Paul: Welcome to another episode of The App Guy Podcast. I'm your host, it's Paul Kemp. I love this show, we get to speak to the most amazing people in tech from around the world, and I'm going to just jump straight into this, because who better to speak to us about tech than someone who's writing for TechCrunch? His name is Steve O'Hear and he is writing for TechCrunch, editor at TechCrunch, but also he's got a wonderful, long history in technology, in startups, and we may even be able to tease out from him his experience of starting up a company called Beepl. But for the time being, Steve, welcome to The App Guy Podcast.
Steve: Thank you for having me.
Paul: Thank you for coming on. First of all, tell us about writing at TechCrunch. How many years have you been doing it?
Steve: I've been a technology journalist for eight years, but I think I joined TechCrunch in 2009 and stayed for about over two years, and then as you mentioned, I did drive into a startup and then I came back about three years ago.
Paul: Let's just jump straight into that startup, because a lot of people listening to this show are going through the same thing: they're either thinking about starting a startup, or wanting to do their own thing. Now you're had the good fortune of trying a startup and you've also got the good fortune of being in technology for years and being an influential writer and totally tapped into the tech press. So it must have been a big hit for you when you went through your startup; tell us about the story.
Steve: Yes, I've been mainly covering European startups for TechCrunch for almost two years, and you get to talk to tons of entrepreneurs, particularly at the early stage, so before they get big and before they have PR people. My background before journalism was a mixture of teaching web development, so I've always considered myself to be a bit of a product-type person, I don't like the creative process. So you're talking to all these entrepreneurs and you're seeing them raise funding and launch really cool products and you sort of think, at some point I started to think, "Do you know what? I'd love to be on the other side of the table." And then an opportunity came up where a very talented developer, a tech-type person approached me to do some consultation - which I don't really do, but I offered to the kid a product, and he was just going to get some advice. Then he kind of talked me into getting a bit more involved and then it came to a point where he said, "Do you want to be a co-founder?" and that was really tempting. After a lot of persuasions, I quit TechCrunch and co-founded this startup, with someone I'd met online.
Paul: Steve, I'd to pick up on what you've just said there about quitting because a lot of people I know listening to this right now are thinking those same thoughts about quitting, but it is a massive risk in terms of that leap of faith. How did you overcome the feeling of just taking a big risk? Talk us through how you overcame it and actually did it.
Steve: Yes, sure. So publicly, I made it seem like the decision was quite decisive, but it really wasn't. You know, in tech journalism TechCrunch is pretty big, so I felt like I'd reached that sort of Premier League of tech journalism, and I wasn't really sure if that'd be a way back if I quit. So I really, honestly, I spent weeks and weeks deciding on moving in a pitch stage for the startup that we were pitching to investors. I even made it slightly jokingly part my Interim CEO, or iCEO, which I think Steve Jobs used when he came back to Apple. That's how, I suppose, slightly daunted I was about quitting journalism and doing a startup. So I think it is something that you really think through. On the other hand, I saw this as a really unique opportunity to swap sides of the table, and rather than writing about other people's stories, hopefully write a story of our own.
Paul: How did you go about the initial stages of raising money and getting good exposure about the idea? Talk us through the early part of your journey with Beepl.
Steve: We raised at the worst possible time because we literally didn't have any money left. The co-founder - the technical person - had already developed a lot of the technology on his own, and was literally unable to pay rent. So that's when we quite desperately went fundraising. We had a lead with a Prague-based VC called Credo Ventures, so at the point when I quit TechCrunch was the point when we'd already started talking to Credo Ventures. We knew there was a very good chance of crowding a funding round with this particular VC; but again, as a journalist I covered funding rounds time and time again, but I'm going to be honest, I didn't really fully appreciate the fundraising process. Particularly when you get a VC who says yes and maybe you're offered a terms sheet, that's when the negotiations really start. I remember the first long phone call I had with the VC firm when we started to negotiate what was originally not a particularly favourable terms sheet, because we were so desperate. Like I said, we were raising at the entirely wrong time. You should always raise money when you least need it because then you have a stronger negotiating position. I remember after this first phone call... Having seen the first terms sheet, I remember phoning up my dad and saying, "I've just stared capitalism in the eyes, and I think I blinked first."
Paul: I don't think we've had on this show anyone who's talked in such detail about that process. So you eventually went out, I'm guessing that the negotiations went okay and you did actually manage to raise some money?
