One day, Brandon looked down at the list of people who volunteered to be street team members for an artist on his record label. The name Steve Wozniak stood out, so he emailed him to find out if it was “THE Woz,” the guy who co-founded Apple. Turns out it was. Woz was a fan and he wanted to help out, so he volunteered.
The record industry counts on street teams to do everything from posting fliers to getting artists on radio stations. And, as you can see from this example, street teams can draw smart people who are so passionate that they’re willing to work for free. That’s why I wanted Brandon, who used to own a record label, to spend so much time in this interview teaching us about street teams.
After getting to know him, Brandon told Woz he was thinking of launching a business that helped anyone with a big challenge put together a contest that encourages the world to solve it. Woz liked it and signed up as an advisor to what became ChallengePost.
Find out more about that business — and about how you can create a street team — in this interview.
Andrew: Before we get started here is something that my sponsors are telling me about you. They are saying that you are an influencer, that you are someone that your friends or business colleagues come to for advice and help. So, I am going to tell you about my sponsors and if they can help out any of your friends or business colleagues I hope you’ll introduce them.
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Finally there is shopify.com. And I was actually talking to shopify this morning and asking them if what I am doing here is helping to get the word out and they are very happy with the response they are getting here, to these called commercials to the way that I am introducing shopify to my audience. So I will continue, shopify.com is an online store that has got all the features that you need in an online store but it’s easy to use and it’s quick to use. It took me five minutes to create a store; it will take you 5 minutes to create a store online, it will take even to one of your slowest friends 10 minutes to create a store online or less. So check them out, if you need any commerce platform, if somebody else need any commerce presence recommend shopify.com to them. All right, here is the interview.
Hey what’s up? Its Andrew Warner the founder of Mixergy.com one of the ambitious app start and I recently asked Mixergy readers if they knew of somebody who created a street team because I wanted to find out how street teams are used by offline companies to promote their brands, to build their audiences and I was hoping to bring some of their ideas online. And the person who a couple of people recommended that I talked to was Brandon Kessler who I have on Mixergy with me here today. And we are going to talk about how he built a record company called Messenger Records, over 12 years starting in his dorm and then used street teams to promote the brands, to promote the artists that his record company represented. But beyond that Brandon actually is also the founder of Challenge Post and Challenge Post is a place where…. well, Brandon what is challenge Post?
Brandon: It’s a platform for challengers. So individuals, or organizations, government agencies can challenge people to do cool stuff. So right now we are running for example NYC Big Apps for the city of New York where mayor Bloomberg in New York City challenged the country to create software apps that in-group New York City.
Andrew: I see. And we are going to be talkingÖ looks like the live audience are telling me that are hearing an echo and I just got rid of the echo, and I am going to be asking you how you raised an 18,000$ for this business, how you got the co-founder of Apple to be an adviser of the business, mostly I want to find out what makes this company great. I am really passionate about the idea and the business behind Challenge Post. So, we will spend time talking about both those businesses. First let’s start with the first of the two that you launched, which is Messenger Records. You were in college at the time when you launched it?
Brandon: Yeah, I pretty much own it since I was a teenager. I read about David Geffen and said that’s exactly what I want to do because I always love business and I always love music. He combined them and started a record label so that’s what I wanted to do. And the more I learned about it the more I knew that it was right. And came to school in New York City and just started working in the industry as an intern or an employee in as many different places as I could. I started my first company at my freshman year which isÖ I saw the Dave Mathews Band before they were signed and they hired me to do all the radio promotion. So, I build that company up a little bit and then in my sophomore year they hired me to do all their street promotions, posters, stickers, fliers on college campuses [xx] point about street promotion. And then in my senior year I started Messenger Records which is the record label that I was fortunate enough to run profitably every year for 12 years, mostly through online grassroots promotions like street teams.
Andrew: Now it feels to me like everyone in college wants to start a records company label, at least 12 years ago maybe everyone in college wanted to do that. Today everyone wants to start an Internet company but most people aren’t able to make it work. So, let’s find out about how you were able to make it work, how you were able to actually build a profitable business. Before you actually launched Messenger Records you said that you were able to work with the Dave Mathews Band, how?
Brandon: Right, I saw them at show. They were unsigned. They were maybe 15 people in the audience. I was pretty blown away. I thought they are going to be big. I went up to the manager and said I want to help and he like a smart managerÖ and when it comes to street teams people are volunteering to help you so he said ìyesî and we established a relationship and I started calling radio stations to get them on the radio.
Interviewee: We established a relationship, and I started calling radio stations to get them on the radio, and it went well. And I guess I did a pretty good job at it, and I was able to get other clients and other labels to hire me. So, you know, first lesson for me was always, just, if you want something, if you like something, if you are passionate about it, go after it. Say I “I want to help you.”, don’t worry about getting paid. That will come later.
Andrew: And so you offered to work for the Dave Mathews Band for free at first?
Interviewee: I said, “Yeah, I want to help.” and they said, “Great” , and so I started doing the radio promotion, and their street promotion. And over time, you know, I was compensated. They were actually helpful in a lot of other ways in terms of introductions, etc.. But yeah, and I made money off it. And actually through that, by doing the college street promotions I ended up doing an exclusive deal with the majority of New York City concert promoters to do all of their college promotions. So I started doing it for free for the Dave Mathews Band. Soon one of the big promoters in town is on my board. Andrew Richet, is a leading Gov 2.0 guy. Great, amazing guy, said, “Who is this guy’? We want you to do all of our stuff.” So we cut an exclusive deal with them, and did others. So work for free, do a great job, and good things will come from it, in my opinion.
