overall, though, the risk was low. If it didn’t work out, that was fine. The only thing I would lose is a little bit of time. So, we arranged to have a “test” week in New York. I booked my Megabus ticket from Philly, and tried to prepare myself for what was next. . .

Half-way through band camp

When I walked into the Techstars for the first time , I think I was expecting to find a florescent-light filled room full of miniature Bill Gates look-alikes — caucasian, male, thin-bodied, thick-glassed über nerds who silently typed code all day and avoided eye-contact. But when I stepped out of the elevator on the 8th floor into the shared office space, I was struck by the abundance of natural light streaming through over-sized windows and the palpable sense of energy and aliveness coming from the twelve companies, who were crammed around a line of tables serving as makeshift desks. Now granted, some of my expectations were accurate. The teams were overwhelmingly male (sorry ladies). The ratio of glasses to non-glasses was, I believe, above the statistical average. And the dress code seemed to come right out of the movie “The Social Nework” with most people dressed in the “casual geek” apparel popularized by Zuckerberg. But that’s where the stereotypes ended. The teams themselves were incredibly dynamic. Harvard P.H.D’s working side-by-side with high-school dropouts. Business guys who were great at programming. Programmers who were great at business. And to me, there wasn’t even a hint of social awkwardness. Quite the opposite, in fact. Nerd-culture is now just mainstream culture, and these are its chief evangelists. They are on the bleeding edge of not just what was happening in the tech world, but what was happening in society, and everyone knew they had a shot at shaping its future. You could feel that everyone believed that this was their time. The next 60 days would shape the rest of their lives.

As I settled in a bit, the group dynamics felt more like a really intense band camp than it did a job. While the teams there were unquestionably competitive with each other, they also shared a strong bond. They had started at the same time, endured the same grueling, non-stop pace and faced the same deadline for demo day and inevitable end to the program. And since Techstars consumed everyone’s entire life, the line between work life and social life was blurry. The office was still packed at 1:00am on most nights. A few people even lived in the office. Literally. They slept each night in a conference room and showered in the office bathroom. People were killing themselves to make this work. But at the same time, no one cared if you walked around the office without shoes on (as some did). No one raised an eyebrow if you grabbed a few craft-beer from the well-supplied beer fridge. And the company ping-pong table got a good amount of play at all times of day.

Is it always like this?

The team I joined was just starting to hit “ big time baller” status (that’s an official startup term). My first day in the office, we received a term-sheet from a top investing group. Now other investors were clamoring to talk with us and get in on the round. I sat through meetings where investors didn’t seem that enthused about our product, but the moment they found out we were about to close a successful round, they wanted to get in on the action. Was there any way we could possibly make room for their money? Let us see what we can do, we’d tell them. Soon, we began receiving interest from investment firms in Silicon Valley. We even had some celebrity investor interest. All this while the team was still trying to figure out what exactly we were building.

There were box seats for us at the Giants football game. A pool party in the Hamptons for the whole group. Reporters from Business Insider were taking pictures in the office. And this was just my first week. “Is it always like this,” I asked?

An Unlikely Cofounder

So after the initial week, we agreed that I would join the company as a co-founder. This was, perhaps, a lofty and overzealous title for someone joining a company midstream, but one that was important for me. It signified the “ownership” that separated this from just being another job. I would learn that ownership, though, was more like “owning” a house. The reality is that don’t really own your house. The bank owns it. And over time, your contributions get you more and more actual ownership. Likewise, my ownership in the company would only be realized over the course of 4 years, which is the standard vesting scheduling.

Of course, this was all new to me. I was learning as I went. We all were. Questions each day had to be answered by doing. I learned the psychology of start-up financing by meeting with actual investors and watching their reactions to pitches. I learned about capitalization tables and the tax implications of equity structures by seeing my own name on the company cap table and simulating real life scenarios. I learned how to do my own market research by conducting 1:1 interviews with potential users. And I saw the impact of various philosophies on software development lived out in front of me in real time.

