Foundr Magazine Podcast with Nathan Chan

Investing in the Future

How three women from Iceland launched Crowberry Capital, a Nordic venture capital fund seeking to support the next generation of creative entrepreneurs.

To be boldly creative, you often have to strike out on your own adventure. So that’s exactly what Hekla Arnardottir, Helga Valfells, and Jenny Ruth Hrafnsdottir did.

While working together at an investment capital fund, the three women noticed a pressing need for more early-stage funding in their region. The trio wondered if they could not only meet that need, but also create something exciting and visionary by launching a private fund of their own.

In 2017, they took the leap, and set out to launch Crowberry Capital, a Nordic venture capital fund with its sights set on supporting creative technological advancements in spaces ranging from gaming to health.

No matter the field, their goal was to help young and promising Nordic companies (in Iceland and Sweden) grow into global brands. And just two years later, they already have 10 startups under their wing.

There were, of course, many steps in between the launch and the fund’s present day success. For one, before a fund can start scouting new talent to back, it needs a whole lot of cash to invest in the first place.

Cold Calls

As you might imagine, launching a venture capital fund isn’t cheap. But you might be surprised to learn that venture capitalists don’t necessarily need to have their own personal wealth to get started (although it certainly helps). VC firms offer financial and other forms of support to early stage companies with high potential for growth, often deploying assets from other sources—wealthy individuals, banks, other investment funds, etc.

Although Arnardottir, Valfells, and Hrafnsdottir knew many of the institutional investors in Iceland and had impeccable reputations, they still found themselves cold calling smaller investors. They even spread word through the media that they were launching the fund.

“We went out early in the process to the local media and said we were going raise this fund,” Hrafnsdottir says. “So we sort of got it out in the open. Of course, that increases the risk that if you fail, you fail publicly, but we took that risk.”

Although they acknowledged the risk, for them, failure was never an option.

“That’s why it’s great to be three,” Valfells says. “There was always at least one optimist.”

That process of raising capital also gave the team a fresh perspective on life as an entrepreneur.

“It made us more empathetic toward entrepreneurs, because you realize you just have to cold call rich people you’ve never met and say, ‘Would you like to invest in my fund?’” Valfells recounts with a laugh.

Being on the “selling side,” as she puts it, helped them to recognize more clearly what it takes to pitch effectively and reemphasized the importance of passionate energy, lessons they carried forward into choosing where to invest once the fund was up and running.

But despite the daily strain of cold calling for investments, Valfells says that living in Iceland took away much of the stress others might experience in their position.

“There’s a great safety net,” Valfells says. “Everybody has access to childcare and school and healthcare, so I think you’re willing to take a risk with your professional life because you know there’s a safety net that catches you.”

She says that this safety net makes walking away from stability much easier and, because of that, creativity is free to flourish. And by extension, people are more liberated to do what they love.

“I think we’ve all made sacrifices in the sense that we’ve turned down higher paying jobs and jobs with more security, but it hasn’t been a sacrifice because this is what we love doing,” Valfells says.

After six months of phone calls and meetings, they had raised $40 million, and Crowberry Capital was ready to take flight.

Comfort in the Chaos

When the time came for the trio to begin investing in up-and-coming companies, they weren’t just focused on the products coming across their desks. Instead, they took the time to learn as much, if not more, about the minds behind the products.

“Everybody wishes to invest in bold, creative, and hardworking entrepreneurs,” Valfells says, “but I think that one part of the process with us is we get to know the entrepreneurs really well and really see the ones that can kind of do things to move the needle.”

By taking everything into account, from the passion behind the pitch to the willingness of the entrepreneurs to leave jobs behind and throw themselves entirely into their projects, the three founders of Crowberry Capital single out investments with staying power.

“It’s about finding the comfort in the chaos,” Hrafnsdottir says. “I think the ones that really go with the flow and are determined with their mission manage to prosper at this early stage.”

They also consider how the entrepreneurs plan to enter the market, draw attention to their product, and brand themselves. Essentially, they have an eye on the creative spirit that exists within a team.

“It’s becoming more important than anything, because in this age of artificial intelligence it’s really important that we as people build up our and social intelligence,” Hrafnsdottir says. “These are the things AI is never going to bring to the table.”

Arnardottir also says that they pay particular attention to what kind of team the entrepreneurs surround themselves with, citing gaming companies as being particularly talented at building stellar teams. Do they communicate well? Do they represent a diversity of skillsets? These are the questions the trio talks over before choosing to invest.

Valfells even noted that she’s seen particular success when it comes to going global when a team is international from day one.

“Having a diverse, international background helps build an international company,” she says.

But, while they try to find teams and companies that can thrive and grow internationally, they aren’t just on the hunt for the next unicorn.

“I think there’s a risk in the world today that unicorns overshadow a lot of good businesses that can give investors great returns,” Valfells says.

She explains that, while unicorns are great, they also keep their eyes peeled for racehorses: companies that won’t make a massive splash but will never fail as they faithfully speed forward into the future.

And the future is where all three women have fixed their sights.

Planning for a Digital Future

In an increasingly digital world, Crowberry Capital has chosen to focus on businesses that are focused on building a better future within that reality.

“We invest in technology that we believe is changing the world for the better,” Valfells says, “and that makes you feel really happy and good about your job.”

For example, Travelade provides online travel guides curated from the recommendations of locals, and Aldin is an immersive VR company. They’ve also welcomed Monerium, an e-currency supported by blockchain technology, and Kind, a virtual communication tool for the healthcare industry, into the fold.

They are also very mindful to choose companies they will want to work with for years, because Crowberry doesn’t just offer seed money to startups. They also plan to support businesses through B and even C round funding, with up to $6 million set aside for each company as it grows over the 10-year lifespan of the fund.

So, Arnardottir explains, if one of the three founders is more passionate about a company than the others, she takes point on guiding that business while the others serve more of a support role.

But no matter how passionate they are about a business, they are very careful to let the entrepreneurs make the big decisions.

