Koombea: Want To Build Colombia’s Silicon Valley? – with Jonathan Tarud

Posted on Sep 6, 2013 - 9:00 AM PST

A few years ago, I had a sponsor here at Mixergy and I did their ads. I knew that people were happy finding out about them but there was something that I didn’t know until a few months ago.

Someone emailed me and said, “You know what? This Koombea, the company that used to sponsor you, it’s a really big business. I don’t know why you haven’t interviewed the founder.” So I started going back and forth with them and discovered how big the company had really gotten and I said, “Yes we’ve got to get the founder of Koombea on here to do an interview.”

Jonathan Tarud is the founder of Koombea, a development firm that specializes in building mobile apps and web apps for startups. Jonathan, I want to find out how big you got and how you did it.

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About Jonathan Tarud

Jonathan Tarud is the founder of Koombea, a development firm that specializes in building mobile apps and web apps for startups.

Raw transcript


Mixergy’s audio transcription is done by Speechpad

Andrew: This interview is sponsored by Walker Corporate Law. Do you need a lawyer? Not the local guy who doesn’t really get startups, not the really expensive guys who want a piece of your business, one who really understands the startup community and is [??] to help you, if you do, go to Scott Edward Walker of Walker Corporate Law.

It’s also sponsored by Grasshopper. Do you need a phone number where your customers can dial in, press one to go to Sales, press two to go to customer service, etc. and maybe even all those numbers actually lead to your cell phone but it makes you look big. Do you need that kind of feature and so many others? Go to Grasshopper.com. Let’s get started.

Hey there, freedom fighters. My name is Andrew Warner and I am the founder of Mixergy, home of the ambitious upstart and a few years ago, had a sponsor here at home of the ambitious upstarts and I did their ads. I know that people were happy finding out about them. Great relationship but there’s something that I didn’t know until a few months ago when someone that they hired emailed me and said, “You know what? This Koombea, the company that used to sponsor you, it’s a really big business. I don’t know why you haven’t interviewed the founder” So I started going back and forth with them and discovered how big the company had gotten and I said, “Yes we’ve got to get the founder of Koombea on here to do an interview.” That’s what happened today.

Jonathan Tarud is the founder of Koombea, a development firm that specializes in building mobile apps and web apps for startups. Jonathan, I want to find out how big you got and how you did it. Welcome here.

Jonathan: Hi. Thanks for having me.

Andrew: I know that there are certain things that you’re not going to say about your revenues. Let me ask you this. Over a million or under a million dollars in sales?

Jonathan: Well over one.

Andrew: Well over one in annual, right? We’re not talking about every dollar that you ever earned combined?

Jonathan: No, annual [??]

Andrew: Congratulations.

Jonathan: Thanks.

Andrew: I’m hearing a little bit of an accent. Where in the world are you?

Jonathan: I’m calling in from Colombia right now, Barranquilla, specifically.

Andrew: Is Barranquilla a huge city or are we talking a huge startup hotbed or one of the smaller cities?

Jonathan: It’s about two million people more or less. Bogota and Medellin are probably bigger in that sense. They have a bigger community. Bogota’s like ten or 12 million, Medellin’s probably like three. We have a nice software community popping up in the last year or so. It’s starting to evolve into the whole startup scene similar to what you would find in San Francisco, which is pretty exciting. A lot of people that are starting companies used to work with us so that’s even better because the community’s flourishing as a result of some of the decisions we made a couple of years ago. That’s pretty cool to see.

Andrew: Let me see what I want to make sure to understand here. You know what actually? Before we get into anything else the name Koombea, where does it come from?

Jonathan: If you look up the word Koombea, the dance, it’s Cumbia. The way that we spell it is the phonetic pronunciation in English. It was a good name, good tradition and it was an available domain and dot com, dot net, everything so that was pretty cool. The interesting thing is that we later found this thing that the definition of Koombea per se is a dance that’s short, sliding steps which is exactly what we do with startups which is we do sprint by sprint releasing incrementally so in a way both are very related and in hindsight it worked out perfectly.

Andrew: I want to hear how a guy in Colombia, far away from San Francisco, far away from a lot of your clients, how you ended up getting all those clients, getting the developers and then building up this business but what I’m curious about is your start. You started at Boeing? I didn’t expect that. What is a guy with your entrepreneurial instincts doing at Boeing?

Jonathan: That’s a great question. By the time I realized, the only way to stay in the States after I finished college was to work at a U.S. company and apply for the H1 so that’s what I did. I got a job at Boeing on the 787 program which was, as I say pretty exciting. By then I already knew that I wanted to stick my head into software more than aviation just the speed and working at Boeing just proved that. The speed at which things happen in the aviation industry are extremely slow and that’s not the type of stuff that I want to do and if I want to build a company it was a lot easier to do it in software than in aviation unless I was [??] musk [sounds like], which I’m not. That’s sort of why I switched [??]

Andrew: Boeing was kind of like the way, some reason, well Boeing was a way to stay in the country. You said, “These guys are not going to,” yes.

Jonathan: It’s not what I wanted to do but it was one of the best options I had considering that I had just graduated as an aerospace engineer. Getting into a Google or a startup in software back then would have been impossible with the experience I had and the degree that I’ve gotten. I made my own way, in essence.

Andrew: I want to get political here because frankly I’m not a political person but how freaking crazy is it that this country doesn’t say, “This is a smart guy. We’ve got to find a way to keep him in. We should be sending him a welcome package. Welcome to business in the U. S. Here are some cookies. Here are some muffins. Here’s everything you need to know. We’d love to have you here.”