Andrew: Okay. You’re the kind of person that companies like the ones that are listening to us right now, and even maybe even ChallengePost, are trying to reach. Someone who is smart, someone who is going some place in this world, and who, at least in the early stages are willing to work for free. So I want to understand a little about the psychology that went into offering your time and your work for free for the Dave Mathews Band. What were you hoping to get out of it? Did you think that maybe if you hooked in with them that you’d become rich in the future as they got rich? Was there an idea that your would parlez them into a business in the future? Why did you do that?
Interviewee: Well Great. So I always wanted to have the record label, and it’s very rare that you find a band that you think is going to be big. So you would be an idiot to find a band you think that’s going to be huge and not get involved somehow. But you know when you say, “free”, it’s not about money, you know, people have other motivators. And this relates to all kinds of sites online. You know, there are other rewards that are equally important, or more important to some people Status, recognition, being affiliated with a company that you like, meeting contacts, learning. I was a freshman in college, and it’s all about learning — internships. Working for free is nothing new. Anyone who has been an intern knows you have to get out there and learn. You’re not going to learn that stuff in school. In school I definately did not learn about business. You learn about economics. You learn by getting out there an doing. Go work for free for someone out there you think are doing cool things, and it’ll pay off in spades later.
Andrew: Your role was to get them on the radio. How did you do that?
Interviewee: Called up radio stations. We did college radio, so I called up and said, “whos the music director?” You know at first I probably didn’t even know they were called the music director. Soon enough a call or two you find out, find out who they are. Tell them, “I want to tell you about this music.”, they hang up on you a few times. Just like anything else it’s sales. It’s not about being a con man, it’s about being passionate about what you’re selling, and trying to find a fit between you and whoever you are selling to. And I just thought that they were going to be huge. Some of them maybe started hearing about them few a few people. But eventually you call them enough, you establish a relationship with them, and they’ll listen to the music, and then has to speak for itself. That’s another thing, you can’t sell something that isn’t great.
Andrew: I did cold-calling in college, and I love sales. I love sales, I love cold-calling, but even for me it was tough to do it. And I was getting paid. Here you are cold-calling, for free, getting turned down over and over again. Why did you keep going?
Interviewee: Well, what were you selling?
Andrew: Ha ha! Good question! Great question! I was selling the San Fransisco Chronical from New York. I didn’t know the San Francisco Chronical from the Houston Chronicle, but here I was selling it.
Interviewee: I’ll put the Dave Mathews Band up against the San Francisco….
Andrew: So you were passionate about what you were selling?
Interview: Yeah, I loved it. I thought this band was going to be huge. I thought they were doing something nobody else had done. There was certainly a grass-roots momentum to what was happening. You know, the sort of hippie jam-band scene they were a little bit associated with. I just thought I saw a star quality in him that was going to be big. So yeah. So I didn’t feel like I was selling. I would be miserable if I were selling something that I didn’t believe in. I would be miserable. You have to do what you have to do to learn, and take a job wherever you can, and you’ll learn skills there. But in the long term, if you find something that you are passionate about, offer your services for free. And in business I am sure you have come across this, I’ve come across this so many times, that people that end up joining your team end up being…maybe its a developer who sent you a few ideas that you thought were great, or built a cool app around your product whatever it is, and just say, “I did this”. Great! Do you want to join the team. Maybe you can help me on this thing, and they get more and more responsibilities.
Andrew: Great, by the way if you see me beaming here it is because I am projecting myself into the future of few days, when I get the crazy, insane, excited emails from people who are listening to what you are saying right now. You are saying the exact stuff that they want me to get out of my interviews. So thanks for that.
Interviewee: It is my pleasure, I have this bad habit of giving advice of what people did to me so maybe it helps. But work for free for people you are passionate about you will learn way more that any other way and trying to get a paid job or something and do a if you need to make money. Do a job you don’t like on the side or if you are in school that is fine. But there is no reason you can’t spend half a day, two days, three days a week even if it just a few hours helping out.
Andrew: You know and also I have got a sponsor, grasshopper is my sponsor they gave me a phone number and I have used it to take calls from anyone who is listening and my audience, and the question that they keep coming to me with how do they meet the right people? How did they meet people who are going to be their mentors? Sounds like a great way to go it, to go out them to offer to work for free and do it before they blow up, before they are huge.
Interviewee: That brings us towards the right compensation, don’t worry about compensation, meeting the right people is worth way more than whatever hourly rate you get. So the fact that I could be at New York and work at 12, 13, 14 different companies I either worked paid some jobs other jobs were part time just to learn as much as I can. But the contacts were invaluable and you asked to find an artist. How do you become a successful label when other people are failing at it? It’s really finding great artists, and you have to be on the group. And meeting the right people and that is everything from who is in the press who is going to write about it. Who is your radio station that is great going to play the music? Who in your record store can you go to? Hey can I put my CD for a consignment, I didn’t have a distribution deal. In fact when I signed my biggest artists I didn’t have a distribution deal at all. But he wanted to work with me he had been on a big label his name is Chris Wetly and I signed him and a few days later I said hey guys I have Chris Wetly and they said great, we will give you a distribution deal, just one day one step at a time.
