“I love thinking of things in completely original and untested ways. Many times these new methods or ideas don’t work out… but sometimes they do.” Yes, sometimes they do, and sometimes KillerStartups is fortunate enough to chat with an entrepreneur like Ron Schmelzer whose generosity, adventurousness, and enthusiasm add an extra charge to the already electric air. Beside his numerous quotable phrases, his views on funding, his handling of a near server overload, and his take on startup meetups, are all not to be missed. The Bizelo founder also has a great movie recommendation in our humble estimation. Enjoy.
When did the idea of Bizelo first come to you, and how did you go about getting started?
Well, the answer is both long and short, but here’s a great story for you. I had already started and sold my first big Internet software company (VirtuMall, which became ChannelWave, raised almost $60M in Venture Capital and then got acquired by a public company, Click Commerce), and the started my next company, the analyst firm ZapThink (which was acquired in 2011 by Dovel Technologies for an all-cash deal), but at the time ZapThink was still going on. I was itching to get back into the product business, but I couldn’t quite find a good product to do it.
So, I had this crazy idea for a new kind of baseball cap called Zoptopz. I know… this has nothing to do with software, but I had this idea and I couldn’t shake it from my mind. Needless to say, I wasn’t an apparel / accessories kinda guy and I didn’t really understand how fashion was sold, but regardless, I was able to make a big marketing hit of it and was lucky to end up in the gifting suite at the Teen Choice Awards in 2010.
Well, long story short, I was selling a limited quantity of these Zoptopz caps in a large number of online and offline channels, and I was having a really hard time keeping all my inventory in stock and things synchronized. I looked high and low and couldn’t find anything that would solve my problems by being an online solution that also didn’t cost a bajillion dollars. Well, I’m a software guy at heart, so I decided to solve this problem myself. Along with one of my early partners, we built a simple solution that pulled inventory and orders from multiple online stores, kept them in sync in real-time, and also helped with a number of order processing steps.
Originally we called the company Yobiz (and we were lucky to get the domain name yobiz.com), but we since quickly changed the name to Bizelo (we couldn’t get a trademark for Yobiz) and realized that there were hundreds of problems just like the original one I had. So, using the enterprise software experience and skills I developed while building ChannelWave and ZapThink combined with the small business insight gleaned through Zoptopz, and the technology innovation developed with the first Bizelo product, Bizelo was launched. And the goal is to build literally hundreds of gap-filler apps that Work Simply and Simply Work (we’re trademarking that!) and are all affordable and effective. Basically, take a similar approach that SalesForce took when they solved Front Office issues and bring it to the Back Office. Whew – long winded answer, but there you go!
When do your best ideas come to you? Lounging by the pool? During dinner? After working for 16 hours? While shooting hoops?
To be honest, ideas are constantly coming to me. It’s like my idea engine is always running and I’m always getting thoughts. I tend to really think things through early in the mornings, but often in the shower! I find the focused concentration really works out, and I have a glass walled shower, so I use the steam to jot notes on the shower walls. I confess to doing math in the shower, too.
We want to know about where you spend your day! What’s on your desk right now?
I spend much of my time in a home office, which is now the office for my coworkers as well! While we’re small and scrappy, we’re all working in my home office basement – but we often change venues, working in coworking spots or my colleagues’ places. At some point, this won’t work and we’ll find a better place.
As for my desk, what’s NOT on it now? It’s got 3-4 computers, multiple monitors, networking equipment, external hard drives, LOTS of paper, and probably most importantly, my cat Milo. Milo seems to always be with us, on top of us, sitting on our computers or keyboards or playing with our mice. Maybe we should put him in our company’s About page!
How many people did you start the company with and how many people work for you now?
Originally, I started the company with James Hagen, who is also the founder of No|Inc, but I’ve since bought him out (he’s still a very interested partner), and I’m so excited to be working with two people I just adore and trust: Evan Schwartz, who is helping on the marketing and customer support side, and Kate Alegado, a marketing and social networking whiz. We’re adding more folks on the development side, and needless to say, we work with LOTS of contractors.
Maybe you can share one anecdote that describes the joy or frustration you’ve felt while starting your company?
Oh my, I have so many stories to tell. But for Bizelo, here’s a great story on the joys of startup land. A few months ago, our servers were getting totally overloaded as our customer base expanded and reached a critical point. We were about to get kicked off our servers and I had to quickly scramble to get new servers online and data transferred before the whole thing just fell apart.
