Startup: 8coupons.com, from their 500sq ft studio apt in NYC

Startups: ‘More Bootstrappy This Time’

8coupon1.jpg

Landy
Ung and her boyfriend Wan Hsi Yuan work on their startup company out of
their studio apartment on Oct. 30, 2007 in New York. (AP Photo/Mark
Lennihan)

NEW YORK (AP) — There are a few hurdles between Landy Ung and her
dream of growing her startup into a household name. One is the fact
that her only outside funding comes from her mom’s fried chicken
restaurant, another is that her only full-time programmer is her
boyfriend, who has a day job.

She and her boyfriend, Wan Hsi
Yuan, 27, run the business, 8coupons.com, from their 500-square-foot
studio apartment, meaning headquarters is, effectively, their couch.
The business, which text messages discounts to users’ mobile phones,
keeps Yuan and Ung, who is 28, up until 3 a.m. most nights. Then, Ung
said, she sometimes finds herself lying awake, worrying.ons."

8coupon2.jpg

Landy
Ung and her boyfriend Wan Hsi Yuan, who run 8coupons.com, out of their
small studio apartment in New York, pose for a photo at the apartment
on Oct. 30, 2007 in New York. (AP Photo/Mark Lennihan)

 

"I need to watch a little National Geographic special on the rain forest or something before I go to sleep," she said.

Welcome startup life in 2007.

While
their Internet bubble predecessors dreamed of stock offerings, spoke
blithely about burn rate and talked about selling everything online,
these startups are focusing on interactivity, services for mobile
gadgets and getting bought by a bigger company.

This time, the
cost of everything from laptops to programmers is lower and no one is
splashing for fancy office space, so starting up a company is cheaper,
said Chris Shipley, executive producer of the DEMO Conference, a
new-technology showcase.

"The Aeron chair is out, the Starbucks latte is in," Shipley said.

"If
your team includes some engineers, you’ve got a laptop, you’ve got an
Internet connection, you code like hell and see what you can come up
with," she said. "It costs your time, it costs a lot of sleepless
nights."

8coupon3.jpg

A
text message from 8Coupons.com is shown on Tuesday, Oct. 30, 2007 in
New York. Landy Ung and her boyfriend Wan Hsi Yuan operate
8coupons.com, which text messages discounts to users’ mobile phones,
out of their small studio apartment in New York. (AP Photo/Mark
Lennihan)(AP Photo/Mark Lennihan)

 

Venture funding for all industries has fallen by more
than half since 1999, dropping from $54.1 billion then to $26.5 billion
in 2006, according to the National Venture Capital Association. Funding
for Internet startups is running at roughly $1 billion a quarter in
2007, down from a high of $14.27 billion in the first quarter of 2000.

At
an October startup camp in Manhattan, Ung, in a ponytail and puffy
vest, and Yuan, in an "8coupons.com, One Free Hug" T-shirt, exchanged
cards with other startup founders, led a talk about marketing on
Facebook and flew through e-mails on their laptops during breaks.

"We
don’t go out anymore," Yuan said. "For the past two years, all we do is
work." When a founder of another Web site asked Yuan to name a
restaurant he likes, he was stumped. He thought for a minute, then
named Cafe Fuego, an 8coupons advertiser.

Ung said, "He develops
and creates. I do everything else. People look at the site and say,
‘How many people do you have working on it? I think, ‘Umm. What should
I say?’"

There’s a lot to keep her up nights.

Like the
Internet bubble, startups are clumping in a few areas and wireless
services is one. Some companies do text coupons exclusively, such as
San Jose-based Cellfire.com, which has venture funding and national
advertisers such as Hardee’s. Others send coupons as an add-on to other
services, such as GoMobo.com, which lets users order coffee or meals by
text message.

Mobile coupons "could work if done in association
with a service the user opted in for, but as a stand-alone service, it
has many challenges," said Jed Katz, managing director at DJF Gotham
Ventures.

Ung and Yuan have put $30,000 into the business. They
figure they have enough money to last a year, but they’re hoping to get
venture funding by March. According to their projections, 8coupons
should be profitable by the first quarter of 2010, but one lesson of
the Internet bubble is that profitability projections often prove
overly optimistic.

To expand, Ung would love to find a business
development person, another programmer and a traditional media partner
whose ad sales force can bundle 8coupons.com text-message coupons into
its ad sales.

She did get a lead on a programmer at the camp,
which was held not at a ritzy hotel or a swank downtown loft, a la Web.
1.0, but at low-budget conference center in a Masonic Lodge. The food
was served from plastic takeout containers and the coffee was cheap.
Reps from sponsor Sun Microsystems Inc., which itself imploded during
the dot-com bubble, were there to talk about how Sun could support
startups (with advice, not cash) and what it wanted from them:
Customers. Sun sent two speakers, both from its marketing department.

Scott
Medintz, the editor of a planned magazine about startups, surveyed a
crowd split between khakis and T-shirts, and said, "It’s a lot more
bootstrappy now."

That suits Ung and Yuan perfectly.

At
home, they sleep in a queen bed and their workspace/living area is
roughly the size of a king bed. They have Internet-only cable; their
flat-screen TV shows their Web site, and Yuan works from the couch on
an arrangement of pillows they call "his shrine," typing braces on both
wrists, a serving tray with a wireless keyboard on a pillow on his lap.

When
Yuan was 16, his mother sent him from Taiwan to live with an aunt in
Athens, Ga. "There were no Asian people there!" he said. He knew no
English, but he learned it and went on to get a master’s degree in
information systems from the University of Maryland at Baltimore County.

Asked
if the risks of starting a company make Ung nervous, she answers, "My
parents came to this country from Cambodia when they were 40 with three
kids, no money and no English. What’s the worst that can happen?"

While
working at American Express Co. in New York, Ung started thinking about
starting a neighborhood Web site. One day, coming home from work and
bombarded by people handing out flyers and coupons, she thought, "Why
not take all this and put it online?"

Eighteen months later, the site was launched.

Growing
it requires everything from algorithms to cold calls. 8coupon’s 150
advertisers, most in New York City’s East Village, start with free
trials, then pay $250 a month. Two part-time employees help with sales,
another works on the math needed to keep the site running.

The
hardest task is converting new advertisers, Ung said. Since most users
don’t print their coupons, she makes sure everyone at a participating
company is ready to honor coupons that exist only on a customer’s cell
phone screen.

The site has 1,700 users and depends on flyers and
word of mouth for more. Users pick a coupon on the Web site, then enter
their cell number to get a text-message coupon.

At the startup
camp, a partner at a venture capital firm ran through a PowerPoint
slideshow on what VCs are looking for: Companies doing things
competitors can’t with technology that’s either patented or incredibly
challenging to create.

As he went on, it was clear 8coupons lacked nearly every attribute he listed, but Ung and Yuan shrugged that off.

"VCs are all looking for the same thing," Ung said.

When
The Twisted Burger in New York’s East Village ran an 8-cent burger, $1
beer promotion, the restaurant was overrun with 500 customers and an
hour-and-a-half line. Ung and Yuan ended up waiting tables and busing
dishes.

"Our goal was to do whatever it took to make the event successful," Ung said.

Asked
what success for her business will look like, Ung answered without a
second’s hesitation. "When a consumer thinks about local coupons,
they’ll think about 8coupons."

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