The startup game offers an intoxicating mix of validation (when we think we’re smart enough to make it big), autonomy (shove it, boss) and lucrative earning potential.
Bodybuilding.com, which neared a half-billion dollars in sales last year, was once a Boise startup. So were MarkMonitor, Blackfin Technology and ProClarity — companies that were sold, bringing millions of dollars to their founders.
Treasure Valley techies and others with entrepreneurial genes now have a place to work on their startup ideas in the company of like-minded dreamers: Trailhead, the “coworking” space that opened in February 2015 at the corner of Myrtle and 8th streets in Downtown Boise. They get friendly advice from business-savvy mentors and find stimulation in plenty of free coffee.
But Trailhead is a house of risk, says Jeff Reynolds, the former Trailhead engagement director and himself a serial entrepreneur. About 90 percent of startups fail, according to Fortune magazine. Reynolds estimates that only 20 percent bring a product or service to market.
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Reynolds says entrepreneurs — including himself — are seduced by the startup game.
“I feel sorry for people once they get the bug,” he says. “If you are a builder and a creator, you don’t have a choice. A fish has got to swim.”
Mike Gibson is a fish learning to swim.
Gibson, 46, of Boise, was a ski instructor in 1995 in Jackson Hole, Wyoming, when the idea for the technology business he now wants to launch first entered his head. He was waiting for a table at a restaurant that he had recommended to many of his skiing students. As he watched a wealthier-looking group get seated before him, Gibson realized the restaurant had no way of knowing how much business he’d brought it.
“That referral is golden for any business,” Gibson says. “If somebody walked through the door [who] you knew sent you a large amount of people, how would you treat them? Probably very well.”
Gibson sat on the idea for the next two decades. He worked as a certified financial planner in Florida, then in 2010 started a one-man business in Boise, The Charitable Funding Group, which offered financial consulting to charities.
When that business failed, he thought the time was ripe to try his referral idea. He went to an event at Trailhead named Idea, Set, Go, designed to help potential entrepreneurs hash out their ideas.
Reynolds says Gibson was afraid somebody would steal his.
“Part of Idea, Set, Go is to make people realize that startups die by suicide, not by homicide,” Reynolds says. “Don’t worry about the competition. Just get it out there.”
That was last fall. Since then, Gibson has spent days at Trailhead ironing out a business plan and interviewing restaurant owners to figure out whether his idea can work.
He thinks it can. His company, Lokal, would build a smartphone app to solicit recommendations for restaurants. Referrals that landed app users in the restaurant would bring a kickback — a dollar or two — to the referrer. Users would get more-nuanced recommendations than Yelp! ratings offer.
Gibson’s idea came into focus two years ago when he traveled with his wife, Marilou, and son Cord, then 9, to San Francisco. There, he asked a hotel clerk to name the best nearby Italian restaurant. The clerk, named Victor, gave his usual go-to pick but mentioned that the music was a little loud and that a restaurant two blocks over might be better for Cord.
The family took Victor’s recommendation. “He had it wired,” he says. “Now, we say we’re looking for Victors. If Lokal can find a couple of Victors in each community, we’ll make a killing.”
Once a week for three weeks, Gibson attended Idea, Set, Go. He worked with a partner to whittle the description of his idea to a few sentences, then shared them with the group. He remembers Reynolds saying, “Oh, you are talking about a platform business.”
Gibson had no idea what that meant. He checked out “Platform Revolution” from the library and discovered that platforms serve as technological conduits connecting consumers and producers.
“It gave me a better understanding of my own idea,” he says.
Gibson says The Charitable Funding Group failed in part because the services he offered were a poor match for the charities that were his target customers. He met with Reynolds and other Trailhead people to make sure Lokal would not suffer the same fate.
He read another book considered a top resource in the entrepreneurial world, “The Lean Startup.” Published in 2011, the book preaches the value of testing an idea as inexpensively as possible, scrapping what fails and trying again, rather than investing more time and money into first attempts.
The startup world is full of stories of founders who sank hundreds of thousands of dollars into ideas without first asking customers if they would buy, Reynolds says. Gibson will invest mere hundreds into Lokal before determining whether he will spend $5,000 to $15,000 into building the app.
“I spent more on the logo design for The Charitable Funding Group than everything combined so far for Lokal,” he says. “I expect to run the test for $150, which is largely due to working with Jeff and Trailhead.”
Trailhead has also provided referrals to experts and software developers as well as a chance to bounce ideas off of members who are further along, Gibson says.
“Half the people I meet at Trailhead have been through those struggles,” he says. “Sometimes they pinballed down the corridor for a while before finding a solution.” Learning from them “can be a stress alleviator.”
Gibson may not be spending money, but he’s not earning any, either.
That’s OK, he says, partly because the family has savings., and his wife earns good money as a pharmacist.
While Marilou Gibson says she was always supportive, she has become more confident about her husband’s startup since he has received positive feedback from local restaurateurs he has interviewed while developing the idea.
“It’s worrisome, and of course it’s a risk,” she says. “I can easily have days getting caught up with that, but I focus more on the excitement to it. I focus on his vision.”
Some startup founders assume they will make money within a few months, Reynolds says. They start worrying about making mortgage payments after realizing the process takes longer.
And money isn’t the only risk.
When Reynolds and Michelle Crosby cofounded Wevorce, a company that offers a team-based approach to divorce negotiations, he thought their long days had been given a reprieve when the company raised its first money from investors. Instead, investor expectations heaped pressure on the startup.
“The highs are matched by lows,” Reynolds says.
The trick for entrepreneurs is mastering their own psychology. It’s all a head game, managing the twists and turns without going crazy.
Jeff Reynolds, former community engagement director at Trailhead Boise
Gibson, who knows little about coding, has met with several app developers about contracting out construction of the Lokal app.
“We have the app white-boarded out in tech language I don’t fully get, but I understand the pictures,” he says.
Before jumping all in and spending thousands on app construction, Gibson will complete a test. He says he will reconstruct the idea — or walk away from it — if the results fail to prove the concept makes sense for restaurants, diners and referral givers.
Gibson says he knows the stats about startup failures. He thinks Lokal, which he has looked at from “a gazillion” angles, will beat the odds.
“Obviously, I’m in,” he says. “The opportunity is huge. When I line up investors, it should be apparent exactly where to apply the money. I’m very confident.”
Marilou Gibson says she’s optimistic, too: “If anybody can do it, Mike will make it happen.”