“I think it’s very important that we are hands on and not hands in,” Valfells says. “For us, it’s very important that we’re backing teams that are really good at execution and are in the operations, and we’re more like sounding boards and mentors.”

So, as the trio behind Crowberry Capital presses forward into the future, searching for the final five investments they plan to make, they are excited to lead another generation of Nordic entrepreneurs onto the international stage as creative innovators who will change the world.

Interview by Nathan Chan, feature article reprinted from Foundr Magazine, by Erica Comitalo


Key Takeaways

  • The pressing need Arnardottir, Valfells, and Hrafnsdottir noticed that inspired the idea for their Nordic venture capital fund, Crowberry Capital
  • Why the trio relied on cold calling and local media to launch their venture capital fund
  • How raising $40 million in capital made the founding partners more empathetic towards entrepreneurs
  • How living in Iceland relieved some of the pressure of taking a professional risk
  • Why Arnardottir, Valfells, and Hrafnsdottir keep their eyes peeled for “racehorses” in addition to unicorns
  • The reason the founding partners take so much time to get to know the entrepreneurs they invest in
  • The difference between hands on versus hands in
  • Why Crowberry Capital chooses to focus on businesses that are building a better digital future
Direct download: FP279_Crowberry.mp3
Category:general -- posted at: 10:56am AEDT

Konrad Bergström and X Shore have set out to change the boating industry, one electric motor at a time. 

Timing is everything for Konrad Bergström.

So when he first got the idea for X Shore in 1996, he trademarked the name immediately, but didn’t launch the company he had in mind just yet. It wasn’t the right time.

Bergström wanted to build safer boats, but he realized that the boating world was lagging behind the automobile industry when it came to details and design. Instead of forcing his dream, he chose to wait.

Over a decade later, inspiration to launch his boat company struck once again, but this time the dream had become bigger. With the world beginning to fully embrace electric vehicles, he wanted to build and sell a sleek, top-of-the-line, 100% electric marine craft.

“This makes actually more sense on the water,” Bergström says. “Because it’s an open area where you are getting fumes, and you are getting noise disturbance, and it’s actually taking more energy to drive in the water.”

Twenty years later, in 2016, X Shore developed its first working prototype. Today, Bergström and his team are ready to change the world’s view on how boats are powered. Not only do they hope to reduce pollution and the impact on wildlife with their electric engines, but they also hope to improve the overall boating experience for the consumer.

But long before Bergström would design his first boat, he started with headphones.

One Journey Ends, Another Begins

If you ask Bergström, he’ll say that he’s never experienced what a real job is like. He’s just experienced different ideas.

From an early age, Bergström has had an entrepreneurial spirit and a knack for creativity. At just 16, he moved to New Zealand, launching a distribution company for windsurfing gear called Thule Roofracks, among other projects. However, his greatest achievement was founding Zound Industries in 2008, where he served as its president until April of 2019.

While at the skateboarding fashion company WeSC, Bergström helped the brand to create a line of fashionable headphones. Wanting to take the concept one step further, Bergström founded Zound and turned it into an electronics giant, specializing in headphones and speakers. The company created many popular headphone brands such as Urbanears, and held licensing deals with audio behemoths like Marshall.

During his 10 years as president of the company, they would go on to sell over 20 million products in 135 countries. Despite the strong sales, Zound and Bergström parted ways over differences on the direction of the company.

“I always think that things happen for a reason,” Bergström says. “So I have moved on and I wish them all the luck. And I did build a fantastic company, so that’s never gonna go away, even if I don’t have any ownership anymore.”

The separation from Zound allowed Bergström to give all of his attention to X Shore, which had gained new life in 2012 after Bergström saw the rise of Tesla and its technological advances. With the electric revolution for automobiles well underway, he felt that concept of the electric boat would also take off.

“We started the electric product in 2012, and basically, I thought it was going to be easy,” Bergström says. “Looking at the internet at some lithium batteries and some engine, like, how hard can it be?”

Very hard, as it turned out.

Over the next four years, the team would work on the concept before completing their first working prototype in 2016. And although it took years longer than he anticipated, Bergström was glad that they went through the growing pains.

“That one, by the way, looked like crap,” Bergstorm says about the initial prototype. “Sometimes, an idea on paper is very far from getting it industrialized. So it takes time, especially with such a big product, to go through all the details and find solutions that economical, so you can have the margins and survive as a company.”

Let the Other Guy Build the Tech

Bergström and X Shore don’t want to recreate the wheel. Rather, they just want to right the ship.

With Tesla and other companies openly releasing their electric technology, Bergström didn’t feel the need to develop his own tech for boats. Sure, he’d have to develop some things on his own, but for the most part, why not use what’s already out there, he figured.

“X Shore, of course, has some of its own technology,” Bergström says. “But basically, we are piggybacking on the automotive industry.”

With armies of engineers grinding away on this type of technology, which is changing all the time, it made more sense to have others advance the technology and for X Shore to translate it into a marine environment. Not to mention, this approach helped their bottom line.

“Instead of having like 100% of the development cost, say that we are paying like 3%,” Bergström says. “But it’s still a lot of money. … We have the first mover advantage of building a new segment, but we are not driving the technology.”

The approach has also allowed X Shore to keep its staff smaller, which includes not having an in-house engineering team. That’s basically unheard of for an innovative company such as this. X Shore has partnered with automotive giants such as BMW and Rolls Royce to help find the best solutions for maximizing speed and driving range.

Despite not having an engineering team in house, it doesn’t mean that X Shore is done innovating. They still have a lot of work to do in order to become a leader in the marine industry.

“We spent around 50,000 engineering hours so far,” Bergström says. “And I think that we are going to have to spend another 50,000, so it’s a total of 100,000 engineering hours.”

Next Up

Bergström is excited to start selling boats and shipping them, starting sometime next year. More importantly, he’s ready to bring more awareness to X Shore, which includes unveiling the third generation of its product in January.

When he first started to openly share the idea of an electric boat, the reception wasn’t warm. Now he feels, the timing is finally right. Proof lies in the company’s recent investment campaign, which raised €1.5 million.

