Tech Stocks – The New Safe Bet

I’m enjoying how high tech stocks are having such a good run. Solid earnings and profits from the sector.

Homebuilders? yeah right! Banks? don’t think so!

Of course I’m a contrarian. Sell GOOG! Buy CFC!

Hoping that the Key to Success is to Not Die

Yesterday the Evenlevel founders got together and scoped out the relaunch of Evenlevel. I enjoyed calling it the Evenlevel 2.0 Project Launch Meeting.

It’s been a hard few weeks having our hard work go down the drain. Everyday that passes, new life is coming back to our business and we’ve worked out a new business model.

Paul Graham indicated that startups tend to either succeed or die. He then proposes that in order to find success, one should simply not die. We’re going to be taking that to heart at Evenlevel: choosing to persist rather then fold.

We left our meeting extremely optimistic. In a sense we are starting over, but more importantly we have all the knowledge that came with the first version of Evenlevel. The best part of all: 80%+ of the original Evenlevel code will be reused.

Unit Testing!

I think I’ve officially become a fan of unit testing. Last night I was writing some code while trying out the upcoming rails 2.0 and decided to write some unit tests. I have been writing rails code as a hobby and then with Evenlevel for at least a year now and have always avoided the automated testing. No More!

Why I Avoided It:

In the beginning, because I was too busy the learning the rails core. Lately, because I felt like it was a waste of time.

Why I Was Wrong:

You’re gonna have to test anyway. I used to spent time in the rails console testing out my models. How stupid. I wrote 12 tests last night. It took less time than manually testing and now I have a small but sure-to-grow suite of tests to perform sanity checks in the future.

 What’s Next:

Gotta learn functional and integration testing now.

What I Learned

I starting thinking about an Evenlevel post-mortem blog post. Each day that goes by it looks like we’re going to be able to relaunch with a different twist on things, so technically a post-mortem is not appropriate. Lets just call this “what I’ve learned…so far”

If you want to learn at the fastest pace in your life, start a company. I was one of the earliest employees at my previous job, and I learned so much; but I’m thinking that nothing holds a candle to starting a company yourself.

Ruby on Rails is developer bliss.

If you want to have fun coding, enjoy elegance and simplicity, there is no better framework.

Rails can also help you deliver a web application in less time

I can accomplish things in a minute with Rails that used to take me a whole day. It’s amazing how simple it is to build your data model and scope out all your controllers. The most time consuming part for me is still front-end (html + css) coding (actually, not so much the code, just settling on something that looks decent and is usable).

Outsource your IT infrastructure

Evenlevel is hosted on theplanet. This is fine, but for the next iteration we’re going with Joyent Accelerators. I spent too much time worrying about DNS servers, backups, etc. No More. Not only that, but Joyent costs less. I realize we weren’t going out and buying servers and colocating, but that was something we were going to eventually have to contend with. I really appreciate how you can scale with Joyent easily from day 1 (Just add more accelerators and BIG-IP load balancing).

Bootstrapping is really really hard

Save money or raise seed capital then quit your job. It is way too hard to burn the midnight oil or be a weekend warrior: Everyone suffers.

Tweaking performance pays off

Within a day of setting up nginx with gzip compression and page caching, Google starting crawling 10 times more of our pages. Two days after that, our search traffic quintupled. Not only did we reduce our bandwidth utilization and give our users a more enjoyable experience, but Google started loving us within a day.

Feelin’ Alive

After about a week of being shut down, we are really close on a new but similar business model. We’ve learned some lessons, and we still have a fair bit of runway.

Why I Don’t Want to Be in Silicon Valley

The top talent may be in Silicon Valley, but you’re living in a bubble

The majority of today’s startups serve obscure purposes that average people don’t care about. I’m tired about reading about one-off, gimmicky AJAX re-hashes. How many twitter-alikes and online data storage startups does the world need?

If there is so much talent in Silicon Valley, why are so many of the ideas so awful? I think the community breeds the culture of crap-shoot, quick-flip businesses. Some do pay off, but where is the true value in the majority of these companies? Evenlevel failed, but it was a novel application of technology to a relatively untouched sector and our goal was to save consumers lots of money on their vehicle purchases.

