Location with brains: LocalMind

LocalMind isn’t just another local check-in app. LocalMind is going to change the way you discover information around you. Trying to figure out if there is a long wait at a restaurant? Use LocalMind. Want to know what beer is on tap at a pub? Use LocalMind. If LocalMind can gain mass market appeal, it will be an app I use at least once a day.

I sat down with a co-founder of LocalMind, Lenny Rachitsky for a quick 20 minute interview. We talk about what LocalMind is, why they aren’t just another location based checkin-service, and how they hustled an interview with Robert Scoble at SXSW.

Lenny’s blog post that he mentioned. Be sure to checkout LocalMind.

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Leaving a Million Bucks on the Table: Why Flotype Pivoted in Y Combinator

When entrepreneurs talk about pivoting, it’s most often because they’ve failed to see a future for their idea. This wasn’t the case with the Y Combinator backed company, Flotype. Flotype’s original idea was to change the way we shop online. Their MVP was an iPad app that greatly improved the shopping experience. Early user feedback was fantastic, and they received an invest offer of one million dollars.

They were ready to go full steam a head with their shopping idea until Paul Graham talked them out of it. Don’t miss this 12 minute interview with Darshan Shankar (a co-founder of Flotype) where he explains why they took Paul Graham’s advice and decided to pivot.

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How GiftRocket (YC W11) is changing the way we think about gift cards

I hate getting giftcards. Rather, I hate that I have to carry a giftcard around in my already bulky wallet (unless I want to risk losing it in a random drawer at home). GiftRocket (a Y Combinator backed startup) is looking to take some of the pain out of giving, receiving, and redeeming gift cards.

I caught up with a co-founder of GiftRocket, Kapil Kale for a quick chat. In this interview we give TSF readers an inside look at what GiftRocket does, the biggest challenges they had to overcome, and their experience with Y Combinator. Don’t miss this interview!

What is GiftRocket? Who would use it, and why?

GiftRocket is the easiest way to send a gift. It’s a new type of online gift card. The way it works is that recipient of the GiftRocket checks in at a specified gift location, and receives an instant credit via PayPal.

There are two huge advantages to our service. The first is that you can pick any business on Yelp as the place to gift. It’s easier than ordering a gift certificate. The second is that delivery is instant & electronic, so it works great for friends in other cities. Want to buy your friend a gift to a cool cafe in New York? Use GiftRocket.

For example, I just sent my sister a GiftRocket one for her high school graduation to an ice cream shop across the country. I wouldn’t have been able to do that without our service.

What other sorts of challenges does your startup face

Product definition was fairly critical for us. I think that a lot of people who tried to do stuff with gifting struggled because their product was very complicated. We spent a lot of time figuring out how to simplify our product. For example, one decision we made early on was to eliminate apps and accounts from the redemption process. Yet another difficult part was explaining this entirely new service to users. We spent an immense amount of time figuring out the right language on our site.

We were defining a new space ourselves, and that was cool and fun, but made our brains hurt.

Tell us a little bit about GiftRocket’s creation story.

Nick and I quit our jobs and moved back into Nick’s family’s house in Berkeley. They were very gracious and let me stay in the guest room for four months. They kept us well fed. We converted a workbench into our office and Jonathan would come over whenever he was back visiting from grad school. Anyway, GiftRocket was born at 3am or something like that around a kitchen island.

Did GiftRocket have a smooth launch?

We had a frantic but successful launch. We launched on Demo Day. We had literally rebuilt the site’s front-end at 2am the night before TechCrunch. We also had no idea when the article would go live, so before going to bed we set Jonathan’s computer to play a sound when we got a new visitor. Then we plugged it into Nick’s speaker system, put the volume on full blast, and went to bed. At about 9am, we started hearing people sign on. Just a few drops at first and then it picked up rapidly. For large chunks of the day we weren’t even at a computer, but fortunately nothing broke. We got lots of feedback, which made launching worth doing despite the fact that we were distracted with other stuff.

How have you gained users?

