Shortly after Seattle entrepreneurs Adam Doppelt and Tony Wright launched CubeDuel, they knew they had a hit on their hands. After all, the online service — which allowed co-workers to choose between two colleagues they’d most want to work with — spread like wildfire across the Internet earlier this year to the point where LinkedIn temporarily throttled the service.
Best described as a Hot or Not for the workplace, the CubeDuel creation (it wasn’t so much a company as a project built over a few weekends) certainly was an overnight Web phenomenon. And, within a matter of days, Doppelt and Wright were entertaining their first acquisition offers.
And, as it turns out, the dynamic entrepreneurial duo actually took one of those deals, selling out to a group of California investors who have big (and yet-to-be-announced) plans for the service.
Until now, the acquisition of CubeDuel had not been reported, nor had the crazy behind-the-scenes roller coaster that went into building the project.
Both Doppelt and Wright, both of whom previously worked at Jobster and went on to start companies such as Urbanspoon and RescueTime, have pretty much moved on to other projects at this point. Wright recently launched the iPhone app TouchBase Calendar and Doppelt — a fervent bootstrapper — is working on sites such as BestSFBooks.com, PickHealthInsurance and Dwellable.
Here are excerpts from our wide-ranging conversation:
GeekWire: How many acquisition offers did you entertain in those first few days after the launch of CubeDuel?
Doppelt: “I think we had, and I don’t want to exaggerate, maybe four or five people who expressed interest in acquiring CubeDuel. But those weren’t all serious. But, in terms of being credible, I think in the end there were only two or three that had any serious interest. We zeroed in on the people we wanted to work with, and who had the most compelling offer…. that wouldn’t require us to work on it for two years and move to Texas. We were pretty specific.”
GW: So who bought you?
Tony Wright: “It was a group of investors. It was pretty instant…. And then everything got a lot slower once the deal started happening. What, the deal took, like nine weeks? It was a really long road. There were a lot of moving parts because it was a group of people.”
Doppelt: “It was complicated. It wasn’t just someone coming in and saying: ‘Here’s cash.’ It was much more elaborate than that. And we should stress, we’re not talking about massive amounts of money changing hands here. It was not the acquisition of the century. It was more notable for the speed, than for the actual dollar amounts.”
GW: For the amount of work you put into CubeDuel, were you happy with the outcome?
Wright: “We were very pleased with the deal. It was a very good deal…. We had to ask: What’s the minimum bar? What would it take us to move? And that’s a big number, because I think both of us like Seattle. Adam has kids, but I don’t know how much Adam likes Seattle.”
Doppelt: “I love Seattle. I guess I can tell you this. But we had one conversation with one company who we had no interest in going to work for. We were on the phone with them, and they said: ‘We want to buy you.’ And I said: ‘Well, I don’t think this is going to make any sense to you, but it is going to cost you $10 million.”
Wright: “Yeah, that one didn’t go too far after that…. We didn’t want to work for them, didn’t want to live where they live…. Adam didn’t like the people.”
Doppelt: I didn’t like the people. Everything was wrong about them, so I tried to set expectations from the first phone call.” (Laughs)
GW: Did you consider just continuing to build out CubeDuel yourselves?
Wright: “Yeah, we had that conversation.”
GW: Why didn’t you do it?
Doppelt: “Have you heard of a company called Jobster? We didn’t want to go back to the recruiting space.”
GW: You could have raised money for CubeDuel, no?
Wright: “Adam is not a raising-money-kind-of-guy, so a lot of the ideas that we bounce around have the additional (requirement) of: Is it bootstrappable? If it is a super capital-intensive business, than we can’t run it. And we thought this one did merit some meaningful funding.”
Doppelt: “I talk to entrepreneurs a lot who express: ‘I really regret having raised that money.’ Or, ‘I really regret having pursued that idea as far as I did.’ Usually, those thoughts go hand-in-hand, and it takes some discipline, especially if you have something that is hot and interesting, you have to have some insight into whether you want to work on it for years and years. And if you want to keep working on it, knowing that it could be a failure, it could be a flash in the pan, it could disappear.”
Wright: “That’s the way it was at Jobster. I am sure (the top executives) had these crisis moments where they were like: ‘There’s really no out for me here.’ And what they thought was a clear road, was really a murky mess. And they are committed.”
GW: Was there just a lack of desire to try to build a big business at CubeDuel?
Doppelt: “It was more nuanced than that. It was more like: Can we find CubeDuel a home with somebody who really wants to build a big business out of this? Because, we were at Jobster, and even though the potential was there, we were like, I am not sure it is the right fit for us.”
Wright: “Adam and I have nearly infinite freedom to do what we want. And we have to say: Is this what we want? Are we the guys to do it? Are we passionate about it? Are we going to be passionate about it in 18 months? And we really didn’t think that we were.”
GW: How long did they lock you in to the deal?
Doppelt: “It was actually a very friendly deal. We were involved, and continue to be involved, and continue to spend time on it. It is an advisory relationship, but it is also at-will. It is not like we are locked in.”
GW: What other things surprised you about those early conversations?
Doppelt: “In addition to the acquisition interest, we had a lot of people who wanted to buy the data. People who wanted a list of who is good or who is bad or people who wanted to be able to look at their own employees, and really some stuff that made us uncomfortable. But there’s no lack of business opportunities for ideas like CubeDuel. ”
GW: Was CubeDuel a one-time wonder? Or is it still generating a lot of usage?