Steve: Yes, we closed around... I think on paper it was near $400,000. European startups always announce that or try to. If their funding round isn't too high, then obviously in dollars it would look better. But the original terms sheet wasn't brilliant, and I did multiple negotiations, phone calls. It was really serious, like a stalemate at one point. I managed to get a terms sheet knocked into shape a bit more and by the end both we and the VC were sort of happy that we moved the right amount if you know what I mean. Because this is the weirdest thing about fundraising, and I thought about this as a journalist since a lot: it's a complete conflict of interest. Because when you go into a fundraising negotiation, your job is to make the investor think you're a brilliant proposition; in a way, you're tempted to tell them what they want to hear. But the minute you sign the terms sheet and then you do the shareholder agreement and the money lands in your bank, then you're there in effect, you're a partner. So you're no longer wooing them, you're on a level playing field again, and you have to make sure you level with them. The startup we did wasn't really successful, to say the least. So you're in a partnership where you did everything to make yourself look as attractive as possible, and then in effect you get married and they see the [unintelligible 00:09:03].
Paul: That's a beautiful way of putting it. So what happened then? Because you ultimately learned a lot of lessons and the risk of you never going back into tech was completely a fallacy, because you did. What did you learn from the whole experience that you could help teach us?
Steve: Several things. The biggest surprise was the startup failed ultimately. It was a consumer-facing product, an app where anybody could ask a question and anybody could answer the question, so in some ways it was a little bit like Quora, but with a difference because we had some smart tech that looked at the questions that you had already answered, looked at your LinkedIn, your Twitter, your Facebook and essentially redirected the questions that people asked on the site to those that our technology decided who was best to answer. It tried to match questions in a smart way to those who could answer them. So it had some cool tech and it got really positive reviews. Obviously with a journalism background, I worked very hard and managed to get us covered in every single tech publication more or less, and even place like CNN; so it launched very publicly, but ultimately it obviously didn't solve a problem that resonated with enough users and we ran out of money, so it failed in that respect. So I guess what I learned in a really harsh way was that no matter how much publicity you get, how much hype you build, how strong your relationships are in the industry, if a product doesn't resonate with enough people, if the problem you're solving isn't one that enough people have, then you're probably not going to succeed. And also I've been told many times, it's probably harder to launch a consumer-facing startup maybe in Europe than it is in the Valley, because in the Valley there are more early adopters that will help to make your thing get a certain amount of pickup, and spread a bit more virally, I guess. But that said, this was a few years ago and the AppStore platform helped your product move quicker; everything was getting quicker and quicker. So that was one thing I learned, that PR is not a magic bullet by any means.
Paul: Can I just pick you up on that? It's just genius what you've just said. Seriously, because everyone listening to my show over a length of time knows that I repeat this time and time again: it's about solving a real world problem, and that's the thing I've learned from 378 of this show. You've just confirmed that it doesn't matter because often people think it's publicity, but it is about building something awesome that is actually solving a problem, and I love that you've picked up on that huge theme that runs throughout my show.
Steve: And the problem has to be big enough, at least from a commercial point of view. You may solve a problem for a thousand people. Maybe that problem is a massive problem for those thousand people, but that isn't probably going to be a business.
Paul: Good. Okay, so you just added to it: solve a problem but solve a problem that's going to affect enough people to create a business from.
Steve: Definitely. So that was one lesson, and the other thing I learned was I honestly thought that when I quit journalism that my contact book - which wasn't bad back then, it's a lot better now; but it was pretty good - would probably become useless overnight. Because when you're a journalist you are pitched stories, everybody wants your help, you can do a lot for other people, so they're very nice to you. And when I did the startup, I mainly started cynically because honestly, people want your attention so much when you're a journalist. I thought, now I've quit, right? Most of my Twitter followers, people I've established a relation with, I'm no longer useful to them. And what I've found was the opposite. Actually in this industry people are very willing to help and even though we failed, we got tons of help. There were technical problems we couldn't solve, and I literally e-mailed a contact saying, "Hey, I know you did a startup a few years ago that solved a similar problem." It was really heart-warming, the amount of help I got on that journey.
Paul: Yes, and I almost want to echo that in the app world, as well among app entrepreneurs it is the same. If anyone listening who is deciding whether to get into this game, you've heard from Steve there that it is truly a remarkable thing that's almost very collaborative, even though many of the ideas are crossing over in this potential competition. We're going to have to switch to journalism now - tech journalism - because you are at TechCrunch and no doubt I have been in touch with many of the listeners who have come out with some specific questions. Do you mind if we go through a few of these?
