Ep 60: Startup Advice - Failing Forward? What Does That Mean? How To Move on to the Next Big Thing, When the First Thing Wasn’t so Good? with Jon Shower (Encore)

Welcome to The Savvy Founder, the one place for entrepreneurs and business owners, away from the everyday bustle, where we help you find your path to a profitable and bright future. Now, here's your host, The Savvy Founder and armchair sociologist himself, Philip Topham. Hello and welcome to The Savvy Founder. I'm Philip Topham and I am really stoked today to have John Schauer here with us.

Hello John, how are you doing? I'm doing very well, thank you for having me. How are you doing? I'm doing great.

We were just connecting and reminiscing that we met at the UCI Cove ecosystem probably two, three years ago. And you were running around there all the time where you had a lot of energy. So really appreciate that. For the audience, why don't you give a, you know, I know you, but they don't know you.

So why don't we give a little background of your, you know, little bio sketch, if you will. Yeah, sure. I've been out here in Orange County since 2010. I love the weather.

It's a great place. Most of my background is military, which was through the mid-2000s for myself. I was in the Marine Corps during that time. I moved out here to Orange County in 2010, went to school actually here at OCC, and started a business in the athletic training world, specifically geared towards general post-surgery rehab with professional tennis athletes and scaled that business for a few years and then jumped into the interesting technology startup world in about 2016.

And I've been kind of dabbling in both worlds for the last few years. And that brings me to today. Very nice. Well, of course, thank you for your service.

Appreciate it. So I always appreciate the veterans. So thank you. Thank you.

Um, so yeah, help me understand that difference between the, the, the physical post-surgery world and the tech world that those are kind of different worlds. Are they different worlds? They're extremely different ones, uh, primarily physical in nature. Um, yes, I, I had a special place in my heart for, uh, people that were injured, especially at the elite level.

I was injured in the Marine Corps and I had my shoulder fully reconstructed. And after that, my life had changed through a rehab program. And I wanted to be able to incorporate and build a business that could help athletes at the elite level get back to performance. So that's kind of why I went into that space, which I love and I still love.

And moving forward into the tech space, I was trying to grow my business on the athletic side. So I started attending different business events and got frustrated with the lack of ability I had to connect to people. And that's where the birth of Inc., the startup that I had had at that time, came from.

I was trying to create a platform that could help people connect and stay connected. But I knew nothing about the tech space. So I learned brutal lessons through the way. Well, that's a great story.

So you were really in that, you know, the physical world of injury recovery, had a problem and said, I'm going to solve this and figure it out. So it must have really, really bothered you a lot for you to then say, I'm going to do this. Yeah. Two pieces, which kind of gives context, I guess, for why I make decisions very fast like that.

I'm kind of passion led. I lost a lot during my time in the military that made me have a mentality of jumping into things, even if I don't know much about it, because it's life and it's worth taking chances on. Almost like the cliche, you never know what's going to happen tomorrow thing. So, yeah, when I was going to events, I was like, man, who am I talking to?

I don't know the right people. It's kind of the similar thing you hear all the time at different events. And I thought, man, there's like nothing in technology that's helping me. I don't really leverage LinkedIn at all.

How do I know who's in the room? All that kind of stuff. And I said, you know what? Screw it.

I'm going to try and jump in and figure out a solution for this issue that I'm having. Yeah. So, cool. Let's delve into that a little bit.

So, how did that go? So, how did a non-technical founder start a tech company? How did you recruit? The big question everybody asks is, how do you recruit your CTO?

Yeah, if you want to make big mistake like me, you don't. And you face plant, I did not have a CTO at all. And I actually think it was probably one of the largest demises of the business and why I ended up actually not being able to get to the point I needed it to. I ended up hiring a software development company.

Again, I could go through a list of rookie mistakes. That was here domestically, actually local in Southern California up in Los Angeles. And because I didn't have a CTO, there was definitely a disconnect from a monetary standpoint to understanding where my brain was standpoint and a lot of other things. So I actually did not have a CTO and kind of battled over a few years going back and forth with a software development company after I had raised around the capital.

