#launchgram

New Post has been published on http://projectopenhand.biz/yc-backed-referly-acquires-launchgram-eyes-ramen-profitability-2/2166

YC-Backed Referly Acquires LaunchGram, Eyes Ramen Profitability

At just about a year of age, Referly may be a tad young to be making its first acquisition.

But the San Francisco-based startup is doing just that today with the purchase of 500 Startups-backed LaunchGram.

Basically, LaunchGram was a service that kept people up-to-date on upcoming product releases. Because Referly also appeals to people who like to curate products and earn extra cash off recommendations through affiliate revenue, there was a big overlap in their customer base, Refer.ly CEO Danielle Morrill explains.

“This will help us be the destination for conversations around products,” Morrill said. “They were at the same place where we were in terms of traffic so this doubles our web traffic overnight.”

The deal was done for a combination of cash and equity, but neither company is disclosing how much. Only LaunchGram’s CEO Andy Sparks is coming on with the acquisition, but Refer.ly plans to keep LaunchGram alive.

“We’ll continue to operate the site, but we’ll keep it separate from Refer.ly,” Morrill said. “It still fits with our overall strategy.”

Sparks will take the lead on curating and editing Refer.ly’s channels around technology products. Morrill said the site has so far leaned toward categories like fashion, so this will cover a lucrative gap in Refer.ly’s offerings.

Morrill added that the Refer.ly is steadily growing with probably 1 million pageviews this month, 100,000 uniques last month and enough revenue to cover one engineer. “It’s a psychologically impactful level,” she said. “Even if there was startup nuclear winter, one person could survive on this.”

She added that they’re holding off on fundraising until she feels the company is performing well financially. The company just raised $ 1 million in a large seed round that included New Enterprise Associates, Ignition Partners, 500 Startups and Twilio CEO Jeff Lawson.

“We want to be ramen profitable before we raise,” Morrill said. “Paul Graham is always talking about startups that are cockroaches and that survive. I’m very determined that we will be that kind of company at the very least.”

That said, there are definitely more than a few things that have changed. Originally, the company was looking to democratize the way affiliate revenue on the web works. Many of the biggest e-commerce sites like Amazon pay others a small revenue share called an affiliate fee if they send buying customers over. It usually ranges from a few percent to 10 percent.

While bigger sites and independent stores tap into this, most regular people don’t because they’re either unaware of it or they don’t want to go through the hassle of registering as an affiliate.

Refer.ly’s bet was that people would want to recommend products and a get a small cut on the side. But it turns out that the monetary incentive isn’t all that strong for many of Refer.ly’s users.

“There’s this constant ‘For Love Or For Money’ debate that happens in this company,” she said. “Frankly, I’ve had questions about whether or not people even care about making an extra $ 20 or 30 or whether they just want a really good product blogging platform.”

New Post has been published on http://projectopenhand.biz/yc-backed-referly-acquires-launchgram-eyes-ramen-profitability/2164

YC-Backed Referly Acquires LaunchGram, Eyes Ramen Profitability

At just about a year of age, Referly may be a tad young to be making its first acquisition.

But the San Francisco-based startup is doing just that today with the purchase of 500 Startups-backed LaunchGram.

Basically, LaunchGram was a service that kept people up-to-date on upcoming product releases. Because Referly also appeals to people who like to curate products and earn extra cash off recommendations through affiliate revenue, there was a big overlap in their customer base, Refer.ly CEO Danielle Morrill explains.

“This will help us be the destination for conversations around products,” Morrill said. “They were at the same place where we were in terms of traffic so this doubles our web traffic overnight.”

The deal was done for a combination of cash and equity, but neither company is disclosing how much. Only LaunchGram’s CEO Andy Sparks is coming on with the acquisition, but Refer.ly plans to keep LaunchGram alive.

“We’ll continue to operate the site, but we’ll keep it separate from Refer.ly,” Morrill said. “It still fits with our overall strategy.”

Sparks will take the lead on curating and editing Refer.ly’s channels around technology products. Morrill said the site has so far leaned toward categories like fashion, so this will cover a lucrative gap in Refer.ly’s offerings.

Morrill added that the Refer.ly is steadily growing with probably 1 million pageviews this month, 100,000 uniques last month and enough revenue to cover one engineer. “It’s a psychologically impactful level,” she said. “Even if there was startup nuclear winter, one person could survive on this.”

She added that they’re holding off on fundraising until she feels the company is performing well financially. The company just raised $ 1 million in a large seed round that included New Enterprise Associates, Ignition Partners, 500 Startups and Twilio CEO Jeff Lawson.

“We want to be ramen profitable before we raise,” Morrill said. “Paul Graham is always talking about startups that are cockroaches and that survive. I’m very determined that we will be that kind of company at the very least.”