Jonathan: It was interesting what happened, especially that year was one of the only years that when we applied there were 132,000 people applying for only 65,000 spots. The interesting was that they did a lottery. It wasn’t even a lottery [??]

Andrew: [??] or a lottery to be at Boeing?

Jonathan: To stay in the country for the H1. They took all, everyone. They didn’t even check they just put anyone that was qualified, they just put them in the lottery and then they would send it via snail mail so when I got the little package saying ‘Loser.’

Andrew: That’s it and you’re out.

Jonathan: You’re out.

Andrew: As a result do you pay, you pay taxes to Colombia with [??]

Jonathan: Colombia and the U. S. right now.

Andrew: And the U. S. on, profits in the U. S.?

Jonathan: Correct. [??]

Andrew: The U. S. is still earning some money on you but they’re missing out on a bunch of money because you’re in Colombia?

Jonathan: Right.

Andrew: Congratulations. We win. We kick this guy out of the country. Right? The hell? Then your eyes were opened up at WW DC. What is that?

Jonathan: The worldwide developer conference for Apple [??]

Andrew: Which goes on right here in San Francisco. You have [??] get in there.

Jonathan: I finally got a ticket. I chose to go at the last minute once I realized I had to return to Colombia. I went there and met a CTO, incredible guy from a venture backed company who eventually became our first client six months later.

Andrew: You just hang out there and you meet the guy who ends up being your first client?

Jonathan: Correct.

Andrew: What else did you get out of being at WW DC? What did you learn? What did you pick up on?

Jonathan: When I got off the, I actually couldn’t take advantage of the conference completely. When I was getting off of the BART, coming in from Oakland airport my laptop got stolen so by the time I got the computer at the end of the week once I was able to buy one again I was the entire week without a laptop and there was no iPhone back then so I had like a really crappy Razr phone or whatever so it was a waste but it was great because I met a lot of people and it got me into this for real.

Jonathan: I think there is. I still think there is. It’s not huge but you can make a good living off of it and if you know how to market yourself, create a good interface and continue producing upgrades, it can become a really profitable business.

Andrew: What year was this?

Jonathan: That was 2007. This is all, the iPhone had just been announced. Nobody had every touched it yet so it was still Mac-centric for the most part.

Andrew: Are you a social guy? Is that how you’re able to meet a person there who ended up being your first client?

Jonathan: No I’m not really a social guy. Actually I was sitting down and the guy had just finished talking to this other guy and so when he went to rest it was almost inevitable and I had to have more than a few beers that night. I had crashed two parties. That was my second party that I was crashing. So I just started talking, to him and learned everything that were doing with subcontracting to Russia and some other places. And that’s how the conversation got started. And then, I finally said, let’s talk tomorrow or the next day. And we had lunch and continued talking, and that’s how we started building the relationship.

Andrew: And then you launched a site in Colombia.

Jonathan: Correct.

Andrew: What was the site?

Jonathan: One of the things I love to use was Yelp. So the first thing when I got back to Colombia, there was nothing like this. And to this day, there still isn’t anything like this.

Andrew: That’s how this would happen at a business, but we’ll get to that.

Jonathan: [laughs]

Andrew: So you saw an opportunity. You said, hey, this is terrific. We need this in Colombia.

Jonathan: Exactly. We need more transparency overall in Latin America and countries like Colombia. Businesses usually treat people like crap, and that’s not cool. So I obviously saw an opportunity both for that and for just being able to find the businesses that I actually needed for whatever it is I needed, which was in existence.

So we started building it, we launched it. We bought the database of businesses. We bought one that we found pretty cheaply. It was really crappy results for what we had. And the quality of the business listings was pretty bad. So we did the best we could and, once we wanted to go national, and started finding out what the real costs were, it was in the millions of dollars. We said, no, screw that. I don’t want to go out and try to raise money . . .[SS] . . .

Andrew: Millions of dollars to do what? Where was the money going to do?

Jonathan: Just buy the listings for the businesses.

Andrew: Oh, just for the raw list that you would . . . So why not say, hey, you know what, Bogota is huge. We’ll start off in Bogota. We’ll be the Yelp of not Columbia, not of South America, but of Bogota. And then we can build from there, but we could at least afford that.

Jonathan: That’s what we did. We launched just with Barranquilla, which was a lot cheaper. Once we went to Bogota, it was five, six times the cost. So there was no way. I was working off of savings back then. So that was a critical time. It was December of ’07. It was the critical time when I knew that I only had a few more months’ worth of cash. If I went that route, I would have burnt it out. Luckily, we switched gears very quickly into consulting, which we used for the consulting business, and it picked up pretty quickly.

Andrew: You know what I noticed that bad interviewers do, is they want to keep proving to the audience that they, the interviewer, are so good that they could get only top people on. And so they brush over the failure, and by brushing over the failure and moving to just the big success, that tells everyone, look, I only have the most successful people on my site. The audience doesn’t have a reason to root for the guest. The audience just feels like, oh, this is a person who’s going to snow me and say that everything worked out well.

Jonathan: Right. . . . [SS] . . .

Andrew: So I don’t want to be that. I want to hear a little bit more about this. And I want to feel the pain of it. And I want the audience to feel it, so that when we get to the success, they don’t feel like, ah, another jerk who’s got success I can’t live up to, or doesn’t relate to me. But they feel like, there’s a guy that I’m glad things worked out for. So you actually launched this site. Right?