Andrew: And you said earlier you did it because you wanted to learn how, how did they teach you. Beyond what you learn on your own from just getting turned on and finally turning those nos into yeses. How formal was the education?
Interviewee: Maybe it wasn’t formal education, it was just jumping into the deep end and start learning on the spot.
Andrew: We are going to tell who at the radio station is to go and talk to and then you go and talk to them to turned down and they say now. Today we are going to show you about how to turn that no into a yes. They gave you the opportunity to fight for something you are passionate about and you do a long way you learn.
Interviewee: And actually there was a point on the radio I was like you guys let me do this, so okay great go for it.
Andrew: So then you go and start your own record label. Why do you go and decide to start a record label in college?
Interviewee: I had always wanted to do it and I saw an opportunity an artist I wanted to work with, my senior by year and I said let’s do it. And so we did a 7 inch single, and you know I worked harder on that 7 inch single than I probably worked on anything else and it was great. This little 7 inch got a lot of press a lot of attention. Just spent every walking hour I had. I didn’t have an office I was in a dorm room. I used the dorm room number as a business number. And I don’t even remember if he had an email address. It makes remember the time, it was basically 1996, most bands had no website, didn’t know what a website was, we had email. But I think most of it was just on the phone so I would just sit there with my lists. How do I get to the press when one of my internships was at a publicity firm did a lot of great bands beasty boys and all that stuff. And through that I met publicists there and I had great lists of all the publicists and listened to them. So I had all the writers at all the publications so I just sat there in between classes with my list of writers and called them up and say that I have got to tell you about this artist etc. So just went and did it it is the way I learnt on the spot.
Andrew: You said you worked hard on the record itself. Beyond promoting it what did you do to get the record made.
Interviewee: So throughout the label everything from finding the artist signing them getting the contracts and attorneys that maybe getting them into the recording studio. Sometimes picking the producer who would be almost like a director of a movie. Producer is the one that says let us try this guitar, let us cut this section out of the song, I had to pay for that and then get it manufactured, and then from there I get it distributed around the world, so it is distribution deals that I cut with various countries and distributors and that is just all through time.
Interviewee: No distributor, as I said, it’s on consignment. And then you get big enough to where you get a local distributor, and then you network to find somebody in the U.K. or Europe who can do it, etc. And you’re just kind of building. And then promoting it. Anything that will convince you to go buy is what I, kind of, have to do. It was the Internet, it was the press, it was radio, it was advertising, it was college street teams, incentive programs, all kinds of stuff.
Andrew: Alright. I want to dig deep into this street teams portion of, of your business, but I, I gotta ask you how you’re able to get press at all. I know right now there’s somebody who’s listening to us who wants to get press for his website and the way that you got press for an artist is got to translate into something that he can use to get publicity for his, for his website. So, why did it, why did it work for you?
Interviewee: Absolutely. So, well, there are a couple things you can do. One, you can hire a publicist, and we’ve done it. I have a, a great publicist, Josh Jones Dilworth. And he’s been helpful with us. Some of the press, you know, before they came on just happened through networking. So, to lay it out. One is you can call people and email them yourself. At this point, you should email them, and it should be short and it should be sweet. It should be a sentence or two. “Hi”, don’t make it really formal, you know, “Hey Jane. It’s Brandon from ChallengePost. Here’s what we do. I read that piece you did, couple weeks ago. It was interesting. We’re in the same vein. Can you check us out? Here’s a link. By the way, we’ve got X number of users.” Like, one, two, three sentences like that. You may get a response, and you, you kinda want to think, “What do they care about?” They’re getting lots of people writing them all the time trying to pitch them. So you really have to be short and sweet, and make it personal. It should not be this group, mass email. You know, where you’re putting everyone email address in your to section, or even. Personalize it for that person. Maybe comment on their blog. I know, Jason Calacanis, who I’m a big fan of, recently said this on his podcast, “This Week in Startups”. You know. “Read their blogs. Make a comment. Retweet something they say, so they kinda know who you are. And talk to them that way.” So I would say, networking is key. You can hire a publicist who will, you know, help write a press release and send it out to their contacts. I wouldn’t recommend spending money on that at the very early stages. So, yeah, cold emails and then word of mouth, of course. As things go well, people do hear about you. It’s a great thing about the Internet, if something’s going well, they hear about you. They’ll contact you. You, you tweeted me.
Andrew: What did a publicist bring to the table? I know Jason Calacanis says that he will never hire a P.R. person, and never has.
Interviewee: Yeah. And you know, he’s, he’s an amazing, there’s probably more press written about him than, than, than maybe anybody else in the Internet space. He has an incredible ability of doing that. And I agree that it’s not a good thing to spend money on if you’re small. I think as you, as you grow, you do want someone’s responsible for that. I know Jason does have people that work for him that are responsible for that. Part, you know, partly. Not everybody has the press appeal that Jason Calacanis does have, so. I think it’s something to consider at some point in time. But again, when you’re starting a website, you shouldn’t worry so much about press. Try and worry about your product and your users, and if people like it then the press will here about you. And you can do some networking on your own. It doesn’t take that long to send emails. So, I recommend, wait until later till you have a publicist.
Andrew: Alright. I did an interview with Jason Calacanis and asked him how he got press. I hope whoever’s listening to us will go search the site and find that. And you’re right, too, that he does have people. He may not have P.R. people, but he’s got Tyler Crowley. The guy who does just about everything in the company for him, including go out and connect with the press.