Got it. So in that process, so if you didn't have the CTO, then the next sort of person that usually is responsible is this chief product officer. So that was your vision of the product or did they follow what your vision was or did they come up with something completely different? I think it's a combination of both and not specifically to their fault.

But I didn't know and I have the skill set to kind of, I guess, create a better roadmap for them. So I'm not going to put the blame fully on them. It's definitely on me as well. But I was the product guy.

I was drawing pictures with pencil and paper on how I wanted the screens to look and what I wanted to happen if I walked into an event and sat with them and their CEO kind of took that, whipped together a design. And I was raising money trying to pitch that idea at the time. And then we moved forward with it. But in between that, there was a lot of lessons learned on what I could have done differently and what I should have done.

And a CTO is definitely one of them or anybody technical that I would have brought into my team as a co-founder is something I should have done initially. But, yeah, there was definitely issues kind of along the way. And I don't think it ever fully came out how I needed or wanted it to. And issues then come down the road with that when you don't have the funding that you need and they're not willing to continue, which is another benefit to a technical co-founder.

if their equity invested heavily, you know, they're going to continue working on the success of that project, even when the money's not there or low, which was another thing I ended up learning with that specific role down the road. Yeah, it's not uncommon. So, Johnny, you know, you we grow up with technology and we use it all the time Right And we just so this is this is easy but we forget how automagical everything really is and how much plumbing is behind the scenes But despite that, I don't usually find the issues with the technology as much.

And I'd like to see whether you agree with this or not. It's more along the lines of the person's communicating, like the true communications, like you're in charge of technology, I'll just let you go do it. And I'm in charge of finance, and I'll go do that. And sort of each assuming the other is completely communicating well.

Is that what you found? I think that that's a part of it. It sounds funny, but I also believe a big part of it is the passion aspect of what we're trying to do, because at the end of the day, they were a software development company. I'm a client and I'm paying monthly and they have other clients.

I didn't feel like their heart was in, you know, what do we need to tweak and change? That's where I was. So I can explain as best as I can from my position. but unless they're there with me and they're seeing it day to day and they're understanding those problems on a deeper level, which may or may not be the easiest to fully kind of disclose in a conversation.

I think that's a part of it too. You know, if I had that technical co-founder and I'm saying, Hey, come to the event, you got to come to these events with me. I need you to see it for yourself as well. I think that would have helped.

And they would have wanted to, you know, because it's in their best interest to streamline that process as well with us. So, yeah, I guess I see kind of a mesh there. Yeah. So for those of you listening, that's really priceless is to really understand the passion, as John is talking about, the passion of the people developing your product.

They can develop your product simply by following the rules of description of what's going on. But if they don't understand the problem and really the core of the business, they're going to go off track really easy. So that's really, really great advice, John. and let's let's segue though into the the money raising aspect because you were very successful at raising money and and that's really successful because not a lot of not all startups are successful at raising money so how do you find that process and you know how did you do that um it it definitely was difficult i know what i've seen with probably 80 90 percent of founders maybe higher is it's difficult for them to speak in front of people.

Maybe they're technical co-founders that like to be introverted or whatnot. I don't have a huge amount of skills. One of my skills that I like to think of having high is communicating with people in a room. And that's important to me.

So I am good at telling a story that I believe in as well, but being able to captivate and get through to people, I think. And so that's definitely something that I try and hone in on, even in my role, if I'm the CEO, being able to talk to people and get them on board and be able to get them to understand what I'm saying. For raising the money, I listened to a few people I had in the beginning that helped from an advisory role. And I was fortunate to have some friends and family that helped initially.

And I gave my life savings to it as well. And that was a key differentiator because that helped some of the angels see the people closest to me, trusted me and understood me. Therefore, they could also trust me as well, coming in with actual capital. But I mean, either way, it's a difficult process.

I was pitching pen and paper at first, then a wiry MVP on Envision, you know, that platform before anything was done. So those are kind of the first beginning steps. Yeah, so exactly. So you put money, skin in the game.

You have this real ability to speak with people and communicate. And that aligns well with what I all talk about is the number one thing that people, founders have that's free is their voice, right? It's in their ability to connect and network with people. It just takes a little bit of time and energy and focus and passion and some other things.