Being outside of the regional startup bubble will help to keep my ideas grounded in reality. A good example is Vidoop with their secure image grid. I really feel like they thought up something truly new and I wish them all the best. Where are they located? Tulsa, Oklahoma. It’s companies like Vidoop that keep the overall bubble from bursting.

There are plenty of rich people here, too

You need money for startups. Austin, TX has money. Maybe it doesn’t flow as freely and there isn’t as much of it, but is that really a bad thing? Startup Darwinism.

California is expensive

I am a product of Southern California. Born and raised, lived there for 22 years. My huge Portuguese family lives there and I miss them a lot, but I’ll probably never move back. I could move to Silicon Valley and probably do really well, possibly doubling my salary. Too bad my quality of life would drop considerably.

First off, the cost of doing business is a lot lower in a place like Austin, TX. Lower rents, lower salaries, lower taxes, lower costs to bootstrap.

I feel like if you have a good home and your finances aren’t causing you to spit out your $4.00 mocha as you contemplate $3.80 gas prices, you are a lot better off when it comes to your venture. Unstressed, happy employees and founders coupled with longer financial runways lead to better companies.

Bottom line

Overall, I am very hopeful that Austin, TX will become a bit more of a software and consumer internet town. You’re already seeing some players in Austin: uShip (my former employer), pluck, thoof, spiceworks, etc.

Regarding the FAIL

Evenlevel

Great looking logo eh? Too bad that is all that is left at this point.

Evenlevel is (was? no…it still is) a great idea conceived by EJ Lawless, Chris Clever and myself. The basic idea is that the auto industry is too old fashioned and that the used car industry has too many inefficiencies. Right now, chances are that a good portion of used cars at your local dealership came from a dealer-only used car auction. Your dealer buys the car, gives it a cleaning, and sells it you you. It sits on their lot, depreciates, salesmen get paid commission, etc.

Evenlevel sought out to bring the dealer-only auctions to consumers, resulting in a more consumer-driven “pull” rather than “push” market for used cars. We would take images and data from these auctions, market the cars, sell the cars and have them shipped directly from the auction to the consumer. The prices were great. Thousands below blue book.

It worked. We sold five cars in two weeks. No marketing spend. Our prices were really low too. The headaches were starting: customer service calls, lots of paperwork, dealing with financing, our line of credit that we used to float transactions was tapped. I considered them good headaches, things we had to figure out and streamline.

On October 4th our google organic search traffic quintupled. On track for ~15k visitors that month. On October 5th, we were told to shut down by the upstream auction that our data came from.

It’s not like they did wrong by us. We were scraping their data without their consent. Our bad. We figured we were great for them and they wouldn’t mind, after all, from what I understand (I wrote the code, but didn’t deal with the financial details) they made $500 dollars per used car transaction on their site. Hey, YouTube had tons of copyrighted stuff on their site, and look at that outcome. We were not so fortunate

Apparently there were complaints about our prices and changing the status quo, so they cut off the wee startup.

So why are we stopping? Not enough resources to rebound at this point. Also, the whole business hedges on a business development deal: getting one auction company to let you sell cars direct to the public. I think the idea is going to rest for a while and make a comeback at some point. I think we lacked connections that could persuade the industry to let us exist. Maybe some big player will be start doing something similar and we’ll be able to bring it to market faster because that’s what startups do.

It’s rare to find a genuinely new way to apply technology to an existing market. Ideas are a dime a dozen, most of them stink (just read uncov.com). I’m definitely mourning for Evenlevel, but I think we’re making the right decision to stop for now.

Writer’s Block

Waddaya know. It’s my first post and I have writers block. I’m thinking this does not bode well for me and this blog. Might as well start with an introduction:

My name is Eric Falcao, I live in Austin, TX and I’m an entrepreneur. Might as well mention at this point that while it’s not finalized yet, my first startup just failed.

Creating this blog is a way for me learn, pick up the pieces and move on to my next project. I’ve got lots of opinions and convictions, feel free to discredit them since I’m 0-for-1.

I’m hungrier for success than ever. Time to start the journey over again…