Jonathan: We launched it. Yeah.

Andrew: How much time did it take you to build it?

Jonathan: About two months and a half, more or less.

Andrew: Okay.

Jonathan: The design and everything.

Andrew: And you developed it yourself, or did you bring in someone?

Jonathan: I developed it partly myself, and I had somebody come in as well.

Andrew: Had to find someone to come and help you out.

Jonathan: Yeah. So I started asking around people I knew that had gone to school locally, and they started recommending me people. And finally reached to somebody that I liked, and we started working on it in a very, small cramped office. And, it was fun, man. It was a lot of fun. Just trying to, you know, be pirates, and trying to mimic the whole Silicon Valley thing from Baranquilla was actually pretty good fun.

Andrew: Jonathan, when you were with this person, you don’t just get someone and say, you start coding. I’ll pay you. You also infuse them with your vision and your passion. Did you do that?

Jonathan: Yeah. To a certain extent. Yeah.

Andrew: And then after things didn’t work out, did you feel like, I’m such a sucker for having said this. He’s probably thinks that I’m a dreamer with no substance.

Jonathan: Yeah. So he actually left in December. He got a really job offer in December and for a few months I actually felt really crappy. We started work…

Andrew: Because he [??] for someone else, like being left by a girlfriend. Right?

Jonathan: Pretty much. Pretty much. I got dumped. He actually came back several months later. Once we started growing again and we started growing the consultancy, I think he probably saw that I wasn’t just full of hot air. And…

Andrew: Was there a time when you thought maybe I’m full of hot air, maybe I’ve just made a fool of myself with this person?

Jonathan: No. I still think it every day.

Andrew: You do?

Jonathan: Yeah. It’s sort of…

Andrew: Honestly?

Jonathan: Yeah. Yeah. Like if not it’s almost like I’m… And I don’t feel this way. Or when I settle in and I’m feeling very comfortable, I usually figure out that I’m doing something wrong. So in the last six months… No, probably like last six months to a year I’ve been dabbling in some other stuff to make sure that I continue to remain uncomfortable with what I’m doing.

Andrew: Because when you’re scared, then you fight harder.

Jonathan: Exactly.

Andrew: I see. All right, we’ll get to what other stuff you did. But first, you launched your site. You paid for the business listings. At this point, how much money [in] were you?

Jonathan: I don’t recall.

Andrew: Roughly.

Jonathan: Probably less than $10 grand.

Andrew: And it’s all your own personal money?

Jonathan: Correct. I had saved about $16,000 total to date. So I was literally running out of money by then. So it was decision time. And that’s when we decided, all right, let’s try to get some clients, get some cash flow going, use this last money to get the business going.

Andrew: [Your] consultant business going, is that the kind of…

Jonathan: Correct, yeah.

Andrew: Well, hang on a second. So then when you launch it, do you feel instantly like it’s not going to work or do you think, “This just needs a little more chance, a little more money, a little more time”?

Jonathan: I realized that it needed a lot more.

Andrew: After you launched you realized that?

Jonathan: Correct.

Andrew: And how did you feel having invested this much and suddenly discovering that you need more?

Jonathan: When you use the product… And it was very easy to see like… If you’ve looked at what [??] and what we’ve built in that amount of time, granted it was a lot less, and I obviously knew that we were really far from being able to really cultivate a community. And that’s another thing that I’m probably not best person for a consumer-type startup, which I realized years later. We’ll get [into that] later, but I’m more of a [??] type product. Once I realized now knowing what I know now… I had so much stuff that I didn’t know about marketing. I knew how to build products. I knew how to make it cool, but after that, it was the typical case that you read about, Eric Ries or Steve Blank build it and nobody comes, and you just… Failure… Complete… Sadness-type thing. So that…

Andrew: Was it for you complete sadness?

Jonathan: To a certain extent. We started trying to make it popular and everything. We got… I think at our peak we had about 300 users, but they weren’t actually coming back. They were just…

Andrew: What were you doing to try to get users to make it popular?

Jonathan: I wasn’t doing a lot. That’s the problem. I honestly was still believing that if I launched it, it would be viral by itself. I didn’t even think about growth hacking it or doing anything like that to actually make it work. So I think that was a big, big failure.

Andrew: I see. And so it was a sense of “Hey, everybody knows that we need this. I’m launching it. Once they see it, they’re all going to come in.”

Jonathan: That’s what I thought.

Andrew: Okay. And you told me before we started this was a dangerous moment for you.

Jonathan: Yeah.

Andrew: Financially you were close to the edge?

Jonathan: Yes.

Andrew: How close?

Jonathan: I had about $5000 or $6000 left, totally.

Andrew: That’s not too bad.

Jonathan: That’s… Yeah. That’s less than a couple of months’ worth [of it], yeah.

Andrew: [I've gone] below zero.

Jonathan: Below zero, yeah.

Andrew: All right, but it was a point where you said, “Hey, this is so bad for me. I can’t handle being less $5000. I can’t handle having gone from where I was to where I’m clearly inevitably going to go” and that’s what made you say, “No more of this. I need to look for consulting gigs.”

Jonathan: Right.

Andrew: And how did you find the first consulting client?

Jonathan: The guy that I was telling you about, he calls me up at 7 o’clock on December 31st, and says “All right, we’re going to start working,” and had been really crappy for the last two weeks, and when that appeared it was like from the sky, you know like doom a little chorus and everything lining up, and said ” All right, we want to start working. We’re sending you the contract two days from now.” I’ll start checking things, and get the team in place. So I scramble to assemble a new team to start working as quickly as possible.