But those are all, they don't cost anything to do, right? So how many people did you talk to before you got somebody to put in? You know, when I put in everything I had, which wasn't huge, but when I had done that, my father immediately came and said, I'm going to actually come in on this as well. And my grandfather did as well.

So they were the first three. If I ever talk about my life story, the men in my family are probably the biggest mentors and pieces of my life. And every man in my family is military. So that's a huge dynamic of why I am who I am today.

But they had also came in with me. And from that, I was able to continue my talking. But I don't know, I probably had talked through 30 or 40 different people at that time before kind of getting the last few pieces I needed for the raise. Got it.

And in that journey of talking to people, was there anything that surprised you about talking to people with money? Were they, you know, helpful, hurtful? What the good advice, bad advice, how was that? I think it was 50-50.

There are a few investors in Orange County that have been very helpful and really good people. Maybe a bit over 50% haven't been super helpful and more negative. I've definitely had a lot of negative feedback. Some of it may be for a good reason that I wasn't a technical founder and didn't have a CTO.

So therefore, I wouldn't succeed kind of thing. There was definitely, you know, pieces like that, or, you know, a lot of the we invest in early stage startups, pre revenue, this, that and the other. So I would put forth the time to build a package for these conversations. And then they'd say, you have no revenue coming in the door, you know, blah, blah, blah, blah, blah.

This is a waste of my time kind of thing. So they don't present themselves as the right stage of investment in Orange County a lot of times. So I've learned a lot about the investment community, I think, here over the years. And it's different.

I think a lot of money in Orange County is commercial real estate driven, which has a very different mindset on investments. And a lot of them will join angel groups. And the way they do things is very different than like a technical or a technology startup. and the way things need to be and the chances you need to take from a risk on risk off situation that they're not willing to.

So there's definitely a few things I think Orange County specifically has that hurts it from an investment standpoint. But with that being said, there's also some good investors that are in the area as well. Yeah, I agree. Orange County holds a lot of its historic wealth to real estate.

You can just look at pictures of the 40s 50s and 60s and it was all open land and you look at it here and we have planned communities and that just created tremendous amount of wealth and you know there a certain company here that that plans communities and they do it in five sprints and everything a you know very well oiled spreadsheet they know exactly what's going to happen and we've always said the Orange County's, we have the Silicon Valley, we have the Silicon Beach, and we even have San Diego.

And then Orange County is a stopover. We don't have that strong thing. And I agree. We have some wonderful advisors in the marketplace and then some others that are still in that real estate mindset.

Yeah, I've seen that. um and it in in that process though in in the in chat how did you now have a better nose for for figuring out who's the good advisor and who's the bad advisor you know what you know if somebody's coming behind you and they're trying to interview um and speak to investors how how do you figure out who's a good investor and who's a bad investor? I feel like I know Orange County very well right now from an investment standpoint, whether it be funds or individuals.

In the beginning, I don't think I'd upset him, but I have a gentleman that is an investor, a well-known investor here, and he helped me tremendously. And if I had issues with advisors that I've had that did things shady or behind my back when they weren't supposed to, I would go to him. And I really leveraged his wisdom and him knowing a lot of people in the area to help me initially. And then as I started kind of growing and going around, I started figuring things out myself.

But it's tough. Every situation is so different. It's tough to know. I think you have a good idea, though, if it's extremely negative, no matter what you say, kind of what investor that is, if they're supportive and willing to help you outside of that conversation, whether it's in their benefit or not, I think that that can speak well to their personality, their morality, whatever you want to call it.

But it's tough. I have a good understanding though, and could go through a list of a thousand names and tell you who I like and don't like. Yeah. Yeah.

No, I wasn't, I wasn't asking for that, but what I was thinking is, is, and I think you've said that is, is those people that are giving, uh, being generous with their advice, right? There's, there's this adage, if you ask for money, you get advice. If you ask for advice, you get money. Um, but if somebody is going to give you advice and show you a way forward or explain to you what's going on, I think that's great advice.

