Closing SolarList: a cleantech post-mortem

The punchline first: SolarList is basically closing. We haven’t been actively operating the core business since the end of 2013. The founders are currently working on other projects. We spent most of 2014 trying to find a suitable partner

for the business and software, but we currently do not see a way forward. We would still love to find someone to work with to help more people go solar. As you’ll see from the rest of the post, we still fundamentally think it’s a great idea. But the fact for now is we’re closing up shop.

What’s next

We have built a ton of cool software and learned a lot about finding, educating and turning homeowners into happy solar customers. If you are interested to work with us, license our technology or have a compelling non-profit use case. Please give us a shout.

The story

SolarList encompasses a three year saga of failures and hard-won triumphs. There’s another blog post coming attempting to glean some generalized lessons from the story, but I wanted to put the full gory narrative out there for the cleantech community and for aspiring entrepreneurs. Hope you find it more useful than tedious.

Origins

Before SolarList, I worked at a cleantech consulting startup called New Energy Finance, since acquired by Bloomberg LP. One of my main roles was producing the Levelised Cost of Energy Quarterly Outlook. The goal of this paper was to examine the apples-to-apples to cost of all renewable and non-renewable forms of electricity generation across every market and every geography. Since the nascence of renewable energy in the 1970s the single dominant problem for the entire industry was that the cost of the equipment (solar panels, wind turbines, electric batteries) needed to come down. As I tracked these numbers quarter by quarter, it became clear in 2008 that many technologies in many markets were approaching an inflection point where they would be become broadly cost-competitive with traditional electricity. All the industry’s brainpower, all the venture capital and all the entrepreneurs were still investing time and energy in incremental improvements to the capital cost of equipment, meanwhile manufacturers of the dominant variants of solar panels and wind turbines reached critical mass.

There was a bloodbath of startups and investors who bet on new technologies to reduce the cost of equipment. At the same time almost nobody was looking at how the industry would scale up. How would it develop 10x or 100x more projects, how would it market and acquire 1,000x new retail customers. The best project developers still didn’t have basic CRMs or any process automation. Marketers of solar panels and other retail products had not innovated beyond plowing huge sums of money on Adwords, driving up cost per click to soaring heights, or paper door hangers. Meanwhile, nobody, almost literally zero people, in the entire industry had any competency in web scale software development. As the cost of equipment fell, soft costs like sales and marketing and customer acquisition composed a greater share of final consumer cost. I saw the opportunity and quit my job with the vague aim of building software to attack these soft costs with automation, simplicity and education.

It’s worth pointing out here that at this point, beyond reading the Rails Tutorial book, I too knew basically nothing about software development. But I had that special blend of overconfidence and ignorance that makes twenty-somethings want to start a company and disrupt an industry.

Failing to launch, then failing again

With a crisp copy of The Lean Startup on my desk I set about interviewing everyone remotely associated with the industry, doing “customer development” in Lean parlance. I had dozens of interviews with project developers, consultants, homeowners, friends, facilities managers and random people surveyed via Mechanical Turk. It became clear that this overall problem, inefficiencies in scaling and soft costs, was most acute in the residential (home) solar industry. What was needed was an easy to use website that let people who were interested in solar educate themselves about the costs and benefits and options. They would self-identify as interested in solar and the app would then connect them with best solar companies. Something vaguely like a Craigslist for solar: hence SolarList. At the time it was not crazy for solar companies to spend $5,000 – $10,000 per customer purely on sales and marketing costs so this matchmaking would be exceptionally valuable.

So the next step was obvious, another friend in the industry, who also knew nothing about software, and I would go hit up some angel investors, raise some money, hire a developer to build the first version of our product, one or two more steps, and we would revolutionize the solar market! I continued to do customer interviews, gather data, create and tweak Powerpoint decks. And we did a lot of pitching. At this point it should be obvious to most that we were not super successful with this strategy. A decade ago it was possible to raise money as two non-technical people with a software idea. But for most people who aren’t incredibly connected within the Silicon Valley scene, this is a fool’s errand. However, through shear brilliance of my then-co-founder we did actually get a term sheet for $100k from one angel investor. Fortunately I had been consuming books — highly recommend this one — and blog posts on venture term sheets non-stop for a month and saw that the document was so riddled with every horrible term sheet trickery that it would be better not to build the company at all than to do so with this as the foundation.