“With a product like this, I needed the car electric revolution to go first,” Bergström says. “When I talked to people in 2012 and said that I’m going to do an electric boat, they are like, you are crazy. But now when we are at the tradeshow, everybody is like, oh that makes sense why didn’t anyone do it earlier.”

Even if people are still skeptical about the concept, however, all they’ll need to do to become convinced is take a ride.

“Once you experience the power of silence, you never go back,” Bergström says. “It’s truly amazing.

Tips for Inspiring Creativity

Konrad Bergström has built a career around opportunity and creativity. A founder of multiple businesses, he’s always kept his eyes open for new concepts and has kept his ideas free flowing. Since 1980, he’s created businesses that ranged from snowboarding contests to stereo headphones. Bergström now is onto his next adventure, X Shore, where he hopes to change the world of boating by making it greener and quieter.

If you’re in a creative funk, here are three tips from Bergström for inspiring creativity:

Be Patient

Bergström initially wanted to start the boat company in 1996, so much so, that he trademarked the name X Shore before actually creating the company. Unsure of the direction he wanted to take, he waited until 2012, when after witnessing Tesla’s new technology with electric cars, he was inspired. It only was then that he knew wanted to build boats that were fully powered by batteries.

If at first you don’t find the right concept you feel comfortable with, especially when it comes to creating a business, be patient. Pursue other interests, and along the way, you may get the inspiration you were looking for in the beginning. Even if it takes 16 years.

But Also Be Persistent

“It took me a long time on different things,” Bergström says, “But sometimes, time is what you need because when you can think things over and over again, it does make you come to better conclusions, especially when you work in design.“

X Shore launched its first working prototype in 2016, nearly four years after officially moving forward on building an electric boat. However, just as Bergström was patient in coming up with the initial concept for the company, he was also very persistent when it came to the design and functionality of the boat. He wanted everything to be just right before releasing it to market.

Look Around You

Bergström was raised in a home of creative individuals. His mother was a theater director, his father was an engineer, his grandmother exposed him to nature, and his grandfather was an innovator in medicine with over 200 patents. Wherever he looked, he saw a creative role model.

However, according to Bergström, you can be inspired anytime and anywhere. You don’t have to be from a family full of creative individuals. It’s more about exposing yourself to different environments, people, and settings. You just have to “change rootings” as Bergström puts it. You can draw inspiration from playing with children, products you’re buying, or even the food that you’re eating.

“You just have to open your senses to make the right choices when it comes to creativity,” Bergström says.

Interview by Nathan Chan, feature article reprinted from Foundr Magazine, by Nick Allen


Key Takeaways

  • The series of unconventional jobs Bergström held from a young age
  • Why Bergström trademarked the name X Shore in 1996 but didn’t launch it for two decades
  • How Zound Industries took over Bergström’s life for 10 years, and what ultimately led him to walk away from the company
  • Why Bergström decided to let the electric car revolution play out first
  • The growing pains that came with creating a working prototype for electric boats
  • How X Shore piggybacks on the automotive industry
  • Bergström’s plans to start selling and shipping X Shore boats in 2020
Direct download: FP278_Konrad_Bergstrom.mp3
Category:general -- posted at: 7:04am AEDT

Content in a Flash

How Grant Munro and Flashstock created an agile solution for on-brand, custom photo and video—and reaped a big windfall.

For Grant Munro, nothing felt right.

He had always aspired to start his own business, but never knew what to pursue. He went on to work for larger companies as a software developer and product manager, but those paths didn’t feel quite right either.

Despite not having an explicitly creative background (what with coming from tech and software development), Munro finally found a pursuit that excited him—helping brands express themselves creatively.

He first came upon the opportunity after major clients he was working with at a creative boutique kept asking for help with creating custom visual content. As photo and video on social media were taking off, and major brands were seeking solutions for creating unique content, Munro realized it was time to start his own thing.

“It got to the point, I was like well, if I’m gonna to start a company, this seems like a pretty good one,” Munro says.

Good turned out to be great. In 2014, Flashstock was born, and it was perfectly timed to the rise of Instagram as an advertising platform.

As a leading custom content creation company with a global network of freelancers and contributors, Flashstock’s proprietary platform allowed hundreds of brands across the Fortune 500 to streamline on-demand visual content (think photos, videos, GIFs, and so on). With its steady growth, unique software, and a list of high-profile clients, Shutterstock acquired the Toronto-based company in 2017, after it had been in business just four years, for $50 million in cash. Flashstock was subsequently rebranded as Shutterstock Custom.

However, had it not been for a former employer making a change to its business model, Flashstock may never have come into existence.

This Seems Like a Good Company to Start

After those early stints at major companies and acquiring his MBA, Munro took his first steps into the startup world, joining a boutique social media agency in Toronto. That’s when he really started to find some joy in his work.

With his experience in product development and software engineering, he joined the company’s product team with the hopes of coming up with new ideas to increase their SaaS revenue. Along the way, he learned that he enjoyed the customer development process, and understanding clients’ pain points and problems.

As the company’s product business grew and it became established as an early player in social media management, the team realized that they no longer wanted to focus on traditional creative agency services, such as content creation.

“They viewed that as something that wasn’t a good type of revenue that they wanted to continue, so they discontinued offering it,” Munro says. “And because we were providing content mostly for social at the time, and some digital stuff, the clients were very unhappy about this.”

Munro was surprised by his clients’ reactions. Although this shutdown may have provided a temporary inconvenience, he assumed that someone else would simply take over their content production, maybe another agency.

That wasn’t the case.

The agency had created a formula for creating low-cost, quick-turnaround content for social media, and clients loved it. They didn’t want to see it go away, and they kept asking Munro for different solutions around content, despite the agency no longer providing the service.

Realizing that these questions would never go away, and that companies were not finding a solution for their content production, Munro got creative and took a risk.