Steve: No, go over it.
Paul: Cool. One of the listeners was wondering, with sites like TechCrunch how do you manage the relationships, as a journalist, with large companies? With really big VC's or the large companies that have fully staffed PR agencies, and how does that compare with smaller, indie app developers or the smaller startups?
Steve: The huge companies - the Facebooks, the Twitters - they have internal PR people and sometimes even a PR agency on top of that. So you tend to get to know who the PRs are, and at TechCrunch if I don't have a contact, hopefully somebody else does. So reaching out to those big companies is pretty standard. How does it compare? So with the smaller indie companies or the startups, they often don't have a PR agency, or they think that if they hire one, that's their PR - done. That's a mistake, because if you're the kind of journalist I am when you're covering really early stage stuff you want a relationship with the founders. They're the best people. They're the people that can almost always tell their story, talk about their product better than anybody else, with more passion and more knowledge. So I guess the difference is big companies are very corporate, they have layers of PR; smaller companies either do it themselves in a very naive way - which I quite like - or they hire an agency. Now when they hire an agency, they're often in the situation whereby if they hire a bad agency, that agency has much bigger clients, so they're not really worth too much to them. Like I said, or like I alluded to, there's the mistake: if you hire an agency as a small company, that's not PR done. It's not like hiring a cloud provider. It's the beginning, it's not the end. And I know, with this sort of avalanche of Kickstarter campaigns - as journalists, we are so tired of products that get announced two years before they're going to hit the market because they're doing a Kickstarter campaign. But I've had startup founders write to me and say, "Nobody's backing our Kickstarter, but we hired an agency that's really expensive and we still don't get any pre-signups."
Paul: That's not their pitch, is it, by any chance?
Steve: Practically it is, yes. Desperation. So yes, I guess that's where the difference really is. Big companies have massive PR machinery, which is layers of PR; this kind of sometimes slows things down. Small companies either do it themselves - which is okay, but obviously some are better than others - or they outsource, and if they outsource wrongly it backfires because they think the job's done, and really it's not.
Paul: Well Steve, that's music to anyone who is listening, music to their ears because we often want to think that there is a level playing field, and as these big tech companies and big sites grow up, the smaller indie entrepreneur, smaller startup founder can sometimes feel like it's a bit against them if they don't have the money, but it's nice to hear that from your perspective you're on top of this, and you want relationships with the founders.
Steve: I can give you an example. It gets back to what we were saying about solving a genuine problem, or creating an awesome product that people like in enough numbers. I know there's an app called Dubsmash which is blowing up over the last year or so. They didn't pitch me, I reached out to them because I was getting told by a sum of people this app is blowing up.
Paul: Oh I see, so you don't want to be left out in a way, you've got to identify the trends early and make sure that you're on top of them.
Steve: That's right. As a tech blogger, or as a tech journalist, whatever you want to call it these days, I have several things that I try to do, but one of the things that every tech journalist or influencer does is they're a filter. Their job is to filter out the crap and introduce the readers to the good stuff; I mean, on a very basic level. So every now and again there's a breakout hit like Dubsmash, where even if we weren't the first to cover the app, you can't ignore it, right? You can't ignore an app that's doing that well. So again, it gets back to just building a product that's good, that solves a problem or resonates with enough people and the PR, to a certain extent, will take care of itself.
Paul: That is fantastic tips. How about this one then: As an app entrepreneur I know you get this many times, so answer it how you like: how do people catch your eye? Because you talked about wanting to look out for things that are really blowing up and speak to the founders, but how's the best way of making that initial contact with you and catching your eye on something?