We killed the idea and the strategy of trying to get angel money in pre-product. We then spent several months exploring partnerships with app development shops. The problem with these deals is that you as the entrepreneur bring just the idea to the table and really have no leverage. Several months of work later we scrapped any version of this strategy. It became clear that SolarList needed an individual technical co-founder to move forward. It was also clear that the current team wasn’t a good fit for that strategy. There was a series of awkward conversations, several things left unsaid that should have been. I’m still not happy with myself about how it all went down but SolarList lost one co-founder before there was even a glimmer of forward motion.

Bootstrapping is hard

At this point I am about nine months out of a job and completely back to square one. I was still living in NYC at the time and I began networking furiously in my hunt for a technical co-founder. I went to every Meetup, mini-conference and hackathon I could. From the very beginning I believed that I needed to learn enough to be dangerous about web development and had been studying hard. By this point I was a founder with a good idea, industry expertise, and, critically, some basic coding skills. With this song and dance I was able to attract a decent number of interested developers and eventually found Matt, an insanely talented Ruby developer with experience working in the solar industry. On paper we were the perfect combination. We had a few discussion and quickly agreed on a shared IP agreement to get to work on a prototype. He lived out of town so, about two weeks after meeting, he moved in to my apartment, sleeping on the couch for a week while we coded 16 hours a day.

From a technical standpoint we started with a hugely ambitious goal for the software. We wanted to completely automate the entire customer acquisition process, building a web app that would generate a complete solar quote and financing package for any home in the US without any interaction with sleazy sales guys who we assumed were a big part of the very high cost of customer acquisition (We later leanred a great deal of respect for those sales guys). After a week of non-stop coding we actually had a pretty decent proof of concept and a good idea of what else we needed to build. But we had a big problem. Both us of were pretty much broke. To get our plan off the ground we needed time to finish the product, launch it and ramp up monetization. I sublet my apartment to cut rent from my cash burn, put my laptop in a backpack and flew to Spain (on miles), lived in hostels and Airbnb (charged to credit cards) and worked every day from cafés. We kept pushing the product forward but struggled with remote collaboration. We spent a painful amount of time entering app competitions and applying for grants to no avail. We launched a version of the product but couldn’t afford any marketing to drive traffic to it. We felt we urgently needed a seed investment to get SolarList jumpstarted.

A big solar company was sponsoring a Cleanweb (cleantech + web software) hackathon in San Francisco. It was so up our alley that we both bought one-way tickets with the intention of winning the hackathon and parlaying that into an angel investment to launch the company. We arrived at the hackathon and pitched our idea to the developers, designers and marketers in the crowd. At that point Matt and I had a clear and compelling understanding of our market, and a foundational product already built. So we easily attracted the all-stars in attendance, including a hackathon legend. We easily won the top prize ($2,000 + a free consultation and incorporation from a top Silicon Valley law firm). So far so good. The next step was an SF road show and an angel investment. We hammered absolutely everyone we knew for intros and pitched everyone who would listen. We spent a month in San Francisco. Crashing everywhere from friends’ couches, hotels in sketchy neighborhoods (booked with miles) to the even sketchier Startup House, a horrible hostel for SF’s legions of broke bootstrapping founders.

Here we learned a hard fact that haunted SolarList from day one. There were, and still are, exactly zero investors interested in early stage cleantech companies. When we first started out, two funds, Sunil Paul’s Spring Ventures and the incubator Greenstart, were making angel investments in cleanweb companies but by they time we got there, both had moved elsewhere. Beyond that, every investor had heard nothing but horror stories from big shot VCs getting hit with $100 million write-offs in the cleantech sector. Never mind that those investments were in massive factories and physical products while we were a lean consumer web company. Funds had been burned or seen their colleagues get crushed in cleantech and they were having none of it. Of course they didn’t come out and say that. We had brief meetings and pitched a ton of investors, because investors like to take meetings and hear pitches. And of course we never got an explicit “No” because investors like to keep their options open and see if anybody will be a first-mover, but none of the conversations ever went anywhere.

Burning through money, not making progress on fundraising, we began to fight about how to code our way out of this corner. I was convinced the only way to make meaningful revenues was to convert our product to a B2B SaaS service and sell it to solar companies. Eventually we stalemated on product development. Making no progress on any fronts our only option was to part ways. I am really sorry that this partnership didn’t work out and tons of lessons were learned, most importantly that startups are freaking hard.