Interviewee: Yeah. Absolutely. But, but still, Jason has an incredible ability to, to network and get press, and that’s one of the beautiful things about him. I should say, I should say he’s an investor in ChallengePost, just, by the way.
Andrew: I was about to ask you that. How big an investment has he made in the business?
Interviewee: Well, he can, I can say this because it’s, it’s public from him. But $25,000. Majority of, of our investors were Angel Investors in the $25,000 or $50,000 range.
Andrew: And so…
Interviewee: Which is a whole topic in itself, because, you know, we raised money during a really difficult economic climate. Where Angels were not investing, if they were it was at relatively smaller amounts of money. So, I think, I definiately learned some stuff about that.
Andrew: Okay. Alright. Let’s then go into the street teams and, and then we’ll go back and talk about ChallengePost and how you raised money there. Because I know people are going to be curious about that. Alright, so street teams. You were a member of somebody’s street team, essentially. So we found out a little bit about your motivation. When it was time for you to create street teams, how did you organize them?
Interviewee: Yeah. It’s really simple. And actually I did other jobs. So I was at Atlantic Records. I was a college rep for them so I was part of their street team. And then I had another job, my senior year, where I organized street teams for another company. It’s so, totally simple. You basically go for your fans. So if somebody, if, in the music space, people are buying your record or emailing you or, or writing you. They’re you fans, they’re coming to your shows.
Interviewee: Öso you just simply put up on your website, on the mailing list page where people sign up for updates, ìWould you like to be a member of the Street Team?î And you explain Street Team members get into the shows for free and get free things for helping promote the artist.
That means going into record stores and moving the CDs to the front of the shelf, taking posters and putting them up all over college campuses and cafes, bars, restaurants, where ever else record stores, and going to the shows and promoting the shows beforehand.
Really, being an extension of your armólocal marketers volunteering their time, but of course, they’re getting something out of it. They get to meet the artist. They get to be involved, just like I did. You want to help the artist, so you ask them to help in exchange for something.
Now on a website, you could certainly have a page that says, ìHere’s our valued Street Team membersî, and give them exposure on your website. Keep them in the loop on how you’re building your company and make them feel like part of your company with regular emails in exchange for them helping.
Andrew: How do you keep them from being jerkoffs? How do you keep them from going into a record store back then and chucking the competition’s records and promoting the band’s records?
Interviewee: It’s rare that that’s happened. Usually the jerks were people that hang out, trolls on web boards and would say annoying things. We know there are people out there like that, but in terms of people wanting to volunteer their time, we really had good experiences.
There were some people that took the free CDs and didn’t do much, so we would ask them to send reports: Tell us which record stores you went to; send us an email, let us know. We were certainly calling out record stores ourselves on a weekly basis to find out if they were in stock, and we’d ask, ìHey, did Jane come by?î or whoever it is.
So there were a few instances of people who just wanted the free CDs, but most of them, they’d send you reports.
Andrew: So you come up with a bunch of jobs that you need, like moving the record to the front of the record store, like going out and promoting it, and so on, and then you give them in return for that, the ability to meet the artist, access to live shows. You give them free CDs which cost you nothing. So far, none of this really costs you anything.
Interviewee: Posters, maybe a T-shirt, yeah.
Andrew: Okay, and you make sure that they learn.
Interviewee: Right, and the other thing we did, it’s totally simple: it’s just, you have to manage them and it does take time. Another great thing we did, for every show, we’d put up an 8×11 pdf with four flyers on that page and say, ìPlease print this out and make cuts so you had flyers.î
So each person, instead of having to mail them 100 or 200 flyers from the early days, we’d just tell them to print it out, and if they had to expense for copying, just send us the receipts. But most of them printed it out or did it at work; it wasn’t an issue. So that was really good, flyers were important. And you could do that stuff for websites.
Andrew: So what kind of things would you get a Street Team to do for a website?
Interviewee: It’s a good question, and you know, we don’t have one for Challenge Post, and it’s probably something we’d like to do over time. I think, everything from if you can print up promotional items like posters and flyers or maybe T-shirts, etc, they could do local parties, local get-togethers. They could put flyers up mentioning your site around town, that kind of thing. It’s really the same kind of thing. We haven’t done it yet. I think it’d be a great idea. I think most people should do it.
Andrew: Alright, let me say this before we move on to Challenge Post. If anyone’s listening to us live right now, can you ask Jason Calakanis [sp] if he could Tweet out that I’ve got Brandon on with meÖ
Andrew: What I’m asking is for the live audience to ask Jason Calakanis to Tweet out that I’ve got Brandon here from Challenge Post. I know that Jason supports the companies that he invests in, and I wouldn’t be surprised if he Tweeted out and told his followers to watch us. So Scott Simpco [sp], or maybe Casey Allen who’s watching us, GladRobot, I don’t know if you know Jason, but if you do, Tweet out to him, let’s see if he’ll do it. Okay, so let’s talk about Challenge Post. What was the original idea for the site?
Interviewee: Sure, so I was actually inspired by this guy named Colin Needercorn, who’s now in New York City, who created this challenge on his blog and it got on Digg. The challenge was: Create a software program that allows Windows to run on Mac.
