Talking Shop with Joe Colopy

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Photo courtesy Colopy Ventures

Startups bud from Durham’s fertile soil into a bright, nourishing sunlight that makes full bloom inevitable. That’s how easy it is here to turn the seed of your next big idea into a vibrant blossom.

Right?

We wondered.

What exactly makes a successful startup leader? What are the keys to sustainability? What, specifically, makes these Durham gardens grow?

We took our questions to Joe Colopy, whose green thumb helped grow his email marketing company Bronto from a seedling into a $40 million business, and then into a $200 million sale to NetSuite in 2016. (Later that year, Oracle bought NetSuite.)

He is the now the head of Colopy Ventures, a “seed stage investor who helps teams be lean and mean to create the next great thing.” Last year, the company launched GrepBeat,
a newsletter aggregation and analysis of Durham’s tech news.

Here is an interview with Colopy, condensed and edited for clarity.

Tell me a little about your history. How did you get into the startup world?

I’ve always been interested in startups and software. I was one of those 10-year-old kids who got a computer and was programming and making games and doing whatever. And this was in the early ’80s, so this is before such things were en vogue. I had a modem. In the sixth grade, I ran a bulletin board, which is the predecessor to a website.

Then I went to high school and focused on other things and went to college, where I studied computer science. I had fallen out of it a little bit but I was dreading writing English papers, so in some ways it felt like an easier path, which is insane, because computer science is not easy at any level. But it was my logic as an 18-year-old. It doesn’t make sense, but it made sense to me at the time.

If anyone was aware of what was going on with the Internet, it would have been me. I graduated from Harvard in May 1993, and then I went into the Peace Corps. I went to the Seychelles Islands, and almost immediately the world wide web came out in a real way. So I kind of missed it. The only way I would learn about it was reading Newsweek on the islands.

What did you do on the islands?

I taught computing at a polytechnic school. My kids were 17, which is weird when you’re 22.

Because it was such a small island, it was extremely dependent on the outside world. No electricity, such a small place, you have to walk or take the bus everywhere, one radio station that would only play some of the time, 70,000 people in the country, 500,000 on the island. When people had to be called in for job interviews they would do it on the radio. It would be like, “Jim, you need to come in.” But, it works. It was an interesting experience.

Did you get out of it what you’d hoped? What did you hope to get out of it?

I wanted some adventure and something different. I knew later in life I’d have a mortgage and kids, and that all ended up being true. So I thought, “Here is a situation where I have no obligations, I can defer all my student loans, why not?”

I also found that, since I was assigned to be a teacher and got only one day of teacher training, those two years of teaching people whose native language is not English was amazing training for what I ended up doing later. Working with younger people to develop these kind of projects in the Peace Corps is exactly what I do now.

English was not the students’ native language, which taught me the importance of  communicating ideas clearly. You learn how to be a good teacher and to organize your ideas and present them in a compelling way.

Later I taught middle schoolers at a private school in Ecuador who were kind of unruly. These kids could hold their own with a chatty class anywhere, and that is when you learn how to engage a group who does not care, who does not want to be there. Those things became very valuable when growing Bronto.

You have to tell people a bigger story, you have to get them tied in, you have to get them to understand the importance.

You were at Red Hat in 2001, right before you decided to go out on your own with Bronto. What was the biggest challenge with your first startup?

The most common reason that early stage startups fail is they build something no one wants. It might be nice, it might be pretty, but at the end of the day it’s a “nice to have,” not a “need to have.” It’s about defining what you’re doing, and not trying to be all things to all people. I think the truth is, with startups, people get into it thinking that if they do more, it means more. And the reality is, it’s better to do fewer things and to be focused for a particular audience.

It’s called product market fit. What do people really want?

After leaving Red Hat, I came up with an online database app. I really used it as a vehicle to learn how to become a software developer. I basically developed a product that no one wanted. It was too vague, and I needed something more tactile. I reframed it as an email newsletter service, which is more tangible, made it about the customer first and rebranded it as Bronto mail. That was in January 2002. Right off the bat, someone was interested in using it.

So you have to ask what a customer wants from your product?

Absolutely. Figure out what people really need, articulate it, and then deliver it to them. That’s the key. And as obvious as that sounds, it’s the hardest thing.

Because sometimes when you deliver it, it’s not exactly what the people are saying. You have to listen to them and decide what they need, or you have to read the market and cobble together something that may be obvious, but the way to get there is elusive.

Take Alexa. I have a million of these Alexas. I had a Bluetooth speaker before, I had Siri, but you put them together and you do a good job, and that’s product market fit. And if you do that well, you really have something. So as an investor and a builder of startups, I’m always pushing product market fit and asking, “How do we get there?”