That said, there are definitely more than a few things that have changed. Originally, the company was looking to democratize the way affiliate revenue on the web works. Many of the biggest e-commerce sites like Amazon pay others a small revenue share called an affiliate fee if they send buying customers over. It usually ranges from a few percent to 10 percent.

While bigger sites and independent stores tap into this, most regular people don’t because they’re either unaware of it or they don’t want to go through the hassle of registering as an affiliate.

Refer.ly’s bet was that people would want to recommend products and a get a small cut on the side. But it turns out that the monetary incentive isn’t all that strong for many of Refer.ly’s users.

“There’s this constant ‘For Love Or For Money’ debate that happens in this company,” she said. “Frankly, I’ve had questions about whether or not people even care about making an extra $ 20 or 30 or whether they just want a really good product blogging platform.”

Part I  Part II  Part III

Once I realized the jig was up, it was time to tell my team, pick up the pieces, and figure out what else I was going to do with my life now that LaunchGram was over.

Telling my team was no small task. In fact, I think it was the scariest part of the whole thing. I was afraid I’d lose my friends. Not only did I want to prevent that from happening, I wanted to make sure create the best outcome possible for everybody. It was my responsibility to make the transition out as smooth as possible.

Closing down a company is a lot like a breakup. Sometimes the circumstances dictate that you can be friends, other times they don’t. I remember getting lunch with my mentor, Christian, a month or so ago when I was in the thick of this decision. He told me, “When the nights get hard, double down on the people in your life.” So that’s what I did. I doubled down and focused on turning my co-founders back into friends.

I wanted to wait until after New Years’ Eve so everybody could enjoy their holiday, but after who knows how many glasses of champagne, vodka and whatevers, and a few PBRs, the emotional side of me came out and spilled some of my conclusion with my co-founders. I could have handled that better. I took each of them on a walk the next day to talk about next steps. Everybody knew it was coming to a degree, and there was an odd sense of peace mixed with turbulence in the air that’s hard to describe. We were simultaneously afraid, but confident we’d figure things out. Throughout the whole process, I had a number of off-the-charts incredible mentors, advisors, and friends who helped me through the process. Despite feeling awfully alone at times, I was tremendously lucky to be surrounded by support. Each individual had a [very] different opinion on what to do, but at the end of the day it was up to me to make the call (see: Feedback Fatigue). After the decision was final and I slowly filled each of these people in, a couple even offered temporary employment as a bridge to help us figure out what sort of future we intended to build. To those of you - you know who you are - thank you. When a dam breaks, the village below does not simply stand up and rebuild. It takes time, and the village is really never the same afterward; some things are broken. Similarly, when you lose a battle, you come out on the other side changed. There’s a tendency to come out with a higher aversion towards risk and there’s a high likelihood you’ll feel lost. I sure did. But I also came out stronger and smarter - able to read the battlefield and see things coming before they hit. That said, I questioned what my role in the business world was: was I a product guy, a marketing guy, a sales guy, or something else? For so long, I had identified with being a founder who wore many hats, some of which fit better than others. Then I remembered the beauty of The Avett Brothers’ line, “Decide what to be and go be it.”

The beauty is that you don’t get to decide what to be just once. You have to repeatedly revisit the act of deciding what to be over and over again. If you’re really going to do what you love, you have to be vigilant in making sure you know what you love doing each day. I saw a TEDx talk in Washington D.C. a few years back that talked about this idea. The speaker called it, “prototyping your life,” as a way of figuring out what you’d like to be so you can get on with being that. In his recent NYT bestseller, The Social Animal (which I HIGHLY recommend), David Brooks said,

“the truth is life is about producing failure. We only progress through a series of regulated errors. Every move is a partial failure to be corrected by the next one.”

Losing the battle with LaunchGram was a “regulated error.” I’ve emerged battle-hardened, entirely more mature and significantly humbled, but not knocked down. What I really learned is that life isn’t about fighting one battle. It isn’t about throwing one big hail mary pass. It’s about a series of focused and purposeful battles.  It’s about knowing each battle is part of a larger war to achieve whatever it is you want to achieve. “Deciding what to be,” “doing what you love and doing it more often,” and “enjoying your work,” are all things worth fighting for, but fighting is hard. It’s emotionally draining, and it’s even painful at times. But it’s possible. You just have to fight. And people only win battles when they’re fighting for what they love. So fight the battles, because the war is waging, and it’s one worth fighting for. It’s a war for a better future and after all, the future is ours.