Well, after a number of sleepless nights and porting data, everything got moved without a single bit of data lost or a single minute of downtime. We had to do this because even if we could stop logins to the app for a specific maintenance period, we couldn’t stop the flow of orders to our system. And so, we had to do this all in real time.
Well, we were able to move things successfully with a bit of planning, some good money spent, and just keeping an eye on everything. After we made the switch, we decided it was best to send an email to all our customers telling them that we switched servers and for a period of time they might have experienced some temporary outages or possible data issues. Well, not only did we not get any complaints or support tickets issued because of the outage, but we got all these email messages from our customers telling us how much they appreciated us sending the notice, and how they feel much better putting their trust in us. We went from 24-48 hours of complete stress to elation and joy that our customers really appreciated what we were doing for them. What could be better?
Who or what inspires YOU? Role models? Particular entrepreneurs? Music? Video games? Food?
I have a lot of inspiration. I’m not just saying this, but my wife is a constant inspiration. In 2000, while I was still at ChannelWave, she was laid off, and to encourage her to stay in Boston (where we were living at the time), I implored her to not go back to Maryland or Virginia to look for a job but rather to start her own freelance business in town. Well, I told her, if she could do it, so would I. I started ZapThink pretty much the month after she started Fairman Studios, and I’m thrilled to say that both companies were a success. Fairman Studios is a substantial business in its own right, and I grew ZapThink to generate over $12 million in revenues before selling it to Dovel Technologies last year.
But in addition to that, I have been particularly inspired by one the first investors I got at VirtuMall (ChannelWave later): Brad Feld. VirtuMall was one of Brad’s first angel investments, and he stuck with us as he joined SoftBank VC and then his own venture group. Brad is one of the most credible and amazing investors I have met. He has no pretense and carries himself in a way that leads others to trust him and give him their support, unlike many other investors I have met. He constantly pushes entrepreneurs to do better and I am always looking to him and the portfolio companies he highlights as ways to be a better entrepreneur and create a better company. While I haven’t approached Brad to invest in Bizelo (see below for more on Bizelo’s funding), I would gladly have him on board as an advisor even without a penny invested. He’s just that great of a mentor, advisor, and role model.
How’d you fund this venture? VC? Self-funding? Crowd-funded?
We are 100% self-funded and bootstrapped. While I have not ruled out raising money (and you’ll see articles out there in which we are quoted as stating we’re in the midst of a $750k seed round and we have attempted crowd funding efforts), I see raising money as a significant distraction for our company. We have decided to stay heads down, focus on the company, our customers, and growth, and I’ve been lucky enough to have successes in the past where I can fund any finance shortfalls until the company reaches its profitability inflection point — which, btw, is not a long time coming.
Got any great bootstrapping tips for the lean startups out there?
YES! Bootstrap as far and as often as you can! Having started, run, and eventually sold (or failed) a number of companies, I can tell you that raising money from outside investors is no panacea.
While it might address short-term cash flow issues, simply raising money does not impact the fundamentals of the business in terms of building sustainable value with customers and a business model that can carry the operational costs and fund growth. While some companies need significant funds to advance their business model to a critical inflection point (see Amazon), most software startup companies can easily self-fund or find ways to bring their business model to a state of profitability much earlier than they expect.
I see many startups using funding as a crutch, in effect postponing the necessary and eventual decisions about the business model. I admonish startups to realize that until they have proven their business model, they are not really a worthy investment. Rather, they are a “speculation.” Sure, many times, investors will speculate on very early stage startups and come out on top, but many many times more, they won’t. Startups are in a much better position to raise money after they have proven their business model, have customers, and a scalable approach, than beforehand. In which case, their valuations will be higher, they’ll get higher quality investors, and maybe… just maybe… they won’t need those investors at all.
Favorite book? Author?
The book that really changed my life–and one that I always look back to–is the non-fiction book, Hackers: Heroes of the Computer Revolution, by Steven Levy. It is a portrayal of the birth and growth of the IT industry, and it really focuses not just on the ideas, but the personalities and the environment that spurred technology growth. That book single-handedly motivated me to apply to MIT (and get accepted early too!) and join the Media Lab as an undergrad.
Probably also noteworthy is my favorite movie: The Hudsucker Proxy–it’s not a movie you see noted or quoted a lot, but for an entrepreneur, it’s a must-see. I really love everything about that movie, and I find its visual and artistic style, not to mention its wacky premise, very appealing. More people should watch it! It’s also got amazing actors: Tim Robbins, Jennifer Jason Leigh, Paul Newman, Charles Durning, and John Mahoney among others. “You know, for kids!”
