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.
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!)