Going it alone

Matt was a much better developer than I was so the code base we had built together was way over my head and I had to scrap it. It’s about 14 months since I quit and I’m back to square one again. A good friend, Sustainable John, offered to let me crash his place in Berkeley while he was out of the country for a month. Despite making lots of technical progress, Matt and I had never launched a fully working product that could truly make money, so I decided it was now or never. I had been sharpening my coding skills for over a year while failing three times to solve the problem of how to really build the app. I thought, what the hell, I’ll try to build it on my own. I gave myself 10 days to build a working product that I could sell to solar companies or I would quit the whole thing. I finished in 8 days, bleary-eyed and jittery from too much coffee and a lack of sunlight and exercise but with a working, sellable product.

I started the slow process of pitching solar companies on my B2B software solution. I put every company in my personal network plus the entire member list of the Solar Energy Industry Association in a lead list and started with A. In short order my time in Berkeley was up and I needed a super low cost place to hang out and continue emailing and cold-calling. South America looked good and cheap and there was a pretty girl I could meet up with there. I hopped a flight to Buenos Aires (I had a lot of frequent flyer miles at the time) and set up shop. It was on this flight that I built Storemapper, the only product I have launched that actually got some traction.

About 400 sales pitches later it was clear I was off track. The very reason I felt there was an opportunity in the market, that the industry didn’t have anybody who understoond the value of web software, meant that none of the companies I was pitching had anybody on staff who could be the internal champion for the product. A few companies, like Clean Power Finance, succeeded in selling software to this market primarily because the software so obviously worked and added value by automating repetitive tasks done on paper, but selling software to solar companies has so far proven to be a tough model. The current iteration of SolarList required that companies make a small bet (the price of SaaS) that the app would lead to more higher quality leads and in turn more revenues. I got the same answer over and over again: “Bring us warm leads and we’ll buy them all day long but we don’t to pay for lead generation tools.” If you’re losing count this is the fourth attempt with more or less nothing to show for it.

A new hope

While still in South America (Peru at this point) it became increasingly clear that SolarList version 4 was not going anywhere. I started to spend more of my time on other projects, freelance software development, ecommerce consulting and other side projects. I had this big lesson learned from discussions with solar companies, they wanted sales leads, tons of them, and were willing to pay big bucks for them, but I didn’t have a clear path to generating my own leads and I was losing a little steam to keep pressing forward. Around that time my friend and former co-worker, Michael Conti, pitched me on an idea: Cutco for solar. We would train legions of students to educate homeowners and create warm leads that we would pass on to vetted solar companies for a fee. The idea was a perfect fit. It matched with everything I had learned to date and was a clever way to generate our own leads and quickly generate revenue. Michael was not only very well-connected in the solar industry, but also a master large-scale organizer. The perfect co-founder to recruit, train and motivate hundreds of college students to go bang on doors. We agreed immediately to join forces. Shortly thereafter, Sustainable John joined us an advisor and practically a co-founder, given how much work he put in, giving us a West Coast presence and serious eco-rapping street cred.

Great progress and a big mistake

In January of 2013 I moved back to New York City. Michael and I started work on this new version of SolarList. But I had a huge problem. I had barely been able to scrap together the cash for first month, last month and deposit for a room in an apartment in Brooklyn. I was a good enough developer at this point to charge a decent per hour rate for freelance work but I didn’t have enough clients to earn enough to afford the NYC cost of living. It was a full-time job finding clients and freelancing enough just to do work enough to afford the City, leaving little time and bandwidth left over to do hard startup things. Taking on this extra overhead without savings or passive income was the single biggest mistake I made through this whole process as it meant we either needed to quickly start generating at least $10k/month in profits or we needed to raise money just to cover our cost of living.

Trading off time with paid work, we didn’t finish retooling the product and recruiting students for our first beta test until May 2013. In early Summer we did roll out beta tests on several campuses. Dozens of totally awesome students came out, volunteering for free, to canvas their cities and test our new solar assessment mobile app. The results were fantastic. Students were able to provide accurate solar assessments and educate and qualify potential customers without any real training using our software. Theses warm leads were stored in our app’s database where we could route them via email to solar company customers. We sold some leads and gave some away to companies to get feedback on whether or not they were valuable (they were). The students were excited and felt empowered to actually effect change in their community. And all the numbers worked. We had a detailed understanding of the solar sales funnel by this point and it was clear that this method would generate new customers at a much lower cost than best in the market.