Interviewee: This is right after they put the Intel chips inside. There was no boot camp or parallels or any of that stuff. And it had to run natively. And he put up 100 bucks and anyone can Paypal him money to add to the
. And in three weeks it was like $14,000 collectively contributed by hundreds of individuals and corporations, and they all got their name or their logo up on the website; teams working throughout the night. It was in the New York Times. It was on television. And it was solved in three weeks. So, as a marketer, I was blown away by the power of this challenge to identify a new problem and to get it solved really efficiently. And I immediately thought we needed an Ebay for this. We need a platform for this that allows these kinds of challenges to flourish.
Andrew: OK. All right. So then you come up with the idea. Why do you need money for it? Why can’t you just create a quick website that does this?
Interviewee: You know, it’s something that I actually learned from my record label days which is we build it from profits. It was small. And I made some mistakes. I should have ñ like as soon as we had our best selling artist, I thought we should have gone out and raised money and hired six or seven people to help me and really expand it. Cause I was just spending too much time on too few projects. And I knew that with this, and I’m not developer, so that was key. And I needed money to do it ñ I wanted to do it right. I think, if you are a developer or have a developer that you trust, then go ahead and make it and launch it. But, in my case, I wasn’t and it’s really hard to get the type of dedicated person you need when you’re not paying them anything. And I couldn’t afford to fund the whole company myself. So, that’s why I wentÖ
Andrew: How far did you get it before you started looking for funding?
Interviewee: Some screen shots and a lot of ideas and sort of I had the business plan and I’d really kind of thought out how we were going to get there. But, I spent a lot of time. I went to business school actually. So, after with messenger records, towards the end I was getting really bored. I wanted some input. So, I did business school on the weekends here in New York. And while I was there, I wound down the label and then sort of incubated challenge first. Right when I came out I started raising money. And then basically the sky fell and the economic apocalypse happened. And it was very difficult to raise money. So, it took me almost a year and a half.
Interviewee: Closer to a year but then some people came in later. And, again, it was 2008. I think when we closed in November of 2008, I don’t know if there were any other angel deals that I’ve heard of that closed during that time. So, it was tough. I had angel investors who said they’d fund — a big portion of the company who called me and said, ìI lost half my portfolio last week in value. I can’t do it.î So, I knew I need to raise money and it did take me a while to do that. But, I went step by step and I had been in the music industry so I didn’t know the technology investors in the Internet world. So, I had to make that transition.
Andrew: Let me, before I ask the next question, I’ve got to thank the people who are tweeting out to Jason. Siculars [spelling], thank you, Gladrobot did tweet out. Buddyboy2006, thanks for telling Jason to tweet out. I hope he’s online right now. And, of course, Scott Simco who’s going to be working with Jason over on this week in start-ups, for him to tweet out to Jason is a huge help. Thanks, Scott.
Interviewee: I listened to his podcast, by the way, like constantly cause I take the subway from Brooklyn to Manhattan and I’ve listened to so many hours of that show. It’s great. I listen to it all the time.
Andrew: Did you hear me on there?
Interviewee: I did. I heard ñ Oh, no, I didn’t hear you on that but I did hear you on was it This Week In Tech.
Andrew: This Week In Tech, yeah. Oh, there we go. Jason emailed or Jason tweeted out. Thanks, Jason.
Andrew: Awesome. The guy’s got tens of thousands of followers. They’re all start-up guys. It’s going to be a huge help. Thanks, Jason and thank you, Siculars [spelling] for telling them.
Interviewee: Hi, Jason.
Andrew: Hey, Jason. All right. So, what were you doing during that time? You said that you wound down your record business. So, now you weren’t bringing any money. You were in this waiting period.
Interviewee: Right. Well so I actually do ñ my records still sell. I’m distributed by Sony here and Universal in Canada and others. But, yeah, I wasn’t putting up new records at that time.
Andrew: So, you were getting money from the past records?
Interviewee: Exactly. The catalog sales. But, still, that’s when I realized that I needed to raise money to make [sounds like Challenge Post] what I wanted it to be, and just went out and started meeting people. Through business school, there was some business plan competitions that were judged by some venture capitalists or angels. So, that was really kind of the start. And I did well in those and I met VC’s and then we met. And most of them said ìnoî because they’d only invest once you’re launched and have significant traction and traffic, etc. But, they said, ìmeet so and so,î this angel. You should meet this person. So, I guess, another recommendation to anybody that’s actually out there raising money, if you’re really in the early stage, don’t waste a lot of time talking to venture capitalists. I mean take the meetings if you can but make it 10% of your time. Most of your time should be meeting angel investors who are these people in between friends and family and venture capitalists who fund start-ups.
Interviewee: Make it 10% of your time. Most of your time you should be meeting angel investors who are these people in between friends and family and venture capitalists who fund start ups and you want to get in your local angel networks. So when you meet the VC, expect them to say no but your request should be, do you know any angel I should talk to? And I did that for a long time.
Andrew: I see. Is that how you met your angels?
Interviewee: Yes. So I guess first I met Steve Wozniak. He was on board of directors. I met him actually through my mailing list. He signed up to vc street member. I said is this the Steve Wozniak. And he said yes. And we kept in touch about it. He loved the idea and he said I got to be part of this. And so he joined my board. And so that was may be the first bigger name personally that joined that was helpful. And then just kept meeting people and networking and networking, working on the project as well.
Andrew: He was on _ team for your record label?
