Last week, just before a meetup at the Madison, WI-based startup accelerator, gener8tor, I overheard someone say, “Startups don’t fail. Founders quit.” I was like, “did Startup-Gandhi just walk in the room?” That was the most profound statement I’d heard in a few weeks. I turned around and it was Eric Martell, COO and co-founder of U Connect.
photo via bjornmeansbear
U Connect is an online food ordering platform that lets restaurants receive online orders for pick up and delivery via their own custom site, and it has an online listing of all restaurants in the area. U Connect partners with 600 restaurants in 17 cities in the U.S.
I walked over to Eric and told him that was such a profound statement it was gonna be the title of my next post and I wanted to interview him and find out what he meant by it.
So, here we are, Friday morning at Ancora Coffee in downtown Madison, WI.
I asked Eric to tell me about a time he and his co-founders wanted to quit working on their startup, U Connect. Eric riffed and I took notes.
“U Connect turns 3 years old on Feb. 1st, 2013 and it’s been close to going out of business once in each of the last three years,” he said.
The 1st Quitisode
Yep, I said quitisode. Quitisode = episode involving potentially quitting.
During the 1st seven months of the startup, all 3 partners were full-time students at UW-Madison, had part-time jobs, and were working on U Connect. The really frustrating thing was there was a huge spike in revenue in the first month, but in months 2-6 business fell off a cliff. It got to a point where the only thing driving revenue was all 5 room mates ordering food using the site. Then things really got bad when only 1 room-mate was ordering on the site.
At that point, they only had 5-7 clients, all of whom were giving them heat about where the orders were that they promised. And they were only averaging about 3 orders per night, or about $2 in total revenue!
This lasted for 6 months and the only thing that kept them and the startup going was personal pride. Eric said, “we started this thing, told all our friends this was going to be the next Facebook, and we couldn’t quit! If you keep on beating a dead horse, every once in a while it comes back to life.”
The 2nd Quitisode
They now had traction with 100 orders per day and could finally quit their part-time jobs. Two of the three co-founders were about to graduate and their parents were pressuring them to get a “real job.” They had solid job offers and the CTO had great opportunities to work in silicon valley.
They asked themselves the following question, “are we really willing to take a leap of faith?” After all, this was no longer a part-time job, but it would be THEIR LIVES-with real consequences. After many heart-to-heart conversations, they decided if there was any time to take a risk and move forward, this was it. Business was “thriving” and to try to recreate it or come back to it later, would have been really difficult.
So, full steam ahead with U Connect!
The 3rd Quitisode
Their backs were against the wall. They recognized they needed to scale up to challenge competitors in NY and Chicago who were 10 years old and growing like gang busters, signing up 100s of restaurants every month, nationally.
Organic U Connect growth was good, but not fast enough to scale and expand to other cities. They needed REAL money to compete! So, they decided it was time to take on outside investment.
Raising money was “way more difficult than we expected. We had 7,000 customers when we pitched our first accelerator. We also pitched several angel investors in Wisconsin, both of whom shot us down. If we didn’t get any money, we would have to seriously reevaluate things.” Luckily, they got into the 94 Labs (now gener8tor) startup accelerator in October 2011, which bought them some time and threw them a financial life line.
Since then, they’ve raised a follow on round of financing from private investors, and will close a Series A round of funding in a week!
In the process of raising the Series A round, they were getting pressure to move to the west coast from investors. But they love Wisconsin, Milwaukee and Madison, and refuse to move. If they had moved, Eric thinks they would’ve raised the money sooner because potential investors wanted to be closer to them. But their decision to stay in Madison helps build the local startup ecosystem. And since I’m new to the Madison startup scene being in the current gener8tor class, I appreciate that decision.
U Connect is launching a new, national brand Monday, Jan 21st, called Eatstreet! Could this new project be quitisode #4?
I doubt it.
So, there you have it. Plenty of times the founders could’ve quit, but they didn’t. And that is the point!
Did you ever quit on your startup? Do you regret it? Was it a good decision? Holla at me in the comments section.
Ciao and suerte! (good luck!)
