Cash is Oxygen
It took eight people, four investors, and three and a half years to take Hugecity from idea to sale. We raised $175k and when we sold everyone came out better than when they went in. We are not millionaires, but we are happy we went on this journey. Here are a couple of the main things we learned:
- You don’t need a developer to test an idea or a feature
- You don’t always need an app
- If you build it, they will won’t necessarily come
- Cash = development time = progress
- Everything takes longer than anyone thinks it does
- Don’t quit your job until you really need to
- Throwing money at problems does not always solve them
Idea to Garage to Seed
On November 3rd, 2010 Adam Wilson and I made the fateful decision of going to the theater to see The Social Network. We hadn’t seen each other in years and there was a lot to catch up on. We loved the movie and in two weeks we were talking about building a startup.
I was working at Philips and my job involved me with large city improvement projects throughout the US. I had discovered that these newly renovated areas became magnets for artists, writers, performers, musicians, professors, political groups, and chefs. These people created pop-up galleries, theatres, concerts, lecture halls, and restaurants. Social media allowed groups to internally communicate and share ideas, but these groups rarely mixed or even knew about each other. I wanted to allow everyone to discover what was happening by putting all of these events on a map.
Our first idea was to create a wiki or collaboratively built event map. Adam recruited his roommate Edward Kujawski to help build and the three of us founded Hugecity. Adam quit his job at the CDC in April and that sped up development. We had a site up and running in no time, but, the new features we were adding did not bring more people to the site. Our only source of traffic was my weekly Atlanta event emails to my slowly growing email list. Growth was very very slow, but we learned a great deal about web development and data storage.
By June we launched the full event map wiki, where anyone could add events to our map. Unfortunately, the only person adding events was still just me! Apparently, "if you build it, they will come,” only works in the movies. After talking with event promoters they said they would first put their event on Facebook because they could immediately reach their audience. Adding their event anywhere else just took time and it was not always affective so they rarely bothered doing it. We were crushed and worn out. By September, Adam had moved in with me, Ed had left Hugecity and I was slowing down. I had been adding hundreds of events every week to Hugecity and creating two emails a week with no sign of improvement in traffic. On October 12, 2011, I broke and could not see a way forward. I was done with Hugecity. Before telling Adam, I decided to sleep on it. That morning I woke up refreshed with a new thought. Every event I wanted to add to Hugecity was on Facebook.
On October 13, 2011 Adam and I pivoted away from an event map wiki that forced people to manually add their events to an event map that only showed the Facebook events each user should know about. Hugecity still acted like a wiki but know the users did not have to do anything manually. All they had to do was sign in and all of the public Facebook events from them, their friends, and likes were automatically added to our map. Each user could add thousands of events in less than a minute. Scaling to outside of Atlanta was no longer a content problem. This would free me up to be able to concentrate on getting more people to sign in. Adam was able to finish a rough version of the web app. Unfortunately, he needed an income so he quit Hugecity and found a job in December. I presented in front of 550 people at Startup Riot Atlanta in February 2012. Adam and Ed came with me and manned the booth and took interviews. Finally Hugecity felt like there was a little buzz starting around us. In March, I offered to pay Adam our of my own pocket to leave his job and finish the web app. My investment and Adam’s hard work got us to our first outside investment from New Kent Capital on July 19th, 2012.
Seed to Sale
I was still creating and sending out event emails twice a week but now our email list was growing. Many people came back to us with ideas for features and advice. We put together a plan to give out swag at Atlanta events to attract new users. We made Youtube videos, printed t-shirts, stickers, and tattoos. We created Hugecity widgets that allowed local blogs to show the events they liked in Atlanta. We built a mobile version of Hugecity so that people could use Hugecity while they were out. By January we landed two more investors and hired two new people. My old friend, Randall Morris took a break from Ogilvy to design Hugecity and Jonathan Nesbitt became our iOS developer. We moved out of my dining room and into a shared office at the Goat Farm. Finally, after feeling like we were actually going somewhere, I left my job at Philips in March of 2013.
