Firsthand Perspective: Office Space and Startups

IMG_5271_smallForrest Woolworth is COO of the mobile gaming startup PerBlue and co-founder of Capital Entrepreneurs. Forrest has been on the office space hunt on multiple occasions with PerBlue, and shares what it’s like to be a startup in the world of corporate real estate with us now.


Even with 2 million square feet of unused office space in the Madison area, the next generation of businesses are having a difficult time finding good places to set up shop.

The emerging lean startup businesses are a different breed of companies than traditional businesses. Many of these startup companies are bootstrapped, and others take on some amount of seed or Angel funding. They are high risk ventures that move at a brisk pace and are generally not able to plan more than a few months out.

Startups are not like law firms or consulting companies which generally have fixed contracts which guarantee revenue for multiple months or even years out. They’re also not like biotechs or life science companies which have long product development cycles and require large amounts of funding to be invested over a period of years. Startups require significantly less capital to get off the ground (thousands, not millions of dollars) and their products have much shorter development cycles (months, not years).

A startup’s existence depends entirely on the amount of runway it has. In order to give a startup the greatest chances of success, it needs to maximize its runway by keeping expenses as low as possible and making sure every dollar spent is spent wisely.

In startups there are relatively few overhead expenses: people, computers, server costs, and space to work. Once a startup grows beyond the coffee shop or coworking space it will inevitably encounter the complicated world of corporate real estate that doesn’t play well with startups.

Based on responses from a survey of Capital Entrepreneurs companies, some pretty clear trends emerge.

Capital-Entreprenuers-Startup-Office-Space-Price-Elasticity

Capital-Entreprenuers-Startup-Lease-Length

With average office space prices in the downtown area ranging from $17.56/sqft – $22.37/sqft, at least two-thirds of these new companies are priced out of the market. Even if they can find a price point that works, lease lengths often run 3-5 years.

There is currently a growing unserved gap in the office space market in Madison (and beyond). The new breed of upcoming businesses doesn’t fit well into the traditional office space model. Startups require flexible, cost effective leases. They eschew cube-land and fancy private offices for simple, open, and collaborative workspace. They want to be near other startups and close to downtown. They also value having an abundance of “third spaces” and people nearby beyond the walls of their office.

This is what startups want:

  • Month-to-month leases are ideal. 6 months is reasonable. 1 year is generally the max comprehensible length.
  • $10 per sqft is an ideal price target. Interest drops off quickly on anything north of $15/sqft.
  • No personal guarantees on leases, especially if the company employs people beyond just the founders. Founders are already shouldering enough risk.
  • Startups are not able to spend their operating capital on build out expenses, but they all want a simple open floor plan and collaborative office space.

Even as startups play an increasingly larger role in the corporate real estate market in Madison, few properties are catering to the actual market demands. Office space targeted at “emerging tech companies” priced at $30/sqft and requiring a 5+ year lease commitment is not going to fill with these companies. The greater lease flexibility required by this newer model will be absorbed in the fluidity of the startup community – existing companies are dynamic and are often growing or shrinking, and new companies are always forming and coming up the ranks.

Instead of forcing promising startups into basements, backoffices, and spreading them all throughout the city, we should look at ways space catered to the needs of startups could actually help them instead of acting as just another big hurdle they have to get over. By co-locating companies on lease terms that make sense, not only will these companies be able to find space that works for them, but it will actually help improve the startup ecosystem as a whole.

What would the biotech community in Madison look like without University Research Park? Would it be nearly as strong as it is today if each biotech company had to independently negotiate with a landlord and try to convince them to put in a wetlab where there once were cubicles? In order to give the next generation of businesses the best chance of success, office space is an important piece of the puzzle to ensure is done right.