The easiest way to get lots of users is to solve some sort of earth shattering-problem. That way your users just flock to you. We don’t solve an earth-shattering problem. Our challenges have largely been around marketing. Our main goal is to cut through the noise. It’s similar to some of the problems Airbnb faced early on.

You were asked to interview with Y Combinator, and when you met with PG you pitched a completely different idea. How did they handle the last minute change?

YC is pretty cool with last minute changes. They operate under the assumption that a third of the companies that they *accept* will change their ideas at some point. We were advised by Harj and YC alums to just pitch the new idea cleanly.

So the interview went something like this. PG: “So, you guys are doing local business referrals?”

Nick (my co-founder): “No, erase that from your mind. We’re doing a gift card startup.”

At one point in the interview, PG said to Paul Buchheit something like “Marketing? These guys don’t know how they’re going to market this, they’ve been working on it for what, 8 hours now?” He said it with a dash of excitement, like he thought what we were doing was just a little ballsy. We really didn’t think of it that way– we just knew we wanted to work on this idea.

Knowing what you know now, would you do YC again?

YC is a great shop. I’d say we all had a really good experience. Nick and I were both new to Silicon Valley so for us it was an instant stamp of approval on our startup, and made it really easy to connect with different companies and build out our product. The product and user acqusition feedback alone was invaluable.

We rented a “vacation home” in Mountain View maybe 1 mile away from the YC headquarters. We had a pretty absurd culture– we basically worked all day, with the exception of runs, trips to the gym, and the occassional game of Settlers. Nick’s dad would come down and drop off rations from our favorite sandwich shops in Berkeley. It seems really intense but the time flew by pretty quickly.

I’d still probably do it again for a new startup, because I believe it takes a period of super-intense work to get a startup off the ground. YC made what we did somewhat socially acceptable. I told my friends that I’d be busy for a while “hibernating” through the Winter.

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How a band got into Y Combinator. The Earbits story (YC W11).

Earbits is a Y Combinator backed company that’s looking to replace Pandora for your music streaming needs. Unlike Pandora, users are completely free to skip songs, change channels, listen for hours on end, and even share tracks with their friends. Earbits has none of the same restrictions that Pandora has, and then on top of that there are no commercials. Earbits hasn’t signed the major labels yet, but they’re gaining traction. Earbits makes its money by letting labels, bands and concert promoter buy airtime, and display their own relevant ads during the broadcast.   If you’re listening to a band on Earbits, you’ll only be shown relevant ads by someone with a vested interest in that artist getting more exposure. For example, you might be shown an ad for an upcoming show that the band is playing. Essentially, Earbits is to music, as Google Adwords is to advertising.

I had the privilege of interviewing a co-founder of Earbits, Joey Flores. In this interview we talked about how Earbits identified a problem, their big turning point, and how his band made it into Y Combinator. You don’t want to miss their story.

Tell TSF how you got started.

My co-founder Yotam and I met in 2005 when he moved to L.A. from Boston and posted an ad for drum lessons.  At the time, I was Director of Marketing for Experian after they had acquired an affiliate network I worked at.  A few months after I started taking drum lessons from Yotam I told him that I had been performing slam poetry a lot and wanted to start a band where I would rap over jazz and funk.

We ended up putting a band together and deciding to record an album. Yotam said that he would produce the album, which he had done before, but that I had to market it. I was managing about $60M a year in performance marketing at Experian, so marketing an album sounded pretty easy.

When did you realize there was a problem?

Our album got great reviews and we could fill up smaller clubs here in L.A. We got invited to open for Grammy winners Arrested Development and it seemed like we had a product people liked. However, after about $20,000 in various marketing and touring expenses, we realized that for all the buzz about how easy it is to be a musician in the age of the internet, all of the services out there either help you sell products to fans you don’t really have, or claim to help you get fans but they really just rely on you to spam Twitter or otherwise try to achieve some viral effect.

Where did the idea come from?