First money in

We felt we had the data we needed to go full-time. After wasting nearly a month of work applying to the Department of Energy’s Sunshot program for a $500k grant (complete waste of time) we finally caught a break. We entered SolarList in the NYC Big Apps competition. The contest had a cleantech category which we won, earning us $20,000 and the help of the city Economic Development Commission with introduction to VCs. For all my previous complaining about the high cost of NYC, it’s worth noting that without this catalyst, SolarList probably would have fizzled again at this point. Looking to capitalize on the momentum we fired up another fundraising process.

We were looking for $500k to make a few hires and fund working capital as our business still had a long sales cycle between when a student would canvas a home and when we collected from the solar companies. We wanted to scale up the students rapidly and still be able to pay them in a timely fashion. If we were aggressive in fundraising the first time around, this time we were ferocious. We pitched hundreds of investors, cold-calling and emailing basically every early stage investor and fund in the country. Michael called in every favor he could, I interrupted a date night to cold intro myself to Dave McClure at the bar in Birreria. We hammered phones and emails and got conversations with almost everyone on our list eventually even getting a final round interview at Y Combinator. But we were still beating our heads against the wall. There was money for mature cleantech companies, but absolutely nobody wanted to put early stage money into the cleantech market. We had a functioning product with operating data, an all-star team and we understood the market better than anyone, but we got basically nowhere. We closed $135k from friends and a family office, to whom we are immensely grateful, but after several months we decided it was best to do what we could with money rather than keep fundraising.

$155k wasn’t nearly the capital and runway we needed to execute our original plan so we had to make a choice to focus on one part of the sales funnel. We didn’t have the time or bandwidth generate lot of leads, sell them to lots of solar companies and make sure all of them converted to actual solar sales, so we decided to focusing on showing that we could scale up the lead generation. There was tons of good data on how much leads could be sold for at volume and what percentage would convert to new customers. We hoped to get data showing we could generate X leads and raise more money based on the premise that X leads would be worth Y dollars if we had time to do the biz dev and sell them. It should be obvious by now that one of our biggest problems was being fundamentally dependent on the possibility of raising money and assuming “if we get to this next milestone, then we’ll be able to raise money and do things right.” We never focused on actually bringing dollars in the door because we assumed that investors would be able to make the extrapolation from leads to dollars if given copious data on average price per lead. This was an incorrect assumption.

Michael, John and our truly amazing interns devised and executed a plan in three weeks to launch The Solar Bowl with over a dozen college campuses across the country competing to educate the most homeowners about their solar potential. More than a hundred students signed up and used the app to create a solar assessment and hundreds of homeowners were qualified with about 300 solar leads created in less than six weeks. The software worked. Nearly all the students were able to easily give accurate solar assessments to homeowners with no training. Theoretically that would have meant about $15,000 – 30,000 in revenue at that time but the leads came from all over the country and we hadn’t had the bandwidth to vet companies and set up lead generation agreements with enough companies to monetize them effectively. The data however was very compelling. Students were fired up and it was clear we could scale the operation to 1,000s of students without hiring much more staff. On top of that the total cost of customer acquisition was dramatically lower than anything else in an industry very hungry for more customer growth.

Go big or go home

At this point we had a choice. We could more or less could see that this could be a business that would work. If we continued to grind it out we could slowly grow the number of Solarists (as we called our amazing canvassers) generate lead generation revenues and eventually build something big. But we had two problems. First, while I have tremendous respect for folks who have been out there putting solar on people’s roofs for 20 years, the customer service for many of the companies in this space was terrible. After handing off customers to these companies we found it could be nine months or more before they finally got solar on their roof. The processes were slow, inefficient and painful for the customer. We knew that we wanted to own that entire process, fully walking the customer all the way down the road to the end. But that meant hiring sales staff as there was no way the two founders could handle the sales process and manage the rest of the business. Secondly, call it what you will, but Michael didn’t want to build a tiny solar sales company and spend 5 years growing it organically. We wanted to make a big serious impact on the industry, otherwise it wasn’t worth it for us.