Firsthand Perspective: How I A/B tested a Database Versioning tool on HN

aaron-larner-profileAaron Larner is a Madison entrepreneur and CTO of The Art Commission. Aaron shares his experience A/B testing his database version tool DevJoist via Hacker News.

devjoist-logo

This past Monday I shared DevJoist on Hacker News. I posted around 10:30am CT and quickly reached the front page, hovering around spot #8 until about noon. I've summarized some of the data that I collected while DevJoist was on the front page.

The Tagline Test

Before submitting to HN I had set up an A/B test to determine how well different taglines converted to registrations. Here are the conversion results by tagline:

Tagline Visits Pages / Visit Visit Duration Bounce Rate Registrations Conversion Rate
Collaborative Schema Editing 379 1.74 0:01:15 65.17% 1 0.0026
Database Schema Versioning 369 1.92 0:01:16 60.16% 2 0.0054
Database Versioning Done Right 314 1.82 0:01:27 64.33% 1 0.0032
Version Control For Your Database 397 1.76 0:01:22 65.99% 3 0.0076
Version Control For Your Schema 313 1.76 0:01:27 59.11% 2 0.0064

Version Control For Your Database and Version Control For Your Schema were the winners in terms of registrations. It's also interesting to look at the time it took people to register based on which tagline they saw:

Tagline Avg. Time to Register
Collaborative Schema Editing 1.91 minutes
Database Schema Versioning 1.19 minutes
Database Versioning Done Right 2.88 minutes
Version Control For Your Database 0.94 minutes
Version Control For Your Schema 1.87 minutes
Product Tours

Within the app, I added a little product tour. The tour consisted of small popups that highlighted the functionality of different elements within the app. Each column in the table below represents one of the tour popups. They were presented to users sequentially starting with "Save a version."

The numbers in the table below represent unique views of each tour popup

Tagline Start a project Save a version Projects dropdown Diff and merge Collaborate with other developers Don't forget to register
Collaborative Schema Editing 22 6 5 4 3 3
Database Schema Versioning 23 0 0 0 0 0
Database Versioning Done Right 15 6 4 4 4 4
Version Control For Your Database 27 0 0 0 0 0
Version Control For Your Schema 23 4 3 3 3 3

I thought it was interesting to see that almost everyone closed the first tour popup immediately, but the people who continued after the first popup were very likely to continue all the way to the end. 3 of the visitors who continued past the first popup registered. That's a 18.75% conversion rate, which is very similar to the 18.33% conversion rate of users who clicked the call to action button. In the end, it looks like the product tour has little to no effect on final registrations.

How To Run Your Own Tests Using Google Analytics

Here's how I ran my tests. For each new visitor I generated a random integer between 1 and 5 to determine which tagline that user would see. I then stored that tagline in a cookie on the users machine, so that they wouldn't see other taglines if they refreshed the page. When I rendered the page I insterted the appropriate tagline for the user and set a custom variable in google analytics (with their javascript API). I also sprinkled GAN event API calls throughout my javascript to keep track of a slew of other information, such as:

  • When users registered
  • Which tour popup boxes they saw
  • etc.

With a mixture of advanced segments and custom reports within Google Analytics, I was able to come up with all of the data that you see above. See the full blog post on the DevJoist website for more implementation details here.

Keep up to date other DevJoist news. Follow me on twitter: @devjoist

Disclaimer: The purpose of running this analysis was mostly to get practice and get in the habit of using data to drive decision making. I haven't done a rigorous analysis on the statistical significance of the results. Many of them are likely not statistically significant because of the relativly low traffic volume.

TechStars Cloud: Month 1 – The Mentors

Max Lynch is a Madison entrepreneur and co-founder of Codiqa. Codiqa provides rapid HTML5 mobile prototyping in the cloud. Max shares his journey through the TechStars Cloud program.

codiqa_page_logoOne month ago Drifty Co. (creators of HTML5 dev tools Codiqa and Jetstrap) started our three months of TechStars Cloud in San Antonio, TX.