“I ended my role there and then sort of rolled over and started Flashstock pretty much the next week,” Munro says. “And went to some of the early clients from the previous company that had requested help on the content side and offered up a solution that would basically connect them, through some software that I wrote, directly to freelancers all around the world.”

By acquiring early customers and refining the product, it provided Flashstock with some growth and sustainability early on, but not without some changes.

Visual Identity Calibration

When Munro initially started Flashstock, the positioning for the company was that it was an alternative to stock photos and videos. The messaging was working with marketing agencies, but brands were not as interested. Munro knew he had to change it up.

As Instagram was making some changes and starting to take off, Flashstock’s positioning went in a new direction. It was no longer just an alternative resource for stock imagery—it was now a place where brands could go for help in telling their stories in unique ways, using differentiated content, but at a much lower cost.

More brands started to buy into this concept, recognizing that creating custom content on a large scale posed a great challenge. Major corporations didn’t have the time to find freelancers and manage the creative process, so they need needed a service to do that for them. They needed Flashstock to do this.

Munro first and foremost needed to come up with a way for a brand to communicate in a non-ambiguous way what it stood for and their target audience. And most importantly, all of this needed to be presented in a way that a freelancer could understand, despite never meeting the client.

“If you’re a big organization, it’s usually okay , because when you’re creating content, you’re usually with the people that are creating it,” Munro says. “But when you’re in this networked world where you’re communicating through software and you’re never talking to people, that level of ambiguity breaks the system. So we needed to come up with a way to solve that, frankly, for our own survival.”

The solution?

Something Munro calls visual identity calibration.

This phrase describes a system in which a brand enters its information and describes its identity to Flashstock, and then the Flashstock team puts the brand through an exercise to pin them down on the right details. The end product is a well defined set of creative variables, which Flashstock then provides to their freelancers to create new, on-brand content.

The system garnered great feedback and has been praised for its innovation in solving this communication pain point. So much so, that some companies have even used a lot of these tools internally to communicate with each other, according to Munro.

Power of the ‘Gram

Around 2014, Instagram really began to open up its platform for anyone to be able to post and create company pages, and major brands wanted to get in on the action. In order to fully take advantage of it, brands would have to post often, but on the cheap for it to make sense for them financially.

This was right up Flashstock’s alley.

“Every organization wanted to be on the platform, but because there was no paid promotion behind it, they wanted the cost of the content to be as close to zero as possible,” Munro says.

This demand allowed Flashstock to be able to acquire new clients regularly, as many brands wanted to create content for Instagram, but not many agencies were offering this custom service at an affordable price. With Flashstock, brands could log in to the platform, find contributors around the globe, and receive on-brand content in a timely fashion.

“I was really able to complement what a traditional creative agency was doing and not really be a competitive threat because they didn’t want to create that type of content,” Munro says, referring to custom content at low cost.

Soon thereafter, Instagram turned on its ad platform, allowing brands to really promote their content that they made native for the platform. Once Instagram flipped this switch, it really took off as an effective place for brands to advertise, and Flashstock’s growth took off with it. The rest, as they say, is history.

The company grew extremely quickly, and within just four years of operating, was acquired by leading stock photography company Shutterstock.

Today, Munro is the senior vice president of Shutterstock Custom, where he has been since Shutterstock acquired Flashstock back in 2017. The division operates as its own unit, where it continues to provide major brands with quick, authentic branded content.

As for Munro’s future, and whether he’ll ever return to entrepreneurship, he’ll never say never.

“Right now, I’m still with Shutterstock and I plan to be with Shutterstock for some time,” Munro says. “When you’re a startup, you’re out there doing it alone and sort of fighting for your life, and then when someone takes you into the fold like Shutterstock has, they provide you with a ton of resources. So, we’ve got a bunch of unfinished business that we have left to take care of.”

3 Tips For Scaling A Creative Company

When Grant Munro decided to start Flashstock, he was learning everything in real-time. Building a company culture and fostering creative talent were all new to him. Fortunately, Munro was a quick learner. He found the right formula for success and company growth, and in just four years, sold Flashstock to Shutterstock for $50 million.

Here are three of Munro’s tips for scaling a creative company.

Know Your Customer

During a stint at a startup, Munro learned how much he enjoyed the process of customer development and understanding what a company’s pain points were. By really diving in deep and talking with his clients about their problems, or even understanding your own company’s problem, it becomes easier to think of novel solutions, or to have “aha” moments.

When you’ve invested the time into knowing the problem and understanding the ecosystem of that problem, you open yourself up more to those flashpoints of creativity and resolution. If you don’t spend the effort doing customer development, you’re making it harder on yourself, maybe not now, but later.

“I feel like a lot of that gets overlooked at companies of all sizes,” Munro says. “Where they almost have to reinvent the wheel every time they want to launch a new campaign because they haven’t created that discipline around customer development.”

Go Chat With Someone Who’s Done It

When a person sets out to create a product or scale a business, they tend to focus first on what they’re good at and what interests them. And if there is a challenging task ahead that may be intimidating, it is quite natural for them to put it off and go back to working on something they’re good at. This can stunt the growth of your business and make it hard to scale.

Munro suggests that if you’re struggling with a component of your business, or need some guidance, go talk with someone who’s done that task before.

“When you talk through your current priorities with people who have sort of done it and been there, they can help you recalibrate those ,” Munro says. “And they can help you say, ‘No, no, you don’t need to write another line of code, or you know, you don’t need to tweak your designs anymore. What you need to do it is set up your accounting software.’”

Define Your Core Values and Mission

Flashpoint’s growth was very, very fast.

Within the company’s first few years, they had grown to around 80 people, so they had little time to set up any processes, let alone establish values or have a clear company mission.

It was when he was repeatedly asked questions about the company’s future, and he realized he didn’t have a hand in the interview process with some key employees, that he felt it was time to create a company mission and values.

With the help of a third party to facilitate a retreat, Munro and key members of the team came up with Flashstock’s mission and values. And immediately, he saw results across the company. It would help them formulate an employee handbook, and to use these values in the hiring process.

