Summer Entrepreneurial Experiences

Week 7: Reflection, back-up plans

Monday, July 9, 2012 8:51 pm

After the harsh news we received from CIT last week, this week was really dedicated to getting everything and everybody back on track. We all took the Fourth of July off, and Nik spent some of the week with his family at the beach. An event like getting turned down by investors really forces you to take a step back from day to day life of the startup and observe the situation from a more objective point of view.

The City Swig does not have the comfort of being a bootstrapped startup. To be clear, the term “bootstrapped” means to sustain the operations of a business through internal means, whether it’s revenue, resources, or individual savings; the point is that it’s all internally generated. Now, that’s not to say that it won’t eventually be able to generate enough cash flow to reinvest in itself and its employees, but TCS has yet to reach that point. At this point in time, The City Swig does not create any revenue, and that is why we’ve had to put so much effort into relying on investors. Obviously, the goal is to make it so TCS can operate on its own cash flow. There are however a certain number of unique truths that The City Swig must address if it wants to be successful.

It helps me to think about the situation as one big analogy that identifies Tommy, Matt, and Nik as the “parents” and The City Swig itself as the “baby.” What do all good parents want for their children, and what do children need in order reach their potential? The answer is as many opportunities for success as possible. What Tommy, Matt, and Nik will have to do is take their deep understanding of the business (they are after all the most knowledgeable- they’re the ones who created it) and use that information to identify the best opportunities to scale their product. That means a number of things, like knowing what aspects of the product work well and why (more of a tech-based approach). On the flip side of that, it also means constantly searching for new ways to market the product, understanding where to go to ask for investment, and thinking of new and innovative ways to analyze the business.

A common way this dynamic is broken down in tech startups is dividing up responsibilities into the categories of “tech” and “business.” The tech side is responsible for constant coding. New versions of the product are released as soon and as many times as possible, and every interaction a user has with the product is measured, analyzed, and understood. The business side is responsible for “selling the product.” That includes selling the idea, team, or business plan to investors, selling the product to the users, or selling the value of the product to external sources of revenue (this is specifically applicable to The City Swig, since it’s a third party service).

Now, back to the truths of The City Swig, or as I like to call it to avoid becoming too abstract, its “reality.” Like I mentioned before, it does not have the luxury of being entirely bootstrapped. It’s not the sort of product, like an iPod, where you make it for x amount and sell it for 10x amount. It will have to rely on things like branding (where companies like Budweiser or Red Bull would pay to have their brand names replace brand neutral words like “domestic beer” or “energy drink”), advertising, and in markets outside of Virginia (due to the legal situation), receiving payment from alcohol licensees and retailers.

All of these ideas about generating revenue are helpful to think about, but the downside for TCS is that it’s difficult (well, impossible) for a tech business to expand and grow without paying, and therefore having, its programmers. And when you aren’t bootstrapped, it sort of becomes a catch 22 that goes like this: you need programmers to develop the product, you need money to pay your programmers, you aren’t bootstrapped so you need investment, you need a developed product to pitch to investors or else they won’t invest, you need programmers to develop the product, and repeat.

It’s a sticky situation, but The City Swig’s “reality” does not end there. Everything I just explained deals with internal realities of the business. However, it’s important to realize that TCS does not exist in a vacuum by itself. There are external factors, and some of them we can’t avoid. Not every investor is going to like The City Swig. Not every market is going to react to the product the same way. The house in which Tommy and Matt live and also run the business costs money, and that’s money they don’t have at this point. Raising money from investors in the summer is a notoriously difficult endeavor, especially for early stage startups. Richmond, Virginia is not Silicon Valley, California. All of these things are true, and whether you call them obstacles, difficulties, reasons to quit, or opportunities is up to you.

I didn’t realize how much of running a startup relies on much more than just how well you can write code, how well you can explain an idea, how well you can sell your product, or how well you did in your business classes in school. It requires a huge deal of creativity. And not just normal creativity, either. It’s creativity that demands focus, and the reverse of that is true as well. In my eyes, I see it as creative focus, but you can call it however you see it. No matter what though, there is always one goal in mind: to keep the company alive.

