Editor’s note: Ultra Light Startups, in collaboration with BrightMap, is creating a new Q & A series with entrepreneurs sharing their tales of how they got started and how they found people to work with. Our first interview is with Jonathan Wegener of the Exit Strategy NYC mobile app.
Tell me about Exit Strategy NYC
Exit Strategy NYC is the ultimate subway rider’s subway application.
It tells you the best route is the second car, third door and when you arrive at your destination you can be right outside the door. It can shave minutes off your trip.
The length of the platform is 600 to 800 feet, so if you’re on the complete opposite end, it’s a 2-3 min walk to the end of the platform. When you need it most are times when you’re running late to a meeting or an interview.
Is there anything like it out there? How does this compare to similar applications?
It was the first app like this in New York. Version 2 has the ultimate NYC subway map too, so it’s a different category of competition. The iPhone version has the official subway map, all five borough maps and even street maps. If you need to look up an address or cross street in the subway, you can’t do that without service on Google Maps, but with our app you can do that.
There are similar apps in other cities, like one for the Tube in London. There are also similar apps for Tokyo and Toronto.
How much does it cost? How many users do you have?
The iPhone version is 3.99 now, but will be going up to 4.99. The Android is 2.99 and the Blackberry is 3.99.
We have 25 thousand uses across the platforms and in general it’s done pretty well.
I read about you on Silicon Alley Insider where you were listed as one of the top 100 people to watch in tech in 2009. When did you start?
Early March of 2009 was when I started seriously riding the subway to collect info and started building the product and designing it. Version 1 was released July 7, 2009. We released versions for the iPhone, BlackBerry, Android and also a Kindle eBook version. Later that year we updated to version 2.0 and will soon release version 3.0 with train schedules in it.
What amount of capital did you start with? What did you spend that on?
The entire thing was really bootstrapped with $3000.
Half went to the graphic design like the app logo, launch screen and train diagram. Two or three different designers worked throughout the building. Some of the money went to app store fees. The BlackBerry developer was overseas and was paid with a cash and equity mix. The first iPhone developer is a friend and was paid entirely in equity.
So you have $100,000 in revenue on a $3000 investment?
A little less. Some of the apps downloaded were unpaid apps.
How did the product evolve?
The product was designed to be a true minimum viable product. The first version only did one thing, which is to show you where to stand on the train. We called it Exit Strategy. When I would show it to friends, they would always ask “can it do this or that,” like direction routing or where the toilets are. We had a long list of feature ideas but stuck to the core vision to do one thing and do it really well.
That’s largely why it was so cheap to launch. It’s a collection of pictures and the entire interface is three screens: one asks you what line you’re taking, one asks which station and which direction, and then it shows you a picture.
The iPhone version was a big winner in terms of sales. We decided to make it into a fuller app. We now have a license with the MTA to use their maps, and have bus maps. The subway map is also interactive. We listened to what customers told us. The number one thing was the map.
What was your marketing strategy?
It was entirely press and word of mouth. I haven’t spent a penny on marketing. I was lucky to have seen this done in Toronto before, where someone published a rider efficiency guidebook that came out in 1999 and showed you where to stand. The guy got a ton of press so I had confidence this would get similar press. I reached out to my network and a reporter at the New York Times was interested to do a story on it.
The New York Times had an exclusive app before anyone else so at 7:30am the story was posted to the City Room blog, and three hours later, Wired was on phone, the New York Post was on the phone, and Thrillist did a post the next day. We launched the day of the New York Tech Meetup, so we could present in front of 700 people that night. I also prepared a kit of video demos and pictures and the media ate it up.
I’ve worked in a marketing PR position briefly for two startups, so I have a little bit of that background, but there’s nothing like learning on the job and doing it yourself. I also had good advisors.
What was the evolution of the staff?
On a day-to-day basis, it’s really just me. The project was done with my sister (who is now back in school to be math teacher) and I.. We did the legwork riding around the subway for two months, collecting info on where to stand on the subway.
In terms of graphics, I worked with a friend in Brooklyn, to make the train icon. Another designer did the splash screen. One of my best friends and college roommate is a programmer but wasn’t an iPhone programmer. He used the project to learn iPhone programming and have his name behind a really cool project.
The Android version was done by a developer who tinkers with Android. I found a BlackBerry developer in Germany. It was my first experience outsourcing and I was really impressed.
In Version 2, once we saw that there was a demand and the market was there, we did hire a professional.