“It simplified everything,” Munro says. “We would reference them all the time. From a creativity perspective, people feel really comfortable, people feel really consistent, people feel really welcomed their ideas based on the culture and that sort of frees up their thinking.”

Interview by Nathan Chan, feature article reprinted from Foundr Magazine, by Nick Allen


Key Takeaways

  • Why the creative boutique Munro worked at stopped offering custom social media content creation
  • How this decision left his clients with an unmet need and led him to launch Flashstock
  • Why Munro pivoted the focus of Flashstock
  • The problem Flashstock solved for brands looking to tell their unique stories
  • How Flashstock’s “visual identity calibration” works
  • The impact that Instagram’s growth had on Flashstock’s business
  • Flashstock’s rapid growth and acquisition by Shutterstock
  • Why Munro doesn’t plan to return to entrepreneurship any time soon
Direct download: FP277_Grant_Munro.mp3
Category:general -- posted at: 6:27am AEDT

Rise of the Urban Beardsman

How Eric Bandholz challenged the stereotypes of bearded men and built a booming community with Beardbrand.

Eric Bandholz didn’t like being put into a box.

In his former life as a financial advisor at a big bank, for example, he was expected to fit the stereotypical facade of a banker—suit, tie, clean-shaven.

He didn’t like it, so he quit.

With his newfound freedom, Bandholz embarked on an entrepreneurial journey, all while sporting a fresh, full beard. While he loved his rugged new look, he noticed it was happening yet again. This time, he found himself stuffed in a box with the likes of ZZ Top and the guys on Duck Dynasty.

Of course, Bandholz didn’t identify with any of these well-known bearded figures either. And he began to realize that other full-bearded men from all walks of life didn’t fit this mold either.

“I ended up going to this event where I sort of meet other guys like me, like stay-at-home dads and ministers, salespeople, doctors, lawyers, who are all rocking beards and they didn’t really fit the traditional stereotype,” Bandholz says. “So I was thinking about it. … Who are these people? How do I describe them?”

Seeing there was a broad community of bearded men without a home to call their own, Bandholz founded Beardbrand in 2012. Along with co-founders Lindsey Reinders and Jeremy McGee, Bandholz created a community where bearded men could unite, evolving later into a full-fledged lifestyle brand complete with their own beard care and styling products.

With an army of loyal followers on social media, which includes a YouTube channel with over a million subscribers, Beardbrand has grown into an “upper seven-figure business” with ambitions to reach eight in the near future.

Bandholz has come a long way from his suit-and-tie-wearing days.

In the Beginning

In 2011, Bandholz was working for Merrill Lynch in Spokane, Washington, as a financial advisor. It was a respectable career that had a bright future and potential for growth, however, it wasn’t a future he saw for himself once he was in it full time.

Although he loved the work of financial advising and investing, it was stuffy atmosphere and the overall “bank life” that Bandholz knew was not for him. Not wanting to spend another moment in a job that wasn’t a good fit, Bandholz packed up his portfolio and moved on.

The next move?

With a background in marketing prior to his career in finance, Bandholz founded Sovrnty, a startup with a mission to help companies set up marketing automation. Although he had great plans for the business, it never took off.

“I was like one of those gurus. I’d never done it, right?” Bandholz says. “So I’m telling people to do something that I had never really done.”

Unable to sell businesses on his idea, he shifted Sovrnty’s focus to something that he was good at, which was designing and building WordPress sites. Although he was getting some business, it still wasn’t enough. He was pulling together around $2,000 a month at Sovrnty, but he was mainly relying upon his wife and her full-time job to keep the lights on.

Always searching for new clients and ideas, Bandholz was a regular at networking events. And at whichever event he attended, he was always getting called out as one of those cliched bearded figures.

The light bulb went off.

If he didn’t like to be lumped into the stereotypes about bearded men, there had to be others who felt the same. These guys weren’t lumberjacks, roadies, hillbillies, or hipsters, but how exactly would he characterize them? What would he call them?

He settled on “urban beardsmen.”

And in 2012, Beardbrand was born.

The first thing to launch was the blog, Urban Beardsman, which would become a place where Bandholz could help foster a community and connect with other men who didn’t fit the Grizzly Adams stereotype. Beardbrand would soon follow, an organization that united that community of urban beardsmen. There they could also find the tools they needed to feel confident about their beards and personal styles.

But getting from simple blog to full-fledged business proved to be a difficult task.

Startup Weekend

Although Bandholz was still working at Sovrnty to help make ends meet, he had high hopes for Beardbrand. However, a clear vision on how to grow this new community was nowhere in sight.

“Aw man, it was terrible. It was just terrible,” Bandholz says. “There was just no strategy at all in those early days.”

The community was growing, but it was hardly going viral. He was posting regularly to Urban Beardsman, had a Tumblr page, and posted some videos to YouTube, but nothing was really taking off.

Despite its middling traffic, the blog was the only one of its kind back then, which by default made Bandholz an expert on the topic of beards. Because of its uniqueness, the Urban Beardsman would catch the eye of a reporter at The New York Times who was writing an article and wanted to quote Bandholz.

As Bandholz waited for the Times article to be published, he convinced friends Reinders and McGee to join him and collaborate at a Startup Weekend, where they could share their ideas on potential projects. They originally came together to work on a different startup idea that Reinders had, but it soon became clear that they didn’t have the capabilities to create her software product in house.

Needing a new business to work on, Bandholz proposed his side project.

“I was like, hey, I got this Beardbrand thing and this New York Times reporter is going to quote me in an article,” Bandholz says. “Why don’t we turn that into something?”

And turn it into something they did.

Reinders and McGee were on board, and in 2013 the business arm of the company was born. Without much capital to start making their own products—they only put $30 into the business at first—the team opted to become an ecommerce company that sold beard oils from a vendor with standard retail markups.

“When the New York Times article posted, we were able to get a couple sales,” Bandholz says. “And I think the first month we did like 900 bucks in sales. And then it was kind of like 900 bucks, 1,000 bucks, 600 bucks … 2,000 bucks, 3,000 bucks, 7,000 bucks. And then it just seemed like we got a lot of momentum into that fall season and holiday season.”

