Lessons for Beginner Entrepreneurs: Reflections on Funding…and Turning it Down
My startup story is anything but the typical Silicon Valley story. I personally funded a prototype for my business idea that would replace your keychain with your mobile phone, then parlayed that into a $500,000 investment offer on the hit reality TV show Shark Tank on ABC. Truth be told: I ended up turning down the offer since it didn’t make sense for my business. But I can give you some tips from lessons that I’ve learned along the way. If you have a problem you are passionate about solving, I believe you too can be an entrepreneur—as long as you’re prepared to be in constant selling mode and 100% dedicated.
When I set out, I wanted to focus on what I was good at: the technology and user experience. I wanted to create a digital key that was more convenient in every way than the traditional metal key we were all used to. I wanted to disrupt a basic technology that had held firm for over a millennium.
Digital keys are one of those things that have to work every time, or you’ll simply stick with the convenience and habit of just carrying around a good old fashion metal key. There’s a reason physical keys have been the dominant “technology” to get us into houses for more than 1,000 years. They are small, portable, require no learning curve and they don’t require batteries or crash. To overtake the ultimate in entrenched products, my product had to outdo keys in both convenience and reliability, not simply just be cool and futuristic.
I didn’t have a lot of VCs to choose from in Central Florida, particularly in 2010 on the heels of the Great Financial Recession that had swept the globe and muffled entrepreneurial risk-taking capital. This was the main reason I applied for “Shark Tank.” On the prime-time show, I was the first entrepreneur ever to get offers from all five sharks, including Mark Cuban and Kevin O’Leary. Though I eventually turned down that deal based on the fine print, I received the validation I needed that my idea was great and that I had built a fantastic product that could pioneer a whole new market segment. Given that exposure, I was approached by a VC shortly thereafter and found my capital partner to scale the business through the next stages.
A lot of people ask me about the investment – “why didn’t you take the Shark Tank money?” I’ve seen people and startups make the mistake where you focus on the short-term gains instead of the long-term benefit. You have to get investor alignment for the long-term or else you’ll never get there. Major lesson learned here: As hard as it is, sometimes you have to walk away from money and opportunity if it’s not right for you and the company.
I was lucky. I had put aside enough money so that I didn’t have to take a paycheck and I could focus on investing time and resources into the company instead. I think that’s super important for entrepreneurs. I recommend trying to have enough capital so you don’t have to make hasty decisions. If I was in a personal capital crunch situation when I had received that offer from the Sharks, turning down the offer may not have been an option. Fortunately, I was able to make appropriate decisions that were strategic for the business and for the vision that I had, which ultimately led to the creation of the first Smart Lock.
I started realizing that you can build these really great, simple products and experiences that improve people’s lives, but behind the scenes it’s a sophisticated dance with many things going on, such as our embedded lock firmware, mobile software, and military-grade encryption and security. We had to get all of that working together and, more than that, we had to make sure it worked better for customers than their old-fashioned keys. Everything we do at UniKey has to answer the question: Is this easier than a metal key? That is what really defined us as a company and it is still what we put all of our focus towards today.
At the highest level, my advice is this: Entrepreneurship is about solving problems. I think the better problem solver you are, the better entrepreneur you can be. Problems continually happen throughout the lifecycle of product development, and a company for that matter. As a startup manager, amongst other roles, it is your goal to identify and embrace mistakes as fast as you can and come up with solutions. Fall fast, fail smart, constantly solve, and always improve.
Entrepreneurship is just about solving problems. Embrace mistakes as fast as you can. In every crisis there are dangers and opportunities.
My final piece of advice for anyone starting a company, is that you just have to be prepared to be in sell mode all the time. You have to sell investors, but also fans, friends and other people that can help you develop the technology upfront. You just have to get people to buy into your vision, and that will happen if you are passionate about your business and your product.
So, to recap, make sure you are solving a problem, be prepared to make mistakes, learn how to recover quickly, and be passionate enough to get buy-in from everyone around you.
Phil Dumas is the founder and President of UniKey, whose access control technology powers the world’s first Smart Lock, the Kwikset Kevo. UniKey’s technology replaces keys, cards, codes and passwords by turning your smartphone into a convenient, universal electronic key. This technology affords secure and intelligent access by simply touching your door lock without ever needing to remove your phone from your pocket, purse or backpack. Serving the mass market by licensing its technology, UniKey works in partnership with market leading companies worldwide, including Kwikset for the Kevo Bluetooth residential door application, MIWA for hospitality solutions, Microsoft for Azure global cloud solutions, and NEST for smart building thermostat integrations. To learn more about UniKey visit @UniKeyTech on Twitter. UniKey just announced a $10 million series A finance round to accelerate development for new vertical markets and bring the same touch-to-open smart lock technology found in Kevo to the smart enterprise, commercial and government industries.