Andrew: Has he hired a guy who doesn’t have a team? Did he know you didn’t have a team? He did.

Jonathan: I don’t recall that small detail. I technically had a team until two weeks before, so I don’t recall the details, but I didn’t have a team.

Andrew: Did you feel like… where you puffing yourself so that he could feel more trust in you, or did he know, “Hey, I’m going to bet on a new guy.”

Jonathan: Probably half and half. I was trying to puff myself. I had business cards within a week of meeting him, and a company within two. So, I was really going down that route, and I don’t know if he saw that. He took a big bet on us, and I’m happy he did.

Andrew: How did you get the computers that these developers were going to code on?

Jonathan: That’s a great question. So I had one computer that I had already bought, an IMac so we had that one. The rest we actually went to this guy that sold computers who my brother knew. So, I went to him and said I need four computers, so he financed them for like, he gave us like 25% down on the computers, and then three, four months for the rest to pay them off in small chunks.

So I didn’t actually use all the money off the bat to buy them, and I’m happy the guy also gave us that credit, or otherwise I wouldn’t have been able to buy those computers. By the way, all this time we had been in a bar room office. It was an unused Optometrist place, so that was actually interesting. We would sit down on the Optometrist chair, and everything where the put patients.

Andrew: Really?

Jonathan: Yeah. [laughs] It was actually interesting.

Andrew: I remember living in South America, and computers were exceptionally expensive there.

Jonathan: They are.

Andrew: Is that?

Jonathan: It’s gotten better now. Some computers like the Sub 1000 ones don’t pay taxes in Columbia now, but everything else has you know, it’s 10% import tax, and 16% sales tax, so that really cranks up the price. Yeah, so they’re still pretty expensive.

Andrew: Crazy. It was crazy that they would tax, that they would put high tariffs on computers, like, “We don’t want our people to have the best equipment out there.”

Jonathan: Exactly, I still don’t understand that.

Andrew: Because what they’re trying to do, I guess is cultivate the local computer economy. “No, we will have our own home grown computers, and we can only do it if we keep out the Dells of the world.” Meanwhile, that’s not going to happen.

Jonathan: It’s not.

Andrew: But people are still going to want the computers and I guess maybe they end up getting cash in the door, and they feel good about it. I remember I needed an IPhone or I needed cell phone coverage and I couldn’t get it there. I went to the bank and I pulled up a bunch of pesos and I went to the guy behind the counter and I said, “I hear you guys in this country bribe. I want to bribe you,” and he had such a hard time working the system even to get my bribe, but he said “You have friends in the U. S. right?” I said “Yeah,” and he goes “They come to visit you right?” I go “Yeah.” “They come if you get me a Dell I can do this.” I thought a Dell? That’s really working here for [??] Dell is the dream? I think he even wanted to pay me for the Dell. He just needed access to it.

Hey, I’m kind of losing your audio as we’re talking. Are you on a Mac?

Jonathan: I am.

Andrew: Do you want to just try unplugging your mic? Let’s see how you sound without the mike.

Jonathan: Sure, is this good?

Andrew: Yeah, I probably should have asked you to do that from the start. I can see that people are really upset when I don’t get the audio right. I completely understand it. I usually listen to programs like this on my earphone so if the audio is bad I can hear words. It’s Blake Caraway who emails me and says “I strictly listen to the audio version of Mixergy. Is there a way to normalize the interviewee audio quality for each episode?” He pointed out that some of them are really good, and some are not as good. Not nearly, so. I’ll pay attention to it Blake. Thanks for pointing that out.

All right, you get your first client. What’s the project that you’re doing for them?

Jonathan: So they have this tool which allowed me to triangulate, so for example it was basically a tool for text messages. So their tool had all these interactions through SMS and they wanted to take that into a web version. So what we did is essentially integrate their new designs for the website with all the API calls and make sure that they was all Ajac c [sp] web 2.0 type stuff.

Andrew: And you were responsible for the whole project start to finish?

Jonathan: Yeah, just the web portion of it. They already had the back end built.

Andrew: How did it go building software for someone else?

Jonathan: It was interesting. It was a big learning curve. I had already managed software projects at Boeing. Some internal tools and stuff like that, but it was completely different. I literally went through a learning curve. I tried to apply my previous project management skills which didn’t work. Quickly we started getting into the whole scrums kind of thing.

By the end of the project we were doing scrums. It was like a six month project, more or less. So by the end we were already doing that and it was a huge difference from when we started. Obviously it was a bumpy road. We got the product to where we could, but, yeah, we learned a lot from that project. And we could have done better. Not really proud of the entire results, but it was a good experience.

Andrew: And how did your client feel about it?

Jonathan: He was a really nice guy. So he took it well at the beginning. And we quickly improved in the areas that we needed to. Finally once they had their own internal team, we just phased out. So there wasn’t really something like an explosion type fire or anything like that. It was a natural transition. So that was good. But I would have fired us a lot faster.

Andrew: Did you find other clients before he moved on?

Jonathan: We did. So we started doing the whole…When I started the project, I started going to San Francisco pretty often. Every couple of months. So I started just pinging people and I would ask them to intro us to other people they knew. So I started doing the whole networking thing, which was a very slow ramp up.