A lot of people have big ideas. What gave you the confidence to actually put your life on hold and realize yours?
There are two things that drive me to just act on ideas. First, I have learned from a very early age not to fear failure. I embrace failure. I crave it. Not to say I want things to fail, but I know that if you are afraid of failure you will NEVER succeed. The whole idea of success is based on the premise of trial-and-error. I wish people would eschew the term failure in favor of “trial and error” as the premise of basic advancement. Because of that, I have no fear. And I guess that gives me confidence. And I’ve been lucky enough to be lucky more often than not, and perhaps that gives me reason to be confident.
Second, I have no filter. I basically think and carry out my thoughts as often as I can–while trying to avoid getting into trouble that way. Because of that, I will give new ideas the benefit of the doubt, and while experience will often rule when exploring a new idea, many times it doesn’t. I love thinking of things in completely original and untested ways. Many times these new methods or ideas don’t work out… but sometimes they do. And when they do, they work out spectacularly.
We also love to know the fact and figures. Care to share some specifics?
As a private (and bootstrapped!) company, I am not really in a position where I can reveal revenues; however, we’ve gotten hundreds of customers, working now into the thousands, and we’ve always charged for our product. We don’t have a free offering, but we do have free trials, and while not all of our customers stick with us, we have seen constant month-over-month growth. If you do the math, that means things are going well! But of course, I think things can be 1000x better, so we’re doing what we can to turn those knobs of growth.
How do you picture your company in 5 years?
The vision of Bizelo is at once remarkably simple–build lots of simple apps that lots of different audiences want, at a price they all can afford–and remarkably bold. We have a vision to build a long-tail of small business apps that will allow us to grow to several hundred million dollars in revenue. While we are tiny right now, we know where we need to go and what we need to do, and until some blocking factor comes up that proves our model won’t work, we’re going to pursue it as if it was a definite. This means that you should hold onto your hat–in 5 years, we will not only be a substantial player, but the dominant player in the small business app marketplace. We’re not playing the game like everyone else!
What’s your largest satisfaction in business life?
My satisfactions are very simple: seeing a business take off in which our customers find real and sincere value in what we are doing, and a bottom line that reflects that value–and also working with and growing amazing team members in which I have served some pivotal and positive role in their career development. Startups can be, and often are, very stressful environments. I find that if you are working with awesome people who you truly enjoy working with, and don’t take things TOO seriously, startups can really be very enjoyable. I also believe in hiring people who might be a bit more green, but have lots of enthusiasm, over those who are very experienced, but are jaded. A startup depends every bit as much on the energy and enthusiasm of its people than it does on their capabilities. You can always improve someone’s skills and capabilities, but you can’t improve their enthusiasm if they don’t have it. Do amazing things. Provide amazing value. Work with amazing people. And maybe, just maybe, something amazing will result.
Where can our readers get a hold of you? Any other projects you’re working on that we should check out?
I’m pretty easy to get a hold of and pretty much everywhere. I’m personally on Twitter and you can find me on Facebook, but I don’t tend to friend a lot of people. I’m on Google+, and a bit more open with that. You can find me on LinkedIn as well. Just search my name on each of these networks and you’ll find me.
As for other projects – YES! I also run what is now Maryland’s largest monthly tech event–the TechBreakfast. We started with just 10 people and we’re now over 1200 people meeting every month in three different locations (Baltimore, Columbia, and DC) with hundreds of people attending each event. It’s been the most amazing ride, seeing TechBreakfast grow so fast. It’s been written about in the Baltimore Sun, BMore Media, Baltimore Business Journal, Technically Baltimore, and many other publications, and it really has helped increase my visibility, increase the visibility of Bizelo, and help me find the awesome people I’m working with now! I heartily recommend to entrepreneurs to start or join a meetup and get involved!
Is there anything else about yourself or Bizelo you’d like to share with our readers?
Hah! What didn’t I say here? I am very much out there with my opinions and experiences in entrepreneurship. I am a very frequent speaker (although more so in the past than now), and I really enjoy interacting with other startups and founders. In fact, I would gladly spend a coffee with any entrepreneur or startup person or someone even interested in the space, and help them work through their startup issues or just give them encouragement. Drop me a line, and if you’re in my town, or I’m in your town, and we both have time, let’s get together.