We agreed easily that we had to go big or go home. We had years of customer and product development, deep industry insight, demonstrable data that the we had a truly innovative and much more effective way to scale up the industry. We pulled out all the stops for a hail mary fundraising attempt. Eventually we widened our search to other solar companies, strategic partnerships and would-be competitors to try to somewhere acquire the capital to get the business to scale. But one by one we checked every one we could think of off the list and ran out of ideas. We also ran out of money. By March of this year we both had to go back to other work to pay the bills.

We spent the rest of the year looking for ways to partner with big companies in the industry to revitalize the Solarist program but at this point we just haven’t found a good fit. We have a few ideas incubating for re-launching the product but for now it’s on the shelf.

Gratitude

I (Tyler) have told this story as a first person narrative so it comes across as very me-centric. But that’s not how it really played out day to day. I could not have made any of the progress without help from co-founders, friends, investors, supporters and colleagues who helped immeasurably at every step of the way.

Several people took big gambles with their time and careers to join SolarList as co-founders. They worked their butts off and didn’t see a pay-off. Within the cleantech industry we had tons of helpful cheerleaders who made introductions and provided helpful advice. Our friends and colleagues were insanely supportive and helpful in the day to day and several of them took even bigger risks, investing some of their savings in Michael and myself. We are supremely grateful. I’m hopeful that our experience so far is useful for aspiring entrepreneurs and I’m even more optimistic about the future potential for solar and cleantech.

Thanks for the journey and for reading.

Storemapper Update: 50% revenue growth in 3 months

Three months ago I published a deep dive into Storemapper, a tiny SaaS product that I run. I thought the post (now on Medium) was too long and delved too much into the gory details to be broadly interesting but I was blown away by the response. The post sat atop hacker news for over 24 hours and my typically sleepy blog saw something like 50,000 uniques in a few days. So, here I am, back with another update.

The impetus for the original post comes from Baremetrics, the insanely simple SaaS metrics dashboard for Stripe that I use. As paragons of transparency, Buffer, Baremetrics itself, and several other cool startups had made their dashboards completely public. Josh from Baremetrics asked if I wanted to do the same for Storemapper. I had been meaning to write a tell-all about bootstrapping my Micro-SaaS business anyway so it all fit. So, as always, you can see Storemapper’s live metrics on our public dashboard.

Storemapper Update: 50% revenue growth in 3 months

50% QoQ growth

Storemapper has been on a tear since I seriously focused on improving it in March of this year. The last quarter has been great with recurring revenue increasing by 50%, up over $80,000 per year, in just three months.

I think Q3 is a great time to launch ecommerce apps. Store owners are putting in time to prepare their business for the holiday surge and are much more willing to make investments to help them better capitalize on Nov/Dec sales. That’s likely part of the story this year as well. Here are a few things I’ve been focusing on in the past three months:

Converting free trials
More Premium features and upselling
A/B testing prices
Reducing failed charges

Onboard like a boss: convert the free trials!

After a little experimentation, we’re back to requiring a credit card on signup. Most people in SaaS have a strong opinion on this. It does reduce free trial signups, and it does slightly reduce overall paid signups, but it saves so much in headache that it’s worth it.

So it was always clear that Storemapper has great retention and very low churn. Setting up Baremetrics let me really see the lifetime value for each plan. With churn below 1% the LTV for most of our popular plans is well over $1,000 per new customer. It was clear that the best thing I could do was focus on getting incredibly good at converting free trials. I re-built the signup process to show platform-specific installation instructions. I tightened up automated emails and in-app messages using Intercom to reach out to customers when they didn’t hit key milestones during the free trial.

The results are awesome. Storemapper is now consistently converting over 40% of all free trials. In October a whopping 42 out of 43 free trials who signed up directly on our site (not through an app store integration) converted to paid plans.

I’m now super happy with our funnel with high conversion from free trial, low churn and super high LTV. The next area of focus will be investing in some paid acquisition. I am a total noob at Adwords/Facebook/retargeting and would love to pay/barter for a crash course from a pro.

Push for Premium

Digging in to Expansion MRR Storemapper’s best upsell flow is convincing medium-sized customer on our Pro plan ($19/mo) to upgrade to Premium ($39/mo). Premium comes with a ton of fancy features like heat map analytics. This past quarter I added several new features like:
* Improved syncing from Google Docs * Facebook Page Tab integration * Pretty map themes powered by SnazzyMaps

I then added several Intercom notifications to prompt targeted customers to test out a few of the features. You can see the results: 20 upgrades, many of them to premium accounts representing a few thousand in new annual recurring revenue.

