Austin-based Wahooly puts a whole new spin on startup investment, offering anyone the chance to gain equity in a company by simply using their social media standing. Wahooly enables users to earn points from startups by writing blog posts or sending out tweets, which can earn them even more every time they’re shared by people on their network.
Users can buy promotional items, such as t-shirts and iPads, or exchange accumulated points for free services through the startup. They also have the opportunity to receive compensation if the company is acquired, as Wahooly negotiates a percentage of equity for each participating startup and shares it with the most influential users.
We chatted with Tony Holmes, the co-founder and CCO of Wahooly, about the company’s big partnership with Klout, which kicked off an overwhelming rush of users following last year’s February launch. Here are some highlights from our discussion:
What is the story behind Wahooly?
Our CEO Dana Severson was writing for FastCompany, doing all of these interviews with startups and this common theme that came across was a lack of traction. How can a startup get traction if they’re just starting out, or if they haven’t raised any funding at all?
We wanted to make it possible for regular people to invest in startups. We thought, “Let’s let anybody invest in a startup, but let’s not do it with money: let’s let them do that with social capital.”
We asked Klout if they wanted to partner with us and they said yes. We were a perk on their website in December of 2011 and we had 30,000 user signups. We had no idea what the response would be. If we had to do it over again we’d probably do it different.
We failed miserably at launch -- we were trending on Twitter in San Francisco and the site crashed. We took the minimum viable product to the extreme. That saying if you’re not embarrassed by your first version you’ve launched too late, we were extremely embarrassed by it, but we had a good community that stuck with us.
We went down for a few months, did a closed beta, and finally opened it up again in August.
When did you know you wanted to be an entrepreneur?
I think I’ve always had that, even before I knew the word entrepreneur or what it was. I think I’ve always had that drive or that passion, that entrepreneurial spirit. Even when I was a kid I was always trying to create my own businesses, even in my head. I thought it would be great to do my own thing.
When I was 23 I started my own company called Minneapolis Sign Company. It was just myself for a few years. I basically built it into a real company and I worked it for 10 years. When you’re an entrepreneur it’s feast or famine; you get exactly what you put into it. It ran its course and I sold the company to a marketing communications firm.
I thought I was done with entrepreneurship for a while. I thought I’d get into the job market and get my steady paycheck. But I got back into it -- it’s something that I always come back to. You have a million ideas of what you can do and make a startup off of, and you just want to keep trying that. Not all of them are going to work. Some of them are going to hit and do well. We’re hoping Wahooly is one of them.
As a busy entrepreneur, what do you do to unwind?
It’s kind of funny because I almost look at it as reverse. I guess a lot of entrepreneurs are like this too. My daily life, my private life, can be pretty stressful; I have kids and I’m married.
I almost look to my startup as kind of a release from that, there’s a passion there. I’m always doing it. It’s not an 8 to 5 thing. I’m always checking emails and going to events. I think unwinding means doing something that I love and currently it’s working on Wahooly. As long as I’m working on a startup or working on something of mine, I think that’s where I unwind.
Who are some entrepreneurs that inspire you?
Our CEO Dana Severson. He’s a buddy of mine I’ve known for a number of years. He’s a life-long entrepreneur and he has a million ideas. Wahooly is his brainchild really. He always comes at me with all of these ideas. I love that and wish I could be more like that. Who would have ever thought of something like Wahooly?
There are always the usual suspects. Seth Godin I really like a lot. He’s kind of an old school entrepreneur. I also gravitate toward entrepreneurs that come from a creative background or a UX background, like Jason Putorti, the designer of Mint.com. I really like his design style and I’ve listened to a couple of his talks.
Other than that I’m so busy with my own startup that it’s hard for me to really get out and follow the ones I probably would if I had more time.
If you sold your company for $10 million today, what is the first thing you would do with the money?
We’d have to pay our investors obviously. There are so many things. Probably pay off the house, take a trip around the world, invest and get back into another startup.
What’s in store for Wahooly in the coming year?
We just released a new revised product. We’re currently trying to raise our next round of financing and get that secured. We’re also trying to form some new partnerships-- like the one we had with Klout that’s been so successful.
We’ll continue to refine our product and make it the best we can. It’s still not quite there yet. For now we’re focusing on funding, polishing up the product, and strategic partnerships. An acquisition would be nice as well.