After almost seven years in business, which included an appearance on Shark Tank (spoiler alert: they didn’t get a deal), the momentum is still going strong. Beardbrand continues to grow in community, employees, and revenue, and is now located primarily in Austin, Texas with about 15 team members and 120 products sold through their website.

Bandholz, whose main focus is on the creative direction of the company, still has major plans for the future of Beardbrand. They intend to try their hands at branching out to create their own custom barbershops, where they can create the same experience a customer may see in a Beardbrand YouTube video. They do this by not only creating an amazing barbershop environment, but also by hiring the right barbers and stylists and coaching them on the information a customer is looking for when they sit in the chair.

“[Customers] can to go Great Clips or they can go to their local barbershop and get a really good haircut,” Bandholz says. “But what we want to deliver is that education similar to how we deliver it on our YouTube Channel.” 

Whether it is through their popular YouTube videos, blog, or even future barbershops, Beardbrand will always work towards its core mission.

“We’re not just here trying to sell products for vanity,” Bandholz says. “We believe that when you invest in yourself, you become a better person and you make the world a better place. You live longer. … I feel this responsibility that I’ve got to get that message out there as much as possible so that we can make the world a better place.”

3 Content Marketing Tips for Bootstrapped Startups

When Eric Bandholz first started Beardbrand, cash was minimal. He was still working at his first company, Sovrnty, and was building Beardbrand on the side. They knew that they didn’t have the money to pay for marketing, but what they did have was their time to invest in content marketing. Bandholz knew that with the right content and strategy, they could reach millions of people.

“Content marketing was essentially our only option in those early days,” Bandholz says. “We didn’t have cash to put into the business. So it started with sharing our story on Reddit. It started with, you know, reaching out to people on Twitter and sharing our product with influencers and not paying them for it.”

Being proactive with their content marketing strategy in the beginning was a key component of Beardbrand’s success. Here are three tips to help your startup bootstrap using content marketing.

Get Started, But Be Patient

Without a marketing budget, Bandholz turned to content marketing to help draw eyes to Beardbrand. It was cost-effective, with the bulk of the investment being his own time to create the content.

The trick was not only to post content and to post it often, but to also know that in the beginning, you won’t get much of a return on your investment. Content marketing is a long-term play. The first step is to just create something. Anything.

“While it does build up over time, it also doesn’t do anything in the beginning,” Bandholz says. “And you really have to like… stoke that fire and get it going. And you get it going by creating, you know, 20 or 40 or 50 pieces of content that start to build that foundation.”

Do What You Like To Do

With so many different funnels and channels to produce content for, it can be intimidating on deciding where to start. According to Bandholz, the type of content you should produce first should be for the channel you’re most interested and passionate about.

“I think you look at yourself and what you like to do,” Bandholz says. “Are you more of an audio person? Then maybe podcasting’s the way to go. Are you more of a writer, you know, introvert? Do you like to express yourself through words? Then blogging is a great way to go. Then, of course, if you’re narcissistic like me…then video is a great source for you.”

The more passion you have for a certain medium, the more likely you’ll churn out content and stick to the long-term plan.

Understanding Expectations

Not all content is created equal, and it’s important to understand the goal for each piece of content you create. At Beardbrand, they use the sales funnel model, where their “content at the top” is there to bring awareness to the brand, the “middle” is used to introduce the products, and the “bottom” hopefully helps to turn the reader into a buying customer.

“Sometimes we have content that is there to inspire people,” Bandholz says. “You know, it’s not going to drive any sales. It’s just there to help build awareness to the brand. And then other good content is stuff that drives sales and gets engagement, or gets people talking and spreading the word.”

By diversifying the types of content you create, you enhance your chances of attracting different types of readers and content consumers on different platforms. As Bandholz says, as a creator, you don’t know exactly what part of the funnel really “helped them become a customer.” For instance, the customer may have first learned about your company through a YouTube video, but it was perhaps the blog or an email newsletter that really got them to trust you and that turned them into a paying customer.

Whichever type of content strategy you decide to implement, one thing is for certain—just get started. You never know who is reading.

Interview by Nathan Chan, feature article reprinted from Foundr Magazine, by Nick Allen


Key Takeaways

  • What drove Bandholz from his career as a financial advisor
  • Why his first startup Sovrnty failed to take off
  • The lightbulb moment that inspired Bandholz to launch Beardbrand
  • How Bandholz leveraged content marketing to grow his business on a tight budget
  • The struggle to grow the community into a full-fledged business
  • How Beardbrand eventually caught the attention of The New York Times
  • The partnerships that helped Bandholz start selling beard grooming and styling products
  • From investing $30 into an ecommerce business to making 7 figures
  • What Bandholz envisions for the future of the company
Direct download: FP276_Eric_Bandholz.mp3
Category:general -- posted at: 9:46am AEDT

The dramatic tale of how Marc Merrill and Brandon Beck set out to make a better video game, and changed the industry with League of Legends.

Marc Merrill and Brandon Beck were typical college roommates. They went to class. They studied. They played video games. OK, a lot of video games.

But they also shared an avid interest in business, including the business of their favorite hobby. So while other gamers helplessly yelled at their screens when a glitch popped up or they felt burned by an expensive new sequel, Merrill and Beck thought up ways they could fix these shortcomings—ways they could make the industry and the gaming world better.

Today, the duo co-chair Riot Games, a video game company that places a unique focus on the needs and experiences of gamers. As their signature game League of Legends approaches its 10th anniversary, it operates in 19 languages worldwide, has inspired a line of Marvel comics, and holds competitive tournaments, with the latest championship drawing nearly 100 million viewers.

How does a free game that can only make money through selling virtual goods become such an enormous business? The answer is in the radical vision for gaming that Merrill and Beck strongly believed in, and were determined to realize—even if it meant challenging game publishers, investors, developers, and themselves.

As Merrill tells it, the story of how they pulled it off is legendary.