Tommy and Matt have entered into a situation where the immediate problems of money are starting to control how they allocate their time. In other words, they’re approaching a moment in which they may forced to pick up side jobs, and in turn sacrifice time that could be spent working on The City Swig. Like I mentioned before, The City Swig does not exist in a vacuum. One of the most important lessons I’ve learned so far working with Tommy and Matt is that sometimes things just happen- call it “life.” Right now for Tommy and Matt, that means having some sort of back-up plan. Tommy has been in contact with UVA about a fundraising position that would allow him to hopefully stay in Richmond. Matt has been contacting restaurants and bars in Richmond, trying to see what work there is available (before working with Tommy at TCS, he spent a lot of time in the restaurant business).

The City Swig is by no means anywhere close to dying. Everyone involved has put in too much work and invested too much of themselves to give up. Maybe the process will have some slow patches, and there will definitely be speed bumps along the way. It’s an easy thing to forget, but something that’s necessary to remember: running a startup is a journey, and a journey that takes place in multiple lives, no less. And just like life, the startup will never go according to plan. There will be amazing highs and discouraging lows, and there will be moments when there isn’t enough time in the world and when time seems to move slower than it ever has before.

Life isn’t always fair, and it’s never predictable. That doesn’t mean it can’t be fun, though. Sometimes a little blind optimism is all you need. Oh, and I should probably include words like “dedication” and “hard work,” just so I don’t forget. Sounds simple enough, right?

 

 

 

-T

Week 6: Lacking investment, Swigify, lunch with Mr. P

Thursday, July 5, 2012 8:16 pm

Last Monday, the 25th, Tommy received a phone call from a woman on the board of CIT (Virginia’s Center for Innovative Technology), and unfortunately heard only bad news. A couple weeks back, Tommy and Nik had gone up to Northern Virginia to pitch The City Swig to CIT to receive some much needed funding. After two weeks of hearing nothing in return, CIT finally told us they decided to pass on investment. To use Tommy’s words to describe the situation, “It’s a tough one to swallow.”

It turns out that there wasn’t enough support among members of the board to receive the required unanimous vote. Like most things in life, this news comes as a coin with two sides. On one side, there are the obviously negative results of not receiving funding. No funding means no money, and that’s no money for rent, food, or things like dog food for Tommy’s rescued side kick called Tater. Most importantly, however, it means there isn’t any money to pay our programmers that have been relentlessly working on developing the mobile app for The City Swig.

The money situation has been only growing tighter and more stressful as the weeks have gone by. Nik, Ben, and Kevin (the three programmers who have been doing the most work this summer) have been doing all of their work for TCS free of charge. Luckily, they care enough about the future of the company to willingly put in work, but they each have their own needs as far as money goes. Nik and Ben both go to UVa, and they both need a substantial amount of money so that they can pay their tuition. If TCS were to receive funding, we’d be able to pay them to work solely on the mobile app, but since that isn’t the case, they’ve had to look elsewhere for cash. One of Ben’s old bosses has agreed to pay them the money they need to create and design a set of websites that he needs for his business, so in order to earn the money they seriously need, they’ve been forced to put their work for The City Swig on hold.

This of course is a huge problem for Tommy and Matt. Their programmers aren’t able to work because they have no money, but we’re having problems raising money to pay the programmers without the mobile app that the programmers should/could be working on.

The other side of the coin is this: not receiving funding is brutal, disheartening, and brings a whole new set of problems; however, it is the choice of essentially every startup whether or not they die. We may not be located in Silicon Valley and we may not be raking in investment dollars, but nobody has told us that we can’t keep moving forward. Nobody has ever said that trying to create, grow, and refine a start up was easy, and all of the recent events prove that point for The City Swig. But there is a silver lining to this cloud. Nobody is forcing anybody to quit working, so there is no real reason to give up.

The money situation for TCS has gotten tight for sure. Our latest project might be enough to keep our heads above water until the end of the summer, though.