I had been creating a weekly event email for over two years and I had expanded it to two more cities. Finally, on March 22, 2013, we released an automated personalized event email for event city in the world. In May, we launched the new design and the iPhone app. We were quickly running out of money and investors were not hopping at the chance to jump into yet another event discovery startup. They all seemed to have a bad history with event startups. We had to show that people wanted what we had created and we had to do it fast. Our marketing at local events was too costly and yielded only a couple hundred users per event. We needed something bigger, cheaper and faster. We knew that we could get visits by using Facebook ads and trading ads on our site for promotion within groups but that was expensive or took a lot of work. We recognized that if we posted directly within a Facebook event everyone invited to that event got a notification. It was free advertising. So we manually tested the limits of the Facebook API and then automated the process using something we called the poster. Then we ran out of money again.
Randall had already gone back to work at Ogilvy. By August, Adam left for contracting work with the CDC and a month later Jon left to for contracting work with the company we had shared an office with at the Goat Farm. I had not taken a dime form Hugecity so nothing had changed for me. I was still working on finding investors, partners, and users. All of the parts of Hugecity were working great! We had tons of feedback from users and we were gaining users like we had never seen before thanks to the poster. Each week was bigger than the week before. I had also landed our first partnership with a small taxi company called Uber out of San Francisco. Uber was rapidly expanding to cities around the world and they were using Hugecity to discover who were the biggest event creators in the new cities, which events were going to have the most attendees in the future and finally where to send their cars when they had not partnered with anyone that day. That partnership made Hugecity a great tool for all of Uber’s community managers but there was no money and very few users that we gained in return.
I was still presenting to investors and I needed help with designed mockups that showed the changes we were going to make to Hugecity due to all of the great feedback we were getting from our users. Unfortunately, Randall was not available, but my friend Michael Gluzman was able to pick up where he left off.
Hugecity was soon to be one of the biggest event discovery apps in the world. More users meant that we had to spend more on the server. At the rate we were going, I would have to turn off Hugecity in a month and investors take time, especially in Atlanta. They kept asking for proven examples of streams of revenue. I would go create small demonstrations for them but with out a developer on staff I could not implement anything big enough to show a real stream. Time was running out.
On October 4th, I found myself in the ER. Maybe it was the stress of Hugecity, maybe it was the thought of Peruvian girlfriend’s visa running out in November, maybe it was just an allergy to wheat, but my throat had swollen up and I had not eaten and early drank for two days. The ER hooked me up to an IV and send me home vomiting. I still could not eat well into the next day when I drank a coke and felt 100%. I had had a piece of chicken stuck in my thought for three days and the coke was like drain-o. The next week I got engaged and a week later we got married. Life was moving pretty quickly.
By the end of October, we were still growing like wild fire. We were about to hit a million visitors in a month. We were completely out of money and we could not make it another month without an investment. Whether it was a blessing or a curse, Facebook made a change that broke our poster. It could be fixed but it needed a developer's time. This dramatically cut our traffic and I was able to get a small investment to keep the site up for another couple months. A week after the poster broke, Y Combinator asked us to come to San Francisco to interview for their next batch and an investment. We did not get in and that was a pretty large blow to the team. YC told us that they have had an event startup in every cohort and they had been unsuccessful with every single one. They did not know how to help us. While we were in San Francisco, we met with a competitor, called Hangtime. They had spent millions to get to the same place we were. They talked about possibly joining forces. We also met with a friend at Facebook. They told us that events were the last thing Mark Zuckerberg coded and it did not seem like there was any future road map for Facebook’s events. Events had been thrown in with pages and the director of that department had left. We headed home. We had been working separately, we were out of money and we were exhausted.
In December I widened my field of investors and also included some potential partners and acquirers. Hugecity had 100k users, we had proven that we could get a million visitors a month, we had millions of events and venues from around the world and maybe someone was interested. I used a tool called data.com to look up the contact information for connections within each targeted company. Cvent, TripAdvisor, Uber, Time Out, Stubhub, Mosley Venutres were all interested. We decided to go for the sale instead of raising more money. Time Out was the first to hand us a term sheet and the lawyers finally completed the sale on May 7th, 2014.