PTM 029 – How to Launch a Tech Startup Part-Time with Kristen Carney of Cubit

Philip Taylor: My name is Philip Taylor of ptmoney.com. This is a part-time money podcast. Today I have with me Miss Kristen Carney of Cubit, and Cubit is a demographic data company. They sell $20 basic packages, they do some consulting, as well, and also have an app. So it’s our first time interviewing someone who is part of start-up companies, someone who has received funding from an outside investment group. Typically, we’ve talked to part-time entrepreneurs and employees who are starting something with their own capital or their own time and effort — not that this doesn’t involve their own time and effort, but Kristen is part of a company that now is taking money from an investment group to help grow her business. So I’m excited to learn about that process, how that works. Her and her co-founder were working on this business part-time while having full-time jobs. But over the past six months or so they’ve both been able to move toward this full-time, and I think some of the past they also did some full-time work while doing this part-time, so it’s kind of a mixture of doing this while trying to do some other things. So it’s a perfect example of a part-time sort of entrepreneur getting going here, and I’m looking forward to talking to Kristen. Sorry for the long intro, Kristen. Welcome to the podcast.

Kristen Carney: Thank you very much. I’m excited to be here.

Philip Taylor: Awesome. So what made you want to get started doing this?

Kristen Carney: So Cubit got started when I was working for an environmental engineering company, and part of my job was pulling demographic data for transportation projects. So if they’re going to build a new road, you have to know how many people of different races your new roads would impact, you’d want to know poverty levels. Are you negatively impacting people that are below the poverty level at a higher rate than people who are above the poverty level? So it would take me about 40 hours of just routine grunt work to pull the demographic data that I needed for these projects, and I thought that was ridiculous. We have amazing technology — this was four years ago. We have this great technology. There should be an app that does this for environmental engineers. And so I was complaining rather loudly one day about these 40 hours of very painful demographic data gathering that I did to a good friend of mine, Anthony, and he said, “Well, I can build you that.” He was a designer for Hoovers.com, an information company— a data information company, and so he picked up the necessary coding skills. And between the two of us, we started working on this app while we had full-time jobs.

Philip Taylor: Awesome. So are you have engineer background, or what’s your background?

Kristen Carney: I’m not. My first job out of college was working for an economist, so I’ve slowly kind of got into doing economic analyses. So I am a data—my technical title, I think, is data nerd.

Philip Taylor: Gotcha. Gotcha. Wow. So you met the partner who could sort of help you do some of the development side of things. I like the fact that it sort of came out— sort of an
on-the-job discovery here. Now did your company, the company that you were working for
full-time, say, “Hey, you should have built that for us instead of going out and building it for yourself?”

Kristen Carney: Well, I built it for me because I just wanted to solve my problem. And when we very first built it, there wasn’t this idea that, “Oh, we’re going to make a company and we’re going to go raise money on it.” That wasn’t it. It was a tool that I needed to do my job better and when we started to build this tool, it got cooler and cooler. I was like, “Okay, there might be something here.” At that point in time both of us stopped working at our current full-time jobs, and we took jobs with the government so we would have not as much— not as many responsibilities and there wouldn’t be a conflict of interest so that then we could further pursue this company. But the crazy thing is, as soon as we had both gotten our lower hour government jobs, at that time I applied for a program— these are kind of new programs that angel investors put together. The most famous one is a group called Y Combinator out of California. But I applied to one here in Austin called Capital Factory. As part of this program, you get a little bit of cash, a little bit of free services, but what you mostly get is 20 experienced mentors that help you build your business.

Philip Taylor: Wow.

Kristen Carney: So we had set up our lives to be able to work on this business part-time. I applied for this program for us, and we ended up getting accepted. So we got $20,000 in cash for our company and over $20,000 in free services and attorneys and accountants to help us set up our business. The most valuable thing that we had was 20 different mentors who we could – even today we could pick up the phone and call these guys and they’d can give us advice.

Philip Taylor: Gotcha. I definitely see the appeal with going with a group like that to help fund. And I’m familiar with the Y Combinator concept, so I like the idea of funding that sort of comes with mentoring attached, right?

Kristen Carney: Mm-hmm. (Agreement)

Philip Taylor: Were any strings attached to the 20K?

Kristen Carney: Good point. I should have mentioned that. Yeah, so we sold them five percent of our company which, I mean, to these guys, that’s nothing. These guys have had multiple successful exits. They’re not going to get any money out of, you know— if 20 of them owed one percent, 20 of them owed five percent, they’re not going to get anything out of it. They do it because they really enjoy it and they love talking to young companies and just being around high level of energy, people doing cool stuff, that kind of thing.