How does a startup get there?

In the early stages it’s almost entirely about the individual. Because the markets change, products change, their understanding of the product will change. So, does this person have the drive to just make things happen? It is insanely difficult to take a startup from 0 to 1. To give it any momentum, it’s like moving an immovable object. To do that, the folks have to be persistent, they have to be able to go through long periods of being demoralized. And they have to be very handy. They have to be able to do lots of different things.

The right person and time, will find the right market. Everyone starts out with the wrong market. And it’s not because they’re stupid, it’s because it’s almost like they’re at the beginning of a hike. They know [where] they want to go, and you just don’t see things until you get more into it, and as you get into it, the trail is going to twist and turn and you’ll get a better view of the terrain. So they have to have the right stuff to make the journey, but they have to be looking up and making the right calls along the way. If they’re wired the right way, then they can be very successful.

What do you look for when building a team?

It’s helpful to partner with an individual who has been in a startup or started something before, especially if it hasn’t worked. There is a lot of fanciful thinking about startups, because of TV and movies – “I’m going to go build the next Facebook.” But it is extremely difficult, with a high level of failure. What helps you be successful is being brutally honest about what’s going on.

And if someone hasn’t experienced early stage startup, or done it, despite what they say, they tend to live in la-la land. It’s helpful for someone to have a real, firsthand experience of those challenges. I want that pixie dust of, “I’m cool, I’m doing a startup, I’m gonna go to a coffee shop and take my laptop,” I want that to be gone. That mindset is a very quick way to waste money.

So that pixie dust has to be burned off in a very real way. Because it’s not easy. When you’ve been struggling out there for a year or two, maybe you’ve done something else that really failed. And in the vast majority of cases, it’s not lucrative either. But the people who survive are wired that way. It’s the only way they can do it.

How important is the idea itself in the inception stage?

The specific idea is just a starting point.

There are two perspectives. Academically, you have an idea before you do anything. You have customer calls, and you validate it, and you figure it out on paper and have lots of interviews and questions with people. That is probably the better and most efficient way to do it.

Unfortunately, I’m just like, “Let’s just make something and see what happens. Let’s just make and iterate,” because I like making and hanging out with people who make. And so let’s just get started. We’re not really going to take this seriously until we start making stuff, so let’s just go ahead and do that.

I don’t know if it’s the best way to do it. But the risk with the academic approach is that it stays theoretical. One of the things that makes a strong entrepreneur is a propensity for action. Maybe it’s not always in their best interest, but it’s a sign. I would rather have someone with a propensity for action. This isn’t an academic, theoretical thing. There is value in the world for that kind of thinking, but entrepreneurism is not that.

Your way seems to have worked.

Well, the verdict is still out. I’m enjoying what I’m doing. I have the luxury to be able to do that. Great things take a long time.

What are some other common mistakes you see in startups?

You have to be financially set up for it. It doesn’t mean you have to be rich, but when I was in business school, a lot of people would take their big fat checks and buy houses or cars. My wife and I very consciously set up a lifestyle that we could live on one salary, hers, even though I was working.

It’s critical that you are financially set up in a way that is viable through those one or two lean years that are gonna happen no matter how smart you are. It takes some of the pressure off, because it is very difficult to come up with and develop an idea while you have a lot of financial pressure in the short term.

From the time I left Red Hat, I didn’t make a paycheck for three years, and I raised no money. We lived very lean. As people get older and have children, it’s difficult to scale back a lifestyle. It’s better to never have had it.

Is Durham as favorable a place for tech startups as it seems?

I’m very biased. In the Triangle, Durham is the best place to do a startup because you have a density of like-minded people, a mix of investors and engineers, and a creative environment. The attributes that one needs to grow startups are here. It’s the right environment, but you have to go get it.

Little connections that seem trivial at the time can be the spark that leads to something else. Much of my management team who took Bronto from $1 million in revenue to $4 million were people I knew from Red Hat. Those little connections that aren’t obvious at the time pay dividends. They help build the next thing.

Are you still learning?

I always thought that I would be able to accelerate things and figure out how to do them differently. But, I find I’m doing exactly the same things as when I left Red Hat.

We started Grepbeat as a product within Colopy Ventures. That means it was something we wanted to do, so let’s do it. It wasn’t brought to me to have to assess the business.

The con with any entity like that, to get anything off the ground you need a tremendous about of personal fire and insistence. The level that people work at a job, even a job they’re very committed to, is not always the same as what they do when it is their survival.

What you would do to go get lunch today as a paid employee, as someone who ate breakfast and ate dinner the night before, is different than if you had been out in the wilderness and had no choice. That is what you need, hunger. Hunger drives innovation.

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Michael McElroy

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