Andrew: So you come in here, and I think a lot of people imagine, “Hey, I’ll come to San Francisco. I hear that everyone in the street talks about technology, so I’ll come to San Francisco. Walk the streets and potential clients and partners will just run into me in the streets.” It doesn’t work that way. There is work that you have to do when you’re here. The first time that you did it, did you get it right?

Jonathan: No.

Andrew: So what mistakes did you make the first time you came here to hustle for business?

Jonathan: So the first one is, and I still do it sometimes, I go to these events like new tech event or whatever, where there is a lot of people, you know, tech people. They go to network and everything. Usually nobody’s buying. So that was a tough one. I did a lot of, I’m trying to remember, like, that was the one thing that I did the most. Go to networking events at night because I was with a client all day during the day.

The other stuff was have budgets or we’re kind of a waste of time. You start learning the hang of it and I think that the one thing that has been proven over and over again is networking. Once I started meeting people and they introduced me to actual people that had budgets, had good intentions to actually build something, that’s how we’ve been able to grow for the most part.

Andrew: I see. So it’s not so much going to the events as asking someone else. And when you ask, I remember in the early interviews I would ask a guest, “Hey, I’m doing these interviews. Who else should I interview?” And they would always say, “Oh, then you should interview Richard Branson.” Or they would say on the low end, “You should interview my next door neighbor. He’s going to start a company.” And it was because I wasn’t asking for the referral right. I needed to know someone who they knew, who they admired as an entrepreneur, who is successful and they can make an introduction. If I started asking properly, then I would get useful introductions. Do you find the same thing?

Jonathan: Yeah, to an extent.

Andrew: What do you mean, to an extent?

Jonathan: So, at the beginning I wasn’t asking. That was the problem.

Andrew: You weren’t even asking for an introduction?

Jonathan: A lot of times. Then when people started showing me how it’s done, I… Still some people showed me that this is how you do it, this is how you… They didn’t specifically show me, tell me, but they showed me how they were doing it, and I just copied whatever it is they were doing. That was one…

Andrew: What were they doing?

Jonathan: They were just… The intros in general, the way that people… For example, one thing that I wanted to do early on to get leads was go out and tell people that I thought could have [??] to actually give them a commission or something like that. I learned early on that it was extremely weird to ask that and it didn’t really produce any results.

Andrew: If you said to me, “Andrew, I will give you a commission if you introduce me to someone,” it’s weird and I’m much less likely to do it, strangely.

Jonathan: Exactly. I learned early on that what I had to do is figure out a way to help them and they help me back. If I don’t have an opportunity to help that person in particular, I just [take it] forward, which I’d learned… It took me three years to actually learn that, but I finally got it. [??] That’s what makes it great. People still think it’s the talent or this or that. It’s just the environment of people trying to help others what makes it great, the community.

Andrew: To start this cycle, you need some people who are going to start making referrals for you. Then, once you talk to them, you ask for more referrals and it grows. But were the initial people the people who you met at those events?

Jonathan: Yes. There was one guy in particular that I met. He had an interest in the hyperlocal space as well. He used to be at Yahoo! We started talking. I met him in San Francisco. He knew people as well. That really helped us. We then went on to start another company called Neighborsville. We raised a [??],but that went… Yeah, that failed several months later.

Andrew: You still, while you were doing consulting, said, “We need our own product.”?

Jonathan: Yes.

Andrew: And why did that product fail?

Jonathan: It was sort of like a hyperlocal type [??] for neighborhoods. Again, execution. This time I thought the guy was a marketing guy, so I thought this is going to be the opportunity. We can just build it, but it turns out we built the wrong thing. We overbuilt it. By the time we actually… We had a raised a small [??] time we needed more money. [??] selling the [chairs]. That was right in the middle of the economic collapse which was late 2008 more or less.

Andrew: Sorry. It was the poor execution and bad economy?

Jonathan: Yes.

Andrew: But the poor execution that you had more control of, tell me a little bit more about that. What did you do wrong?

Jonathan: We basically overbuilt it. We started working on it and we insisted on having so much more than we needed. We essentially instead of building on [top of a Facebook], we essentially built [on more Facebook].

Andrew: Your own Facebook? Your own social network on top of this neighborhood product?

Jonathan: Right, which was a big mistake. We should’ve leveraged Facebook a little bit more, included more privacy settings for the neighborhoods themselves. We [sort of diverted] in trying to solve some technical problems around the neighborhoods and their areas and stuff like that, that we shouldn’t have, that were probably overkill for what we needed [??].

Andrew: How much money went into this?

Jonathan: About $50K.

Andrew: $50K?

Jonathan: Yeah.

Andrew: I wrote a note here to come back and ask you about your side businesses. It seems to me that part of it is, tell me if I’m wrong in the way that I’m evaluating the situation… It seems to me that part of it is you want to be in the product business. You don’t want to be building businesses for other people. You don’t want to sell your time and other peoples’ time. You want to have your product that grows and continues to grow despite how many hours you put into it. Isn’t that it?

Jonathan: Correct. Yeah. That’s the long-term vision, but there is some fun stuff that you learn working with other people, trying to help their businesses grow. It’s almost like dating. Dating is kind of fun when you’re getting a girl every couple of weeks. A different girl every couple of weeks is kind of fun, right, but after a while it gets old. To a certain extent, it keeps things fresh and you get new perspectives. You get leads to a lot of different markets and different verticals, which is fun. But it’s also like a surrogate service. You make a baby, then you give it away. It gets painful after a few times that you’ve done it.