One day, Yotam and I were in the car on the way to San Diego and I was complaining about how miserable I was marketing products I don’t care about – mortgage leads, etc. And Yotam says, “How do we do what you do, but for music?”

We kicked around some terrible ideas until finally he says, “The problem with marketing music online is that nobody can tell what you sound like from an ad. Give them 10 seconds of listening to you and they’ll know if they like you or not.”

Within about 10 minutes, we were rabid talking about turning radio into a performance “ad network”, with affiliate stations on hundreds of music sites, and good artists could just buy airtime like you would with Google Adwords.

It becomes painfully obvious that there is a problem when you explain to people that, in the age of the internet, bands still hand out fliers.  Fliers cost about $0.15 a piece.  Meanwhile, all you’re hoping for as a band is that someone actually takes that flier home and goes online to listen to you.

What was the big turning point for Earbits?

If you consider that Pandora tries to make $0.05 per hour in ads and commercials, and there are 15 songs played every hour, then we can introduce a band to a new listener for $0.01 and make 3 times what Pandora does, while providing massive value to artists.

Once we started telling that story, we got advisors on board from Google, EMI Music, and Yahoo! Music. We raised a bit of money from friends and family, started getting traction with bands and labels, and closed a partnership to power a country music channel for Nashville.com.

What was the Y Combinator interview like?

With these partnerships under our belt, I talked to a lot of the Y Combinator alumni to see whether YC was a good fit for us. They all assured us it was. I believe the quote was, “If you think you might need Y Combinator, you need it. If you’re not sure, you need it. If you’re positive you don’t need it, you probably still need it, but maybe not.”

We decided to apply and we got an interview. We walked in to the interview room, and I think it was Jessica immediately asked how long I had been growing my hair.  There were 7 of them on the other side of the table, and Ben, Yotam and myself on the other.  We all shook hands and started the interview.

A good YC interview is just a brainstorming session with about 6 questions thrown at you every minute in an excited flurry, where you’re trying really hard to answer them well but being cut off about 5 words into every sentence. If that’s happening and the tone is friendly, it means everyone is excited to be talking about your idea.

That being said, you have to wrangle in the conversation, especially if you want to demo your product. So someone would ask me a question and I would say, “Let me show you.” and they would keep going, and finally I just turned the computer toward them and said, “Let me show you.”

When we showed them Nashville.com’s country station, that pretty much sealed the deal.  They understood how we would solve the marketplace problem, and it made the whole thing very clear to anyone how excited country musicians would be to have their music on something like that.

We left and went to hang out at Yotam’s brother’s place in Redwood City. Ironically, I wasn’t at all nervous headed into the interview, but the next few hours were unnerving. Finally, Harj called us, said they wanted to fund us, we feebly tried to negotiate with them, and then took the deal.

What’s the biggest challenge you have going forward?

We’re solving a marketplace problem. We need content so that we can get listeners, and listeners so that artists want to work with us. I’m very happy with our progress in that regard. We have some big distribution deals coming up, and more and more labels are actually reaching out to us. So, I think we have plenty of struggles looking forward. Acquiring more mainstream music is just one of them.

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Why two engineers left Apple to build a Flash alternative: The Hype (YC W11) story

Hype is an HTML5 Animation Builder for Mac OS X. It allows you to build interactive sites in HTML5 that rivals Flash. Hype launched last Friday and they are already the top grossing app on the mac app store.

Earlier today I had a chance to catchup with one of the cofounders, Jonathan Deutsch, to talk about his experience leaving a safe job at Apple to launch a startup, where his inspiration came from for Hype, and his experience with Y Combinator.

Where did the idea for Hype come from?

At one point after a trip to Europe, I wanted to make a photo website that would be as nice as a beautifully bound photo album, and use lots of effects.  Coding this with HTML5 would have been a nightmare.  There had to be a better way, and that’s how the idea for Hype was born.  It stuck with me, and eventually I realized this was going to be a great opportunity for a business.

Where did you work prior to launching your own startup?