Steve: If it's an app that hasn't yet launched, but let's say is going to launch in a couple of weeks' time, then it's literally just e-mail me, tell me what the app does, why it's better or different from what already exists and give me a sense of the timeline of when it's launching. Because if it's too much in advance I'll go, "Okay, whatever. Get back to me a week before you're ready." And if it's today or tomorrow you have a chance of missing out from me personally, because I'm usually pretty booked up with other launches. We have breaking news, we have [00:20:19] that I'm trying to chase where I've been given some insider information, I'm hunting down contacts trying to get a second source for it so we can run it. And then we get stuff that is pretty planned, so a funding announcement that's going to happen in a week's time or an app launch. I always try to [00:20:36]. But basically just tell me what the app does, what the problem is that it solves and why it's different and hopefully better than what already exists. Because to be honest with you most apps don't feel particularly original; and in a sense that's a good thing, because if somebody else is trying to solve the same problem, then it sort of validates that that problem maybe actually does exist for enough people, but I always need to know what the differentiation is. Why is it better? Why is the stuff out there not very good? And you see this time and time again, that many apps just simply take an existing problem that already has some solutions, but we all know that this isn't good and that somebody covers them much better.
Paul: Just moving on now, someone else wants to know what do you feel about the tech press in general? Do you feel like there needs to be a push to promote more diverse role models and more sustainable businesses? Because there obviously is an element, as you said, of hype on the latest thing, but do you feel like there's enough exposure to those sustainable models of tech? Do you have a view on that?
Steve: In terms of revenue models you mean?
Paul: Yes, I think the actual listener is asking about, you know, you read everywhere about the 18-year-old who gets bought up by Yahoo! and all that kind of success stories, but we don't get a good flavour perhaps of all the horror stories as well. For example, you know, how much it was reported about your failure. I feel like this is where the listener is going. Do you feel like we get enough exposure to those things that don't work, as well? Or is there a complete focus on the things that are blowing up and are successful already?
Steve: Yes, we don't. There isn't enough written about failure or enough about horror stories or enough of the bad news. I wouldn't blame tech journalists, we work really hard to get out stories, to get our insight and to get to our information, but at the end of the day everybody says they want the industry to be more open. But those who are really in the know are the least likely to spill the beans. What happens is when an app or a startup fails, you don't get an e-mail a hundred times a day by an app entrepreneur saying, "Yes, we might have launched but you know what? We got a hundred downloads so we ran out of money. We're going back to our day jobs." That doesn't happen. But if that really is what the reader is getting to, I'd actually like writing about failure or near-failure. I wrote a story about a startup that is doing really well now - I forget the name - but they took out a payday loan for the business.
Paul: Wow, that was brave.
Steve: Yes, and I don't know how many days they had left, about 30 days. And now they're fully VC-backed. I think the company is Marvel, which makes a prototype app.
Paul: I've been using Marvel, I think I was told about it over a year ago, maybe two years ago. That's amazing, I didn't realize... Well, I'll tell you what, we'll take a link from you and we'll just confirm that that is it, and we'll put it on the website. So it's TheAppGuy.co for anyone who want to go and check that out; TheAppGuy.co, just search for the episode with Steve O'Hear. Steve, are you okay to do one or two more of these?
Steve: Yes, sure.
Paul: A lot of people, obviously they don't get this time and I want to make sure that we cover a lot of these things that are asked. So here we go: what trends are you seeing amongst your readers? Anything interesting that you feel is kind of a good insight in terms of products, services or apps that are coming out? What interesting trends are you seeing from your readers and what they're reading?
Steve: That's a hard one. I get to see trends because I get pitched so many ideas every day. There's a lot of emphasis at the moment on the so-called "on-demand" apps that allow you to get something really quickly; which is interesting, because it means that the length to purchasing a service and getting it is shortening. So that's like in cleaning... Everybody calls himself the Uber or apps... So anyway, that's one trend; the short time between thinking you want something and it arriving somehow; it's interesting. And the other thing I still am astounded by is I get pitched a lot of startups that are essentially taking a legacy industry and still moving it online. There are still industries where people do things primarily with phone calls, fax machines, Excel spreadsheets, and a lot of startups I'm seeing are taking in a sense a business process and making it digital. Whether that be finding a room to rent, or farm-tech, agriculture-track, tracking farming processes that again were done with spreadsheets or pen and paper, freight... I've covered recently a couple of startups that are moving the freight industry away from the fax machines to online. And that sort of astounds me, because you think that job surely would have been done like five years ago.
Paul: Yes, that seems like a no-brainer. Wow.
Steve: I think that's where you cannot underestimate specific industry knowledge, right? Because I could probably get a developer and build a better way of tracking farming stuff, fields and weather and all that sort of stuff in terms of crop planning, but I don't know anything about farming. So I couldn't do that. I could do the tech side and I could help design the product, but I don't have that industry knowledge. And that's what I still find interesting: there are still a ton of industries that haven't been digitized yet, and that surprises me.