Andrew: What about the pain of saying, “All these people are building successful companies. I’ve got great developers at a reasonable price because I’m in South America. What’s wrong with me? Why am I not able to do it?”

Jonathan: Right. Exactly.

Andrew: You go through that?

Jonathan: Yeah.

Andrew: How do you get yourself out of it when you start going through one of these period?

Jonathan: So I just build another product.

Andrew: You just build another one.

Jonathan: Yeah. We built several products. Our latest one’s called dashable.com. It’s basically an agency managing tool.

Andrew: I’m going to go to dashable.com.

Jonathan: So that’s the one that I’ve been putting my heart into in the last six to eight months.

Andrew: Alright. You talked earlier about doing customer development calls. You’re not doing customer development calls for Dashable, are you?

Jonathan: I am. I am.

Andrew: How are you doing that?

Jonathan: So just through Skype is my typical…You know I meet somebody or somebody refers me to someone and I schedule some time and just do it over Skype. It would be cool to do it in person, but Skype does the job good enough.

Andrew: Okay. And you just reach out to other Dev Shops?

Jonathan: Correct.

Andrew: And aren’t you worried that as you tell them about this they’ll think, “I can’t believe I keep trying to copy 37 Signals by creating my own project management software and this guy just reminded me that there’s this whole other business that we could be building”?

Jonathan: So it’s not a project management. It’s mostly time tracking and invoicing.

Andrew: I know, I know. So, what I’m saying is it seems like many development shops heard the way the 37 Signals went from development to product by saying, “Let’s build project management software.” And many of those are creating project management software too following the 37 Signals playbook a little too carefully. Now you’re calling them up and showing them a new possibility. What I’m wondering is, are you worried that they’re going to steal your idea?

Jonathan: No, no. Stealing ideas is over rated. Like all the problems and all the challenges that we’ve gone through just to get to where we are with this product, they’re going to have to discover themselves. And if they don’t discover these problems, it’s because they’re not doing it correctly. So instead of just building the product, it’s figuring out the market technique, figuring out the right words to say about it, figuring out the right pricing, figuring out the market channels. There are so many different variables that go into something like this, it’s almost impossible to steal.

Andrew: Are you putting your own money into it?

Jonathan: Yeah, we’re bootstrapped entirely.

Andrew: Okay. So you take a step forward with consulting and then you spend that money to invest in a product. Then you continue and continue until you get your hit.

Jonathan: Yeah, pretty much.

Andrew: I see. So you keep going. Your clients at Cumbia, are they all coming from word of mouth?

Jonathan: A lot of them. Although we’re getting a lot of leads…

Andrew: I shouldn’t say word of mouth. It’s Biz Dev. You flying to San Francisco. You asking for introductions.

Jonathan: Oh, things are a little bit different nowadays. I used to travel a lot, specifically to San Francisco. Now I’m doing other stuff as well. I also get a lot of introductions via email now that I have a little bit bigger network. And we have a small team in San Francisco. So I’ve been focusing this year for the most part in the Northeast. Boston, New York, all that area. To get things going and kickstarted there. As we have a stronghold already in San Francisco, so we’re trying to expand elsewhere. And now 80 percent of our client base used to be San Francisco based. Now it’s probably 50/50, with the other 50 being across the U. S. So it’s diversified.

Andrew: What about this guy who told me about how big you were, Nathan Zaru? His twitter handle is Yes. I just wanted to recheck that right now to make sure that that really is him. He got the twitter name, Yes. So he does you marketing. What kind of marketing is he doing for you?

Jonathan: For the most part right now he’s focusing on the Dashable side of things. But his job is to do marketing for both Cumbia Consultancy and the Dashable product.

Andrew: What kind of marketing do you guys do? Is he buying ads?

Jonathan: A little bit of everything. We’re starting with the content strategy. We’ve been buying ads. We roll display ads. We’re targeting. We’ve been doing a lot of social media type stuff. So straight across different channels so far.

Andrew: What’s been working best?

Jonathan: It depends. So, for a while the display ads were working very well, better than the ad words especially for some of the key words that we were using for the Datschlow {SP] product. So it really it’s varied so far. We’re doubling down on the content strategy, so over the next few weeks we’re probably going to be ranking up a lot more.

Andrew: Of your own content.

Jonathan: Correct.

Andrew: Right, his user name is “Yes” on twitter he only has 1266 followers. He has to get either more or I think…don’t you think he should sell that name, it’s such a good twitter name?

Jonathan: So, it wasn’t [??], but the story I heard it was pretty tough to get the name, so it was, somebody was using it, or something whacked out, but they had it, but they weren’t using it, so he went through the proper channels to get it. That was way back when twitter had this policy that any one used account could be reclaimed, so he got it that way. Apparently one of the founders for twitter afterwards tried to get it from him, but somebody blocked it internally because it was against the policies, and stuff like that, so it has its share of controversy. That, that…

Andrew: Really good name. I get it, so I see he doesn’t want anymore controversies now by selling it.

Jonathan: Probably.

Andrew: What about when you personally this is before you had a marketing guy in the company you personally bought the Mixergy ad. Give it to me straight. How effective was advertising on Mixergy?

Jonathan: We actually got several leads. We got, I don’t recall exactly how many, but we got a few clients off of it.

Andrew: You did?

Jonathan: We did. One or two I believe.

Andrew: One or two clients, and this was like a $650 ad.

Jonathan: That’s pretty good.

Andrew: That’s really good. What is a client worth to you guys?