Somebody that simply says, it ain't going to work, go fix it. That's not very useful advice. That's sort of like throwing rocks. Right.

Yeah. And I've, I mean, and I've had an investor or two in the area that have said, you know, I, I, I don't like this, you know, with maybe it's, uh, for instance, like the financial projections or, or how I feel like the business could grow in some certain area. And they're like, you know, I don't like this, but change this and I'll work on it with you. And, and then, you know, let's, let's talk about it after things like that have been super helpful.

And, and I respect that a lot. I, I'd like to think that that's how I would be in their position, uh, instead of just saying, you know, no, or, you know, I don't like this or not really say anything at all, or be kind. And then when you go away, you hear other things. So I think, you know, you can start figuring that out pretty quickly.

Very nice. Now, I want to set that all that stuff aside. And then you've got this new venture that you've started on. I got to look at my notes, what it was called.

Oh, Blackbird Secure. So how did you, you know, when you shut down, there was that transition period from knowing you had to shut down the business and then to this new venture. So help me understand that transition period. Was it tough for you?

I had to cry a little bit, you know, for a few days. And it was painful on my ego to shut down Inc. It was, there were a lot of things because I had some naysayers in the beginning and I wanted to prove them wrong as well. I had a lot of difficulties, I think, but it was internal.

It was in my own head that I had to fight and deal with and the feeling of failure towards the closest people in my life that had put money into it. So, yeah, I've had some significant troubles as far as getting through my own brain. But I learned so much through ink. It almost helped create the spawning of Blackbird Secure, which is still within the realm of relationship management, just different based on how we saw the economy, how we saw the market, what we did wrong, what should be different and where we saw the future.

And that's what kind of spawned Blackbird Secure, super early stage, very beginning period right now. But yeah, it was a tough transition, but we tried to make it swift. Yeah. So, you know, for everybody listening, there is life after, you know, and you got your MBA, right?

You got your MBA by doing and you now have a tremendous opportunity looking forward to, you know, who to talk to, who to get device from, you know, CTOs. So, you know, I think that that speaks volumes to your fortitude. Right. And probably that military background of, you know, the grit, you know, let's just move forward.

So good at you for that. So cool. What can you you know, so what what as you're looking forward in the business that you're building, what do you need help with? There might be some people out there listening that, you know, what kind of help do you need?

We are looking for people in the cybersecurity expert realm. I do have one gentleman in the space that's overseeing things from a technical perspective right now. But essentially, we're a secure messaging platform for personal relationship management. So things that we're trying to work on integrating is post-quantum cryptography measures specifically.

So PhD engineers in the world of post-quantum cryptography is post-quantum cryptography. Now, what is post-quantum cryptography? I don't even think I know what that is. It's an hour-long conversation to the future that we're all going to be facing sooner than we know it, where in a post-quantum world, there's a lot larger issues because we're going to have a lot of faster computers and algorithms on the backside.

So the security of today's encryption, RSA keys, tokens, all these kinds of things are almost irrelevant to how fast that's going to be broken in the future. So there are methods and processes you can put in place today to help protect the data in the future when they going back in time to break into it if that makes sense which is a real thing I know it sounds great Yeah no no no no But you know as I listening to you for a non-technical founder, you've certainly become technical.

I, you know what, I, it's funny because I've done as much as I could to learn more. You should hear me. I actually have some good terminology and things like that. But yeah, we, the WhatsApps, the telegrams, the typical text messaging that you have, it's all very bad.

And we're working on plugging in that gap and bringing in the tools of a CRM into text. So, yeah, it's. Yeah, I actually understand more than I'm letting on. I served as a HIPAA security officer, you know, chief security officer for a health care company for a while.

And so I'm very familiar with how easy it is to, with enough computing power, hack everything where, you know, you're on the website, you got that little nice little lock saying it's all secure. You got a good computer, you can hack that really fast. And the quantum computers will hack it really, really like instantaneously. Yeah.

And nobody has a solution yet. So, which leads me to, in your bio was reading that you raised money by getting a SBIR grant. And for the audience, SBI is a small business innovation research grant. And that means it's non-dilutive, meaning it's just money you get to build your business.