@jamesoliverjr
Latest posts by James Oliver, Jr. (see all)
- Entrepreneurs Must Have a Supportive Spouse if Launching a Startup - February 23, 2013
- Startups Don’t Fail. Founders Quit. - January 23, 2013
- How Not Having A Tech Co-Founder Put Me On The Bubble For A Start-Up Accelerator - January 9, 2013
Hello James, nicely done, two things that stood out to me were the refusal to move to the west coast. Love the loyalty to your location. I don't understand that need to be "closer" in todays digital world that should not be an issue.
Thanks, Gerry. Maybe Eric will chime in and answer some of these questions. I'll see if I can get him to chime in.
Hi Gerry,
I totally agree with your sentiment for the most part. EatStreet is excited to be a part of a fledging startup community here in Madison. There's a lot of excitement surrounding new ventures in Madison. Companies like StudyBlue, PerBlue, and Shoutlet paved the way for us, SnowShoe, the host of Gener8tor companies, WomStreet etc to build the momentum! It's almost like being in a second startup in the sense of creating something, in this case a startup scene, in Madison. it's a close knit community that we certainly were not ready to leave.
The devil's advocate point to your comment would be that nothing beats face to face interaction. I find myself a thousand times more productive in face to face meetings with our developers, strategists, etc. Additionally, top talent often prefers places that are already hotspots for their field, just because the culture already exists. To both those previous points, Silicon Valley is truly something special, and there are definitely still benefits to surrounding yourselves in a culture that embraces the entrepreneurial lifestyle.
In general, decisions like relocation are never easy, and there is certainly no right answer. For us, it was the excitement of being part of a growing startup community in our home state, versus being another face in the crowd thousands of miles away, that led to our decision. The University has been a great talent feeder for us, and we've had all our needs met. The decision to relocate definitely needs to be evaluated on a case by case basis, but it's always been obvious to us that EatStreet a child of Madison, WI!
Thanks for the reply!
Eric,
Thanks so much for stopping by and responding to the comments and questions in such a thoughtful manner.
Btw, I love the new eatstreet.com website. Well done.
Talk soon.
This was a great piece, James…
If you don't quit or give up on your dreams, you're destined to live them. Period.
Cheers to never quitting!
Cheers to that!!!
Amen!
Great write up.
Eric, how did you get out of each quituation? Loved hearing you got out but I want the details!!!!
Thanks, Matt. Hopefully, Eric will stop by and answer your question.
What's up Matt!
Short answer would be determination, caffeine, lack of sleep, and some real analyzing of what got us into the problem in the first place.
Longer answers:
Quituation 1: We had to step back and ask ourselves why we weren't gaining traction. We realized our site wasn't usable enough for customers to find it more convenient than the traditional phone to call in orders. If our product didn't offer value, why would anyone use it? Likewise, we realized our restaurant list wasn't comprehensive enough to offer real convenience to the customers. We had to work on our core product.
We also realized customer acquisition was (and continues to be) HARD. We did a bit of a classic startup pivot and started promoting our site as a deals site versus a restaurant aggregator (including subsidizing a couple deals early on), and that helped us dig in our heels and finally gain customer mass.
2) This was just a kind of now or never attitude. In this case it was basically our decision to call it quits or not; we were doing well, and it just came down to a personal decision of whether to risk it or not. As early 20 year olds, and having already amassed a good userbase and restaurant connections, we thought, "Hey, this is a once in a lifetime chance; we can't walk from this."
3) We hit the pavement and raised some cash! We knew this was necessary for us to grow faster in order to not miss the opportunity of a fast moving market. None of us had investment experience, but we were able to get some folks excited with both our traction and our passion for doing what we loved.
This is an interesting subject. Startups are a form of experimentation and thus prone to failure (inherently). Knowing when to quit is something learned via experience, but never quitting an idea could lead a person to spending too much time on an idea the market does not want.
It takes confidence to know when to say when and move on to the Next Big Thing.
Personal experience. I spent probably 6-9 months too much time on CircuitCourtPro before quitting. When I finally did, a couple of entrepreneurs from Milwaukee bought the app. And now they're struggling to figure out the marketing angle (lawyers, not fun to market to), while I'm free to move on to the next thing.
Interesting story, wiscoDude. Thanks for sharing.
I started a digital publication years ago, and after much toiling and sacrifice, I moved on. At the time, it felt like the right thing to do, but to this day, I lament the choice to quit. I just can't help but wonder if there were a few more rocks I could've turned over.
WiscoDude, you're completely right! This is still a grand experiment, and our decision making through the entire process has not always been by the books. It definitely sounds like you played the right angle with your decision back in Milwaukee.