Last week I talked about a new project we’ve been working on called Swigify. To recap, it’s a service that collects the phone numbers of members of a socially inclined kickball league, and sends those who sign up the best deals at bars in Richmond for that specific night. Last Thursday, we launched the project for the first time. Earlier that week, Tommy had gone around to a number of bars, and he asked them whether or not they could handle 100+ customers on a Thursday night. A bar called Delux said they’d love to have the crowd, and so on Thursday, Tommy and Matt went around to the different kickball games and started to spread the word. The results were huge. A huge number of people showed up to the bar and stayed well into the night.

We’ve showed that our service can work, so now we have two things in mind. First, we need to spread the word even more. That means more flyers, a marketing campaign, and showing up to the kickball games to get people out. Second, we need to secure revenue. That means establishing relationships with bars, and convincing them to pay us to bring our user base to their bar. In other words, we’ve got our work cut out for us.

——

Towards the end of last week, we went out to lunch with the president of a Haley, Buick, and GMC dealership in Richmond, VA. We thought it would be a good idea to use our contact with him to ask questions and bounce ideas off of him because of his reputation as a savvy businessman. We went out to lunch, and pitched the business to him. I watched closely as Mr. P and Tommy would go back and forth with questions and responses to different aspects of the business. Mr. P’s, as an accounting major, prime concern was with how TCS planned on gaining revenue. He was concerned with the fact that bars as a business operate with low margins. In other words, even if TCS had relationships with 15 bars in one city, there wouldn’t be that large of an amount of cash to accrue from the bars, especially if bars were spending anywhere between 5k and 10k dollars. Tommy’s responses were all legitimate and answered the question completely. He cited revenue from branding and advertising, for example.

The thing we learned the most from the conversation was that Mr. P immediately turned down the prospect of investing in TCS because we did not present to him a concrete plan for creating revenue within the business. That was an important lesson that we should keep in mind as we move forward. Tommy and Matt have the idea of the business fleshed out extensively: the design of the product, its intended use, and its plan for growth and innovation. However, the presentation lacked a concrete plan to raise revenue. Mr. P was looking for a thoughtful, weekly outline of what steps we had agreed on to move the business forward. Now, that logical, left-brained approach is in direct opposition to the more play-it-as-it-lies, right-brained approach of Tommy. I’m not entirely sure at this point if one approach is better than the other, but I have learned that training yourself to think about things in as many ways as possible can really help generate new, creative ideas.

I seem to have joined The City Swig team at a very crucial time in their journey as a tech startup. These next few weeks will be extremely telling of the success TCS may or may not enjoy down the line. Right now though, that success will be determined by a number of things, including bootstrapping projects, luck with investors, and the resilience of people like Tommy, Matt, and Nik to not give up. There are dark days ahead, but it’s impossible to know how dark and for how long they’ll last. In a way, it’s best that we don’t know what’s coming. If anything, the most important thing to keep in mind is to enjoy the ride.

 

 

-T

Week 5: Changing directions, preparing a new product

Monday, June 25, 2012 8:07 pm

The first couple of days this week reaffirmed my thoughts I explained in my last post. Selling web design to restaurants is a daunting task. The first half of this week we made more visits, more phone calls, and heard more “no’s.” A little disheartening, but it also came as a feeling of relief. We talked to enough people to make some pretty solid conclusions. Websites are sellable to restaurants in Richmond. A lot of owners and managers think our product is a solid product, and maybe down the line they’d be interested in paying for our services. However, and this is a big however, we decided this week to stop placing such a large amount of effort on selling these websites. We did this for the following reasoning:

Selling these websites takes time, which is something we do not have a lot of these days. Our original intent was to sell a few of these websites, and generate some quick revenue for the company to last us to the end of the summer. The reason we’d like to last until the end of the summer is because that is when the official City Swig app will (hopefully) be released, and we will no longer use the current mobile web app that we use now. In addition to the lack of time, we feel even more pressure to find a more efficient way to raise funds because we have yet to hear back from CIT, the folks who Tommy and Nik pitched the company to last Tuesday. Note to self: never rely on investors, even when you have to rely on investors.

