BY SUSAN LAHEY
Reporter with Silicon Hills News
Joshua Baer has a set of those millionaire-on-a-skateboard dotcom Gold Rush stories that give the Austin startup scene its own sexy tech history.
Baer graduated Carnegie Mellon with a less-than-stellar academic record, and a couple hundred grand in revenues from being an early dabbler in web hosting and email services. He secured two houses: one for his business and one for his home and skateboarded to work every morning. He was one of the dozens of entrepreneurs spun out during of the Golden Years of Trilogy. And, as a young man, he sold his first company and made enough money that he could afford to sit back and contemplate what he’d like to do with the rest of his life, now that he could do whatever he wanted.
He decided what he wanted was to help other entrepreneurs take their own version of the wild ride that brought him there. So Baer founded Capital Factory, which provides work space and mentoring to entrepreneurs. He’s also the founder and CEO of OtherInbox—which he sold in January to Return Path. He’s also a specialist at the University of Texas and an investor and advisor at more than 25 other companies.
The man who once-upon-a-time was scared to have his own company is equipping all the entrepreneurs he can with the knowledge and contacts to create theirs.
Baer grew up in Nashua, New Hampshire, a third-generation descendant of Eastern European immigrants. His father was portrait photographer and most of his ancestors were entrepreneurs.
“So when I first started a company, I thought of it as something achievable,” he said. “It wasn’t as intimidating to me as it is to some people.”
As a computer science major at Carnegie Mellon, he was an early internet adopter. At the time, if you wanted a web site you had to run your own web server. He couldn’t afford a web server and he didn’t get chosen for the StarNine WebSTAR beta program. So instead, he applied for the beta program for ListSTAR, an email server that fewer people were applying for. Being a student with time on his hands, he could afford to play with the email software and read the manual, which led him to start answering questions on the ListSTAR forum. He became the resident expert and eventually drew the attention of the StarNine CEO, who decided to make him an intern, an official spokesman of sorts, to answer questions on behalf of the company.
Soon people were hiring him to consult about issues on their servers, paying him a pizza or $10-$15 bucks an hour. He started farming out work he didn’t have time for to fraternity buddies who were computer science majors. Then one day, one of his customers proposed that, instead of fixing problems as they arose, he would pay Baer $50 a month just to keep his server up and running to avoid chronic breakdowns and angry customers. It looked like money for nothing and Baer launched into the server industry. That was the real beginning of his first company in 1996, SKYLIST. And as it grew, rapidly, Baer got nervous.
“I was afraid to have my own business,” he said. “I didn’t know what I didn’t know.” The CEO of StarNine had sold that company and started another. He offered to help Baer out by making Baer’s company a division of his own.
“By the time I graduated in 1999 I had a couple hundred thousand dollars in revenue,” he said. “I employed a couple people doing tech support and people doing programming. I was the king of my world. I could buy more beer than anybody I knew.”
He got inundated with job offers. But then Jonathan Berkowitz, a friend who graduated six months before him, got hired by Trilogy Inc. and told him about it.
“I met with the CEO and he said ‘Keep your company. Come down here, work for me, learn a ton on my dime and when you’re done you can go back up there.” How could he refuse?
He brought his CMU gang who were working for him down to Austin. They housed servers in his house until they ran out of room, then rented a place up the street. His next company, UnsubCentral, spun out of SKYLIST. Compliance rules were emerging around email and he created a leading compliance solution for email list operators. Part of that company required him to meet with the Federal Trade Commission to provide industry comment on CAN-SPAM. He was 24.
“I don’t really enjoy wearing a suit,” he recalls. “But if I had to do it again now I am so much more confident and better prepared, I would totally show up in jeans and a t-shirt. Back then I was a 24-year-old trying to be an adult.”
When he was 30, he sold both SKYLIST and UnsubCentral to Datran Media (now PulsePoint) for an undisclosed amount estimated at $10 million in 2006. And that changed his life.
“Selling my first company was an inflection point,” he said. “Right as I turned 30 I sold my first company. It was a life changing event. I wasn’t doing poorly before I sold the company but I never had any financial security. ..your perspective on life changes when you have financial security.”
He pondered what he wanted to do. Go sit on a beach? A career as an EMT seemed exciting. “I romanticized the idea….” he said. “It must be incredible to walk home every day and say I saved two people’s lives today. But I pass out when they take blood from me.”
“Then I realized: I get a ton of personal satisfaction from helping people become entrepreneurs. … If I help somebody actually get their company started I feel successful. I get a ton of positive energy back from them…. The best way I can help the world is to help one person achieve financial independence. They’re going to make their own lives better and it’s going to have a trickle-down effect. If they start a company, that makes Austin better. That makes the world better. That’s I thing I can do and I’m good at it.”
So that’s what he does. He has always been a good networker, by his own admission. And he teaches what he’s learned along the way.
“He was one of the instructors for our class, we got to get advice from him on a weekly basis,” said Dwayne Smurdon, CEO of Predictable Data, a company that was created in one of Baer’s classes. “He’s very pragmatic. He gets down to issues you really need to worry about rather than the big scale issues like human resources. He focuses on what is the minimum you have to do to be viable, to get your company started up. “
That might include teaching students how to deal with mentors: Make sure you’re prepared to ask them very specific, targeted questions. Don’t waste your time or their time. Make sure you’re asking until they’ve said no; you never know how much a mentor is going to give.
It includes pitching advice: Start with a story people can relate to. Start with a small picture and build towards the big picture.
“He helps you network, get involved in the entrepreneurial community,” said Smurdon. “He’ll introduce you and what you do with that is up to you. It’s such a big advantage that other people who didn’t’ get to know someone like Josh don’t have.”
Both Smurdon and Baer say he emphasizes focus. There are so many potential issues to tackle, entrepreneurs don’t know where to look first. During pitch competitions, he said, entrepreneurs need to be able to drill down to the point.
“My goal is that I should be able to help everyone in some way: Introduce them to somebody, help them figure out a key tactic–something to do differently,” Baer said. And he’s carved a unique spot for himself in the world of Austin startups
“Josh is such a great catalyst for the city of Austin,” said Bryan Jones, 2012 chair of the Greater Austin Technology Partnership through the Austin Chamber of Commerce and CEO of Collider Media. “There aren’t many people that are both a successful entrepreneur, prolific investor and community activist. His ability to evangelize the city, while still making the community feel smaller by making constant introductions, is amazing.”
Baer is a fierce advocate for Austin as a tech growth center and weighs in often on the Silicon Valley vs. Silicon Hills controversy. While California benefits from a greater supply of early stage capital, for example, he points out that fewer companies need that much capital. He, for example, bootstrapped his first two companies.
“We want to learn what we can from the Silicon Valley, take their investors and their money and never become them. They’re at the pinnacle, they are the Mecca of consumer internet technology but they’re kind of like an established old boy club. It’s not impossible to break into that, but it’s hard. It’s hard to carve out a niche. Austin is a big pond that’s growing. That’s the exciting place to be for me, not in the busiest, most crowded room, but a growing one that creates opportunity…. You can affect what it’s becoming. You can change it. You’re not going to change Silicon Valley….I was a nobody in Austin but I’ve been able to get involved, get to be part of the community, stepping up and filling the void. There are places to jump in and play your part in what is going to be.”
So that’s what he’s bringing to Austin. The message and the knowledge to invite entrepreneurs: There’s opportunity here…come and play.