My personal opinion: In a culture dominated by lean startup methodology, people do sometimes pull the trigger on quitting too early. I agree with the methodology, but I think people often misinterpret the "iterate and pivot" idea as "immediately gain traction or quit". We did iterate after our first crisis, improved our product and changed our service to be more deals focused, but we didn't drop the brand, didn't move away from restaurants, etc. After the first six months of operation (we're three years old now), we came back when the students returned to campus and doubled our customer registration from 1000 to 2000 in three days. It just took some insight on where the business had to be tweaked.
You're 100% right about the necessity of not wasting your time and knowing when to walk; I'd just encourage startup folks to walk after 9 months and not 9 weeks.
AWESOME! AWESOME! AWESOME! This is my new favorite post on SF. I agree with Eric. The new culture encourages quitting too early, though I do agree one has to know when to hold them and when to fold them. It comes down to a combination of data (often ignored), experience (we never have enough) and gut instinct (sometimes too much). All of that being said, one still has to be willing to take huge leaps of faith with the confidence they can always recover.
Yep, I was ready to quit prematurely out of frustration in 2001. I went home and told my wife, "I'm done. This sh*t is too hard." She and my mother both told me to keep going, so I did. A year later I had a number of large contracts, including government. It is important we surround ourselves with the right people to help get us through those dark days.
Congrats to Eric and James. And thank you both for being true examples of what this game is all about.
Thanks, Derrick, for the usual insightful comment. And glad you liked the post. I had fun writing it.
James-
Awesome post that really underscores the idea of startup perserverence. Yes, there is some luck involved…but really…it's just being able to take a punch to the face multiple times and bounce back up, smiling!
Much appreciated!
DD
That's quite the metaphor. But I like it! Thanks for stopping by and commenting, Daniel.
Great stuff as always. My case is a little different. About 15 years or so years ago I had a one-man thing going quite well. Then I decided to take a short break and do something different for a short while. However, going back was not as easy as I thought it would be, so I quit and got stuck in the 9-5 for a long time. Your posts are inspiring me to keep going this time. Thanks for sharing.
Hey, Churchill.
Would love to hear what your current or next project is. Glad to inspire you with the posts.
Cheers!
First, great article. Then, Eric glad you hung in there…congratulations and much success.@Jimmy , your dream is going to explode. Glad you’re determine.
I know about start up business. While on medical for leave I started a business (childrens transportation service) and grew it 5 years. With no more capital and other challenges I stopped.
Today, I’m starting something different and slowly will birth it.
Jimmy, keep writing. Loving your blogs. I’ll do one one day. Thanks for info, encouragement.ooh, congratulations on the twins.
Hy
Thanks, Hyacinth.
Your post is SO true…thank you for it! I've been through many Quitisodes in almost a year…
I also created a comic strip about the foolish things I've done/seen as an entrepreneur. http://www.entrepreneurfail.com
Let me know what you think!
Love the comic strip! Just tweeted your latest one. Are you on twitter? Couldn't find a follow button on the site. I also signed up for it via feedburner.
Thanks for the comment. And good luck!
Great post and perspective James.
On one hand quitting can be easier than toughing it out too make it all work, then again, knowing when to quit can also sometimes be easier said then done.
Something that comes to mind is that there serial entraperaruers who like and do well at starting startups, then moving on to the next one vs. actually taking that step to become a full-time entraperaruer seeing things through including when the tough get going. Thats not to diminish the value of the serial entraperaruer who are good at what they do. However having started up my own business, and knowing many others who have built thier business as well, I have a lot of respect for those who stay with them through thick and thin, good and bad times vs. racing off to a new venuture when the going gets tough.
I would be curious to hear any correlation to those who are more personally invested in their projects/business not quitting, vs. those who have less of their own resources invested and rely more on outside funding support.
Thoughts?
That is an interesting question.
When I "quit" my previous startup I only had my own money invested. This time, I have my own money in the biz, but expect to raise investment capital. My mindset this time is quitting is not an option-I'll pivot a few times before I quit.
Thanks for stopping by and commenting.
James thanks for the perspective and feedback on your own project, pivots, adjustments they are part of the game and something that some might see as a challenge vs. simply moving on and restarting another startup per say. Best wishes on your current startup project…
gs
Thanks a ton. Cheers.