Trying to Raise Money Without Building the Product First

Hi Dane! Who are you and what are you currently working on?

Hi, I’m Dane Jensen. I’m 34 and I’ve been in Austin Texas for the last 11 years. I run a startup here in the custom merch space Sock Club Custom Socks. We’ve been a D2C brand for over ten years and built our American supply chain designing and manufacturing custom socks.

Cam.ly made wifi cameras that would stream and store video in the cloud. I founded the company along with my friend Rhett Creighton. Our product was very similar to dropcam.com which eventually became Google Nest Cams.

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What’s your background and how did you come with Cam.ly’s idea?

I have a degree in Mathematics from Brown University. I’m a web software developer. Cam.ly was one of the first jobs I had after college.

Cam.ly was my business partner Rhett’s idea. He had built a few internet startups at that point. He is a true entrepreneur at heart and has since been building cryptocurrency startups.

Rhett and I tried a business finding and matching great software developers with software companies. Two products got some traction jobpoacher.com and githire.com. Job Poacher was a simple form that said what you currently did and what you were looking for and had an anonymous email feature like craigslist. Git Hire read your GitHub profile and ranked you and reached out to top performers to see if they wanted jobs. 

How did you go from idea to product?

We raised an Angel round from friends and family. We spent maybe 5 months building the product. We bought off-the-shelf hardware from China (IP cameras). Made some changes to the firmware and built our web video hosting service that connected to the cameras in Rails.

The product was pretty technically difficult. We had lots of obstacles designing a good consumer experience.  

We launched on Reddit and hacker news. Did some fun marketing stunts like building a pinata busting machine that we streamed using our service. We reached out to very popular critics of electronics and gave them our product to try out for free.

Which were the strategies to grow your business?

Listed above posting on internet channels, marketing stunts and giving our product to critics. I think the marketing stunts worked the best. If our product were more polished I think giving it to popular critics would have been more successful.

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When did things start to go in the wrong direction?

In the end, the business shut down because we failed to build a polished product in a short time and convince investors that we were worth betting on.

I think we should have had a plan for how we were going to raise our next round. We were pretty green and just tried to go to the market. But I think with the type of product we were building we should have instead built the product to raise money.

I think our competitors were more well connected and had raised more money. Our competitors had worked at top tech companies including Microsoft and Apple and successful startups like Xobni which meant they knew a lot of people with cash to invest.

Which were the causes of Cam.ly’s failure?

The main cause of our failure was that we didn’t build a polished product. We built something that worked for us (as hackers). We could easily set up the product but for a layman to set up our product it was a hassle. When famous electronic critics reviewed our product they wouldn’t even write reviews because the product “just wasn’t consumer-friendly enough yet.” We built everything ourselves. From the web servers to host the video to the firmware on the cameras and we were running on little Angel funding. I think we should have thought more about what we needed to prove to investors to get that next round of funding to give us a runway to make a more polished product. We were trying to go from zero to a consumer-ready product all without much funding. It was also our first time trying to raise money. I remember getting an email from Paul Graham in our YC rejection email saying something like “you seem like good hackers but your product doesn’t seem good enough yet” which seems about right.

Which were your expenses? Did you achieve any revenue? In the end, how much money did you lose?

Our expenses were pretty bare bones. Rhett and I were living in an apartment in Austin, TX that probably cost $800/month. We had food expenses. And then we were buying these commodity IP cameras from China that were probably like $1000 for the orders we were doing (maybe like 10 cameras at a time). 

If you had to start over, what would you do differently?

I would have told him you need to either focus on making this a product that your mom can use or the other path to success is to prove to a VC or other investor that you're a good bet and spend all your time raising money and not on the product.  Don’t split your time between product and fundraising.  Make the plan to make a good product and then go fundraise or make a great product and go to market.

I wish I had more determination to raise money.  I think we had a good team and good sense for what made a good business we just needed a runway to get product-market fit. 

Which are your favorite entrepreneurial resources?

• Shoe Dog - if you want to go far, focus on building a team.
• Everything YCombinator puts out - That community just has a very rational approach to business and cuts through the BS and figures out how to build something people want.
• Derek Sivers blog - Importance of customer service and execution.
• Creativity Inc - We went through a tough period last Fall/Winter of exponential growth that we weren’t necessarily prepared for. I got this book for all of the Sock Club employees as a Christmas gift. It includes great advice about scaling a business and investing in your employees.