We realized we needed to find another way to raise money. We spent a day or two brainstorming, then one day Tommy and Matt came back from a business lunch with a great idea, and it fits perfectly into the bigger idea of The City Swig.

Every week, over 100 people get together to play kickball in Richmond in a league called River City Sports and Social Club (RCSSC). RCSSC isn’t limited to just kickball, either. It includes wiffleball, football, broomball, dodgeball, and volleyball. Here’s the thing about RCSSC: it’s a social club as much as it is a sports league. They really have a refreshing definition of the word “recreational.” After every day of games, the activities do not even come close to being finished. Almost every single person goes out to bars for happy hour after the games. This is where The City Swig comes in.

As of now, there is one guy in charge of letting everybody involved in the kickball league know about what bar has what special on whatever night the game is on. In other words, the guy has one bar designated for each day of the week, and that’s where everybody goes after the game without fail. This guy gets paid by bars to let people know in the kickball league to come to their bar on a specific night.

Here’s the opportunity for us: as of now, the specials this guy provides end at 9pm. For those of you who have been out to bars to enjoy some drinks, you know that 9pm is pretty early on in your night. That being said, once the bar special ends at 9pm, the crowd scatters to other RVA bars to find other specials that extend into the night. There is general unrest about the bars they go to among the people who play kickball, including Matt and his team; they feel like they don’t have as many options for bars and drink specials as they’d like. If only there were a huge database that listed ALL of the drink specials at the best bars in Richmond… Wait, you mean The City Swig already has this database, and the technology to send that information straight to your phone via flash deals? You can see how we got so excited about this opportunity.

Matt and Tommy were the first to get the ball rolling. They got in touch with the woman who organizes the kickball league, and she immediately jumped on board with the idea. We had to then decide what our plan of action was.

When The City Swig was first getting started, Tommy bought the domain name www.swigify.com, with no immediate knowledge of how they would use it. All of a sudden, he looks like a genius for making the purchase. We suddenly had the product we wanted to use for the situation. Here’s how we envisioned it all happening: kickball members go to www.swigify.com, register their phone number (or e-mail), and every week during their kickball game, we send flash deals of the best bars to go to and why straight to their phone. All of a sudden, everybody in the whole league would know exactly where to go and why they were going- and it all happens without any prior planning, in completely real time.

It’s all about having more options. But how do we get people to sign up? Because Tommy and Matt had gotten in touch with the woman who organizes it all, we have access to all of the teams’ emails, so we decided that would be one way to get people to go to swigify.com. We also decided that we needed to show up to one of the games with a physical product to show people, so Tommy put me in charge of designing promotional business cards that we will pass out at the next kickball game. The card’s info reads like this:

Front: WANT MORE OPTIONS AFTER KICKBALL? www.swigify.com. Back: We think you could use more options after kickball. Give us your phone number or email, and we’ll send the best bar specials in RVA straight to your phone. Sign up at www.swigify.com.

Without a doubt, this is an extremely exciting opportunity. We now have the ability to send 100’s of people every week to a bar of our choice, and will be able to generate the revenue for which we’ve been looking. In addition to helping bootstrap the business, this project directly relates to The City Swig’s most basic function: distributing bar specials and alcohol prices to people through their mobile phone, and helping them structure their night around the information they have at their literal finger tips. Not only will this help us raise money, but it will also be a great way to promote The City Swig to Richmonders who already love the RVA bar scene.

The mood is very excited heading into the weekend. Next week we’ll be pushing forward with this project. I look forward to writing about what happens, as it should be a pretty eventful week.

 

-T

Week 4: Face to face sales, slow movement

Monday, June 25, 2012 6:29 pm

This past week marked my fourth week working at The City Swig, so I’ve begun to pick up a little momentum. I mentioned in my last post that the bootstrapping project we’ve been concentrating on has been to sell websites to restaurants and bars around Richmond. Our product focused on a website that would automatically scale to whatever medium through which the website is accessed: desktop, tablet, or mobile device. We noticed that the combination of restaurants generally having poorly designed websites, the steadily increasing percentage of web browsing done through mobile phones, and the fact that navigating websites on a phone that are not optimized for mobile browsing is a hellish experience. We thought we had a great product- and we probably do- but it turns out that selling a great product isn’t as easy as you’d originally think.

