Zaarly’s Wild Ride: Winning a Weekend, Quitting a Job, and the $100 Midnight Cheeseburger

3/24/11Follow @curtwoodward

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entrepreneurship for the Kauffman Foundation. Koester was vice president for operations and general counsel at Seattle-based Appature. Both had been part of successful startups in the past. And experience with the competitive format offered some key insights—apart from being an adviser, Koester himself has participated in Startup Weekend sessions about a half-dozen times before.

As a practical matter, Koester says, all of that background meant that he knew talent was the first priority. And recruiting in such a small pool of people is pretty straightforward: He just went up to the organizers and asked them to point out the best developer in the room. That’s how third co-founder Ian Hunter joined the team.

Koester says they’d settled on the basic idea in probably the first six hours of the 54-hour cram session. In a way, it’s an attempt at inverting the group-buying concept behind the now-ubiquitous daily deal services. “The buyer’s the one who always wants something they can’t get, and it’s the buyer who is really willing to pay for it. That’s where we flipped it on its head,” Koester says.

Many sleep-deprived hours later, they won the competition. But nobody was penning their resignation letters just yet. “We thought that there was enough to it that we wanted to keep trying,” Koester says. “We didn’t intend to raise any money, actually, at all. We thought this would be a fun part-time project for us.”

That started to change when Kutcher—one of the judges at that L.A. Startup Weekend—and others began inquiring whether Zaarly might be interested in some cash to get going.

“It wasn’t us going out—’Hey, we want to raise money.’ It was the reverse. It was, ‘Hey, we think this an interesting idea. Would you like to raise money?’ Which is not normal,” Koester says with a laugh. “Our original intention was that the three of us, maybe some others, were going to put in a couple grand, finish building it, put it in the App Store, and see what could happen.”

But things had begun to snowball. Within two weeks, the key people were leaving their day jobs behind to go full-time into Zaarly. Koester, who had just joined Appature in October in an operations role, had to tell the rapidly growing healthcare marketing company that he was leaving for a startup.

“I believe they have a huge opportunity at Appature. It’s a big market they’re playing in,” Koester says. “It’s like you’ve got two pretty girls you could date. It was very difficult.”

The timing obviously wasn’t ideal, Appature Chief Executive Kabir Shahani says—the company, which doubled in size between 2009 and 2010, is now getting four to six opportunities for potential … Next Page »

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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