Philip Taylor: So, who’s a good fit for a program like that?

Kristen Carney: Okay, so the scary thing was we had to quit our jobs. When we got accepted into that program, we were not allowed to have jobs. And we had ten weeks over the summer to build— to go as far and as fast as we can. Technically, launched our company at the end of the ten weeks. But first off, you’ve got to be willing to– you’ve got to have the savings in the bank to be able to give you that runway to not have a job and then you also have to have, you know—What’s your plan after the ten weeks is over? Because 20K isn’t going to feed two people. Even though we live in fantastic Austin, Texas, with a really low cost of living, that’s not going to last very long. So I think that’s one of the most important things. And then the second thing is before you go to the program, you have to already have the idea, you have to already have traction. So we had a free app on our website that was a very early prototype. You have to already show you have the team. They like having the more marketing or the more market side of the team and the technology side of the team. So you have to come in with lots of pieces already in place before that’s a really — before these kinds of programs are good fit.

Philip Taylor: That makes sense. Was it very competitive to get in? I mean, did you get a sense that, you know, “Hey, we’ve got kind of a leg up on the competition,” because you have all these sort of things lined up, or was it still sort of, “Will we get this?”

Kristen Carney: No. We didn’t know if we would get in. I think they accepted –so our unit accepted five companies, and there were like over 250 applicants. And every year they just get more and more applicants as this program becomes better known in Austin. But we were accepted the very first year, so my co-founder and I always joke that we got in on accident, they didn’t know what they were doing yet, and we just kind of snuck in under the radar.

Philip Taylor: Gotcha. Nice. That’s good. So talk to me about— we’ll come back to sort out some of the information about the funding and all that. But talk to me more about what the company does. What does Cubit do?

Kristen Carney: So today Cubit, we help small businesses pull demographic data for site selection and for marketing projects. That’s what we do in a nutshell. We have three different products that help people. We have our original web app that we built for environmental engineers. And that’s no longer kind of our primary money maker for our company. We have $20 canned reports, so if you just need a very basic demographic data for a city or a county, we have a $20 report that kind of pulls that data together for you nicely. You can attach it to your application, to your bank, or somebody who needs to see the data. And then we also do custom data requests.

Philip Taylor: So if I wanted to open a restaurant in my hometown or the town next door, or the county next door, you guys would be a good resource for that. Now where would people traditionally go for something like that?

Kristen Carney: Well, there’s other companies online that will sell that kind of information, but they can be very expensive, so Hoover’s or Melissa Data or something like that, these guys could cost $10,000 for market analysis type work. So we do very similar. We provide the raw data. And it’s been our experience that our customers want to analyze the data themselves. They just need somebody to give them the raw data. That’s at least on the custom data side of it. So, “Give me the data. I want to play with it. I want to get my hands in there.” Most of our customers, their presidents, their founders, their CEOs, they just need the data to flush out their ideas. That’s a little bit how we’re different.

Philip Taylor: Gotcha. That makes sense. And how did you figure out the name? What’s Cubit mean?

Kristen Carney: So Cubit, it’s originally kind of like a unit of measure. We liked the sound of the word, that we’re dealing with data, that kind of thing. That was how we came up with Cubit. Plus, there was a really famous Bill Cosby skit where he’s talking about Noah, and Noah’s asking God, “What’s a Cubit?” So it’s just kind of a fun word. But originally we named the company Cubit Planning because we were going after environmental engineers in this kind of—the app we built was specifically targeted for a type of environmental engineer doing a type of planning so we called the company Cubit Planning. But it was a terrible name because everybody thought we offered planning services like city planning, urban planning that kind of thing. And we didn’t. We were a demographic data company. So eventually, even though— like our URL on our website is cubitplanning.com, we had to cut the branding and just make the brand Cubit.

Philip Taylor: I like it. It’s sharp, and the website’s great. Like you said, cubitplanning.com looks great, looks professional. Did you guys do that yourselves?

Kristen Carney: We did. My co-founder is a fantastic designer. He originally was a web designer. Then he’s taught himself development. He’s kind of like this golden unicorn that doesn’t really exist in the world. Somebody that can do both design and development.

Philip Taylor: Yes.

Kristen Carney: We’re very fortunate to have him.

Philip Taylor: Very cool. So what did you use the 20K for, just living off of?

Kristen Carney: So the 20K is what we used to build the app. So back to this. We have this group of people that we have prophesied with paying money if we would take 40 hours of routine data gathering and build them a tool that would do the same 40 hours in 30 seconds. And that’s what we built. It’s part of the capital record when we had ten weeks to build out this app as well as figure out who our business is, who we’re marketing, how are we going to market to them, are we going to call them up, are we going to send them mailers? And then at the end of the ten weeks, we’ve launched to a large group of press and investors.

