Founding a company is a leap of faith that most find difficult to take, which is why we are Introducing our monthly series called “Founderly Advice!” Each month, we will handpick a founder and ask a series of questions to understand the grit and fortitude it takes to launch a startup.
Our debut Founderly Advice interview features GiveForward Co-Founder and current Techstars Managing Director, Ethan Austin. Join us as Ethan discusses his experience with starting a business, what you should look for in an accelerator and his insights into what accelerators look for in startups.
TechDay: I kind of want to go back to the first company that you founded, which was GiveForward. Can you tell us how you came up with this idea for crowdfunding for medical needs?
Ethan Austin: Yeah, I'll start by saying that I was in Law school and my friend convinced me to run a marathon and I wanted to run for a good cause because I'm never going to ever run a marathon again, so I decided to run for children's cancer. My dad passed away from cancer when I was a kid, and I wanted to do something to honor him. This was before Facebook, so it was really about just spreading the word through email. I couldn't believe how many people were donating! At some point, I decided to start wearing a banana costume in order to get people to donate more. It was this really incredible thing and a really powerful tool. My dad died of colon cancer, so I wish I could have raised money for colon cancer, but for the marathon, you can only choose between 20 official charities. I thought it'd be great if there was a platform like this to raise money for anything nonprofit or about any cause that you care about. I had this idea and I told a bunch of friends and everyone would just kind of give me a blank stare because crowdfunding wasn't a thing from 2000 to 2007. I couldn't convince anyone to do it. Then one of the people I told called me up one day and said that she met this person at a Super Bowl party in Chicago who is starting something that was really similar to my idea. We connected on the phone and just instantly clicked. She'd had more guts than I did to actually start it. That inspired me to make that leap. She said, "I'm doing this, with you or without you. If you want to come along, you can join me in Chicago." So, I packed a bag and three months later, I was moving to Chicago and stayed there for the next eight years.
TechDay: You guys were pretty much the pioneers of medical crowdfunding, because now there are all these companies out there like you said, GoFundMe and Indiegogo. What differentiates GiveForward from all the rest out there?
Ethan Austin: Well, GiveForward is now part of GoFundMe, so it's no longer in existence, but what differentiated them...we launched the same year as Indiegogo and there were two or three other companies that quickly died off that launched that same year in 2008. The following year, Kickstarter launched and the year after that, GoFundMe launched. Probably by 2012 or 2013, there are about a thousand crowdfunding platforms, and truthfully, between all of them, they all offered the same relatively same function from a technology standpoint. All the crowdfunding platforms ten years later in 2018 were largely the same as they were in 2008. It was a largely undifferentiated field, and they all offered the same picture, video, send to friends, clubs, money disbursed money, that was the basic premise. What I think differentiated us were our values, and that's why people would consistently say that they chose us because we were focused around medical. We were focused on helping people during difficult times and difficult moments in their lives. Our mantra was to "create unexpected joy." People sometimes felt like charity cases if you started a page for them. It wasn't something that was the norm back then and they didn't really want them. What ended up happening was this magical thing, where people were in the deepest, darkest times of their lives, they have cancer, they're scared, they feel alone, and all of a sudden, there's this outpouring of love. All these people across the United States, across the globe, people they haven't talked to in years who probably wouldn't have said anything otherwise or wouldn't have contributed. And that was our mantra, "create unexpected joy," and we took that mantra and made it the heart and core of our culture. Our number one value is to cultivate true compassion and just be kind to people, be unnecessarily kind to people and let them spread the word about GiveForward. I think what separated us, from a culture and values standpoint, is that we put humans first and we cared. We did a big partnership and Nationwide invested in that. What they saw in us and what they wanted was the values and the feelgood aspect of GiveForward. We had a net promoter score of over 80 and that people really loved, not the product, but the service. Half of our team was what we called Fundraising Coaches or Customer Support, but it was well beyond. It was really going into the needs and wants of our customers. Anyone that's doing this is going to have this feeling of being alone and scared and we focus on really being there for people. I always think of us as a customer service company that happened to use technology.
TechDay: Co-founding a company is not easy. So, what were some of the biggest challenges that you faced when trying to launch GiveForward?
Ethan Austin: I mean we were laughed out of every single room for the first few years. No one had heard of crowdfunding, we were calling it peer-to-peer fundraising at the time. Nobody would invest in us for the first two years, so we bootstrapped and we had to be scrappy. I think the biggest thing was having to survive those two years and the startup world is all about luck and timing. Everyone is smart and everyone works really hard, but you have to be in the right place at the right time. The year after we launched, Kickstarter launched and that helped everything, of course. They created awareness in the space, and so by 2010, 2011 and 2012, we went out to fundraise again. There was some education in the space around crowdfunding, and basically, we were scrappy enough for two years to bootstrap. We had a bunch of interns, we made our own business cards, we were just really cheap and scrappy, and that allowed us to be in the right place at the right time when crowdfunding was still in its infancy.