Interviewee: Yeah, he loved one of my artist MQ and then other artist _. He said guys I don’t know what I am getting into but it sounds cool.
Interviewee: What was he getting into? Steve Wozniak is going to put posters up around Apple office?
Andrew: Well, I don’t think he has put up. He left awhile ago. I think he signed up and may be wanted to know more. But he flies around. He is a big music fan. He is a huge music fan. He supports artists. I think in his book he talked how much money he lost putting up concerts.
Interviewee: Yes, Yes, his festivals. And I don’t think he regrets anything. I wish I could have done some of those festivals.
Andrew: Sounds like a lot of fun. By the way I loved his book. I used to have it behind me when I had my bookcase. People always identify with it who have read it. They e-mail me back and tell me how much they loved it.
Interviewee: That’s right. We should plug it _.
Andrew: _ a great book. He talks about relationships and dating openly. About lack of his relationships and dating openly.
Interviewee: Yeah. And I remember he was the first guy to type on the type-board and see it appear on a small screen. That’s just amazing. He is basically credited with inventing the personal computer.
Andrew: And I loved how he took credit for it in his book. Lot of people think Steve Jobs and I, the two of us created the computer. No, I created on my own.
Interviewee: I support those guys who doesn’t right.
Andrew: Yeah right. Everyone is their huge admirer. Everyone in business right now is in awe of what they were able to create. Al right so let’s see. So I am just curious about what you may be going through for year and a half. So what was it like to try and fail and try and fail over and over like that. Sounds hard.
Interviewee: Right. It was progressing well until obviously economy happened and lost some. But I needed to get to a minimum threshold. So sometime when you raise money. You go out there and ask people for money. Like there has to be a minimum threshold usually stipulated in the offering document. That you cannot close until you reach X number of dollars. Because there is disadvantage with the early investor. And so sure I would give you 25 grands but if you do not raise the rest of it then it won’t work. So I hit my threshold when the economy happened. So I really just go out there and again it is networking but it is not a sales game though there is certainly an element of it. But you really have to believe what in what you are doing. You have to have a good team, you have to have a great idea, you have to have a great marketing strategy. All that stuff. And people have to realize whatever idea you are telling them is going to change dramatically at some point. They want to know you are the kind of person that is going to do whatever it takes to make it happen. Entrepreneurship is the only thing that makes me happy. It is the only thing that I kind of ever do. So I would be miserable if I don’t do. So may be there is something in it for investors, franchisers.
Andrew: Who is the first investor?
Interviewee: Good question. I should know that. There was a guy from the business school I think, Tom _ and there were couple others. And frankly you know, it is awhile so I forget exactly who were the first in. Then there’s the other thing if they are not sending you checks. They are like saying, I am in. It is like _ circle. I will invest but come back to me when the time is right to get it signed. So then you go back and hit everybody with papers. You try to get them to sign papers earlier. It is little bit of a dance. People want to hold their money back until the very last second for obvious reasons.
Interviewee: For obvious reasons. But, you as an entrepreneur, people are asking you: How much have you raised, how much is in the bank? So, you’re learning and you try and pick a deadline and you create urgency around this time but, it always kind of gets moved, especially when you’re first time. The deadline for our round just probably kept getting extended for, who knows?
Andrew: How did you get Jason Calacanis?
Interviewee: So, Jason came in toward the end. Our initial round had already closed but, what I did was, because we reached that minimum threshold, because it was 2008 and it was a tough time, I just said to everybody: Hey, allow me to extend this round for a year, so that when I meet new investors we can just bring them in. I don’t need to do a new valuation, I don’t have to worry about getting everyone to sign new papers. I should be running the business. Let’s just allow them to invest and everybody, of course, they do that all the time. It was fine. It was our first round. So, I had the round extended for a year and then I saw he was going to be speaking at the New York Tech Meetup, which is an incredible organization of all the New York tech scene, which is very vibrant and thriving. And, I knew he would be there and I asked my board member, Andrew Rasiej, who knows him, for an introduction. He made the introduction, he said: What’s ChallengePost? I told him and he said he really liked it. Right away. It was probably the quickest pitch ever and we talked and he really liked what we were doing. And that’s it. So, again, what we’re doing is we’re a platform for challenges, where an organization or individual challenges the world, the public, to do something cool. Like the Netflix prize or the X prize or, in our case, NYC BigApps and a bunch of other cool challenges we have upcoming from some big name company.
Andrew: The Mozilla foundation, I saw, has an open contest on your site, right now. Right?
Interviewee: Yeah. It’s actually ended, but we did a really cool Mozilla Firefox challenge and we’re looking forward to working with them again in the New Year. But, we also have some big name technology corporations, a federal government agency, and some other great stuff coming, in the near future.
Andrew: What was Mozilla trying to do? They were trying to get their users, or trying to get anyone online, to redesign their bookmarking system and a few other elements, right?
Interviewee: Yeah. That’s exactly it.
Andrew: And they were offering?
Interviewee: Yeah. The prize was not monetary it was they will allow you to sort of have a say and have your code or your ideas incorporated in a new future version.
Andrew: So, why wouldn’t they just put this up on their website? Why are they coming to challengepost.com and doing it?