I worked at Apple. I was the engineering manager for the Mail.app back end (Mac OS X), but also worked on software updates, automation technology, SJ keynote demos, and other engineering projects.

I met Ryan at Apple as well, celebrating after a successful WWDC kickoff. He was working as an engineering project manager for Mac OS X. It was a really central role; he (and the team he was on) were responsible for coordinating the entire release of Mac OS X. Sometimes at bars we’d run into people who were Apple or ex-Apple, and Ryan would introduce himself, and they’d reply, “Oh, I’ve gotten emails from you!”

What made you decide to leave a “safe job” at Apple and build a risky startup?

I had always wanted to have my own company; I suppose its “in the blood.”  It was getting to be pretty clear that there was a new wave coming to the web, much like “Web 2.0” but instead of it being called “Web 3.0” it was called HTML5.  It’s a marketing term really, generally referring to new HTML5 tags, CSS3 styles/animations, and better JavaScript performance.  It also refers to being able to have the full web on your phone.  It was always in the back of my mind that for any technology shift you’d need tools to help out.  I’m really a tools guy, though we tend to call them “apps” nowadays.

I was faced with the decision of continuing to work with the great people on my team on a clearly high impact project, living with the “what if” syndrome, or trying to forge my own path.  “Regret Minimization” is what should win out in life, so it did.  I had done a lot of different projects at Apple, and felt I made my mark both internally on the company and externally on Mac OS X.

I had established a fair number of relationships at Apple, and felt if my startup failed I could always go back.  At Apple the question is often “how many times have you worked here?”  When you’re hired, you get new hardware… so I like to joke that the worst case is I’d end up with a new Mac Pro out of the deal.

Walking away is bittersweet, and there’s definitely a social and professional net that you leave behind.  That’s one of the main reasons we decided to pursue Y Combinator.  We didn’t want to be on an island by ourselves.

Apple is publicly against Flash. Did this have any influence on your decision to build Hype?

Not specifically.  While Flash enables some really great content on the web, there’s lots of people who aren’t favorable on it due to its lack of accessibility, CPU usage, or crashes.  It isn’t appropriate for mobile.  To Adobe’s credit, they’ve been more active lately in trying to address these issues.

What perhaps had more of an influence is Apple’s driving the web forward.  WebKit is really a great project.  I think a lot of people forget that innovation in the browser was basically dead until Safari.  The canvas tag, while controversial at first,  showed that new standards could be made and adopted by other browsers.  The JavaScript performance wars have moved the world forward.  Now WebKit is on almost every smartphone.  It’s great to see HTML5 as a new platform, and Apple deserves a lot of credit.

How did you get into to Y Combinator?

We got in through Y Combinator through the normal interview process. Ryan and I both found the questions from the initial application were great for helping to clarify our business plan, realizing our target markets, and helped ensure the two of us were on the same page. I’ve recommended to everyone I know that even if you’re not going to apply to YC, fill out the application.

What has been your experience with Y Combinator?

YC is definitely worthwhile. The network effects are staggering… it gives any YC company an advantage in making the right contacts, finding investment, and being in a support net with others in the same boat. And if you’re starting a company, why wouldn’t you want every advantage available to you? Paul Graham, Paul Buchheit, and Harj Taggar all give great advice with brilliant ideas sprinkled in. The dinners are fun, and there’s a lot that we learned from the speakers. Most founders would come early before each dinner just to hang out and discuss their startups or demo their products. The atmosphere is electric and contagious.

Y Combinator is also heavily focused around finding additional investment. Startups always need more cash! Finding funding was not a major concern to our us, as our “old school” business plan was to sell Hype from the get-go, and we had confidence it would be able to generate revenue. In that regard, we didn’t take as much advantage of YC as other companies are able to. We did make several strategic connections through investors to other companies and individuals in our space that have already been of benefit.

As an aside, during the YC timeframe we were so focused on developing our product that Paul Graham actually emailed us and was concerned that we hadn’t gone to enough office hours!

Don’t forget to checkout Hype!

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