TechStars is a national, mentor-driven accelerator program for early stage startups. The “Cloud” version, sponsored by Rackspace, focuses on companies building out the future plumbing of the cloud. Of all the TechStars programs, Cloud is probably the nerdiest, with many startups stacked with technical founders focusing on developer tools, APIs, and services.

TechStars programs follow a consistent format: the first month is all about meeting with mentors and finding a core set to meet with for the duration of the program. Month two is all about working with that core set of mentors and making progress, and month three is focusing on demo day and raising money for those who choose to (hint: it really is your choice).

We are in the first month, which is supposedly the most intense part of the program, and I have to agree: I have never been more mentally and physically exhausted or worked so hard in my entire life. We have met with so many mentors, and each has had something unique to add or challenge us to conquer. We work hard each week to try out their suggestions, gather data, and figure out where the truth lies.

You learn quickly that to get the most out of your mentor meetings you must effectively explain your company, vision, current progress, and challenges within the first few minutes, lest you dwell on the same questions from mentors and waste the precious 30 minutes.

The mentor meetings have been hugely important for us. We have gained perspective and clarity about where our company is at, and where we are going. I feel much more confident about our future and how we are going to tackle this huge opportunity in front of us. That includes working on our marketing, big vision, hiring strategy, capitalization, and product development, among many other things.

Now that we are reaching the end of the first month, I am happy to say that the group of 12 startups (50+ founders and employees) are becoming much closer. Through drunken nights of ping-pong to playing Werewolf, to critiquing each other’s pitch, we have formed relationships that feel more like real friendships than simple business acquaintances.

I’m starting to fully appreciate the importance of forming real friendships with others in the startup space. When you can’t bullshit each other and can trust telling each other your deepest darkest fears, you form truly strong bonds that help you conquer amazing challenges and grow in profound ways.

It’s one of the biggest lessons I want to take back to Madison with me. Our startup scene and city will grow best when we form more informal relationships with each other outside of work. When we feel more comfortable sharing the realities of running a startup, we can receive and give the best advice. But it’s a two-way street.

Now that month one is ending and month two is beginning, we are extremely anxious to hit the track and make more progress on the product and business. We are preparing for demo day, but we are leaning towards not raising money: we’d rather close some big deals we are working on and use that to fund our company.

More than anything, TechStars is like a 3rd co-founder, complete with all the closed-door discourse and honesty you’d expect from a founder. But at the end of the day “it’s your company” (commonly heard here) and you truly are in control.

We all feel like we are in college again, and this is a once in a lifetime opportunity. It’s a blast!

Until next month,
Max Lynch
Founder of Drifty Co.
max@drifty.co

Firsthand Perspective: Building our Startup from Scratch

Max Lynch is a Madison entrepreneur and co-founder of Codiqa. Codiqa provides rapid HTML5 mobile prototyping in the cloud. Max shares his journey taking an idea and turning it into a company with us now.

In 2012, my friend Ben Sperry and I launched our startup Codiqa, in Madison, Wisconsin. Since the year is almost over, I thought it would be fun to create a timeline of events that carried us through the year, as well as touch on what we are excited about in 2013.

In one year we went from just an idea to a three-person profitable software startup. Here’s how we did it:

Late 2011 – The Birth of an Idea

When we built Codiqa, we didn’t really have any plans to turn it into a business.

We built it because we were doing jQuery Mobile development through the standard mockup -> prototype -> end-product process, and we thought mockups were redundant when the end-product technology was known (in this case, jQuery Mobile). Why not have a simple interface builder for jQuery Mobile that could quickly build these kinds of apps?

There were a few visual builders for jQuery Mobile, but we largely put them out of our mind since we just wanted to build something that was ours. We started playing around with the idea late in 2011, but we hadn’t shown it to anyone yet.

Ben and I also had full time jobs at a local mobile game startup, PerBlue, so we were juggling our 9-5s and our side project.

Jan 1st – The Landing Page and Initial Users

Before we had a working product, we threw together a fun landing page that had an interactive demo and a viral share option upon entering your email for our beta mailing list. Through this landing page, we grew to about 1500 interested beta users, primarily through Twitter shares.