Wright: “Almost every day people are Tweeting about it, and it is still churning along.”
Doppelt: “I am not sure if any of this was on your radar, but a half dozen copycats sprung up almost immediately — like BranchOut added a feature like this and Klout added a feature. A bunch of different sites tried to do this.”
Wright: “Nearly pixel for pixel.”
GW: So for the entrepreneurs out there who are thinking about kicking off a two or three week project, what sort of outcome can they expect? Is this the equivalent of a really good engineer’s salary for a year or more?
Doppelt: “You have to look at it like, am I getting back an appropriate return on my time? So, if you spend two or three weeks on something — whether it is a CubeDuel or a PickHealthInsurance or whatever it might be — if you can get out of it what you feel is more than a few weeks of salary, you should feel pretty good about what you did.”
Doppelt: “It is like The Black Swan, right? If you do 10 these things, four of them will make no money, four of them will do something and one of them will get you sued … and one of them could be a big hit. So, there is more to it than the raw dollars you are getting out of it.”
GW: Isn’t this a new model for doing startups? Can you make a living this way?
Doppelt: “I think the model is very rare. Because what you need are a couple of ingredients that don’t mix well together. You need somebody who tolerates risk, somebody who has cash in hand or a sugar mama or sugar daddy to look after them as they are making no money, and you need a good flow of ideas …. and those things don’t always go that well together. And, usually when people have enough savings that they don’t need to be jumping from job to job, oftentimes they are not as interested in building product after product after product. They get lazy or they don’t have the energy or they don’t have the technical skills.”
Wright: “Or they get increasingly big. They say they want their next thing to be bigger than their last, and say I am going to invest my energy to do one thing… I hate the ‘fail fast’ mantra, but there is that idea. Try something, and there are a couple outcomes: dismal failure, delivery of something good and awesome success.”
GW: Why do you hate the fail fast idea because it seems like that’s what you did here?
Wright: “I think there is a delicate understanding that failure is oftentimes the precursor to success. You look at the Airbnb guys, those guys literally failed for years with Airbnb…. They made an Obama breakfast cereal and used it to stay afloat, which is an amazing story, and now they are cashing out on this awesome funding round that they did. So, I think there is a delicate understanding of like: ‘What we did just failed, but I still think there is something awesome there.’ And I think a lot of people — if it is not a megahit out of the gate or it didn’t go viral — they want to put a bullet in it. There is that delicate balance of fail quickly, and have a big enough vision that you are passionate about that you fight through the failure and keep trying. And the winners are the ones who make the right choices there.”
Doppelt: “It has become so cheap now to build products — especially if you are the engineer. Building the product is really cheap, and I think that more people should try it. Just build little things, and then see what happens.”
Doppelt: “I get emails from entrepreneurs weekly who say: ‘I have this great idea for a startup that’s about restaurants, can you help?’ And it makes kind of sad because even if the idea is good, if the team doesn’t understand anything about SEO or sales or customer acquisition or SEM, they are doomed. Customer acquisition is always the hardest part of any startup, but if you have a hit like CubeDuel on your hands, it has some built-in customer acquisition…. But a lot of people launch startups …. and maybe it is a good idea and they get a little spike, but it is really going nowhere. I think an experienced entrepreneur will look at it upfront, and be like: ‘You are screwed. You should abandon ship.’ And, if you’ve already taken investment, your hands are tied.”
Wright: “The question is can you get customers for free or can you buy them for less than they make you? A product is literally just a ticket into the game, which is just the acquisition game of how do you find customers. Especially, as easy are things, you have 60 Y Combinator companies, you have 100 TechStars companies starting out, you have Startup Weekends literally happening every weekend all over the world, so the noise level is so high, if you don’t have that customer acquisition figured out, you are really just banking on a magical hit, like a Firefox or a Google where a movement rises up around it, and it just works because it is so awesome.”
GW: Are you guys working together on any other projects?
Doppelt: “I’d love to.”
Wright: “We keep sending screen shots to one another. It is sort of this confluence of someone you want to work with and an idea you want to work on, and I think Adam and I enjoy working together. And every time I have a startup idea, I send it to Adam.”
GW: Are you building any new startups?
Wright: “I’m fun-employed. That’s what we call it. It is this no man’s land, which is actually fun and uncomfortable where you literally have this spreadsheet of ideas — I am not sure if you have this spreadsheet or not?”
Doppelt: “The idea list. You add additional columns. It is not just the ideas, it is the opportunity, the costs.”
Wright: “How big is the market, how quickly can you build it, how much do you love it, who are the big competitors. It is a big commitment when you actually say: ‘this is my thing, and I am going to be doing this for years.’ But, I think you are right, the new model of things that have a great minimum viable product, the Eric Ries sort of thing, things where you can toss something out there in three to four weeks to see….Adam and I tend to shy away from things that have these one-year minimum viable products where you literally can’t even test the idea without investing hundreds of thousands of dollars.”
Doppelt: “We’ve done that before, and oftentimes you wish you could get that year back.”
GW: How many ideas do you guys have on your lists?
Wright: “I have 10 that are not crossed off.”
Doppelt: “Ethan (Lowry) and I built a list when we started Urbanspoon. The first one was restaurants, and the second one was travel. So, I am working my way down.”