Here we go, here’s our interview with Smallknot cofounder Jay Lee (watch him in the above video killing it). Smallknot is a Techstars company based out of NYC. Jay is a former “big bank” (his words, not mine) lawyer for Lehman, and will introduce us to Smallknot, as well as provide some sound advice on the startup process and his experience in an accelerator. Smallknot makes investing in your neighborhood’s small businesses easy. This summer, Smallknot was featured on CNN and Entrepreneur.
Tell us what your company is all about.
“If you want the quick and dirty unofficial version, we are what happens when you take Kickstarter, map it onto your neighborhood and tweak it for small businesses.”
Smallknot is a community crowdfunding platform for small businesses. We help small businesses raise funds to start, expand and grow by harnessing their communities. We do this by mixing finance with barter — communities and neighborhoods rally around local businesses and provide funds in return for premium products and experiences. Or, if you want the quick and dirty unofficial version, we are what happens when you take Kickstarter, map it onto your neighborhood and tweak it for small businesses. We’re also starting to combine crowdfunding with traditional loans, which is really exciting.
How did you come up with the idea for your company?
The short version is that a couple of us were locked in high-rise office towers doing work for the big banks as lawyers right after the collapse of Lehman. We’d see billion dollar transactions flying across the globe at work, while watching small businesses around our neighborhoods get the buzzsaw from the credit crunch. It was utterly bizarre how easy it was to move huge sums of money around the world to finance distant companies that might open a new chain on your block, but nearly impossible to finance the coffee shop 50 yards down the block that you went to every day. So we set out to do that — create a way to put money to work to build the neighborhoods we want.
Can you tell us if / how you gained consumer insight before launching?
“….not the savviest approach, but it got us what we needed to get started.”
Yeah, but it was pretty informal. We did user surveys of all of our friends, walked door to door hassling store owners, cold emailed dozens of businesses and sat down for long, involved drinks and dinners with business owners. Not the savviest approach, but it got us what we needed to get started.
What were some of the challenges that you faced starting a company?
We didn’t know what we didn’t know. The technology space is noisy and it’s hard to make sense of it all. You can spend weeks and months digging yourself into a rabbithole on any of a hundred topics — all of which some thought leader will declare is absolutely vital. Playing the investor game, building an MVP, learning to code, the Lean Startup movement, the Lean Startup is Bullshit movement…it took us time to process and figure out our priorities. There was actually a long period where I vehemently denied that we were a “tech startup” — we were just building a business with the plumbing handled by a website. Part of me actually still feels that way — so count me as naive or enlightened.
You’re part of the TechStars accelerator program, what difference do you feel being part of an accelerator makes to your company?
For TechStars, the value is all about people — top to bottom. First, it is a warm introduction to an astoundingly deep and rich network of people. You could spend an entire year trying to meet all of the folks we met within 5 weeks. The quality and pace of the feedback was overwhelming. On top of that, we were placed into a pressure cooker with over a dozen companies stuffed full with some of the most talented and brilliant entrepreneurs I’ve ever met. You share your six pack during 1 am sessions. You freak out together in conference rooms. You throw ping pong balls at each other during pitch practice. A lot of those folks are going to be friends for life.
What advice would you give to an entrepreneur looking to get their company into an accelerator program?
You just have to be yourself. Or at least figure out how to express whatever part of yourself is your strength. Maybe you are annoyingly and relentlessly competitive, or supremely dorky and obsessed about an idea that you can’t let go or you’re still on a decades long revenge-kick against the middle school girlfriend who dumped you. If something in you burns, let it be known — you can’t hide that stuff and it is as likely to inspire someone as it is to make you look stupid.
How much traction did you have before joining the accelerator program?
Not much, actually. We launched two weeks after we got into the program and just 6 days before the program started.
What advice would you like to give to an entrepreneur thinking about writing their first business plan?
Ha, don’t do it? Well, I take it back. Early on, it’s worth planning 1 or 2 intense thinking days where you can sit down and write out every single piece of your business model, strategy and plan for execution in a huge sprawling document. Articulate all of the brilliant insights, giant gaping holes you can’t answer, all of the assumptions you’re setting out to prove and then…put it in a drawer. No one wants to read that.
After all that, find a way to shrink it all down to a simple product, a ten second explanation and then go get absolutely buried in feedback.
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