We spent this entire week printing out pitch after pitch for every restaurant and bar in Richmond of which we could think. We would print it out, call the location, and follow up in person. We sent copies of the pitch through email, and brought hard copies with us wherever we went. We used our networks to get in front of as many owners and managers as possible. We followed up with a phone call or sometimes even another visit in person. Before we knew it, we had spent two weeks devoted to this bootstrapping project we thought could bring in the cash flow that we desperately needed, but hadn’t been able to make one sale.

Unfortunately, selling our product was not as easy as we originally had intended. Where ever we turned, we ended up running into a wall of some sort, and it usually fell into one of three categories: we couldn’t get in front of the right people, the people we did get in front of were not interested, or we couldn’t move forward with the sale for a month or more. What we had was a great product, but not a great tactic to get some quick cash flow into the business to get us through the summer.

We’ve stopped trying to increase the number of restaurants that we pitch our product to, and have started to concentrate on the restaurants with which we’ve established a connection. That includes a lot of follow up phone calls, trying to set up a meeting so we can move forward on the sale.

One of the things I’ve learned through this process is that the market in which you decide to enter really affects the process from start to finish. From that, I’ve learned that selling products, especially products like websites, to restaurants is a tall order. Restaurants have an extremely unique flavor to them, no pun intended. They’re a cash business, and profit margins are low, which makes them unlikely to invest money they have into something that might not guarantee immediate growth in sales. In addition to that, a lot of restaurants feel they might not necessarily need a website to bring in customers, mainly because they don’t physically need more customers. A great example of this is a famous Richmond restaurant called The Black Sheep (which for those foodies out there has appeared on Food Network shows like Man vs. Food). The Black Sheep is located in a very low key part of the city, and has an extremely small eating space. It probably fits 30 people when it quite literally is packed. On Thursdays, Fridays, and Saturdays every week, they do not have any problem at all filling up their restaurant from 5:30pm to 9:00pm. However, like most restaurants, they have a hard time bringing people out on Sundays, Mondays, and Tuesdays. Will a website bring people in on their slowest days? Maybe. Unfortunately, that “maybe” hasn’t been enough to convince any restaurant owners that they need a better, more efficient website.

So where do we go from here? We’re going to keep going next week, but Tommy, Matt, Nik, and I have all agreed that we may some point soon need to put this website bootstrapping approach on hold. We’ve also agreed that we need to start brainstorming on new ways to bring in cash flow. Any ideas for a tech startup with an extensive database of liquor, beer, and drink prices at their disposal to raise some quick cash? I’m sure we’ll think of something.

 

-T

Week 3: Pitch development, investors, and product vision

Tuesday, June 12, 2012 8:39 pm

In my first post, I spent a good deal of time detailing one of the projects we tackled first this summer. To review, we developed a product to help bootstrap the business and bring in some cash flow while we wait to hear back from a number of investors. This product is a website that will automatically scale to whatever device through which it’s accessed. In other words, it’s a website template that focuses on the efficiency and elegance of its mobile version.

The idea that sparked the project was this: on the whole, restaurants have pretty terrible websites. Not only are they pretty terrible to use from a computer (the platform for which they were designed), they’re even worse and sometimes even useless on a mobile phone. We spent some time making cold calls, but came to realize that we needed to have a more developed pitch before we would even come close to selling anything. That’s what we did this week.

We spent the first half of the week gathering as much information as we could about restaurants and their websites, especially dealing with the “mobile” side. This meant researching statistics on the number of people with smartphones, using Google Analytics to see how much mobile traffic certain restaurants in Richmond were getting in terms of monthly searches, and a collection of other meaningful numbers.

We had the idea and the numbers to back it up, but we hadn’t yet attacked the main issue: from the perspective of a restaurant owner, why even buy our product? That’s when we began discussing that actual value proposition of the product. Eventually, we worked through enough arguments, some better than others, and finally had enough information to put into a document that we could use to physically pitch to restaurant owners.