Philip Taylor: Okay. But then you sort of have pivoted from that point, right?

Kristen Carney: Exactly. So for a number of reasons the initial concept of Cubit didn’t work. The environmental engineers, while they do make up— we had a small number of environmental engineering customers that use the same web app that we still sell today. That industry didn’t want that time-saving product. And I’ve had a lot of hypotheses about it. I’m not 100 percent sure why, but what I think is that the engineers— you can bill out that 40 hours of routine work for lots of money to the government, so there was no pressure to do that work better, faster, cheaper. Whereas, we ended up selling to small business owners who were under a lot of pressure to get work done better, faster and cheaper.

Philip Taylor: Right. Ironically, you were working for the government at the time you were discovering that. What jobs did you have with the government?

Kristen Carney: I worked for Travis County. I had a position as a statistical researcher for Travis County for like a month before I had to give my notice because we got accepted into the program. So then after the program was over, both my co-founder and I, we lived off our savings for about a year working on this business full-time. And during that year is when we figured out that this business that we quit our very secure, nice paying jobs for, is not a feasible business. So at that point—

Philip Taylor: Oooh.

Kristen Carney: Yeah, it was really tough. So at the end of that year when we were like, “This is going nowhere. What are we going to do?” Then my co-founder went out got a job for the next year and half. And we kept trying to— well, at that that time we kept trying to make the business work. We were just kind of beating our heads against wall, trying different things, maybe some marketing maybe some positioning, maybe we’re not doing these things right. And then finally we figured out, “Hey, we’re just on the wrong track and have no clue what we’re doing.” And so the way we solved that problem was— this is the way we should have started the business in the first place— was we took a form, we put it on the website, and we said, “Tell us what demographic data you want and tell us how much money you’re willing to pay for it.” So that was the very beginning of our custom data requests, in spite of everything else that’s come out of the business, like who our market— who our customers should be, what data did they want, these $20 reports, everything has come back out of this form that we put on our web site in getting customer feedback.

Philip Taylor: So how are people getting to the form?

Kristen Carney: One of the things I picked up is search engine optimization. We do a lot of SEO work to drive traffic to our website. We have several websites and we get about 50,000 uniques a month, so that’s not bad for a small business.

Philip Taylor: On terms like city planning data or…

Kristen Carney: So we’re even going along further than that. We’re going after people who— like City of Austin income data. We have a landing page form out for every city and every county.

Philip Taylor: This line of pages in on the Cubit website?

Kristen Carney: We have some on the Cubit website, and then I also have something like 51 other URLs. So I own texasdemographics.com and other smaller ones. Pretty much every state has its own URL, and we drive traffic from there. Then just different things. We’re going to drive traffic to those Texas demographics. That’s going to rank really well, then we’ll drive that back into Cubit.

Philip Taylor: What does those landing pages contain?

Kristen Carney: They contain demographic data that we pulled using our data sets.

Philip Taylor: Okay. So it’s providing the data there for the search results. But then if someone wants more, there’s an opportunity to go to the landing page itself for the customized report. But then now that you built up Cubit itself, you’ve got packages to sell as well, right?
So the packages have sort of come last, right?

Kristen Carney: Yeah, the $20 reports came — so these are kind of canned reports that came out of the custom data requests because we were getting very basic requests like, “I need Demographics 101 data,” which, to me, is population, income, race, sex, age, poverty and maybe education. So those are like really basic stats. And in my mind, well, you can go find that online. But lots of small business owners, you know, that find— and more importantly, the Census’ website is very confusing. I mean, do you use Decennial Census or do you use the American Community Survey? And if you use the American Community Survey, do you use the one-year, three-year or five-year estimates? What’s the most current of all these data sets and which has the best information for my city? And so what we’ve learned is that people, they would pay money for somebody else to figure that out for them.

Philip Taylor: That’s awesome. So what were some of the part-time jobs you guys were doing while you were— did you ever go back to work at all?

Kristen Carney: I did. So the first year and a half, my co-founder, he went to work and he has a contract design position with another government agency. He was working for the DPS in Texas— or police and highway patrolmen here in Texas. Afterwards, he worked for a year and a half, then I went back to work for a year and a half. So we switched off. So for that first year and a half, I worked for the company trying to figure out what’s going to work for the company. And then when I went back to work, he worked on the company for that year and half. So then I worked for a company called Vertive in town that does coupon code sites. So by that time, I leveraged my year and a half— two years, I guess, of running Cubit into a product manager position for another Internet company. And then after about eight months, I switched. I got a—very fortunate to have a job offer from AMD, the chipmaker who’s here in Austin, and I was doing kind of website marketing services for AMD.

