UE.co was established in 2008’s recession. Forbes once suggested that economic downturns can actually be great opportunities for startups — would you say this was the case for UE?
Charlie Munger said, “My idea of shooting a fish in a barrel is draining the barrel first.” My interpretation of that is that when others leave a market, there is opportunity. In 2008 there was a panic in the market, and capital left the ad-tech space. This created an opening to step-in and pick-up all the fish out of the barrel.
With the previous question in mind, what kind of setbacks did the recession present for UE (if any)? How did it impact UE’s progress as an up-and-coming entity, and how were these challenges addressed at the time?
It was challenging raising startup capital, and the debt markets were bone dry. This meant that the only way to get the company started was to fund it with my savings. Having to write the check yourself as an entrepreneur makes you reflect on if the business idea is really thought out and ready for market. That doesn’t mean that entrepreneurs discount the value of outside investment, but it hits close to home when the founder’s signature is on the check. This pressure drove me to long hours, and work-filled weekends when I might have pushed it a bit less knowing there was a safety net if things didn’t go as planned.
Innovation is a huge part of starting a new business, regardless of economic stability. What would you say allowed UE to innovate in a time as turbulent as the recession, and how has it continued to innovate today?
When economic stability is disrupted there is a consolidation in most markets. This created sizeable competition and economies of scale we were not prepared as a start-up. The only way to compete was by building a more efficient mousetrap than fighting a war of attrition. Tough times bring out the most creative and innovative parts of the human brain, and we were fortunate to face this adversity early in our business cycle.
UE started as a small business, but has clearly grown into a full-fledged staple of the San Diego business community. As the company’s CEO, what are the biggest lessons you have gleaned during this growth process — especially during UE’s early phases?
The biggest lesson we learned was that the company culture has to mature along with the business cycle. This is difficult when you launch a start-up from your garage with friends. That same casual attitude can create cultural challenges when you take the next step in growing the business. The best way to manage this is to self reflect along the way and take in consideration the larger picture.
In turn, what advice would you give new entrepreneurs — especially those facing unforeseen obstacles right out of the gate?
The best advice is to learn to really enjoy working — and then spend lots of time doing what you like to do. Believing in your idea and business, with enough time and pressure, just about anything can be solved. The difference is that you have the ability to stick it out until that happens. Good luck!