Part I   Part II

Around Thanksgiving I panicked, and I don’t panic often. I decided to spill my guts to my Dad, who I’m lucky enough to be able to count as both a mentor and a friend. He helped me realize I had two options: close it down, or double down and give it another shot. I convinced myself afterwards that I was just hallucinating, I would go back and set some goals for numbers, and we’d figure this thing out. 

Part I

Distraction is the enemy of progress and ambition. It happens when we take our eyes off the prize and start letting other people’s goals dictate our own. Distraction happens too often and it happens because we let it. When I look back at LaunchGram and why I failed my team, my investors, and myself, I see a story with distraction at its source.

The honest truth is that I started LaunchGram not because I cared about movies, tv shows and video games coming out in the near future, but because a mentor threw out some statistics that lead me to believe that it could be a lucrative opportunity. I looked into the data on what was then a Facebook ad arbitrage system and it looked like we could print money. 

Ever since I was in the fourth grade I’ve been waging war. This war is about not settling for working in a coffee shop or a cubicle when you know you’re capable of more. 

In Mrs. McKenzie’s fourth grade class, she asked us all to go home and ask our Dads what they would be if they could go back in time and do it again. It was an exercise for Father’s Day. I remember my Dad somberly admitted without hesitation that he’d go back and become a baseball pitcher. Instead, he did ops for a dot com.

That was the first time I can remember feeling incredible sympathy towards my Dad. If I had the words I have now, I think I would have said to him, “Damn. That is some real shit, Dad. Why didn’t you, then?” Right then and there, I was determined to have my answer to my son be, “I wouldn’t change a thing. Not a damned thing.” Looking back, that poignant conversation with my Dad and the realization that I might live my whole life doing the wrong thing, has been motivating me to fight this war for the last fourteen years. It turns out I’m not alone. This war is about a call to action like The Avett Brothers’ “Decide what to be and go be it,” and it’s about Holstee’s manifesto proclamation, “This is your life. Do what you love and do it often.” It’s about what a Reddit thread called, The New American Dream: “Doing what you love and trying to find a way to get paid doing it.” It’s about not settling for working in a coffee shop or a cubicle when you know you’re capable of more. Our war isn’t just a naive “no regrets,” battle-cry. Rather it is a generational and cultural shift away from realistic retirement plans and stable careers towards an environment rife with chaos. Flexibility is compulsory, manic economic conditions appear to be the rule rather than the exception, and education is not something that happens to you, it’s something you’re responsible for individually. In war, the eventual victor doesn’t necessarily win all of the battles. I fought two battles since graduating college and lost them both pretty miserably. The first of which was working for a mobile software startup in Columbus, Ohio (I went to Ohio State) while believing I could run the place. The second battle I lost was technically my second incorporated company (my first was a microbrewery at 19 and you can guess how that fared). I lost the second battle this month. Not only did I lose it, I retreated. I surveyed the battlefield, considered my odds, and decided to live to fight another day. Writing that makes it sound like there was some kind of glory in it. There wasn’t. It’s a metaphor that not only makes me feel better about doing something hard and failing at it, it helps me understand this failure in the larger context of the war. In October, we managed to hustle LaunchGram into 500 Startups. I started a weekly blog series to cover what the experience was like but I ended up stopping the series. It was a time suck and transparency is easy when things are going well, but doesn’t always make sense when things aren’t. Somewhere in that series, I got a few tweets and emails asking for stories about the hard times and the worst times, because a lot of blog posts are about the good times and the best times. So, with that, I’ve decided to write a series while my latest failure is fresh. I’ll publish three more posts in this series to cover (1) why it happened, (2) how it felt while it was happening, and (3) how I picked up the pieces and came out stronger.   It’s a story I haven’t taken lightly. When I set out to write it, I was doing it to share the experience with other founders & aspiring founders. After finishing it though, it has been deeply important in helping me understand the role of failure. So with that, this story is a bit self-serving, but I also truly believe it has the potential to be helpful to others. Part II: Distraction will be published tomorrow.

Before anything else, I wanted to make sure our Chief Creative Officer, Carrie, got the credit for making this awesome "whiskey inspired" label for our latest batch of 500 Startups seen to the right.

I could not be more pleased to announce that Zach, Carrie, and I have accepted an offerfor LaunchGram to join 500 Startups’ 5th accelerator batch starting this fall. While this is only the beginning of an even greater adventure, I thought it might be helpful to others to document our path thus far. Telling our story is fun for me, but chances are you, the up-and-coming startup community, don’t care that much about the story. You’d like to read something to help you get into 500, so I’m going to try to emphasize certain points.

BUILD RELATIONSHIPS BEFORE YOU NEED THEM Our journey to Mountain View began in Austin, Texas at South by Southwest (SXSW) in 2011. It was my first time at the conference and my employer at the time bought me a pass to see all the talks. My good friend, Ben Gilbert, urged me to go see Dave McClure talk, but I declined, as I hadn’t heard of him (I’d find out later this was short-sighted).