From Passion to Plan

“We had two shared passions,” Merrill says. “One being gaming—we were both incredibly hardcore gamers, and we loved playing games with each other—and the other being business.”

Merrill and Beck were studying business at USC and, although they spent every spare second gaming, they never imagined it would lead to a career. Even as they worked toward their “responsible, adult jobs,” they constantly bounced ideas off of each other, dreaming up ways to solve the problems that irritated them most as gamers.

After they graduated, and Merrill moved into a career in banking and Beck went into consulting, they continued the conversation in their West Hollywood apartment.

They, and many other gamers like them, found the current model of game development frustrating. The industry ran on new releases, sending gamers to retailers to buy endless $60 sequels to beloved games. Meanwhile, those who played the games didn’t actually want a brand new game or a sequel to what they were playing. Instead, they would have preferred updates, new features, and new adventures to appear in the game they already loved.

Was there, Merrill and Beck wondered, a way to create a game that first and foremost served the wishes of gamers, rather than the needs of retailers? One that could grow over time with the players?

They sensed that the video game industry was headed toward a significant disruption, and as the days passed, they began to realize they might be the disruptors.

“We, as passionate players of games, had identified that we felt really underserved at the time,” Merrill says, “and so had a whole thesis about how to go create a company that solved a problem that we deeply felt.”

So, when the twentysomethings weren’t working diligently away at their respective day jobs, they drafted a business plan for a new kind of game. But they were nervous about taking the plunge, and they wanted to be sure this was something they could see all the way through before moving forward. So they asked themselves three crucial questions.

Was there a demand for what they wanted to build?

Could they build it?

Would they be able to find the necessary capital to turn their dream into a reality?

The moment they felt comfortable answering yes to each of these questions, they charged forward and, in 2006, Riot Games was formed.

Establishing Credibility

The creation of something revolutionary is never easy.

“We’ve had many catastrophic circumstances that should have torpedoed the company,” Merrill says.

From day one, they knew that overcoming their lack of credibility was going to be the biggest challenge in creating the game they were imagining.

“Knowing what we know now, we literally wouldn’t have invested in ourselves back in the day,” Merrill says. “We ironically believe that our naïve optimism was one of the incredibly important ingredients for success.”

Experienced developers were hesitant to join the team because of Merrill and Beck’s inexperience and lack of funding. Meanwhile, shrewd investors were skeptical about hopping on board due to their inexperience and lack of experienced developers. But Merrill and Beck moved forward anyway with the best they could recruit, and they strove to build credibility.

At one point, they tried to bring someone on board as CTO and executive producer who had thrived in the industry for years and even had a publishing background. But as the three of them worked to recruit talent for the business, Merrill and Beck soon realized that they didn’t quite gel with their new teammate.

They felt more drawn to interns who lacked experience, but understood the vision of the game and had great potential. Meanwhile, the senior staffer tended toward experienced developers the co-founders would not have chosen themselves.

Because they didn’t want to come off as overpowering, micromanaging founders, Merrill says they let the developers work freely. But this soon created a serious problem. Merrill says they discovered that the lead developer had plans to steal the company and had been secretly pitching his own version of the game to other publishers.

The cultural divide Merrill saw growing within the young company, punctuated by this betrayal, inspired the co-founders to become far more hands on with their business.

“That was a really galvanizing event that helped teach Brandon and I that when experienced individuals say, ‘Trust me, because my 20 years experience in this particular industry or this field means that I know what I’m talking about,’ it’s really important to say, ‘Well, enlighten us,’” Merrill says. “If somebody can’t articulate a good rationale for whatever it is they’re doing, even if it’s a deeply technical concept, that’s a red flag.”

Merrill and Beck righted the ship, took a more active role, and set out toward building a game demo that would illustrate their idea to investors and publishers. But after constructing the demo, they realized they didn’t have the internal talent yet to fully realize the game they envisioned.

So they established an advisory board, through which very experienced, talented developers could gain free shares in the company by mentoring Riot Games’ young developers, without leaving their full-time jobs.

Over time, the relationships with those on the advisory board grew. While initially, those developers would have said no when invited to join the the team, things began to change. “As that equation changed, those eventually turned into yeses,” Merrill says.

With each new, experienced addition to the team, the game development leaped forward with new input and inspiration for the junior talent, pushing the limits of what was possible for the company.

While the game slowly took shape, they started approaching publishers with the idea. Unfortunately, Merrill says, every publisher they spoke with believed the concept of a free battle arena game that generates revenue through in-game purchases was insane.

“Our whole business model was very unproven at the time,” Merrill says, “because our game was planning to be free, and we were literally selling virtual goods.”

Because of this, they realized they were going to have to publish the game on their own. And that was going to require some serious cash—$20 million, in fact.

“We had no idea if we were going to be successful until spending about $17 million of other people’s money and bringing the product to market and then starting to get validation,” he says.

This made investors nervous, and Merrill says that 50 VCs turned them down before Benchmark and FirstMark Capital decided to come on board at $7 million. Riot Games was given the first half of the investment up front, with the second half to come after they had conducted a 1,000-user beta test.

The only problem was that in 2008—before widespread smartphone adoption or cloud computing—the technology was not yet in a place to support the user base they anticipated for their game, meaning they had to build that, too.

After briefly partnering with a startup in an attempt to outsource the creation of the necessary backend, they were $1 million poorer and no closer to what they needed. So, in the second half of 2008, they worked to build the platform internally from scratch.

With only three months of funding left in their account, Merrill says they hired 1,100 people in the Philippines to beta test the game in internet cafes. The test was successful, and Riot Games lived on.

Charging Toward Launch Day

But Riot Games’ potentially catastrophic struggles were not in the rearview just yet. With launch day rapidly approaching, Merrill, Beck, and the 55-person team prepared to self-publish in North America and to publish in Europe through a licensing deal with GOA, a division of Orange Telecom. They even had a set “ship date” despite the downloadable nature of the game, to try to build credibility with media outlets skeptical of the level of quality found in most free games.