A/B testing prices

I have been testing prices on Storemapper for a long time but I’ve always kept it simple and just changed the prices and watched what happened. I never ran a simultaneous A/B test because even with cool tools like Optimizely it’s still a pain to setup.

Optimizely can do the front-end stuff to make sure each customer is cookie’d and sees the same prices every time they load your landing page, but you still have to do a back-end integration so they see consistent prices if they go to upgrade or change their plan.

But I went ahead and did it. I hacked up a solution using Mixpanel to track funnel conversions and Nate Kotny’s Simple Abs to handle the A/B. Then I manually did the math between the Mixpanel conversion data and Baremetrics LTV metrics.

It was still a big waste of time. It’s very hard to see conclusive evidence of superior pricing. Even if you get more revenue from a higher price point you need to wait to see if that higher cost leads to a higher churn. Blah blah blah. In a micro SaaS business you’re looking for big wins that obviously improve recurring revenue. If you need to do some math to determine that something is statistically significant then it wasn’t worth the time and effort to do it.

I’m still testing prices but I scrapped the whole setup and went back to manually tweaking and watching for big moves.

Reducing failed charges

Here’s something you don’t learn until you have a portfolio of customers’ credit cards that you charge every month: charges fail a lot! Like an insane amount. I went about 9 months on Storemapper before I looked into this and I discovered that like 50% of my customers’ credit card were invalid or failing. Initially I built a simple email notification using Stripe Webhooks but it turns out that a) customer’s don’t immediately jump at the first opportunity to update their billing info and b) it’s a HUGE pain to keep track of every outstanding charge.

I highly highly recommend using Stunning to solve this problem. It integrates directly with your Stripe account and emails customers when their card fails automatically (and keeps emailing them until they comply!). That feature alone makes the service worthwhile but you can also use it to send pretty email receipts and other email notifications, it pro-actively updates cards before they expire, has an iPhone app that shows you all your Stripe events and a bunch of other stuff.

Storemapper Update: 50% revenue growth in 3 months

In this quarter I tightened up my Stunning integration, taking advantage of everything they had to offer and hunted down some very very negligent customers as well. Failed charges is still a huge deal but my process is 99% automated now.

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How I pay my bills

A lot of folks regularly ask me this question so I’m going to blog about it. It seems weirdly narcissistic to think anyone would be interested in my finances but let’s give it a go.

My last paycheck was in June 2011. I quit to start a startup, or build a company, or something. I didn’t have much of a plan or much in the savings account.

I also don’t buy into the mythology that founders of meaningful companies need to spend years living in their parents’ basement and eating ramen noodles. My folks live in Florida so they don’t have a basement. And they wouldn’t let me live in it even if they had one. And I wouldn’t live there even if they let me. I wanted to become an entrepreneur and live on my owns without sacrificing my quality of life.

In those three unemployed years I’ve lived a pretty good life. I’ve lived in Manhattan, Brooklyn and Washington DC. I spent more than a month each in San Francisco, Barcelona, Buenos Aires, Cusco, Thailand and Bali. I spent more than a year homeless, traveling out of a backpack and working in coffee shops around the world.

I also had several close calls, ran up some credit card debt and spent a few sleepless nights googling personal bankruptcy. It’s been a wild ride.

So, first I’m going to list the various ways I scraped together money, then I’ll close with a few tough lessons learned.

Independent Consulting

My last job was at a consulting company advising cleantech investors and cleantech companies. While I was there it wasn’t crazy to book a six week project, where I did nearly all the work, for $75,000 – 150,000. Meanwhile over those six weeks I was paid maybe ten or twelve thousand dollars in salary and doing a lot of other work. Like many of my colleagues, I thought surely, there must be way to do this on my own. Bringing in just 50% or less of that amount would be a huge raise and I’d be able to operate on my own terms. So, after I quit my job, I reached out to companies for private consulting gigs. Here’s what I found out.

It’s totally true that you can split the difference and make (nominally) a lot more money. The first gig I booked was for a month or so of work for over $20,000. On an annual basis it was about $270,000, not too shabby even in NYC. But the sheen of independent consulting faded quickly. As a solo consultant you face a lot of tribulations that rapidly erode that shiny dollar per hour figure. Accounting is a nightmare, I spent hours tracking down invoices that were weeks or months past due. As a small consultant, clients feel entitled to bully you around constantly expanding the previously agreed, fixed-price scope, pushing back on hours and in general just making your life pretty shitty even without intentionally being jerks. This type of work is decent as a bridge to somewhere else but I got tired of it very quickly. It did however allow me to start earning some side income immediately after losing my paycheck, which was valuable.

