The $37 Investor: When Publicity Is Worth More Than Cash
Maciej Cegłowski didn't know what to expect when he announced the Pinboard Investment Co-Prosperity Cloud, a tech startup fund that emphasizes publicity and mentorship more than cash. In December 2012 more than 300 hopefuls e-mailed Cegłowski their startup ideas--a number the San Francisco web guru says "completely stunned" him.
In January, Cegłowski announced the six winners. Among them: a weather-forecasting system for sailors, a web community for board-game enthusiasts and a site on which people can sell home-baked goods.
The prize? Each received $37--and a nice publicity boost and mentorship from Cegłowski, who has grown Pinboard, the social bookmarking site he launched in 2009, into a one-man, $250,000-per-year operation.
We asked Cegłowski about his contest and his hopes for the six startups.
People need to recognize that if you have free technical labor available, you don't need additional funding for most ideas. I wanted to [test this theory] by giving a tiny token in funding but also as much publicity as I could and as much help in getting them over the first hurdle of actually having users, whether it was access to people who could help them or introductions to potential customers. I thought the $37 would be a fun gimmick, but I was serious about trying to help people with getting the word out.
How did you choose the six winners?
I had a list of criteria: Was it a viable idea for a small business? Was the person capable of building the thing they described? Did they seem like someone who had the focus to do it? It had to involve the internet so that I could, if necessary, help with introductions. I filtered out anybody who had already gotten funding or had worked on startups before, because I figured they already had a network.
How are you helping these firms?
If you are trying to make an app and you get stuck and want a collaborator, I can probably help you find someone, because I have an audience that I can yell to for help. Then there's this pure psychology aspect of it: It legitimizes you. And it's not just the customer seeing you as more legitimate because you've won a contest and you're being treated like a real business. Now you start to take it seriously because someone else is taking it seriously.
How long will these startups be under your wing?
I hope it's an indefinite relationship. In running the contest, the goal was to try to get them their first group of customers. If that turns out to make a difference in their businesses, I'll try doing another round of this.
What is each required to do in return?
I'm out $37, so I hope to get that back someday. I'm hoping that they'll share with me what worked for them and what didn't, and that I'll hear from them down the line about how it's going. But they're not obligated to do anything. They can just take the money and run if they want.
What do you hope to see happen with these businesses?
We have this image of startups like Facebook and the Mark Zuckerbergs of the world, where you swing for the fences, and either you get a huge hit and you're growing by hundreds of percent per year, or you fail and you try another startup. But there's so much room for these lifestyle businesses, where you actually do something for years and years and you enjoy it, and it gives you a living and independence.
Anywhere but the tech world that's considered a wonderful victory. I want to try to remove that stigma and encourage people to actually try it. I think there's never been a better time to do it than now because of the combination of these wonderful, free online tools for building and running things and the fact that people are starting to understand that it's OK to pay 99 cents for an app or $6 for a website. It's a golden opportunity.