Interviewee: Right. So, they actually do have their own. But, most people, there’s several reasons. One is, it’s a headache to work on these. They often are considered contests, most of them are. They’re legal rules behind it and it’s kind of a pain. Most people don’t have the administration, the back end to run it. I think we’ve helped perfect that. It’s certainly an ongoing process. But, we’ve really made a lot of the headache go away, in terms of that. Second, problem solving numbers go up dramatically when there is a connected network of people. So, a lot of these competitions suffer from lack of exposure. So, we have a network of people who are interested in solving them and finding out about them and the more we do, the bigger the mailing list of people we have to be exposed to them. So, that’s another big reason is, you’ll have much more exposure. And then the third, and very important reason, is that we’re really the only platform that allows social rewards. So, with New York City, for example, there’s $20,000 in cash prizes but there’s also almost 10,000 people from all over the world who have registered their support on the competition homepage. This is for the New York City competition. And, when it’s solved all of them will get notifications: Hey, go ahead and thank the winner. Tell him great job. And then the winner’s going to get credit on the page for helping these 10,000 people. So, when you solve a problem, there’s status and recognition and affiliation and social rewards that live on in perpetuity. So, there’s that benefit to our platform, as well.
Andrew: You’re taking about how, when I look at a contest on your site, there’s a big button on the right, that’s red, that draws my attention, that says: ëMe, too’. And if I click ëMe, too’, meaning, I also want this problem solved. Whoever solves it will get credit and a pat on the back virtually from me and everyone else who hit that ëMe, too’ button, right?
Interviewee: Exactly right. And, if you go to NYC BigApps we’ve changed it so, it’s not ëMe, too,’ it’s ëI support this.’ And, as soon as you click it, you see your name appear, right there, as a supporter. And, people have said things like: Wow, why isn’t my city doing this. Or: Philly [?] in the house. So, you get to be part of the competition, you become part of the actual prize, and in some cases you can contribute money to the prize. And, you become social rewards and you get updates. So, a lot of problems only can be solved by a few people. But, they’re so interesting that they appeal to thousands and thousands of others. And, we’re sort of the only platform that allows those other people to play a part in problem solving.
Andrew: And the money, to you, the revenue comes from where?
Interviewee: So, two ways. If an organization like New York City or a federal agency or a corporation wants to do a challenge they pass a good sized flat fee to create the challenge, host it, run it, do all that stuff. And, then when users want to create their own challenges, we take a cut of the prize.
Interviewee: We take a cut of the price, so it is free to post the challenge and we take 8% when it is solved.
Andrew: 8% right?
Interviewee: That’s right. Only when it is solved.
Andrew: Okay, we have got a question here from buddyboy2006 on Twitter who is asking how much equity should you give away to angels in general, in fact did you have a number for how much in general? Do you have enough experience to answer that question?
Interviewee: Well yes, maybe  but you are not giving away equity, you are selling equity, and they are buying shares in your company. So the answer for that question is it really doesn’t have much to do with where the shareholder or the prospective shareholder, or the prospective shareholder is an angel or VC or a family friend member, it is really how much you are willing to sell off your company and at what price. So that is done by picking valuations. So you say my company is worth a million dollars right now before anybody invests, and I need $300,000. So after the investment my company will be worth $1.3 million and then you go out there with that number and the investors say you are crazy, I will give you a 50 grand and I want 20% of your company. So when it comes to raising money, if you are a new startup that valuation number is really you are haggling over price and you also have to know how much you need to raise to make it happen.
Andrew: Okay, and how much you did give away?
Interviewee: So about 25% of the company 
Andrew: And I keep using the wrong terminology. Right, how much did you give away is obviously not the right way to say because you are not giving them away, you are selling.
Interviewee: But you do give away as options, stock to employees, obviously to incentivise them, you want them to be properly motivated and incentivise when the company does well, sometimes to advisors as well, and those numbers vary. There are some standards but it depends.
Andrew: The other 75% is owned by you?
Interviewee: That’s right. There are some set aside for employee options.
Andrew: Okay, Beta Works is one of your investors. They have invested in Bit Lee, they invested in Surmise, they are now shareholders in Twitter, how did you get Beta Works as investor.
Interviewee:  it was networking. I think we were introduced by a great  capitalist here who, again I knew it would be too early for him but he said you got to meet these people and one of them was John  who, and then I met with him and Andy, they are fantastic early stage investors. New York is really becoming a serious place for startups in terms of raising money, in terms of there being more developers than never before.
Andrew: Who is the venture capitalist who introduced you to them?
Andrew: Based on his connection to them and also the conversations that I have heard him have with other entrepreneurs in the city.
Interviewee: Yeah. He is amazing, obviously everybody reads his blog and looks up to him as well.
Andrew: How did you get to talk to Fred Wilson? How did you get to meet him and tell him about your business and  values?
Interviewee: We were introduced by a mutual friend named Mark Vineem who is a great guy, who is a web guru, marketing guru at a company called  through the music industry and we also shared office space together.
Andrew: Where is your office, what kind of office do you have?
Interviewee: It is in the meat packing district.
Andrew: Is it that you are showing somebody else’s office kind of the way that Mahalo rents out office space if there is space?
Interviewee: Yes, originally I was renting a little space here, and the person who had is sort of left and I took over the lease and then started sub-letting. So I don’t know , yes I sub let it to two companies.
Andrew: Okay, looking to see my list of questions we get to everything, here is something that I heard, there is an issue with the challenge post with some writer who said that there are so many different kinds of competitions on your website, it is hard to figure out who is the site is aimed towards. If it was all developer competitions, then developers would know this is ourl home, this is where we saw the tough problems and get credit and money. If it was geared towards someone else you would have had the same benefit. How are you addressing this issue considering that there is no focus?
