The Austin Chronicle

http://www.austinchronicle.com/screens/2014-01-10/safe-start/

Safe Start

Vivogig's rebirth exemplifies a fundamental truth about the Austin start-up scene

By Chase Hoffberger, January 10, 2014, Screens

Like most of the companies that comprise our city's tech start-up scene, Daniel Senyard's formed because he saw a hole that needed filling.

"We were just starting to see the emergence of local photo-sharing, and there was a need for niche content," he recalls. "Instagram wasn't much of a thing at the time; Foursquare and Gowalla were battling it out."

So he created the mobile app Vivogig, bootstrapped it for over a year, then found an investor who would throw him $300,000. "He came back and put in another $100,000 after that," Senyard adds, "so we thought that this was easy."

At its inception, Vivogig was a cool, easy-to-maneuver mobile application built like many of the ones you probably keep concealed within a clustered thumbnail on the third page of your iPhone. It afforded music enthusiasts an intuitive method of streamlining their fanhood. In theory, Senyard and co-founder Raymond McGlamery figured users would join for the photo-sharing among fellow fans, and money would come through affiliate ticket sales and iTunes purchases.

"We pull your favorite bands from Facebook and know who your friends are," Senyard explains. "We say, 'Hey, this dude just saw this band you like, and they're coming to your town: Here are photos and links to tickets.'"

Users would receive the two deliverables alongside a stream of photographs taken from like-minded fans using Vivogig in other towns. Senyard suggests they made for a more compelling sales experience. "Instead of saying 'Bruce Springsteen's playing in your town tomorrow,' he says, 'Bruce Springsteen's playing, and here are all the photos from the tour leading up to this show.'"

The company spent two years working clubs around Austin and started to see slight traction, eventually accumulating around 3,000 users by early 2013. But that user base was largely unpredictable. It spiked on nights in which Vivogig would sponsor a show and thus hang its banner and various paraphernalia all throughout the venue. But it wasn't making any money.

Nevertheless, Senyard and McGlamery hightailed it to Los Angeles last May to take part in the Music Business Association's Music Biz 2013 conference, where they received strong feedback from Linkin Park's manager and an executive at Sony Records. Jazzed and thinking they'd "gotten the ears of the big boys," they returned to Austin and decided to chase venture capital money. So they scheduled a meeting with an individual at a firm and requested some advice.

The advice, Senyard remembers, was "'No. You're trying to monetize off too many things. Interest is great, but it doesn't change the bank balance. It doesn't equate to users, and it doesn't generate revenue.'"

Top-Down

"The best way to get good at starting a company," relays Evan Baehr, an entrepreneur who, in addition to having spent time at Sulia and Facebook, recently co-founded Outbox, a sleek, consumer-based app designed to make snail mail sexier, "is by starting a company yourself."

That's a sentiment expressed over and over again within the local tech culture: Get out and do it on your own. Only then can you see how much you need to learn.

"The number one thing about teaching entrepreneurs is to help them engender that pioneer spirit and to make them aware of their own blindness," adds Kevin Koym, a former consultant for Dell who, since diving into entrepreneurialism in the mid-Nineties, has helped start seven companies and now advises young companies in their earliest stages.

"If they can see their own blindness, they can adapt to what's needed."

Koym's mindset explains why incubators – start-up culture meccas wherein accomplished entrepreneurs teach, advise, and oftentimes invest in younger entrepreneurs and their companies – have become such an integral component of the Austin tech scene this decade. He's got one of his own – Tech Ranch, a Northwest Austin facility that currently houses more than 60 companies – but there's also TechStars, DreamIt Ventures, Austin Technology Incubator, and Capital Factory, the most regularly mentioned and highly regarded of the crop. Last year the Downtown hub admitted 42 companies into its incubator program, including, in July, Senyard's Vivogig.

Senyard arrived at Capital Factory looking to increase Vivogig's usership, create new value for current stakeholders, and become a more appealing value proposition to any future investors. There were a number of ways he could go about making all that happen, but he knew that his current model – a platform for individual use he'd hoped would get popular in the same way that Facebook and Twitter had – would spur no interest from organized investors.

Working within CF's incubator, he restructured his business plan, shifting from a business-to-consumer model dependent on user-generated activity to a business-to-business-consumer model that would use Vivogig's tagging functionality and location-specific photo galleries to reel in corporate sponsors wanting to attach themselves to music. Those corporate sponsors would team with a band – say, a situation wherein Pepsi pays the Rolling Stones – and facilitate a Vivogig-powered contest, one in which, who knows, Keith Richards gifts a signed guitar to the concertgoer whose photo was shared the most. Or consider Vivogig's just-inked partnership with Revolver magazine for a national fan photo contest.

"Instead of going from the bottom up to get consumers, let's look at this ecosystem and go top down," Senyard explains. "The top, being the people with the most money, are the brands. If we can get the brands, they can put the money in the hands of the influencers – the bands – who'll then drive the users."

Senyard says the new model "gives users more incentive to share" their photos and also takes the onus off individual usership for a revenue stream – and it's starting to reap rewards. In December, he received a "small" investment from Capital Factory Executive Director Josh Baer and another from CF Incubator Director Gordon Daugherty, money that will help keep Vivogig's technical infrastructure active while Senyard secures a couple of "interesting deals" with corporations Baer affirms are currently "in the pipeline."

"It's that triangulation," Senyard says. "A lot of that shift was trying to appeal to investors: 'You know brands have a lot of money, and an ad network is a business you understand. Think of us as a mobile ad network in the events space.'"

If It Ain't Broke ...

Man Reverts to What He Knows Works is not how one would typify the Hollywood-enhanced idealism and high-stakes risk-taking that circulates through start-up culture, but in Austin that's often how things work. San Francisco – the romantic embodiment of its start-up scene, at least, a culture most individuals I spoke with for this story suggest truly does exist – can keep its all-or-nothing approach to investing. Down here, as Senyard and so many others have learned, sustainability comes from steady growth and, in the early stages, small, situational investments.

Some, like Baehr, seem dismissive when discussing Austin's propensity for developing software enterprise companies: "Most tend to be ... more conservative, focused business visions than the kind you have in the spirit of Stanford grads, who are trying to do crazy things like deliver packages by drones. Most of those will fail, but you have a chance of doing something extremely extraordinary," he says. Senyard even admits he regularly questions whether he could have found more initial interest for Vivogig if he'd opened it in California. But others suggest that the landscape's actually more progressive.

"We exist within a high-trust culture," Koym says. "When you have a high-trust culture, it takes less money to build things. You can take a risk on something that you want to do. Out in the Bay Area, you have five teams replicating your exact same idea, which doesn't make sense. It's just a waste of human effort. It's why you see more innovation here, per capita, than other cities."

It's a line of thinking that runs parallel to another popular opinion: that Austin's perfectly capable as-is, and doesn't need to make a citywide, cultural push into the more glamorous business-to-consumer realm.

"Let Austin be Austin," suggests onetime San Franciscan Eric Simone, a mentor at Capital Factory and TechStars and the CEO of ClearBlade, a company that "helps all types of business enhance existing systems by applying modern web and mobile user interfaces." "Things happen different here. It's much easier to connect here than it was in the Bay Area.

"Everything in the Bay Area's got to be a billion-dollar idea out of the box. Even if it's a half-baked idea, you can still get money thrown at it. Here, it's a little bit harder. It's a more cocooned environment, but you've got some time to incubate."

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