Once we put it all together (and thanks to CFO Nik Philipsen, it looks organized and professional. He also added a some smartphone graphics to show a screenshot of the specific restaurants website and a demo to show what it could look like), we had good-looking document that outlined our argument, and it went like this:

We start with the number of people searching for the specific restaurant every month from their phone. This number is typically between 1,000 and 4,000 searches per month, which is a pretty significant number of people searching a restaurant to find hours, menus, locations, events, or other information. Under that, we included two images side by side: one of what it looks like to view the current website from an iPhone, and the other what our mobile website could look like viewed from an iPhone.

After a general introduction of our idea, we touch on why the mobile side of the web is so important, and is only becoming more and more that way. We note that mobile web access is only going up, a mobile website is different than the website “you” (the restaurant owner) has now, and that a mobile website can provide a great deal of value to your business. We focus on this “value” for the rest of the document: increasing the number of customers who walk in the door, increasing the number of reservations and take out orders, improving the customer’s overall experience with the restaurant, improving brand continuity, making it easier to market your brand, creating a competitive advantage, and a more efficient means of relaying important information to your customer base, whether it’s new specials, events, or important changes in things like price and location.

We put together about 10 different pitch documents for 10 different restaurants, and plan to send them out electronically and also deliver in person to each restaurant.

———-

Another important thing that happened this week was Tommy (co-founder, CEO) and Nik (Chief Product Officer) had a Skype call with 500 Startups partner Paul Singh. I was not a part of the call, but sat on the other side of the table listening to the whole conversation. 500 Startups is a venture capitalist firm that, “provides early-stage companies with funding ranging from $10K to $250K via seed investments, our startup accelerator program,and new micro-fund models like the Twilio Fund.” In other words, this was a great opportunity for The City Swig to receive some much needed funding. Tommy and Nik went into the conversation asking for $140,000, but left it with a lot to think about, some great advice, and another opportunity to receive $150,000.

Right off the bat, Paul told Tommy and Nik that he really liked the The City Swig, but that it was too young of a startup to receive any money from 500 Startups. However, the conversation was far from over. Paul immediately began asking Tommy and Nik questions about the business, and they were able to aptly provide well-thought out answers. Once this went on for about an hour, Paul left us with two extremely useful pieces of information: advice on the future of the company and an amazing opportunity with a Virginia-based venture firm called the Center for Innovation and Technology (CIT, of which Paul happens to be on the board) to raise money.

Paul’s advice that he told Tommy and Nik was we should come up with three aspects of The City Swig to focus on going forward. These three aspects should be easy to measure, and should be measured at all times, especially when we decide to do something new with the product. The three points should be the constant goals of every individual working for The City Swig. If we succeed in optimizing these three points, we should be on track to be extremely successful. Immediately following the call, we took a walk around a lake nearby the office, and discussed what three things we should focus on in The City Swig.

After a long, long conversation that lasted a couple days, we decided that three points of focus for The City Swig going forward will be: shares, app downloads, and the number of active users per week. These three points now permanently sit on the wall in the main room of the office. I won’t detail the arguments that took place to reach these three points, but all agreed that if we focused on these three things, The City Swig will achieve its goal of “revolutionizing the nightlife experience.”

Next Tuesday, Tommy and Nik are driving to Northern Virginia to pitch The City Swig to the board of CIT. They are asking for $150,000, and thanks to Paul’s advice and connections, The City Swig is in a position to earn funding that could really help propel it towards its potential.

 

-T

Week 2: Legal challenges, expanding markets

Tuesday, June 12, 2012 7:41 pm

My second week at The City Swig shed light on one of the startup’s biggest problems that it faces going forward. For those of you who know anything about Virginia’s laws regarding alcohol, you probably know it has one of the strictest, most complicated systems of regulation in the United States. Following the repeal of the 18th Amendment (prohibition of alcohol) and passing of the 21st Amendment, interpretation of the new law by both politicians and the Supreme Court essentially gave the states absolute control over all laws regarding alcohol, including liquor/spirits, beer, and wine. This has led to a great deal of variance in the laws regarding alcohol between states. Other than the legal drinking age being 21 in every state, there are differences in nearly every other category: drinking and driving laws, distribution laws, open container laws, and the list goes on.