Jonathan: It depends, so usually what are object is, is to build an MBP usually for a client. So that usually starts in the 30′s to 50′s, but it extend for any number of months or years, so any lead can become pretty big along the long term.

Andrew: And that’s what you told me that I always ask guests, what is an ideal goal for you from this interview. I know what I want out of this, and God knows the audience can see me driving towards that, but I want to see what you want out of it, so that it’s a fair conversation. You’ve said ” Hey, you know what? If we end up with one client, then that’s a win for us. What do you guys charge for I guess you told me for a MBP it’s what 30 to 50 thousand dollars? What about for an IPhone app?

Jonathan: It’s pretty tough to estimate, you know. It’s usually whatever it’s time and material, so whatever it takes us to accomplish it is what we charge.

Andrew: I recognize actually it’s not the best question because it’s like walking into a bar and saying, “What does a drink cost here?” It depends, do you want a beer or do you want a soda, do you want high end scotch? It’s all that, all right.

Things are going well with the consulting business, but you told I guess it was Jeremy who pre-interviewed you, and he likes to figure out where your low points are. We don’t…we always want to get the high points of success, the revenues, and we also want to understand the big challenges. One of your big challenges you told him was dealing with firing an employee.

Jonathan: Yeah, so it’s not the easiest thing to do obviously, especially when our… the way I try to build the company is that we’re all family, and I think that’s the most important thing. I think we differentiate. I was actually reading some articles yesterday about how you can’t be loyal to a corporation. A CEO is just there to drive the value for the shareholders, and so it’s a one side story.

We try to build it as we’re all in this together. We’re obviously re- trapped{??] so we’re not you know, getting, you know we don’t have shareholders to give them an IPO or something like that so it’s mostly about building a place where we want to go every day, and having fun doing it, through building our own products, or building stuff for others. The most important thing is that we’re having fun. So when you have an environment like that it’s really tough when you have to single out someone, and say “You’re fired” which is pretty tough. And my personality doesn’t really go with that. That hasn’t been easy over the years.

Andrew: You actually ended up having to meditate, you had to really spend a lot of time getting comfortable with this?

Jonathan: Yes. Yeah. And . . .

Andrew: And then, how did you finally get finally get yourself to do it? It’s hard to pull the trigger on something like that.

Jonathan: It is. Especially when it’s completely unexpected from the person. It’s usually, they usually ask, ‘What did I do wrong’? And it’s not like something that you just did wrong, it’s just, when you haven’t been doing for the last, ‘X,’ months. There’s no easy way for them and there’s no easy way for you. It, let me tell you, what I learned is that I could probably, it’s good to let people go, but I think if I would have been more transparent with them saying I wasn’t very happy with how they were performing throughout the year, it would have been easier if I told them, you know what? I actually read this early, Jack Welsh used to do this, which is, you’ve gone as far as you can in this organization, I’m going to help you get to your next job as quickly as possible but you can’t continue here.

In retrospect, if somebody hasn’t done something really, really bad, I think that’s the best way to do it. I haven’t done it so far and I hopefully won’t have to do it anytime soon but if I do that’s probably how I’m going to do it.

Andrew: And on the other hand, when they quit, how do you take it?

Jonathan: It feels like I’m being dumped. I still get upset. I understand, it depends on the person. Some people you’re happy that they’re leaving to a certain extent. Others, it’s just disappointing. Especially for everything that you, especially when you have a relationship with that person and you’ve done a lot with them and they just, they come in, they say they’re so grateful for everything that we’ve done but they’re basically dumping us. And there’s no easy way to take that. I just shake their hand and wish them luck but I’m still pissed. I got to be honest with you.

Andrew: I get it. All right. I want to do a quick plug here as a follow-up to anyone who’s listening to this, if you want to take one of the courses at Mixergy, let me give you one recommendation. And I should say this that there’s a reason why guys like Jonathan advertise on Mixergy it’s because they know the Mixergy audience is real entrepreneurs building, it’s full of real entrepreneurs building real businesses. That’s what I think of when I come to these interviews and when I put together a course. It’s meant for people who are really going to be doing something, people who are real builders.

And one of the things, Jonathan, I noticed about you, Jonathan, is that you networked in the beginning to get your customers. Well, we have a course on networking taught by Ruben Gomez. He is actually a not great networker, he said. Or at least, he’s not naturally that way, he’s someone who’s a real introvert but he found a way to go to conferences and build relationship and he came back to Mixergy and I said, “Break down your process, teach us how you did it.”

And he did, and that’s one of the course, that’s the course that I’m going to recommend anyone that’s watching this take as a follow-up. Ruben Gomez’s course on Networking for Introverts. Because Ruben is full of substance but he’s not very comfortable talking naturally. He figured out how to do it and I like his process and I think if you’re looking to build your relationships and get sales in a one-on-one basis and build it through networking, that’s the course you take. Ruben Gomez, Networking for Introverts.

It’s part of Mixergy Premium, so I’m not trying to get you to buy that course, I’m trying to tell you that if you have a premium membership you should watch that and if you don’t I hope you sign up for premium membership. It’s available at Mixergypremium.com. We have 100 courses and 100′s of interviews for you, all part of your package. Mixergypremium.com. Let’s get it out there clearly.

OK. I have a few resources that you mentioned in the pre-interview and I should say, actually, it’s April Dykeman who pre-interviewed you and you gave her a few resources. Before we get to the resources can you give me on piece of advice of someone who’s watching your success who says, ‘I want to get into consulting,’ one piece of advice that you would give them?