I work at Techstars now. The reason I work at Techstars now is that Techstars was our first investor, the first institutional investor to believe in this idea, this idea of crowdfunding before it was a thing when no one else would believe in it. They said there's something here and took a chance on two people who really had no business in business. My co-founder, she came to non-profits and I was a lawyer, we never had a job and we had no business doing it. I've always been so grateful for that. That really helped save thousands of lives for people and changed hundreds of thousands of lives. Obviously, other people were coming up with this idea around the same time. Crowdfunding would have existed without us, but I think in the medical crowdfunding space, which became such a huge base, over half of the funding is revenue that came from medical crowdfunding. Facebook ended up building the same platform. That may or may not have happened without us. It probably would have. But, you know, it happens with us, and I really thank Techstars for making that happen.
TechDay: You have gone through the Techstars accelerator program. What advice would you give to other founders as they are going through the accelerator process? What should they look for in an accelerator and what should they avoid?
Ethan Austin: Yeah. So, I think we can talk about it on a couple of different levels. One is what feeling do you want in an accelerator? An accelerator is a loosely used term that can mean all sorts of different things, so if you do a Y Combinator, they are much bigger classes and so it's a much bigger feeling. You're in a group of a lot of people plus one to one interaction. TechStars is like a 10-person class, It's more intimate. I would joke that it's a mix between DC and summer camp. And then it depends on what you want there. Do you want a smaller or bigger field? Neither of them is better, they're just different. And the other thing to look for, as you look through accelerators, is in the quality of the mentors and how much you're going to be interacting with the managers. I'd say you obviously are going to look at the results of the accelerator. You're going through this for a reason, and you want to make sure the accelerator has had good results in either accident or markups on the fund, on the portfolio companies, have the companies succeeded coming out of this accelerator? If you're asking for tips on what to do, once you get into an accelerator, I think the biggest thing you can do is just lean in. You get out of it what you put into it. The relationships you make here will last a lifetime. I just had lunch yesterday with David Cohen, the CEO of TechStars, who ended up being an angel investor, that's a ten-year-old relationship. I've gone to Africa with my classmates, I've hired one of my classmates, a lot of my classmates now are mentors in the program I run. A lot of people sometimes focus too much on the near term and just try to be transactional, and really, it's about the long-term relationships in the network that you're going to create and that last forever.
TechDay: What characteristics would you look for being part of the TechStars team now in a startup when they are applying to the accelerator program?
Ethan Austin: I put very little emphasis on what the company is actually doing because at the seed and preseed level, they're really betting on people. Every single one of the ideas that came into Techstars last year had some either minor pivot or in some cases a major pivot and has changed into something completely different by the end of the program. So you're not really betting on the idea, you're betting whether these are people exceptional? I ask myself, "would I want to work for this person? Can this person inspire greatness and inspire great people to want to join them?" I think if they can, then they can build a great company. Usually, people are able to iterate into a product-market fit, but that's oftentimes just the first step. The hard part is really scaling the company. Once you have a product that people like or are willing to pay for, scaling to a big company, and all of that really depends on authentic leadership on the CEO and the co-founders building a great culture, and one that attracts great talent and great people around them.
TechDay: For any people that are thinking of starting their own company, what advice would you give them before making that leap?
Ethan Austin: Don't think too much about it. I passed up on another company in college with my friends and went to law school instead. I still regret it! They had a blast and made a bunch of money and just did it. They were running a hospital in Panama and they had a blast, it was a great experience for them. I passed it up and went to law school and I regret it. That helped me decide the second time around to go for it when another opportunity came around. But my co-founder, Desiree, had a magnet on our fridge that just said, "leap and the net will appear," which is something I've always taken to heart, that there's always inertia. When you're not started, it seems impossible to start, but once you get in there, there's a flywheel, you just take that lead, and usually good things can happen. If you never do, nothing's ever going to happen. I think that's honestly the hardest part. Startups are hard. Don't get me wrong, it's going to be a hard slog, but nothing's harder than taking that first leap.
TechDay: We're coming into the new year now. As someone who's super involved in the tech community, what are you most excited about in tech for 2020?
Ethan Austin: That's a good question! We're going to be traveling around the world doing a recruiting tour, so what's exciting for me is...in fintech, there's such a huge opportunity, especially overseas in continents like Africa and Asia, where there's less of an installed base and there's less incumbent infrastructure in the financial sectors. There's so much opportunity for new technology to really leapfrog other technology. The United States, has so much new technology and fintech, is coming from overseas, and with that, my bend is obviously coming from GiveForward and social impact, so I'm really excited about the idea around financial inclusion and bringing people who are underbanked or unbanked into the digital economy. It's really just a huge opportunity for us and within the sector, to lift up people's lives, and that's why I originally got into GiveForward and why I'm so excited about what we're going to do now. In other sectors, you have to stretch a little bit more to find the good, but in fintech, it's inherent in a lot of the products that we're working with. So, it's really fun to be able to do well and do good things.