Photo © Joseph Lin
Entrepreneur: Kathryn Minshew, CEO and co-founder of New York-based The Muse, a career-development platform with original content, interactive job boards and comprehensive company profiles.
Setup: In December 2010 Minshew quit her job at the Clinton Health Access Initiative to run Pretty Young Professionals (PYP), a women's networking site she had started with three co-workers a couple of months before. She bootstrapped the company and guaranteed a small payroll with personal savings, working as an unpaid CEO and editor in chief. By spring 2011 she'd managed to attract only 9,000 users. Then, a redesign increased users to 20,000, and the other members of the founding team began to get more involved.
"Uh-oh" moment: The group splintered in half after an argument about how best to run the company, and the threat of a lawsuit loomed. "We split our equity on a piece of notebook paper. We didn't have lawyers; I didn't think we needed them," Minshew recalls. "I spent three weeks alternating between the fetal position and the whiteboard trying to figure out how strongly I wanted to fight for the existing company vs. how prepared I was to strike out and do it over."
The way out: Minshew decided on a do-over, watching PYP's rebranding from the sidelines. In September 2011 she launched The Daily Muse (now called The Muse), and PYP's entire staff, plus another co-founder, joined her. The Huffington Post and TechCrunch covered the launch; the site drew more visitors in its first month than PYP had in its best. "The community knew what happened and stood behind us with tweets and shares," Minshew says. "It was painful, but being forced to start over was a unique sort of gift, because having been through a lot together, the team comes out of it with the confidence that nothing is going to stop us."
In November, she was accepted into the prestigious Y Combinator accelerator program. She added mobile, local and social media functionality to her platform to look more like a "billion-dollar" startup.
Success: She's still out $20,000 in savings, but by the end of 2012 the website had nearly 2 million users in more than 160 countries, increasing at a rate of 30 percent every month. The Muse, now with eight employees, has partnerships with 60-plus companies, including Intel, Sephora, NPR, Pinterest, Twitter and foursquare.
Take-away: In a business partnership, formalize the process and paperwork, and hire a lawyer who can spot problems you never dreamed would arise--just in case things get personal. And of course, choose your partners wisely. "It's so important to find people who share your values and ethics," she says. "There are a lot of things you can paper over, and having different sets of opinions is valuable, but not when it comes down to code of conduct."
Entrepreneur: Frank Jadhavji, co-founder and interim CEO of JustDeals.com, a flash-deal site specializing in consumer electronics and appliances.
Setup: After many years in the computer and consumer electronics industry, Jadhavji decided to parlay his experience into his own company. He launched JustDeals in 2010 in Chatsworth, Calif., buying up closeout and refurbished electronics and appliances and offering them at discounted prices online. The self-funded company broke even its first year. He decided it was time to ramp up for the next stage of growth and purchased a large volume of cameras and other electronics for the holiday shopping season, working with consumer reporters to promote the deals.
"Uh-oh" moment: Soon after the inventory arrived at the warehouse, it was stolen. At 6 a.m., a red van slammed into the cargo door; two minutes later, a group of thieves had taken more than $300,000 worth of merchandise. The worst part, Jadhavji says, was that the cameras had already been sold, and customers were waiting for them. "We had to bring in the executive team on Sunday to talk about how we were going to handle it," he says.
"It was demoralizing," adds Richard Chemel, co-founder and executive vice president of merchandising. "In e-commerce, reputation is all on what you sell, and we were scrambling."
The way out: Old-fashioned crisis control. The team members put their heads down and got to work, dealing with insurance companies, contacting customers and explaining the situation, offering discounts and coupons and negotiating with vendors to find similar products.
Success: Customers were satisfied, and business is booming. JustDeals' traffic tripled in the last year.
Take-away: Sometimes shit happens that's out of your control. Jadhavji recommends hiring a management team that's able to make crucial, turn-on-a-dime decisions during times of emergency.