Now back to what’s happening in Virginia and The City Swig. Virginia’s alcohol regulations are in many ways similar to that of North Carolina: state-controlled liquor stores (ABC stores), odd possession laws (one can be charged with possession of alcohol… even if it’s already in your stomach), and strict regulation regarding advertising and marketing. This is where things have become dicey for TCS.

These laws and codes are largely vague and confusing, and have brought up a seemingly infinite number of questions we wish we could answer. What is the accepted definition of advertising? What is the accepted role of third parties like TCS? Can third parties like TCS advertise “on behalf” of licensees like bars and grocery stores?

In Virginia, there are a number of laws and codes that specifically deal with what actions alcohol licensees and retailers (grocery stores, gas stations, bars, and distributors) can legally take regarding advertising alcohol prices and specials. For example, it is explicitly forbidden for a bar to advertise discounted drink prices during a specific time (happy hour). Under legislation 3VAC5-50-160-B-8 it is specifically stated that, “On-premise licensees can not advertise happy hour prices in the media.”

Unfortunately, this is one of the main functions of The City Swig. We allow users to access alcohol prices at both on and off-premise locations. However, we spent a great deal of the week developing a legal challenge to Virginia’s Alcoholic Beverage Control (ABC) office. Our argument, in a very condensed sense, went like this:

Under the guise of Virginia legal code, specifically 3VAC5-20-10-A, we understand that advertising means, “Any editorial or other reading matter in any periodical, publication of newspaper for the publication of which no money or other valuable consideration is paid or promised, directly or indirectly, by or for the benefits of any permittee or licensee does not constitute advertising.”

From this definition, we conclude that the services that TCS provides does not constitute advertising and is therefore legal, so long as we receive “no money or other valuable consideration.”Even though we are pleased with our conclusion, we still have to meet with ABC to go over some lingering questions, and make sure that we can tell licensees that every aspect of our business has been legally approved.

In terms of The City Swig, the alcohol regulation issue has affected another side of the business, apart from legal considerations. Now that we understand licensees cannot pay us for advertising their alcohol prices, we’ve been forced to think critically about how we’re going to create revenue as well as expand. Luckily for me, Tommy, Matt, and the rest of TCS team has already put a great deal of consideration into this aspect of the issue. For example, they envision much of future revenue coming from the desire for brands to insert themselves into the user experience. Say that a popular bar in Richmond called Three Monkeys has a special on Tuesday nights from 7-9pm for $1 draught beers. Instead of appearing as “$1 draught beer” on the Three Monkeys’ web profile on TCS’ mobile app, it would appear as “$1 Bud Light draught,” and Budweiser would pay TCS to have their brand inserted there. This is just one of several ways TCS intends to generate revenue as we weave through the convoluted alcohol regulations of Virginia.

All of these problems and issues have become such a point of attention and work that it has greatly influenced how The City Swig plans to grow. Although everyone who currently works for TCS is from Virginia and/or goes/went to a Virginia school, because of the challenges created by Virginia’s laws, we have been carefully deliberating on where TCS will choose to expand, and despite all of our home ties to the great state of Virginia, it does not make much sense to stay, mainly due to all of the laws and regulations.

As of now, we are looking to expand to cities that have a lot in common with Richmond. Cities and towns that have a high college presence top the list, with places like Morgantown, WV, Charleston, SC, and Savannah, GA. We spent a good amount of time this week doing research on a number of cities. We looked at population size, age distribution, and of course what the state’s current laws are regarding alcohol and its licensees.

It was another interesting week here at The City Swig, and I’m sure I’ll be back to discuss what new experiences we’ve had with Virginia and all of its laws and regulations.

 

 

-T

Week 1: Catch-up, cold calls, and pitch development

Thursday, May 24, 2012 6:54 pm

www.thecityswig.com

“The City Swig is a startup headquartered in Richmond and Charlottesville, Virginia that is bringing a better deals model to bars, convenience/grocery stores, liquor stores, and their patrons. The City Swig allows our users to find the best existing deals when they’re planning to drink with their friends and allows businesses to send targeted flash deals directly to our users to solve their unique marketing problems in real time.”