Everything was ready to go. At least it seemed like it was.

Rather than building the store feature of the game themselves, Merrill says they had hired an online store provider to handle the construction and management of the in-game shop. But as the beta tests progressed, the store struggled to keep up with growing demand. They tried removing unneeded features, but it made little difference.

The store was the hinge on which the door swung. It was the only way for the free game to generate revenue, and it housed the players’ in-game wallets and account systems, meaning that without the store, players wouldn’t have any content.

Because of this, Merrill was eventually forced to conclude that, once again, it would be better for them to build something of their own from scratch that could meet their needs. He reached this decision two weeks before Oct. 27, 2009, the set launch date for League of Legends.

It was time to get creative.

To buy themselves the time necessary to build the store, the game started with a “launch party,” during which all players could access all of the game’s content for free. The strategy worked well, attracting tens of thousands of players to the game, and once the shop was introduced, the paid content began immediately generating revenue.

But Merrill says that the main reason League of Legends succeeded wasn’t their ability to attract new customers. It was their ability to retain them. So when the game continued to grow steadily in North America but remained stagnant in the European market, they had to take a closer look at what was happening underneath the hood.

In North America, Riot Games made players feel heard, addressing their concerns with regular two-week patches. The European publishing partner, however, was unable to meet this same level of service, and Merrill says this is what caused the stagnation.

So they immediately set to work unwinding the deal they had made with GOA, and then had 45 days to create a European entity, build an office, hire staff, create servers, and get the whole operation rolling so that gameplay in Europe would go uninterrupted.

Despite the hassle, the change made all the difference.

“We were able to operate differently and demonstrate why quality service matters because the second we took it over, we started growing,” he says. “Then, Europe started growing faster than North America.”

Slowly but surely, month over month, League of Legends gained an avid fan base until it became the worldwide sensation it is today.

But there was one more dream Merrill and Beck wanted to try to bring to life.

A New Kind of Sport

Both Merrill and Beck grew up loving and playing sports in the same way they loved and played video games.

“We always believed that competitive online games of a certain type had all of the same dynamics that ‘real sports’ did,” he says.

They knew that someday, a game would become an arena sport just like basketball or football. So why not theirs?

In July 2010, they introduced the first significant update to League of Legends called Season One. With this update came the concept of singles and team rankings. This enabled them to launch a tournament system that would end in a final tournament in Sweden for a $100,000 cash prize.

Interest in the tournament exploded as gamers battled for the crown. But Merrill says the realization that this could actually become something big came not from the competitors, but from the fans.

During their first end-of-season tournament, over a million viewers tuned in to watch.

“For us, that was validation of, like, ‘Wow, a lot of people are like us and really do want to watch games played at a competitive level.’”

From that moment, the esports aspect of Riot Games grew rapidly. They established leagues worldwide and a world cup system similar to soccer.

Today, they operate 13 leagues across the globe and hold their World Championship in the Staples Center, home of the LA Lakers. Merrill says there is even a player in China sponsored by Nike and that their most recent World Cup had more than 99.6 million live viewers, besting the viewership ratings for the Super Bowl.

“As a League player, there’s always something to watch,” he says. “There’s always something to talk about. There’s interesting drama between teams. There’s players and pros to aspire to or to become fans of. There’s events that are happening all around the world.”

Podcasts have sprung up analyzing players and teams, and fans cheer on players from their country the way they would with any other sport.

Merrill says that about half of League players will never spend a cent in game, but that’s OK with him.

“Our business is fundamentally about keeping players entertained and engaged over the long term,” he says, “and our view is that the only way to really do that is by delivering incredible value to them.”

And if they don’t buy in-game items, they might buy one of the ancillary products, like the comic line currently running through Marvel. Or they may simply tune in for big events to cheer on their favorite players.

While they work to further establish esports leagues, Riot Games is also striving to improve every aspect of the game itself. Merrill says that, since launch, they’ve redone every aspect of the game multiple times, improved their tools pipeline, overhauled their engine, and expanded their team to 3,000 globally.

They are also looking into the creation of new games.

“Riot is Riot Game right now, we’re not Riot Games,” he says. “The ‘s’ is still aspirational.”

But Merrill knows that there is so much more to come for the video game company he and his college roommate founded to solve the woes of gamers like them.

“We really feel like we’re just getting started.”

Marc Merrill’s Tips for Building a Successful Business

When founders set to work on their first companies, they are faced with a whirlwind of concerns, needs, and potential goals. But Marc Merrill believes these four items should be at the top of every early-stage founder’s to-do list:

Set a Clear Mission

“Having a deep sense of purpose and mission can really carry you through the darkest days, and also carry you and your team to great heights.”

Build the Ideal Team

“In our view—and I think in many businesses—the team is by far and away the most valuable asset. So getting the right people, building the right culture, being thoughtful about mission and purpose…those are all really important things to evaluate when building a team.”

Establish a High Level of Trust

“I think Riot’s success has largely been fueled by incredible people who are very committed to our mission and are willing to acknowledge mistakes and learn rapidly through failure because there’s a lot of trust.”

Don’t Get Discouraged

“You’re going to have days where you feel like you can take over the world, and there are so many possibilities, and then other days where you’re like, ‘Oh my god, how are we possibly going to solve this problem. We’re so in trouble.’”

Interview by Nathan Chan, feature article reprinted from Foundr Magazine, by Erica Comitalo


Key Takeaways

  • How Merrill and his roommate Brandon Beck mixed their love of business and video games
  • The frustrations the duo had with game development industry
  • How the co-founders overcame their lack of credibility in the industry
  • A betrayal that changed the way Riot Games was run
  • How a strategic advisory board solved their talent acquisition challenges
  • Why game publishers and VCs alike weren’t on board with Riot Games’ business model
  • The creative problem-solving that made the launch of League of Legends a success
  • How Riot Games exploded the world of esports, leading to 13 leagues around the world
  • The hunt for the next big video game
Direct download: FP275_Marc_Merrill.mp3
Category:general -- posted at: 9:44am AEDT

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