I was working a lot with cleantech projects and was often offered success-based contracts, with big fees if I closed an acquisition, financing, or won a bidding process. I signed contracts with the possibility of earning over $250k over the course of a few months. I actually delivered about $75k worth of successes but my total take home was zero. Big fat waste of time and I would caution strongly against these “opportunities.”

The switch to software freelancing/consulting

The reason I quit my job was to build a startup that made educating homeowners about their rooftop solar insanely easy with software. I had no background in software, but I knew that I would need to learn enough to be dangerous, even though my initial plan was to hire or recruit software developers for equity (some of you are laughing at me already. Yes, I’ve since learned my lesson).

So in late 2011 I was devoting a decent amount of my time to learning to code. I was making steady progress when I had a realization. There was then, and remains now, a huge demand for software development. Instead of paying to learn to code, I thought I could big for freelance jobs, that I didn’t know how to do, and get paid to learn. So I went to freelancing sites like odesk.com and elance.com and created a profile. I barely had a portfolio (just some wordpress sites I made for myself and friends for free) and had zero credibility. So I made it a numbers game. I setup a workflow, with pre-written templates and automation that allowed me to apply for tons of small web development gigs.

Eventually I started to get some small $200 or $500 contracts here and there. Once I got a gig I would dive into the topic, reading every blog post and ebook I could and massively over deliver, winning both a happy client and a ton of knowledge in the process. By 2012 I was able to consistently get small jobs at a decent per hour rate. I worked very little, 10-20 hours a month and the net amount put me well below the poverty rate for the full year. But it was something.

In contrast to the strategic consulting I was doing in cleantech, software consulting is much lower stress. The client says “I want my website to X”, you do the work and show them “Look, your website now does X” and you get paid without much fuss. I’m not trying to make a broader point about the long-term benefits of different types of consulting. But if your goal is just to make some short-term cash, look for consulting opportunities where the deliverable is extremely concrete and success is very well-defined.

Geo-arbitrage is a bootstrapper’s best friend

I quickly realized that bootstrapping my business in New York City just didn’t make a lot of sense. Yes there are tremendous networking opportunities, but in the early days it’s mostly you on your laptop in a coffee shop building things, which you can do equally well anywhere in the world without NYC’s insanely high cost of living. I think NYC is an amazing place to build a funded startup, but if you’re on your own you should do what I did in early 2012 and run! I put all my stuff in storage and went full nomad, with just a backpack and laptop. I initially went to Spain for a few months but quickly headed to Latin America (Argentina and Peru). Compared to some big cities, traveling and living in hostels and Airbnb can still be a big savings. One month in Peru my total cost of accommodation was $180, about 10% of typical NYC/SF rent.

Combining the very small income from software consulting and my much lower cost of living I was able to squeak by through most of 2012. The details are for another blog post but 2012 was mostly a year of educational failures for me with three successive abortive attempts at launching my startup and three return trips to the drawing board. If I had not cut my costs to the bone I would certainly have been forced into getting a job by the end of that year.

I’ve used this kind of geographic arbitrage several times and it’s a great escape hatch in a cashflow crunch and good reason to stay away from long-term leases that you can’t easily sub-lease.

Storemapper: my tiny software business

Throughout this whole period I carved out some of my time for side projects. This was probably the smartest thing I did and it saved my butt several times. Sometimes collaborating with friends and sometimes on my own, I launched several small products. Almost all of them were failures but one of them, Storemapper, survived. I’ve detailed Storemapper extensively here where you can see that I launched it in late 2012. At first it was just a tiny trickle of subscription income. By mid-2013, when I moved back to NYC, it made enough roughly cover my Brooklyn rent. The whole time I was back in the city I was running my personal finances very close to the edge and at one point I completely messed up the accounting. I literally had like $300 in the checking account and rent was due in a week. At that point most Storemapper customers were paying me $5-9/month so I quickly hacked up a solution where they could switch to annual billing for $99/year and emailed all the customers. Fortunately about 15 of them took me up on the offer and I made enough money to pay rent and buy myself a small victory beer. These days Storemapper generates about $80,000 in annual subscriptions, which is freaking awesome. This whole story would look very different if I had not found this source of subscription revenue through trial and error. By very different I mean that I probably would’ve been bankrupt. So, hard to overstate the importance of side-projects.