Philip Taylor: When you had those jobs, what were you going through, I guess, mentally with where you were with Cubit? Were you resigned to the fact that this may be the new norm, or were you saying, “This is the last gig. This is temporary until Cubit hits”?

Kristen Carney: Yeah, it was always, “This is temporary until Cubit hits.” I felt that I was very honest with my employers that I had this product on the side, and they had to know that because it was such a big part of my resume, because here I went from economics to environmental engineering to web service marketing. They had to know about Cubit for them to even consider hiring me for that position. In my mind it was always, “I’m doing this to make money temporarily, and then once we figure out the Cubit business, that’s going to be my long-term— that’s where my passion is.” Because both my co-founder and I were very passionate about helping people use their time, putting it to the highest and best use. And pulling routine demographic data is not the highest and best use of people’s time. They should be focusing on analysis and making business decisions. You should not have to spend 40 hours just getting the raw data. Even though it took us four years before we finally both were able to quit our jobs, it was something we inherently we feel very strongly about. That kind of sounds silly, but just talking to our customers and hearing them in that pain— it’s just a problem that’s near and dear to who we are, the way we think about efficiency in life and how we’re going to spend our time.

Philip Taylor: Yep, yep. And you guys are building something, like you said, that’s useful and it’s enjoyable to work with and it seems like the interface is pleasing to sort with. So congrats on having a successful product and offering. And, you know, also for being able to leave those jobs and now both be full-time. So what kind of revenue was needed to sustain you guys full-time?

Kristen Carney: We needed to bring in at least $7,000 a month to pay the business bills and to pay us enough money to pay our bills.

Philip Taylor: So that’s where you’re at, at this point?

Kristen Carney: Yeah, we should be doing much better than that this year, because it’s really hard having one person— as your audience knows, it’s really hard having just one person working on the business. When you have two people working on the business full-time, man, you can go so much faster. So you really appreciate that now that we’ve been running it one person solo for three years.

Philip Taylor: Right, right. So what’s the work that you’re doing now with the business? Is it continuing to build out the packages, or is it doing more the custom reports?

Kristen Carney: Well, we’re still trying to kind of finish that pivot. So on our website, we don’t have the marketing copy that needs to be there to talk to small business owners and to really kind of address their pain. So right now we’re doing a lot of analysis and surveying and talking to our customers in to try to better understand their pain, because, in essence, I was very familiar with environmental engineers. The problem they had, why they were solving this problem, how much solving the problem was worth to them. We’re not familiar with how much— like, what exactly is the pain that a child care center has that requires them to come to us for demographic data? We needed to better understand our customers so that we can go about building better products for them. I do think we’ll always have some kind of combination of canned reports, an app that will help people pull the data themselves, because people want to be able to pull the data themselves. And then some kind of custom branch, because that’s really fun, working with our customers and actually getting in there and touching their problems. I love that. That’s one of my favorite parts of what we do, is actually being able to pull these different data sets for people. And it will help us stay in touch and in tune with our customers, because if everybody comes through and they’re buying a canned report online or they’re using an app, you don’t get to have that conversation with them or if you do have that conversation as part of the custom process. So hopefully by the end of the year we’ll have transitioned into the company that we want— to be based on the market research that we’re doing right now.

Philip Taylor: Gotcha. Are you still able to rely on the mentors?

Kristen Carney: We can. So Capital Factory has something called “office hours.” So on Friday—I think it’s almost every Friday some of the mentors will be available for office hours, and they’re like 20-minute meetings. So in the past three years we didn’t do a lot of talking to them because nothing was working. It’s really not fun to go in and say, “Try this new thing,” and it’s failing and we tried this new thing and it didn’t work either. It’s just trying stuff and failing all the time. We’re talking to them more now than we have over the past three years because finally we’re getting some traction and things are starting to work.

Philip Taylor: Right. That’s awesome. So where do we go from here? What’s next that you see kind of coming down the pike for you guys at Cubit?

Kristen Carney: Yeah, maybe one of the biggest problems that I’m facing right now is, do we hire or do we stay a two-person team using contractors? Right now I think we have about five contractors working with us on different projects and we need— Anthony, my co-founder, is trying to decide whether or not it is time to bring on a full-time person. There are some benefits of being a two-person company, like, we get to work out of our homes, we don’t have to have an office, we kind of come and go as we please. We work a lot of hours, but if we want to take off at 12:00 in the afternoon, we can do that. And having an employee would require some sacrifice on that. But at the same time, can we grow the company to get the company where it needs to be to provide the best customer service and the best products for our customers without having that additional help and relying on contractors who— I mean, they have their own priorities and their own schedule and there are other things that they’re worried about. So I think by the end of the year after we’ve kind of flushed out where this company needs to go, we need to make that decision. I’m actually pretty scared about that because being a manager or being a boss is not an inherent strength that I have. It’s not a skill set that I have. I’ve done it, and I’ve done it poorly in the past for other people, and so I’m scared to do that in the future.

