One Founder’s Opinion: Internet Entrepreneur Andy Sack Says Seattle Startups Need Less Money, More Mentoring
It’s going to be a busy summer for Andy Sack. The serial online entrepreneur and investor is getting deep into his latest venture, Founder’s Co-op, and he doesn’t have much time for chit-chat. I’m just able to catch him on his cell, while he’s rushing off to a meeting and getting ready to head out of town.
I’ve heard a lot about Founder’s Co-op, Sack’s new collaborative of Web entrepreneurs, and I want to get the story straight from the horse’s mouth. But Sack, an Xconomist originally from the East Coast (he’s been in Seattle for eight years), is also uniquely positioned to comment on the broader state of Web entrepreneurship in the area, something I’m tracking closely these days. “It’s more active than it was, but it’s fragmented,” says Sack of Seattle’s startup climate. “There hasn’t been a really big win since Amazon. People are looking for the next big hit.”
So that’s the context. Back in January, Sack and his business partner Chris DeVore had wound down and sold off Judy’s Book, a local social networking and shopping site, and started working on their next project. “Founder’s Co-op came out of lessons learned at Judy’s Book,” says Sack. “In part about overcapitalization, and in part about focusing on fundamentals in business—like generating revenue ahead of expenses.”
The vision of Founder’s Co-op is to bring a group of entrepreneurs together, invest in small Web companies (typically comprising just two people—one business and one technical), and share 5 percent of the equity in each of the companies among them. The size of any particular investment is expected to be between $10K and $250K. The networking support is pretty informal, says Sack, but he’s providing mentorship to first-time entrepreneurs, peer-to-peer mentoring through weekly lunches and other gatherings, and shared office space.
Sack points to two compelling motivations for forming his new group. “One, it costs less to get to market and create a real business than it used to. Very small teams can have highly leveraged businesses without a lot of infrastructure,” he says. “Number two is a real lack in the Seattle community of supporting first-time entrepreneurs with expertise, mentoring, and networking. Those things exist much more in Boston and San Francisco, and for some reason it doesn’t exist here. Chris and I have a desire to fill that.” (Take for example the Boston area’s Y Combinator, which Bob wrote about last month.)
In March, Sack and DeVore announced an initial $2 million fund, and played an active role in focusing and supporting two local startups, helping them get off the ground: Cooler Planet (which matches alternative energy suppliers with customers) and Orange Line Media (which monetizes online stock photography). “Now we’ve made a commitment, and we’ll raise more,” says Sack.
How’s the new venture working out so far? “It feels like we’ve got solid footing in terms of deal flow and things like that—the things that would make you feel good about investing in this environment,” says Sack. The plan is really to attract first-time entrepreneurs, such as those leaving big companies in Seattle, Redmond, Kirkland, and the like. “We’d like to be their first stop,” says Sack. And the unique challenges of the area? “Talent is a real issue for the startup community,” he says. “It reminds me of Boston in the late 90s, it’s a very tight labor market.”
As for his plans for the near future, Sack is pretty tight-lipped. “There’s a bunch of deals we’re working on,” is all he will say. Some could be pretty interesting, so watch this space. (He could tell me now, but then he’d have to kill me).
I ask Sack about his biggest surprise these days, and he admits that it’s how well his portfolio companies, Cooler Planet and Orange Line Media, are doing in terms of generating revenue already. “They’re off to a great start,” he says. “Of course, a great start doesn’t make a great finish. But it’s better to have a great start than not.”