February 1st – Private Beta

When we felt like we had a product that worked well enough, we started inviting some of our initial users into the beta. The biggest feedback we received was that this was awesome… but way too buggy.

Ben and I had just read about the Lean Startup method, and we were trying to apply it to Codiqa by releasing early and often, testing our ideas with customers, and tweaking them when we had learned what worked and what didn’t.

Over the next few weeks we took what we learned and the bugs we found and tweaked and improved it, releasing many small updates in a short amount of time.

February 20th – Public Beta

By the end of February, we felt confident we had something that worked well enough that we could open the product up to the public. We sent an email out to our beta list inviting everyone to the new site, and we replaced our landing page with a real site.

A few weeks before our beta, we started showing the jQuery Mobile team what we had built. We thought it was be an awesome way to give back by making an embedded version of our tool that would make it easy for anyone coming to the jQuery Mobile site to build an app and try it out right away. They agreed, and we tried to figure out a way to make it happen.

At the end of February, we launched an embedded version of Codiqa directly on jquerymobile.com, and started to slowly grow our user base.

A few weeks later we blogged about growing our user base to 10k users in a month, which coincided nicely with a rejection from YC a few months earlier. The post was #1 on HN for a whole day and drew us a great deal of traffic and interest from around the world…

But wait, there’s more! Find out the rest of Codiqa’s journey of Building their Startup from Scratch – including Monetization, MVP, Marketing, and more! Read the full post here.

Firsthand Perspective: FounderFuel Accelerator

Adam Perkins is a Madison entrepreneur who was part of the InfoActive team as they traveled to the FounderFuel Accelerator in Montreal. InfoActive was formed out of the Startup Weekend Madison event earlier this year. Adam shares his experience at FounderFuel now.

FounderFuel (The Montreal based startup accelerator modeled after Techstars) was an amazing experience, no questions. I’ve always dreamed of being part of an intense business accelerator with like-minded people. The company I went there with, InfoActive (We make data beautiful and interactive. Think interactive infographics. Example: Salaries Around the Globe), was born out of a concept from Startup Weekend not two months before we left. It has been a rollercoaster ride the past three months, learning and accelerating the business.

The most important aspect of the experience was the personal education. Going into the program I was new to software startups and assuming nothing, was very helpful. Keeping an open mind when speaking with entrepreneurs, executives, mentors, and investors in addition to listening to the numerous education sessions they had planned, let me absorb everything. We learned about their experiences and how they’ve succeeded and also failed. On average we had about two learning sessions per week with renowned speakers from all over the world and met with mentors daily.

Because FounderFuel was run by a seed stage VC firm (Real Ventures) in Montreal we had the opportunity to work with the partners directly, day in and day out. They see hundreds of companies a year and we had their distilled experience, educating us what works and what doesn’t. They had a tendency to be very ‘real’ with many of the teams.

Honest, brutal, critical feedback is vital for honing any business and FounderFuel gave it. At times I thought teams would break-down, drop-out, or walk-away from the barrage of almost daily input. However, all the teams took the criticism to heart, made changes, and kept moving forward. Everyone came out stronger because of it.

We accelerated. Our three months there was worth twelve going it alone. Every available moment was cannibalized to advance the business. We had an amazing mentor network providing us with connections to early customers, potential employees, other entrepreneurs, conferences, and more. The intense feedback focused us to a single, effective point, allowing us to test and fail quicker. Our peers generated a competitive yet cooperative environment pushing everyone up and forward. Meeting with dozens of investors allowed us to understand their mindsets and start developing relationships. They also had 16 cases of redbull available
every month. It usually lasted six days.

If you want to be a successful entrepreneur, get yourself to a world-class accelerator program. The three months packed with education, hustling, and experiences which will change you in ways you cannot imagine. It will make you a better entrepreneur but you have to be open to the experience. I can’t wait to do it again.