Friends are awesome

I would be massively remiss here if I didn’t mention the help of friends. I was never one for asking for favors until I decided to try to build a company, and a life, on my own. You get over that pretty quickly. Friends of mine have come through big time in the last few years, letting me crash couches and housesit for much longer than reasonable lengths of time. They know who they are and they are awesome.

Credit Cards are useful

Saving the most controversial for last, yes, during the last 3.5 years of trying to build several different companies I racked up a five figure credit card bill. Right before I quit my job I signed up for a ton of credit cards and loading up on both ready to access capital and bonus frequent flyer miles (almost all of the traveling from above I did using miles for basically free).

I’m honestly not sure where I stand on credit cards. For sure I could not have gotten access to that much capital through a traditional loan of any sort. As I started this journey I was convinced that it would be at least as educational (if not radically more so) as an MBA. At its peak my credit card debt was less than one-fifth the cost of a top tier MBA so I genuinely think it was a good wager in the long run. That’s still a lot of debt though. In the short run it’s much more stressful than nice subsidized and negotiable student loans.

I think it’s a huge shame that it is so easy to get a loan for a $100,000 grad school with pretty dubious value and nearly impossible to get $20,000 to cover living expenses while you build, learn and experiment. But those are the facts. Without access to that credit I certainly would have had to quit and get a job. It worked out for me and I’m on track to nuke all my debt by early next year, but it’s also a risky and stressful move.

Lessons learned

I’m in a good mood right now, just finishing up three weeks in Iceland. I saw some great Northern Lights last night and they’re supposed to be better tonight. So I’m concerned this blog post paints too rosy a picture. I quit my job with very little savings and no real plan on how I would make nearly enough to cover my cost of living. I plowed my little savings into learning things and failed spectacularly for a long time at launching my company(ies). There multiple times where I was very seriously googling personal bankruptcy and several times where I only barely was able to make ends meet. I feel now like I’ve only just barely made it out of the gauntlet. There’s still some credit card debt to deal with and my taxes where a complete clusterfuck that I’m only just now getting in order. But, here are some key things I feel I have learned:

Keeping overhead low is essential. The biggest mistake I made by far was moving back to NYC before I had any meaningful income. Every month you live in that city you need to spend like five grand. It’s stressful, it limits your options and kills your creativity.
Maximize flexibility. I have never signed a lease in my life. I don’t have a car, a dog or a cell phone contract.
Ask for help. When you do some stupid and crazy, you’ll be surprised how much your friends want to see you succeed.

There are more lessons learned but this post is getting too long. I’ll think harder on this and write another post.

Iceland Field Report & Reykjavik City Guide

I just returned from my second trip to Iceland. In 2007 I did a 7 day trip using the Icelandair stopover option on a flight to London. This time I spent a bit over three weeks driving the ring road with Anne, exploring and working remotely in Reykjavik’s cafés and bars and visiting Thorsmork National Park.

Visiting Iceland is a surreal and unmissable travel experience. The raw natural beauty, mind-blowing landscapes and unique natural features give every new moment the possibility of blowing you away.

A photo posted by Tyler Tringas (@ttringas) on Sep 9, 2014 at 1:15pm PDT

In this post I want to answer some questions I’ve gotten about visiting, talk about both of my trips and provide some general tips for planning a trip. I also spent more than two relatively relaxing weeks living and working remotely in Reykjavik so I’m including my mini city guide of the best cafes, bars, eats and unusual places worth visiting in Iceland’s capital. Continue reading →

Compound Interest is a Scam

The miracle of compound interest is often taken as gospel. Your parents are constantly extolling its virtues. “Be sure to max out your 401k every month”, they’ll say. “Save 10% of your paycheck.” “It’s never too early to start planning for your retirement.”

Meanwhile the average savings account last year had a laughable 0.06% interest rate. What a joke. If asked you to lend me $100, and in a year I’d give you back your $100 plus a whopping 6 pennies you would justifiably laugh in my face. But we have been spoon fed since we were little that no matter how tiny the interest rate on offer, we still have to fork over the cash to our savings accounts or suffer the guilt trip.

Continue reading →