Somewhere in that same week I met Danielle Morrill, still CMO at Twilio, for the first time just as the first box of Twilio shirts arrived in the now famous “Zaarly mobile world headquarters.” Later that week, I got dinner with Danielle and some folks. At this dinner, Dave McClure came up as she discussed his philosophy of “data, design, & distribution” and the corresponding optimal team for a startup: “developer, designer, & hustler.” These theories were new to me, and I realized how much more I could have learned by actually seeing Dave talk.

LEVERAGE YOUR TRIBES’ NETWORKS Fast forward seven months: by now I had gotten very familiar with 500 Startups and Dave McClure. After doing a good bit of research on 500 Startups, we learned – as many others have – that there is no formal application process; all the deal flow comes from 500’s network of trusted mentors and advisors. They push for at least three mentors to make glowing recommendations before they’ll take a meeting with you (obviously this is flexible, but a safe rule).

After starting what would become LaunchGram at a Startup Weekend in Columbus, OH, I recruited a developer and a designer (both friends) and put together a minimally viable product (MVP). Soon after, we packed up and moved to the Bay Area, all with the goal of getting into 500.

It didn’t take me long to realize that people I knew through my involvement with Startup Weekend were connected to mentors in the 500 network. Conveniently, my friend Nick Seguin was on the board of Startup Weekend with Danielle and Dan Martell. My work organizing and participating in events made asking for introductions from Nick easy. After those two, through a combination of luck and hustle, we got in touch with a few more mentors.

Additionally, our CTO had interviewed with Twilio fairly recently and shot Danielle an email (two approaches are better than one!). We met up after a month or so of back-and-forth and learned she was moving to Mountain View, not far from our own apartment, to run Refer.ly during the summer class of Y-Combinator. After a cup of coffee with Danielle at Red Rock, I shot her an email asking her to join on as an official advisor, which she accepted.

Something my co-founders and I talked about and worried a little bit about was how to ask these mentors to vouch for us once we talked to them. Much to our surprise, however, after speaking with each of them the offer came from them! As to why this happened, I can only speculate. That said, while each made the offer to make introductions, we had to follow up - sometimes several times - to make sure it happened.

DON’T JUST FIND MENTORS & ADVISORS. BUILD FRIENDSHIPS. A couple nights later, Danielle called me up and told me to come over because she was having some people over to play poker. I grabbed Carrie & Zach and headed over.

When I arrived, Danielle casually mentioned that Paul, Christine, and Dave would be joining us for poker. I immediately reached for a Corona and prepared myself. When the 500 team arrived, I played it cool and used a tactic I like to call The Anti-Pitch.

The Anti-Pitch is based on the premise that people like Dave, Christine, and Paul don’t like to be pitched by people they don’t know. We all chatted for a bit, started the poker, and then as Paul was leaving I grabbed him and introduced LaunchGram briefly and asked if we could meet sometime soon.

Thankfully, he obliged and we set something up for the following Friday. Meanwhile, Dave got pocket aces – TWICE – and took Zach and I to the cleaners. He told us he’d pay us back 50x over if he did our deal.

BE PATIENT & DON’T STOP HUSTLING. The following Friday I met with Paul at the 500 offices and I felt like it went well, but they weren’t doing deals for the next accelerator batch yet, so we set up another meeting. A part of me was expecting either a yes or a no from that meeting, so the next couple weeks were agonizing. At our second meeting, I brought my co-founder Zach. Paul told us he wanted to see a clearer strategy for user acquisition / traction and we set up another meeting for two weeks later.

In that two weeks, we doubled our user-base and traffic. Finally, I showed up to the 500 offices mid-renovation, Paul grilled me on some metrics and strategy, and then he asked us to join Batch No. 5.

CELEBRATE, BUT NOT TOO MUCH After an expensive phone call with our lawyer, we accepted the offer. I bought some six-dollar champagne sparkling wine, some orange juice, and headed back to the home-office to tell the team.

Getting into 500 Startups is a win for us, and while it’s clearly only the beginning of a lot more hard work, it is still a win and wins deserve to be celebrated. We know only so many of the companies in our batch will go on to be successful, so we’re feeling the fire underneath us and intend to build something that people want to withstand the test of time.

FINAL POINT The big takeaway is that relationships matter to 500 Startups and that’s not to say they don’t to other accelerators. I really want to place emphasis on how much relationships mattered in my personal experience with the 500 team so far, and I doubt that’s changing anytime soon. If you want to be #500strong, get to know mentors and founders of 500 companies on a personal level and don’t just sell your product or idea, sell your team.

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