This past Saturday was my first day working at The City Swig. The company recently moved its headquarters to a new office on the southwest side of the city, and I’ve spent this week getting to know Tommy and Matt (co-founders, CEO and President, respectively) as well as the business itself. After a quick introduction to the whole scene, they quickly threw me into the deep end. They laid out the projects that we’ll be working on this summer, and we got started immediately. The first project is to develop a template for a website that automatically scales to the device through which it is accessed: computer, mobile device, or tablet. From that point, we’ll be working to sell this template to restaurants and bars in Richmond. The first step: cold calls.

There are a handful of The City Swig team members who have the sole purpose of writing code. These people are the ones who will be developing the physical product (the website). As they sit in front of the their computer screens upstairs, Tommy, Matt, and I sit around a table on the floor below discussing how we’re going to go about selling this product to restaurants. We broke up the city into different sections, and made a list of every restaurant and bar in each section. We were looking for two things: the effectiveness of the restaurant’s website and its contact information. Tommy was responsible for the West End, I took The Fan, and Matt took the remaining areas (Northside, Monroe Ward/Downtown/Shockoe bottom, River Road, Carver/Jackson Ward, Midlothian). Once we had come up with about 30-40 restaurants each, we moved onto actually making cold calls.

The first thing I learned about making these phone calls is that they’re referred to as “cold” for a reason. In addition, I learned that people generally don’t like the feeling of being sold to over the phone. We spent all of three days making phone call after phone call, just trying to get the chance to set up a meeting with any restaurant owner. We knew that if we could just get in front of an owner, we could do a pretty good job of selling our idea. It turns out though that getting a meeting in the first place is harder than we thought. We also realized that we might be approaching the project in the wrong way.

Tommy made the argument that he would feel much more comfortable trying to set up these meetings if we had a more developed and thought-out pitch. So we all agreed to put the cold calls on hold temporarily, and we shifted our focus to fleshing out what we are going to say to these restaurants when we eventually do get the opportunity to have a meeting.

We started with the original thought that sparked this project: when you sift through the thousands of restaurants in Richmond’s websites, you realize that they’re more often than not poorly developed, unorganized, cluttered, and are not designed to be viewed from any device besides a computer. From this, we understood that roughly 50% of all internet activity takes place from a mobile device. This presents an interesting problem. As more and more people use their phones to browse the Internet, any website that isn’t designed to be viewed from a phone is hellish to navigate on a mobile device.

These two pieces of information create an unique situation, but it does not stop there. As we conducted more research, we learned more valuable information from Google Analytics. One of Richmond’s most highly acclaimed restaurants, Edo’s Squid, is at the top of our list for potential clients because they don’t even have a website; they rely on Yelp reviews and Google Maps to provide information to their customer base. There is an aspect of Google Analytics that allows us to see how many searches per month are conducted for any phrase related to Edo’s Squid: “edos squid richmond,” “edo squid restaurant,” “edo’s squid,” and the list goes on. Not only were we able to see how many searches per month on average were being conducted, but also how many of those searches were conducted from a mobile device. The results were shockingly pleasant. We found that there were roughly 5,000 searches per month for Edo’s Squid made from mobile devices. That’s a lot of searches for a restaurant that doesn’t even have a website.

We decided that this information was where we wanted to start with developing our pitch. Tommy, Matt, and I created a document on Google Drive, and we started to outline how we were going to convey our message. Overall, the message is clear: we believe that we can make you (the restaurant) money by making a mobile-optimized website for a cheap price (our pricing is miniscule in comparison to what other web developers charge).

This week and next week we’ll be finishing up creating and refining our pitch, and hopefully in the mean time we can get some meetings set up from all of our cold calls. To use an analogy from art, we can see the final statue and how beautiful it can be, but right now all we have is a big, ugly chunk of limestone. Bit by bit, we move closer towards the finished product, and we’re learning a ton along the way.

 

-T

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