You don't have to give up equity. So how did you find that process? How did you come up to do that? One of the guys on the team actually had brought it up.

We thought it was a good idea. And everybody on my side is military. So for us, it was a win-win because we have a lot of connections on the government side. And I never had thought about doing this because I didn't know what the SBIR program was.

So we had built a proposal. The government's looking heavily for a secure messaging platform right now, just in general, not to mention the CRM side, because they're having a huge amount of issues with people using WhatsApp and things like that. So we put a proposal in one pretty quickly for a phase one. So we're working directly with the Air Force at the moment and looking to expand actually right now with with some MOU, some signers that want to come on board from other branches as well.

So, yeah, we do have a SBIR phase one. And then I actually leveraged that immediately when we started this business purely on an idea. And I was able to get the rest of the capital I needed within 30 days. I think it's a super hot space right now and easy to understand.

So it made it a year of trying to raise funds with the last startup took 30 days, probably with this one. So it was definitely a different feeling. Very nice. And when you said it was originally SBIR with the Army, and then you used the term MOUs, Memorandum of Understanding for everybody.

And so your military background really helped you strengthen those relationships? Were you able to talk the jargon that they're talking? A hundred percent. And I have a ton of people that are active duty buddies of mine or, you know, people from the past.

So, yeah, we it's I'm able to get into the doors I need to get into easily and they can understand me when I talk and I can understand them easily with their specific needs on a daily basis. So. Got it. So if I'm like sort of listening, we were talking the pre-show that the free thing every founder has is their social skills, their ability to speak and talk, and also their relationships and social network.

And you're doing a phenomenal job of networking in your strength, which is your military connections, your military relationships. So for everybody listening, take note of that. If you have a network of school alumni or something like that, you should be tapping into it and use their skill set. It takes a tribe to build a business.

So I have really enjoyed our conversation. And I want to know, is there anything that you'd like to tell the founders out there that maybe you're following in your footsteps or in the business? What advice would you give them as they move forward in their own business? um I think the couple things that I wish I would have done in the very beginning was um go on meet up or eventbrite or anything like that and find some groups that are free to go to and talk with other founders and startups to learn and get some experience from them before even starting your own and chances are you're going to end up meeting people that you probably even bring on your team or work with uh when you kind of push yourself into that environment and I wish I would have pushed myself into an environment to learn from other startups first.

Another piece of that is going and working in another startup because you're going to gain a lot of knowledge if you're a first-time founder that you might not have to make mistakes doing on your own. So I wish I would have done that. Maybe it's going into an accelerator or something where you can learn things early on would have been super helpful. And then make sure if it's a technology that you put an emphasis on getting a technical co-founder, which is funny because I was going to bring this up regardless if you had brought it up or not.

Because I really think that that can change the game for you and will help your stress and help the success of the business. So those are definitely a few things. And everybody goes through tough times, being able to be around those meetups or those event bright events. When you're going through crappy times, the one thing I did like about accelerators I've been a part of is others are too.

And you can feel alone a lot of times at home, especially today. But when you're hearing other people go through hard times, although you don't want to be like, ah, you know, that sucks for you. It helps you relate. It helps you relate and know that you're not alone.

And I think that a lot of times that helps, you know, the camaraderie of failure or learning something or whatnot. So. Yeah. Thank you.

That's priceless advice for everybody and a testament to your fortitude and appreciate it. So how do people get in touch with you? I mean, you could use LinkedIn. Okay.

I'll put LinkedIn in the show notes. And if you want to reach out to John and have something, find out some more. I really appreciate you on the show today. And thanks a lot for being brutally honest and sharing your story with everybody.

I think it will help a lot of people. Thank you. Of course. Thank you for having me.

Yeah. With that, if you please share the show with other founders, as we always said, you know, we want to network with other founders. We want to make sure if we can shorten your journey by a month, a week, a day, an hour, we've done a great job. And with that, make sure you also give a five-star review.

Thanks for listening. I'm Philip Topham, the Savvy Founder. Take care and have a bright and profitable future in both your personal and business lives. Take care.

Bye-bye.