What’s the long-term vision?
The vision is that this will be passive income so I can work on a billion dollar company. Once you kind of figure out how to bootstrap, it’s kind of addictive. There’s a thousand things I could have spent money on. Instead, I incorporated the company by myself, without using a lawyer I think a lot of people are scared to do that, when it comes to legal stuff especially.
I learned that Delaware has an 800 number can call and get help. The government is happy to help you and you don’t necessarily need a $600-per-hour lawyer when Delaware State can be your help desk.
I wasn’t sure if I needed to talk to a lawyer. Someone recommended a lawyer who charged $550 an hour. He drilled into fear mongering, asking things like “what if there’s a virus, or someone using it falls onto the train tracks and sues you?” I realized he’s not a startup risk-taker guy. You never ask an insurance salesman if you need insurance, and at the end of the day I realized I didn’t need any of this.
When you incorporate, you can make money off of it. Some banks will pay you. For example Chase gave me $200 for opening a checking account, and other accounts. After all was said and done, I made money off of incorporating.
What was your biggest mistake?
One of toughest things was working with family, my sister. It put a lot of strain on our relationship. We had different ideas on what it should look like. I have an advertiser in the app for ad placement on certain stations. My sister and I disagreed over whether to put advertising in what would be a paid app. My vision was this won’t harm the product and will bring in money.
There were things like legal contracts when my sister watched, as I Googled around to write the advertising contact. Was it a perfect legal contract? It doesn’t matter at the end of day because there’s trust. I think legal stuff scares a lot of people away, but it shouldn’t.
Another thing I would have done is to define equity support at the beginning. I waited until the middle half to have that conversation and it was a painful conversation to have. In some ways I’m not sure I would ever work with family again..
What worked the best?
What works really well I’d say is selling people on your vision. I had to convince iPhone and Android developers that it would be successful and would benefit them. I had the enthusiasm and vision that every New Yorker will be walking around with this product.
There are other forms of compensation besides money. The first iPhone developer owns a piece of the product but at the end of the day, he made less than market wages. Part of the reason the Android developer was part of the project, was that he thought it would be a success and wanted the pride in saying “I worked on something successful.” They were also both able to come up on stage at the New York Tech Meetup.
The iPhone developer was looking for job at startups but it wasn’t going so well. He wanted to get out of cubicle and when he was on stage in front of 700 techies I said he works at a bank, hates it, and for startups to please come talk to him. And right after it, seven people approached him and he’s now a developer at Gilt Group. He got an awesome new job out of this project. And the Android developer now has this on his resume.
Another thing I learned was that anytime you post for bids, you should take the time, an hour or two, and find people whose work is good. You write them a letter inviting them to join the bidding competition on your product. I looked at past iPhone splash screen designers and wrote a love letter to one saying “I love what you did with this and would love for you to do my project. Here’s a link.” Sure enough, he did join the contest and came up with a fantastic design. Now he’s the main graphic design guy. That’s what works - reach out instead of waiting for people who are desperate for work.
Why did you bootstrap and how do you feel about that in retrospect?
I think the amount of discipline that’s imposed on you by bootstrapping is really valuable. Both in shipping the product and forming the way you work. I was forced to launch a minimum viable product. I didn’t have $20,000 to hire a professional development team. We built it up slowly.
I’m split on this. On one hand, when investing your own money, you never care more so you’re not gonna start paying people to do features that you have no idea if anyone will care about them. That discipline is really valuable.But it also limits innovation and makes it hard to take risks.
I don’t think it was a mistake though I think there were definitely features I would add if I had capital.
What advice would you offer to someone thinking about doing this?
Think small, start small. Start thinking about how to build your product with as little money and as much time as possible. I think there’s the moment in many entrepreneurs’ lives when at some point they’re gonna invest their own money and risk their bank account. That’s kind of a scary thought to many people.
Exit Strategy NYC: First Year Financials
Graphic Design $1,500
Blackberry development $–
App store fees $–
Total Expenses $3,000 (approx)
App copies sold 25,000
Revenue per app $3.99
Total Revenues $100,000 (approx)
Benny Wong (iPhone developer)
Matthew Bergman (NYC based android developer)
Georg Sisow (German Blackberry developer)
Jonathan Glanz (version 2.0 developer)
Carlos Pacheco (splash screen and icon graphic design)
Meg Moorhouse (train screen illustration/design)