Philip Taylor: Yeah, I feel you there. That’s a struggle for me, as well. Sometimes we solo entrepreneurs have success because we’re so good at working with ourselves and making it happen and then getting someone else to align with that same passion. Yeah, it’s tough. Yeah, I feel you there. So, what do you use the contractors for?

Kristen Carney: Some of the mapping services that we do, if we have custom data reports that require really heavy mapping, we use a JS contractor for that. And then we still have a contract with AMD, my ex-employer, to provide some web services support for them. We try to contract as much of that out as possible. That way we’re free again to focus on building the demographic side of Cubit. Technically, Cubit has the contract with AMD because I wanted Anthony to feel some of the pain of working with giant corporations.

Philip Taylor: Nice. So how did you structure it business-wise? Are you a partnership?

Kristen Carney: Yes. Well, technically we weren’t in Cubit as a partnership. But I think technically, we’re more of a C-Corp. The reason we had to do that is the five percent investment that Capital Factory put in it as part of Capital Factory. The attorneys set it up. I really don’t understand it. The accountants handle filing it, so fortunately, I haven’t really had to figure all of that out. If we ever take on additional investment or if we decide to sell the company in the future, then we’ll have to figure out what they did.

Philip Taylor: Gotcha. Okay. So you guys have an accountant then that does all the books for you?

Kristen Carney: Yeah. Well, we use a really cool app called “Less Accounting,” and then we just give our accountant access to Less Accounting. Less Accounting will hook right up into your web account and will suck everything down and will auto-file your expenses. So again, an app kind of trying to be efficient and have the highest and best use out of your time. We try to use apps for that as well. We use lots of apps and services and kind of put them all together.

Philip Taylor: That’s very cool. In terms of some of the mistakes you might have made along the way that people looking to follow a similar path might not make, any advice there?

Kristen Carney: Absolutely. Don’t build a product that people don’t want to buy. And we should’ve figured that out. There’s no reason for it to take three years for us to figure that out. We went about it wrong. And so what I tell people when they ask for advice is, there’s a book called “Running Lean” by Ash Maurya and if you follow this book, it gives you step-by-step instructions, here’s how you interview your customers, here’s how you validate your learning, here’s how you move through the process of making sure you have a product that people will pay money for without ever building a product. Now, if we would’ve done that, we wouldn’t have spent so much time and so much money, and I would’ve been a lot happier.

Philip Taylor: Great. Awesome. Well, what are some of the things that you’ve done right along the way, some keys to the success?

Kristen Carney: The biggest successes I think we’ve had is in engine search optimization and content creation. Perhaps, the thing about being a small business is if you put out good content, an interesting content, you don’t have to have a salesperson. You don’t have to have that full line of folks pounding the pavement for income marketing, so people finding you online and signing up for your newsletter and opting into your messaging. That’s a huge opportunity for entrepreneurs trying to build a business. It takes time and that kind of thing, but it works. So I think learning search engine optimization, learning the basics of inbound marketing— we’re not experts in either of those, I would say. But we know enough to follow businesses for, and that’s probably the big successes in that.

Philip Taylor: Awesome Well, Kristen, thanks so much for being on with me. It was a great peek inside the world of the startup and congrats on all success. Any parting thoughts or any other information I forgot to ask?

Kristen Carney: I guess the only parting thought, I would say, is to find things that are going to feed your passion. Find things that keep you excited about your business because you’re going to go through a long period of time— hopefully not as long as I went through, and things just are not going to work. So what is it that you can do to keep your passion? Recently I just discovered, for example, Gordon Ramsay’s “Kitchen Nightmares.” I think that show is fantastic. And he goes in and he helps these restaurants fix their business. That just makes me more excited about working on my business. Or I like to read “Packard News” because in addition to all this programming geeky stuff, you get these great articles on goal planning and that kind of thing for business. So find whatever the outlets— and part-time money can be a great outlet to opt into and read that content to keep you passionate in all of this.

Philip Taylor: Very cool. All right. Well, check out cubitplanning.com. Kristen, thanks so much for being on with me and good luck to you in the future.

Kristen Carney: Thank you. Thank you.