Toto, We’re Not in Kansas Anymore

When I started, I knew had a lot of catching up to do. Most of the people there had been living in this world for years. It would not surprise me if some of them slept on pillow cases with lists of Venture Capital firms. I mean, everyone lived and breathed this world 24/7. “Hey, did you see what so-and-so investor tweeted 20 seconds ago?” “Yeah, of course. I’ve already re-tweeted it and sent a blog post in response.” It was a little daunting. I was constantly scribbling little notes to my self: “To do: 1. sign-up for Twitter 2. Look up so-and-so investor. 3. Read his tweet.”

My schedule was intense by my own standards. Most nights I was in the office until 1:00am. I would usually stay up for a few hours after this reading books on business models, product development, negotiation techniques, and other topics I needed to master. Then I would sleep on a couch in the living room of my friend’s apartment. This regimen, though, was hardly going to be enough to catch me up to what others had spent years of their lives preparing to do. In fact, most of the founders maintained a schedule that was much more grueling than my own. The lead founder on our team was often up working until 4am, sometimes later. In a strange way, it was both inspiring and demotivating. There is something about this level of commitment that felt incredibly macho. People were sacrificing everything for a shot at making it big. But this also made me wonder, is it worth it? Was I beginning to sell out on the very things that I had set out to achieve by leaving my corporate job?

Fire, Aim, Ready

Though I felt behind, I still had something that few in the program had: a proven track-record of successful product launches. I had been trained on how to deconstruct and understand markets, develop clear strategies for winning, and then execute against those strategies. Obviously, the market here was different. I wasn’t working in consumer packaged goods anymore. But that didn’t matter. The principals and the framework can be applied to any industry. I had learned to see everything as a kind of chess match, where careful planning and the ability to see moves in advance was the difference between success and failure.

I quickly learned, though, that this was not how my team approached things. They approached business more like playing Halo on Xbox 360. They didn’t really try to predict what was going to happen next. The just kept moving forward, kept shooting, and learned as they went. If they made a mistake and got shot, it was OK. They could just restart the level and try something different.

The tension in these two operating philosophies was apparent. The first thing I tried to do in each situation was clearly define the objectives and create the best strategies to achieve those objectives. For instance, when I was asked to lead recruiting, the first thing I did was try to understand how our recruiting needs aligned to our product road map. If I could understand our ideal goals and timeline for product development, I could help focus recruiting efforts on getting the right team to create the products we wanted to make. I was told that was the wrong approach. We just needed to hire as many people as quickly as we could. This was the answer to everything. Just do more faster.

I interpreted their approach as a lack of structured thinking and preparation. A recipe for losing the chess match, or at best, making the road to victory painfully indirect. And as the product development fell further and further behind, I saw this as justification for my viewpoint. On the flip side, they interpreted my insistence on structure as a by-product of my corporate experience. That I was unable to be fully effective working in the unstructured world of tech startups that demanded constant action and course-correction. I think, to some extent, we were both right.

The Unraveling

At some point, a little over a month in, things started to unravel. It wasn’t the right fit. It didn’t map to what the team needed or what I really wanted. Our philosophies weren’t compatible. The initially promised “co-founder” status was removed through rounds of legal revision (not maliciously, but for tax reasons). And the request for personal sacrifice had increased, with pressure to move to New York City full-time, something my wife and I were not prepared to do. I legitimately enjoyed all that I was still learning as a part of Techstars, and so I began planning to stay through demo day, and then part ways.

The end, though, would come sooner than I thought. I sat in a brown leather seat in a Starbucks with my friend, some five weeks after our initial Facebook chat, as he told me what I already knew. And just as sporadically as my time with them had begun, it was over.

Regrets?

A few weeks have passed, and maybe it is still early for introspection, but I’ll share my current state of mind. First, I’m really grateful to have had the opportunity that I did. I went into it knowing that there was a good chance things wouldn’t work out. I had played out in my mind this exact scenario and accepted at the outset that it would be a worthwhile venture even if this happened. I still think this is true – that the positives have drastically outweighed the negatives – even if it has stung my pride a little.

I regret that I was not able to fulfill my obligations to the cross-company ping-pong tournament. There was some real talent in the mix, but I think I had a shot at making it pretty far. As luck would have it, my top-spin forehand kill shot was just beginning to blossom. C’est la vie.