Interviewee: Well, it is not no focus but there is a fantastic point and it is a marketing rule that I intentionally broke. So the traditional marketing rule is, and this applies I think to most people is, pick a vertical and kill it, and then go out from there. There were several reasons why we remained Broad, there are clearly categories and when you go to the browse page you can see all the categories and pick the ones more actually something like 80-85% of our challenges are software technology related. So it is not hard to see that on the site. That said, we kept abroad for two reasons, one is we want big companies to be doing great challenges and you can’t say what the topics of those would be. I can’t walk into a Pepsi and say, hi we are challenged first, we do crowd source  design. They help us and make your customer’s dreams comes true by helping solve their problems. You can do that, so the key to our ultimate
Interviewee: Our ultimate vision was, you can’t pigeonhole yourself. Otherwise, I can’t bring in some of these big clients, some of whom we have already, and some of whom are on tap and are coming really soon. The other reason is that it’s somewhat new. And while we knew that technology software API challenges would be the low hanging fruit and they represent a large percentage of what we do, we’re really exploring and trying to find out what are the best verticals. What are the ones where, when we really [break in audio] challenge, people will spread the word through blogs. And, we can create this ecosystem of people promoting it. So, those are the two reasons and it’s a great point and most people, I think, should start out with vertical. I intentionally broke that rule and, so far, it’s proven to be a good one.
Andrew: Alright, let’s take two questions from the audience and then actually one from me and then, like I said, that’ll be the end of the interview. So, the one from me is: Who designed your site? Beautiful frickin’ site.
Interviewee: Oh, thanks very much. We have a fantastic designer. Her name Agnieszka Gasparska and her company is called Kiss Me I’m Polish, so she has the best name and the best company name. And, you know, I should know. If you Google Kiss Me I’m Polish, she has a great website. It’s probably kmip.com, or something like that. But, check it out. She’s a fantastic designer. And, I’m a big believer in design. So, thanks, I’m glad you like it.
Andrew: It’s unbelievable. Even if you have no interest in challenges or any of this stuff that we’ve talked about, go to challengepost.com, just to take a look at his design. The fact that my eye went to the right places on the site, I think, speaks to how well it was designed. And it was beautiful enough that I’m now commenting on it here. Alright, from the audience, buddyboy2006 is saying that he happens to work three floors down from Fred. Let me suggest to you that next time you bump into him in the elevator, ask Fred to come and do an interview here on Mixergy. I’ve been trying to get him on here for a long time and, so far, I haven’t had any luck. Now I haven’t asked him directly but I’ve been asking my audience to ask him. Who needs to do anything directly when you’ve got an audience. So, Casey Allan has a question here. He’s saying: What companies do you admire because of how they marketed themselves while they were still unknowns.
Interviewee: Yeah, great question. Internet companies. I would say it’s not so much how they marketed themselves. Here’s a good point. So Twitter. My favorite quote is when somebody asked Dev Williams: How did you think about market size? How did you estimate market size for Twitter? And he said: We didn’t, we just built something we thought was cool and we liked. So, these days, marketing is important but, more than ever, I think it’s your product. There’s no such things as distribution, anymore. Anybody can get to your site, if they know who you are, by going to a URL. So, marketing is important but, these days, it’s really just gonna reinforce what you’re doing. And, a lot of it is built into the system. So, if your site is viral and there are mechanisms on the site that allow people to spread the word, it’s much less about promoting and being great with the press and taking advertisements out and maybe even having street teams then it’s more about building a great product that is inherently viral and one that people want to use. So, it’s changed. It’s not so much about marketing, these days. Twitter is an amazing example. They built a cool product and Ö You know, one thing they did do is they started out at South by Southwest and there was that community of people that were together. And, then similarly, Facebook started at a university so maybe that’s a take away. Which is, pick some group of people that you’re targeting first. Now, I said that after saying that we broke that rule. But, we are going [break in audio] software technology and API challenges, as well. Take my words, maybe you’ll only want to take them with a grain of salt.
Andrew: No, I mean, we’re learning from your experience. We’re learning from what you would have done if you could have done it over again. We’re also learning that sometimes you just don’t follow the rules. You just have to try things and they work or they don’t. And, then you correct later on. I gotta take Moses’ question because he’s such a big supporter of my work here on Mixergy, he’s known as monocat on Twitter, and he’s tweeting out: Is your site designed with the Ruby on Rails because his browser’s throwing off all kinds of errors and he’s seeing code. I don’t know what that is. Monocat, is that possible that it’s your browser?
Interviewee: We’re not in Ruby, we’re a PHP site.
Interviewee: Yeah, and well first of all. Please email me at Brandon at challengepost.com if you see errors. We haven’t heard of nothing like that before. But, we want to if there is. What browser is he using?
Andrew: What browser? Moses, email him directly and if you don’t have his email address or if you didn’t catch it here, email me and I’ll connect you to him. I hope you’re checking out challengepost.com and if anyone has any questions or any issues or any information or any way that they can help out Brandon and challengepost.com, you can email him directly. He just gave us his email address, it’s Brandon at challengepost.com.
Interviewee: And my Twitter is, @bkessler, and if anybody else is seeing errors
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