Lettuce app co-founder gives us the low down on starting a business, selling a business and starting all over again.
Credit: Lettuce App image courtesy of Lettuce
From penicillin to Corn Flakes, some of the greatest innovations happen by fortunate accident. In the tech world, serendipity often leads to new products and opportunities that developers and entrepreneurs never even knew they were looking for.
Although the folks at Lettuce didn't exactly create the Lettuce app by accident, discovering its potential as a business venture was a stroke of serendipity that took its founders from wholesaling to app making.
Lettuce is an inventory and order-management iPad app that aims to save small businesses time by automating business functions, such as shipping, credit card processing, data entry and accounting. It also connects popular back-office software, such as QuickBooks and Shopify, and enables businesses to turn their iPads into real-time point-of-sale systems with integrated digital catalogs and mobile payment processing.
Here's the kicker: The Lettuce app was never the original business idea. After founding Dura Doggie, a dog toy company, its founders discovered that people were more interested in their inventory software than in their products.
"While at Dura Doggie, we grew from a tiny project to a business hitting a million in revenue," said Raad Mobrem, co-founder and CEO of Lettuce. But the company's success meant tons of paperwork and wasted hours tediously inputting data into several back-end systems. "It got to a point where we were growing too fast to keep up with incoming orders, and we needed a solution to manage and automate it all," Mobrem said.
But Mobrem and his team found that the existing "solutions" to this problem were clunky, expensive and difficult to use, and lacked some of the features they needed. Instead of settling for what was out there, they decided to build their own app.
"After building this first version for ourselves, other companies in our industry caught wind and requested that we make the same solution for them," Mobrem said. "And then, we got requests from businesses in different industries, at which point we decided to make this a company and help these people out."
They then sold Dura Doggie and began to focus on the Lettuce app. A couple business incubators later, Lettuce is now a profitable and self-sufficient company.
Mobrem spoke to BusinessNewsDaily about starting a business, selling a business and the entrepreneurial journey from dog toys to business tech.
BusinessNewsDaily: How did you come up with the idea for your first business, Dura Doggie?
Raad Mobrem: Dura Doggie was founded in a college class project. In 2008, one of our early team members, Chase McElroy, and I decided to work on a dog-toy company for our entrepreneurship class. By the end of the three-month course, we manufactured a line of dog toys and actually sold a few. My current co-founder, Frank Jones, joined us, and we decided to scale that company after graduating. We must have done a good job, because Dura Doggie ended up in more than 2,000 retail locations across the U.S., Canada and Asia.
BND: What made you decide to sell Dura Doggie and launch the Lettuce app?
R.M.: Demand. While at Dura Doggie, once we started taking our iPad app to trade shows, not only were we wowing our customers, but our friends from other companies wanted the app for their orders also. Anytime we went to a trade show or ran into business friends who had product-based companies, they would ask when our app would be publicly available. Not only did we personally feel the pain they felt, but we also saw there was a real demand for this product.
BND: How easy or difficult was it to sell Dura Doggie?
R.M.: For a little while, it was superhard. No one wanted it. We were making products in the U.S. out of expensive — but very safe — material. In addition, we had major companies reach out, but we honestly felt like they were fishing for information, since our products were so unique.
In the end, a company of young guys that we knew had just raised money. They decided to expand their line of products, and they bought Dura Doggie. It was perfect timing, because we were about to close on the $2 million in funding for Lettuce.
BND: What was the accelerator process like for the Lettuce app?
R.M.: Launchpad LA, a Santa Monica, Calif.-based startup accelerator, was the best thing that happened to Lettuce. And it was perfect for us, because we had already started one company and had a ton of knowledge and experience coming in. Right from the start of the program, we got $50,000 in investment and were able to move very quickly in terms of development and fundraising. We had no real network with Los Angeles, San Francisco and New York investors, but Sam Teller, co-founder of Launchpad LA, opened the doors for us, and we were able to raise $2 million by the end of the program.
We also got connected with some of the most amazing and intelligent people we could ask for, and some became advisers.
BND: How different was it from funding Dura Doggie?
R.M.: Raising money for Dura Doggie was very different. Because it was not a tech-focused company (e.g., software, e-commerce, etc.), it was much harder to find investors. In the end, we knew three investors, and they put in money that helped us build our inventory. When we started Lettuce, we actually gave them stock because we started Lettuce while running Dura Doggie, and we thought it was the fair thing to do. Stick with the early backers who believed in you first!
BND: What were the biggest challenges you faced in launching both companies and in making the transition from dog toys to business app?
R.M.: For both companies, it has always been hiring good talent and having money in the bank. With Lettuce, we are a little more comfortable, since we raised $2.1 million, but we are also spending a lot more than we did at Dura Doggie.
The transition was actually not that bad. I have always been a big tech follower and kept tabs on what was happening in the industry. The only difficult thing that I could think of was that the amount of work at Lettuce was much more than what it was for the dog-toy company. It's like going from college football to the NFL — much harder and faster.
BND: What was the biggest mistake you made along the way, and what did you learn from it?
R.M.: The biggest mistake we made was hiring the wrong person from a company culture standpoint. We hired this guy who was talented at his job, but was a jerk to everyone. It was not bad until four to five months into the job, and then it really ruined the morale. I am the head of the company, and I didn't even want to deal with him. I thought about it and decided that culture is more important than functionality and let him go.
I can tell you that the company became way closer after he left and that we are more careful to learn who candidates really are before hiring them.
BND: How did your academic or personal background help you as an entrepreneur?
R.M.: In some ways, school helped me, and in some ways, it did not. I did mechanical engineering, and we were taught to break things and make them better — so that aspect helps with running a company. We always test and iterate at Lettuce. But school, in general, did not help me as an entrepreneur. We are programmed to follow the course outline, and then after we graduate, to go work for a big company.
It wasn't until I took an entrepreneurship course that I found out who I really am: Batman. No, just kidding — an entrepreneur. I had to throw in a joke somewhere.
Personally, I had a mentor: Paul Orfalea, who founded Kinko's (which was bought out by FedEx in 2004). He taught me about how to think outside the box. I wanted to go to Oxford or Stanford for graduate school, and he asked me, "Why?" All the reasons I listed were not good enough for him, and he said that I could do more by starting something, versus going to more school and then working for someone else. I'm glad I listened to him.
BND: What advice do you have for other entrepreneurs and those thinking about starting or selling a business?
R.M.: Do it — but make sure you spend the time to figure out how long and how much starting a business will really cost. If you are comfortable with those numbers, then go for it.
We only live once, and we only live for about 80 years, on average. You might as well try hard to make a great life by building something that will provide joy for others.
Finally, if you do start a business, enjoy it yourself. Otherwise, what's the point?
Originally published on BusinessNewsDaily.