On a more serious note, I regret that I did not have more time to spend with the amazing people within Techstars and on my team. Not only are they the best in the brightest in the industry, but they are also genuinely awesome people — the kind of people that you just want to hang out with. I hope that some of the brief connections I made there will last. I’m rooting for them all to crush it on Demo Day, which is just around the corner on October 18th.

Back to Plan A

So it is back to “plan A” for me. I have felt a new appreciation for truly owning my time and efforts. Being back with my wife all week in Philly is amazing and reminds me of the reasons I started this journey in the first place. And I have a new source of inspiration for ideas and business models.

I’ve also realized how much I enjoy working on internet related technologies. You may be shocked to hear this, but I was a nerd once. (It’s true.) Back in Middle-School, before Google or Facebook or iTunes, I used to love spending time exploring the endless world contained in the MS-DOS prompt, or writing little games in Q-Basic. And with the advent of AOL and E-Mail, I found little hacks I could do to kick other people offline or send e-mails from fake addresses. (Aww, the innocent days of my youth.) I feel like being in Techstars was like going through my own personal boot-camp on the future of the internet, and it was really thrilling.

So be on the lookup for future posts (soon, I promise!). If you have any comments or questions, I’d love to hear them below!

-Nathan

{ 10 comments… read them below or add one }

Carter Hunt October 13, 2011 at 10:17 pm

Nathan – you will always be a Techstar in my eyes…

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Nathan Johnson October 14, 2011 at 5:32 am

LOL – thanks man.

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David Young October 14, 2011 at 12:25 am

Sounds like it was a great chapter in the journey to wherever it is you wind up. Very few people ever get an opportunity to even see what those types of meetings are like!

Next time you’re in NYC, let me know. I’d love to catch up!

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Mackenzie Webel October 19, 2011 at 11:05 am

Nathan,

Your definition of “soon” and mine are apparently drastically different, but thanks for the new post! I love reading your blog and hearing your take on the adventures that have been coming your way! How about “soon” for the next post is more on my timeline, k? :)

Reply

Nathan Johnson October 19, 2011 at 2:57 pm

Hi Mackenzie, glad you like it. Yes, I promise the next post will be much much sooner, hopefully closer to your definition :)

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Loc October 23, 2011 at 1:07 am

Nate – awesome story…so how’d the team do? It’s been a few days since Demo Day..

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Nathan Johnson October 23, 2011 at 8:58 am

Thanks Loc. Everything I’ve read about demo day has been positive. I was pulling for the team, and it sounds like they did a really great job. We should connect. Let me know the next time you’ll be in Philly!

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steve November 4, 2011 at 6:03 pm

I find something very appealing and inconsistent in your message. I as would everyone like to be “famous” for the “incredible things I have done”. The problems is I am not rally willing to risk my relationships with the people I love to have that fame. I do not want to be the next Bill Gates when I know what hs is not allowed to do. Send his kids to school without the worry that someone sees dollar signs when the see his name or his kids faces.

THe tech startup environment described is one that thinks no one can execute a project in normal time as ideas are so time sensitive.

Where is the 4 hour work week?

Which is more important?

Miss you

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MJ December 2, 2011 at 12:02 pm

I actually am just reading your blog for the first time because a friend saw your Urban Meyer satire and sent me the URL. This post caught my eye. I have been in corporate America working for a Telecom giant for about 20 years. I can completely relate to your struggle with this startup. My company wants to follow protocol on everything we do and it flies in the face of the fire-aim-ready mentality you encountered. I would say that the startup’s behavior could be deemed appropriate if you assume that time-to-market is the overwhelming factor in all decisions. Taking time to analyze situations may be a luxury they don’t believe they have. The other thing to remember is that unlike your previous employer or mine, these folks have no existing customer base to disappoint. If they make a mistake, no worries! They have nothing to lose and everything to gain. This situation is a great example of the “unlearn what you have learned” lesson from Yoda. Don’t look back though. Working 24/7 does not sound like my idea of balance or happiness. Go Gators!

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Nathan Johnson December 2, 2011 at 12:09 pm

Thanks for the comment MJ – couldn’t agree more. And Go Gators!

Reply

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