Paul: Yes, you kind of reminded me of the example of Halo as well, where the three tech guys go and meet the three most seasoned taxi drivers and had a really good insight, wanted to do something like Uber but in London and obviously that was successful, but you think that the bigger advantage they had was insiders who knew the industry back to front.
Steve: Yes, it has to be. As a tech journalist, especially at TechCrunch, I'm so focused personally on European startups. Sometimes it's not tech journalism, it's business journalism and my biggest learning curve often on some days is literally getting my head around a whole industry that has nothing to do with tech. It's just that tech is coming along and is disrupting the existing way of doing things, which is really a completely way of looking at it. So it's not the tech I have to understand, it's a whole industry and why a particular [unintelligible 00:30:37] is going to change that industry, hopefully for the better, although not always.
Paul: Steve, what is nice is that normally I have a section where we try to flesh out an idea for an app, but I think you have just given a lot of people listening to this a great idea, which is to look around for industries that are in the stone age, in a way, and just try and bring them into the digital age. It just seems like an obvious possible winning solution for potential problem-solving.
Steve: Definitely [unintelligible 00:31:13] startups suffer a disservice have an inbuilt business model, which is people pay, right? They pay every month to use that software because it makes that business process orders of magnitude more efficient.
Paul: Wonderful. There is only one more thing we need to do before we say goodbye, Steve. This is a show about apps; you obviously are inundated, your inbox overflowing with apps coming to the market, how on earth can we get you to pick one or two...? But would you be able to give us one or two app recommendations of apps you feel like we may not have come across before?
Steve: That's really tough, I feel on the spot now.
Paul: Okay, what's on your home screen, how about that?
Steve: I'm really traditional. Seriously, because I have to get stuff done. My home screen is a ton of messaging apps, WhatsApp, and all of them virtually. I rely on Skype every single day, and I still do tons and tons of e-mail. So I'm kind of flat boring when it comes to apps. I still am a big fan of Foursquare or Swarm. I think a lot of tech journalists are like probably the only people that use Swarm because they like to check in and see where they've been, and that's kind of funny. But no, I tend to try a lot of apps for a very short amount of time which is really, in a sense, terrible. It's a demonstration of why the app market is so hard to break through because there are so many new apps and often of a very high standard. Over the last few years, I've seen the standard of app design improve remarkably.
Paul: Definitely. Steve, what a wonderful chat with you, I've really enjoyed it. For anyone who want to get links, just go to Episode 378 with Steve O'Hear and you'll see links to Swarm and to other things that we've talked about; I'll make sure we put those in there. Steve, in the meantime, how best can people reach out to you? What's the best way of getting in touch?
Steve: To be honest, e-mail. I'm very responsive on e-mail. My e-mail is pretty public, you can put a link to it in the show notes; and Twitter, I'm also really responsive on Twitter. I like how with Twitter it's quite a good way of having a bit of banter, having a bit more of a human relationship with readers and people who want to pitch me. That said, don't ever pitch me on Twitter. That is kind of annoying because I manage everything in my inbox. So by all means, exchange banter and good conversation and send me links to other stuff that isn't yours on Twitter, but if you want to do a serious pitch, e-mail. Keep it short, keep it sweet, tell me why the product solves the problem, who it solves the problem for, and maybe why it's better or different from what else is out there. Simple. I do tend to reply to every e-e-mail, and if I don't then trace me up a couple of days later and then I definitely do.
Paul: Wonderful. Steve, it's so wonderful to hear that because I've spoken to a lot of entrepreneurs who just get disenchanted with the reaching out and never getting any response, and to hear you say that is wonderful, so thanks so much...
Steve: The only other thing I'll say is you're going to get a lot of no's, right? So take it on your chin if you get a no. It sounds horrible, but don't always expect feedback. I get a lot of people lately when I say no they want to know why. If I did that I wouldn't get any writing done whatsoever.
Paul: Yes, they kind of forget you've got a day job as well.
Steve: Yes, exactly.
Paul: Wonderful. Well, Steve, thank you so much for joining us on The App Guy, what a wonderful journey, and all the best with your next 10-20 years. And hey, don't get too tempted for the next startup but you never know... We'll have to keep a watch, watch the space, right?
Steve: Yes, totally. I'm pretty sure it will happen again, but not for a while. Right now I'm loving being back in journalism, so yes, thanks.