Joshua Baer, serial entrepreneur from a dorm room to the board room
Joshua Baer is 36 and he has founded and sold four companies. His most recent startup, OtherInbox, was acquired at the end of 2011 by Return Path. In addition to the technology companies, Joshua founded Capital Factory, an incubator in Austin, Texas for others’ startups and teaches a class at the University of Texas for undergraduate entrepreneurs who are currently working on a startup. He has invested as an angel in more than 50 private companies and is one of the top rated investors on AngelList.
Joshua is the ultimate accidental entrepreneur. He started his first company, SKYLIST, out of his dorm room as a sophomore at Carnegie Mellon, back in 1996. One of the first email marketing companies, SKYLIST took no outside funding and after 10 years of operations, was acquired by PulsePoint (formerly Datran Media) for the low eight figures. Two years later, Joshua jumped back onto the entrepreneurial saddle, as a founder (OtherInbox), angel investor (Capital Factory), and educator (University of Texas).
Background. Joshua didn’t know he was destined for an entrepreneurial life, but he surprised himself during his freshman year of college by telling someone that he was going to be an entrepreneur and have his own business. Joshua comes from an entrepreneurial family so maybe he has the e-gene? He says that it’s partly that and partly nurture. Joshua took some of our entrepreneurship classes at CMU (including mine) and feels that they gave him a great foundation and demonstrated the value of having great mentors. Of course, Joshua founded SKYLIST before he took these classes. Remember, he is an accidental entrepreneur…
Dorm room dot com. Joshua started SKYLIST during his sophomore year in CS at CMU. Back then, there were no open/free beta programs for software testing. If you wanted to beta something, it was hard: you needed a NDA, there were requirements, and you had to apply and be approved. Joshua applied to get access to software he couldn’t afford to buy. He wanted to try new tools and technology. He got accepted to beta test some email software and got involved in online newsgroups and dlists (the pre-cursor to social media). He played; he hacked; he learned.
The company that made the email software finally hired Joshua as an intern because, “I ended up answering questions about their program on discussion boards and forums. I was more expert than the company’s employees! That was pretty hilarious because at the time they didn’t know that I was a kid in college!” That led to some consulting work which Joshua subcontracted to his Computer Science friends and fraternity brothers at CMU.
The SKYLIST hosting business grew out of this consulting work. A client asked if Joshua could fix their server. The company noticed that Joshua’s server never needed fixing and offered to pay him a fixed fee of $50 per month to host their email on his server. Other clients came on board and SKYLIST was born to host and deliver email marketing campaigns.
SKYLIST was bootstrapped from the beginning. The first server was the computer Joshua’s parents bought him for school. The next few went on credit cards. With no outside investment and only one shareholder, it gained traction until it was sold 10 years later. It was actually a double sale…
One plus one. Joshua’s second business was also accidental, not some big idea. In 2004 a federal law was passed that regulated email marketing. It was created to stop spam, but like many laws it also created new requirements for legitimate companies to prove that they were following the law. Joshua spun out a separate company. He knew that he would have to partner with SKYLIST’s competitors to offer a platform solution to the problem that the law created: “Nobody saw this coming. First I had to convince the customer that this law even applied to them and then I had to convince them to pay us to solve it – in effect, I had to create the market.”
He sold both companies to the same acquirer (PulsePoint) at the same time. He became the CTO of the company for two years. The first year went by fast. The second year was painful. He was in Austin; the company was in NY. He didn’t have any resources or direct reports and felt unempowered. He realized that to effectively integrate into that particular executive team he would need to move to NY – and he didn’t want to do that. He had met his wife… He tells me, “While it was a dream job, with a good salary, a corner office, firstclass flights, all expenses paid, I was bored, it wasn’t for me, and I wanted to have a family.” Joshua is now the father of three and loves his Austin roots.
One plus two. In 2008 at TechCrunch50, Joshua launched company #3, OtherInbox: “My first two email companies helped the biggest companies in the world to send all of their email; it’s only fair that my third email company helps people that get too much email! Without changing your email address or doing anything differently, your inbox gets organized and it’s easier to find the messages that matter most.” OtherInbox developed its technology for Gmail, Yahoo, and AOL. The tool is free. The business model is similar to Nieslon or Comscore – using their service as an anonymous panel to measure the effectiveness of email campaigns and report that information back to marketers.
OtherInbox tools help me control how to best to manage my inbox. It’s better than currently available email offerings. So I can quickly and efficiently read the emails that I want and ignore the ones I don’t. To date, OtherInbox has helped organize over 2M mailboxes and billions of email messages for people just like me.
OtherInbox raised more than $4M from angels and 500 Startups in two rounds of funding.
One plus three. As an angel investor, Joshua has made investments in more than 50 companies. He is one of the most active investors in Austin and in particular focuses on email-related companies. His growing portfolio presented yet another opportunity. Not satisfied with two exits and a growing company, Joshua founded Capital Factory in 2009 to nurture others: “I received great advice and mentoring and I wanted to pass that along.” Capital Factory is an incubator that provides $20K in funding for 5% equity. Joshua and 19 other entrepreneurs invest in and mentor five companies per year.
Challenges. Even though Joshua is an experienced entrepreneur, OtherInbox has had its share of challenges: “The thing that you start out with is never the right idea.” Joshua and Mike spent almost a year building one product that never gained enough traction, but then were able to pivot into the current product set and attract a key strategic partnership with Yahoo! Mail.
Advice. Here is Joshua’s top 10 list of advice for entrepreneurs:
- Pick a problem that you have personally
- Find a co-founder
- Think mobile first
- Outsource as much as you can
- Don’t buy any servers
- Use Ruby on Rails
- Create an AngelList profile
- Raise as little money as possible
- Get customers and vendors to fund your growth
- Apply to Capital Factory, TechStars or Y Combinator