For Brian Krejcarek, Feb. 23, 2011, was the day every entrepreneur dreams about. He was offered a last-minute opportunity to present his product in front of a panel of investors and an audience of peers at a San Francisco conference called Launch.
At the time, Krejcarek was illicitly sleeping either under his desk at the Cambridge Innovation Center or on a mattress stashed in an air shaft of the building. Rather than paying for an apartment, he wanted to put the money into his start-up, GreenGoose. Its big idea: inexpensive wireless sensors that you could affix to any object, like a bicycle or a child’s toothbrush, to track how often it was being used. Krejcarek suggested that adults and kids might be motivated by earning points for those activities, and the company tagline was “Play Real Life Even Better.”
Krejcarek’s demo could not have gone better. Two investors on the panel committed $100,000 in funding for the company before he’d left the stage. The company won an award at the conference, got lots of ink, and eventually raised a little over $1 million.
Today, GreenGoose is out of business, and Krejcarek is grappling with $80,000 in credit card debt — his approach to funding the company after investors’ money ran out earlier this year. When he says, “I’m trying to scrape together spare change to buy gasoline,” it’s hard to tell if he’s kidding.
We’re living in a golden age of entrepreneurship, when the tools — and the capital — needed to transform a cocktail napkin concept into reality are accessible to more people than ever. Start-ups like Instagram, Dropbox, or Airbnb zoom out of nowhere to become household names. A growing number of “accelerator” programs offer mentorship, guidance, and exposure to investors. (Boston is home to at least a half-dozen.)
And yet, as Google executive and angel investor Don Dodge observes, “It has never been easier to start a company, but it has never been harder to build a business.”
Krejcarek started the company in Portland, Ore., in 2010, but couldn’t raise money. So he came east, to the 12-week Betaspring accelerator program in Providence. In exchange for a chunk of equity, accelerators serve as a kind of entrepreneurial finishing school, offering small stipends for living and prototyping expenses and opportunities to make connections with investors.
When the program ended, he moved in — literally — to the Cambridge Innovation Center. When I met him in a Kendall Square coffee shop in November 2010, he told me that “everyone has a lifestyle goal that they’re trying to achieve, like getting more exercise.” With an Internet-connected base station from GreenGoose and unobtrusive wireless sensors affixed to, say, a pair of Rollerblades or cross-country skis, “We want to help people achieve those intentions.” GreenGoose collected the activity on its website, creating a Facebook-like stream of events, which might include everything from skating for an hour to opening a bottle of vitamins.
Krejcarek’s dazzling demo at the Launch conference led to investments from well-regarded backers like HubSpot cofounder Dharmesh Shah, Harmonix Music Systems cofounder Eran Egozy, and Silicon Valley venture capitalist Shervin Pishevar, who has put money into companies like Tumblr (recently acquired by Yahoo for $1.1 billion) and Uber, the transportation app.
In all, about 25 different investors put money into GreenGoose. Dodge, who was on the panel at Launch, but didn’t invest, says these kinds of “angel” investors are “basically buying $25,000 lottery tickets. It’s an option on the future. You know that if you place 10 bets of $25,000, one of them is going to pay off.” That’s the hope, at least.
After Launch, Krejcarek moved the company to San Francisco. But he had trouble hiring full-time employees. A chief operating officer came and went in six months. The product that eventually made it to the market, last August, was called Brush Monkey. For $49, it included a base station that connected to the consumer’s wireless router, a sensor that clipped onto a toothbrush, and an iPhone app that encouraged kids to brush for a full two minutes, while keeping tabs on their success.
But there were technical issues with the wireless connectivity in the first batch of products and setup wasn’t simple enough. Krejcarek says the company sold “a couple hundred” Brush Monkeys via its own website, but never managed to snare a distribution deal with a partner, such as a pharmacy chain.
Krejcarek returned to Boston late last year, trying first to find a partner that might have more promotional power, and later to “pivot” the company, developing toys that linked to phones or tablets. But he acknowledges, “I lost support from investors.” They’d opened their checkbooks when GreenGoose was a captivating idea with infinite potential; now, it was a struggling company with infinitesimal revenues.
GreenGoose’s Twitter account posted its last tweet in May. Its online store is shuttered. Krejcarek, now back in Portland, says he is doing consulting work for other companies, but he’s also working on a new game-related venture, ZowPow. “I like building things, and I don’t want to stop building things,” he says.
Some recent analysis from Launch Capital, a Cambridge investment firm that isn’t connected to the Launch conference, found that about 2,500 companies, primarily in the United States and Europe, have raised initial seed funding in 2013 so far — a number that about doubles the pace of last year.
But the availability of follow-on funding isn’t on a similar trajectory.
That means that many more entrepreneurs will follow GreenGoose’s flight path. While more are getting seed funding to flesh out their ideas, more will inevitably smash into a plate glass window when they can’t generate significant revenue or attract millions of users. As Dodge says, “This is the start-up business, and the nature of the start-up business is that most start-ups fail.”