Startup Lessons Learned From a 20-Year-Old CEO

I sat down with Mah to talk about her latest venture and already rich experience.

BNET: Where did your idea come from? 

 

JM: InDinero is entirely based on what I wish I knew before I worked on my first two businesses. In my first business [renting server space to small- and mid-sized businesses] I thought I was making a lot of money, because I was bringing in thousands of dollars in revenue, but my margins were really bad, and I didn't know that at the time. And my next business [a Website for internship listings] was the same thing. I was really good at production, selling, and customer service but I didn't manage my money well. I wish I had known what I was going to owe in taxes. I wish I had known what my margins were. I wish I had known how much I spent on advertising. I wish I had known how much I spent on contractors. If I had known all of that, I probably would have made better decisions. 

 

BNET: How do you make sure you're building something people will want to use — and pay for?

 

JM: In the beginning, we got a lot of feedback from professional entrepreneurs and investors. They all told us to just build a simple accounting solution. They also said we needed an accountant on staff to help us build the product. 

 

BNET: But you didn't take that advice.

 

JM:  Ultimately we asked our users and found out that businesses just don't want to use accounting software at all — that's for accountants, not entrepreneurs. So if you try to build an accounting package, no matter how simple it is, you are attacking the wrong problem space.

 

BNET: What happened when you first approached investors about InDinero in the summer of 2009? 

 

JM: The experience was really bad. I could not get anyone to commit. But I think part of the problem was that I was talking to a lot of institutional investors. And those people don't get my problem very well. 

 

BNET: Did your age matter?

 

JM: No. They didn't seem to know or care.

 

BNET: So what did you do differently the second time?

 

JM: This summer, instead of talking to institutional investors, we only talked to investors who had run their own business before, and did so successfully. A, because they are easier to deal with; b, because they are significantly smarter; and c, because they actually understand the problem we are solving and get it instantly. If I just start pitching the problem we are trying to solve, they'll start telling me what they want the solution to be, and then I'll say, 'funny you say that because we actually built that!'

 

BNET: And that resonated?

 

JM: We had to turn a lot of people away. It was really competitive. And that was really fun. [Laughs.] 

 

BNET: So you're 20 years old, you've raised $1 million, and you had to turn away investors. Does that start to mess with your head?

 

JM: Well, you can get lazy. You can start to think that your business is really successful, but in reality it is not. We're not anywhere near where we need to be. Having traction is good, having customers is good, but really we want to be the single place for every business to manage its finances. Raising money is the easiest task you can do as an entrepreneur — it's not a huge accomplishment. 

 

BNET: What will be your next big accomplishment?

 

JM: The next goal is to be in a place where we can rapidly scale up. If I threw $500 grand at hiring, then I could handle more customers, for example. 

 

BNET: How many people will you hire in the next year? 

 

JM: We're looking to hire five more people — three developers, one designer, and one business generalist. We have already hired four part-time people in addition to our five full-time staff. 

 

BNET: What are you looking for in candidates?

 

JM: Inherently high IQ, which unfortunately isn't acquirable.

 

BNET: How do you test that?

 

JM: Mind puzzles — one of my favorites is the prisoner light bulb dilemma. They require people to examine a lot of potential problem spaces, and if they go down too far and deep into one, then it will be very hard to traverse back to find another problem to attack, and they will spend hours on the wrong problem. The best way to figure out IQ is to see how many problems they explore and how deep they can go into each without getting lost. But I could be completely wrong. 

 

BNET: What else will you look for as you hire?

 

JM: Founder intensity. Because I don't want to have a company where there are like 20 people and they just work 9 to 5. For example, we pay our intern but not that much. He would get paid much more if he got a legit job at a big company, but he has such founder intensity that he was actually sharing a mattress with another one of my employees at our house.

 

BNET: That is intense.

 

JM: How to test for that going forward without having them share a mattress? I am not really sure. And then there's loyalty — that's the really important one and the one that is hard to find. 

 

BNET: Beyond hiring, what's your biggest management challenge at this point?

 

JM: The biggest problem for all founders, and especially young founders, is that they don't know what they don't know.