Jonathan: Yeah. Don’t get into consulting. [laughs]

Andrew: Why not?

Jonathan: It depends on what you’re trying to build. Some people really love consulting. I think long-term, it’s a good way, short-term. It’s a good way to get experience. But long-term, if you really want to build a scalable business, building something around products is probably going to be a lot better.

Andrew: It scales much better.

Jonathan: Yeah.

Andrew: All right. Here are the resources that you suggested. If we asked you about a book, you said, Guy Kawasaki’s, “Art of the Start”. “Art of the Start”, why?

Jonathan: That was actually the first book I read about the whole start-up thing. It was a little bit one-sided towards the DC type stuff, but I still remember that book as giving me the initial kick start to actually go through with this. So, I still cherish that book. [??]

Andrew: You also suggest “Copy Hackers”.

Jonathan: Yes, that’s a really great, it’s a course they have a few e- books, I did the course. So, one of the things you’ll be doing the most at the beginning and for the most part is writing good stuff. By there being a good sales letter, an e-mail, news-letter, anything you can do that involves writing. So getting better at writing is always one of the key objectives that you should try to get early on. It’s something that I only got into this year, which is pretty late in the game. Now looking back at all our old websites and stuff, I used to write pretty crappy. So…

Andrew: Joanna does a really good job of teaching copy writing.

Jonathan: Yes, she does.

Andrew: Alright, CopyHackers.com. You also suggest, we have so many so let’s try to rip through them. Unicorn Free with Amy Hoy, why do you recommend that?

Jonathan: It really shows you, the develops fall into this [??] cycle which is creating stuff for them, or stuff they think it’s cool, just because they can. We’ve done this a few times. Not [??] correctly, not find the niche correctly. And if you’re not really organized in what you want to do early on, in terms of the company. So for example, they’re very keen on bootstrapping and anything. I knew that one should bootstrap, but I didn’t know specifically that I wanted to bootstrap. As I started to learn about all these methods and all these things, I realized that’s what I want, right? [??] early on is key to driving that success.

Otherwise, you get distracted with all these things that you read on TechCrunch, HackerNews, everywhere people are raising millions of dollars and we start seeing this. And you think you can do the same thing through your business understanding what type of business you want to do and for who is key.

Andrew: Yeah, she does want developers to stop thinking “what can I do?” and start thinking, “What do people need and what are their problems that they’re so desperate to solve that they’ll buy from me?” Alright, for blogs, you have a bunch here. KISSmetric’s blog, HackerNews, [??] Andrew Chen’s blog, you recommend UnicornFree, which is Amy Hoy’s blog. But there’s one that doesn’t get mentioned a lot – Lincoln Murphy’s blog.

Jonathan: Yes.

Andrew: In private I’ve heard people talk about it, but I don’t think we’ve talked about it on Mixergy. Why Lincoln Murphy’s blog?

Jonathan: You mentioned a good point. When I start investigating this whole [??] stuff, I’ve loved [??] for the last few years. And only when I started needed practical advice, did I actually find his blog and he had answers for most of the questions that I had. I then e-mailed him, and we got in a call and he really opens your eyes onto making things better for [??]. A lot of the times you end up optimizing the wrong thing. Just a few weeks ago, we were trying to optimize how are we going to board users on to Dashable, when our problem was that the people that we were on boarding weren’t the target customer.

So things like that, understanding that and knowing how to map out your free trial , how to successfully activate those users and all that, is so valuable and it’s something that honestly a lot of people ignore completely. So, that’s why I think he has really great resources in his blog and he has this thing where he keeps updating his blog on a weekly basis on actual cases of people that he talks to. So, it’s always fresh, which is pretty cool.

Andrew: Yeah. I’ve heard about him from other people in the [??] base including Ruben Gamez. I think Ruben likes him because he and Lincoln talked about how to keep sass subscribers subscribed. How to keep them from wanting to take off. Alright, the company is Koombea.

Jonathan: Yes.

Andrew: We’ve learned a lot from you. We understand that your goal here is, now that the interview is over, to get at least one customer and I’m curious to see, will you tell me if one customer came from this interview?

Jonathan: We will. We will.

Andrew: Will you tell me audience? Because, frankly, they’re the ones who are going to be curious, too – and I don’t want to hide information from them.

Jonathan: No, no. We will, don’t worry.

Andrew: You will tell them.

Jonathan: I will tell you over coffee, in San Francisco.

Andrew: Coffee means middle of the day, or morning. In the morning, I like to run, in the middle of the day I like to work. After work, I like to have scotch. So I would like for you, if you’re coming to San Francisco and you want to hang out, let’s do Scotch.

Jonathan: Yes. Excellent.

Andrew: Alright.

Jonathan: Perfect.

Andrew: Cool, and if you shoot me an e-mail with when you’re coming, and like who you want to meet when you get here, maybe we can get them to come and join us for scotch.

Jonathan: Excellent, that’s good.

Andrew: Alright, Jonathan, thank you so much for doing this interview.

Jonathan: Thank you for having me.

Andrew: You bet. Thank you all for being a part of it. Bye, guys.

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  • lporras16

    It was a really great interview, but please stop using the word “Columbia”, the correct country’s name is “Colombia”

  • raulmantilla

    Koombea is going to be the biggest company in the next few years. Thanks to JT, Trust me he is going to be the next “Steve Jobs”. Great interview.

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