John Corcoran: 10:42
Yeah. So you say that a year later you reassembled Chosen development. Was that array creative?
Clay Unicorn: 10:50
That was. Yeah.
John Corcoran: 10:52
Okay. And so what indicated to you that it was the right time to put the band back together, so to speak?
Clay Unicorn: 11:00
Yeah. So it was always limiting. I was really good at software and all the staff I had were all software developers. I had a playbook back then, before I knew what playbooks really were. That was I would hire people from construction or service industries, literally people at McDonald’s.
And I would teach them to code, and I just look for some key indicators and their personality that they possess the hard skills. Because I saw gratitude when I tried to work with other Rockstar developers, the ego came with it and it was so hard to manage and retain. And you shouldn’t have to put in foosball tables and Xboxes in your office to keep a developer around people. You know, maybe just enjoy it or be grateful for it. So it was a time where development developers were in high demand. We were running one of the only dev agencies in Colorado.
And I thought, man, we’re just still developing so limited a lot of times that that intertwines with design and we need a good designer or marketing to go to market. We need a good marketer. So I partnered with two business partners to kind of represent, you know, be more of a three legged stool development, design and marketing. And it went really well until it didn’t.
John Corcoran: 12:10
So what happened?
Clay Unicorn: 12:12
Well, so basically we started this venture. We became equal partners and just merged. Two of them were freelancers.
John Corcoran: 12:20
And are you talking about the investor or are you talking about starting?
Clay Unicorn: 12:25
No.
John Corcoran: 12:25
This would be okay. All right.
Clay Unicorn: 12:28
Yeah. So basically I had two partners.
John Corcoran: 12:30
It’s the same people who were chosen.
Clay Unicorn: 12:32
No. These were kind of new people. Okay. Some. Some were similar. I don’t want to name names because, you know, there’s no bad blood between us today. But yeah, ultimately three of us came together as founders. We merged these three kinds of pillars together. And I was the only one bringing real capital. We had a profitable business chosen before that. So I was essentially doing a merger, you know, just taking all of my previous assets and staff and merging it in. And that came with a bank account and savings, which was substantial to me at the time. It’s like a quarter million dollars, but not oh.
John Corcoran: 13:03
That’s it.
Clay Unicorn: 13:03
Significant.
John Corcoran: 13:04
For startup funds. Yeah, yeah.
Clay Unicorn: 13:05
Well, and you’re in your early 20s still, you know. So yeah, that was spent very quickly. I didn’t put controls on it. I trusted my partners. We had the most amazing offices in Denver.
I mean, hands down we had Kid Cudi concerts. We hosted all kinds of events. We hosted a marketing get togethers. The Fire Marshal came in and shut us down because we essentially had professional parties. Just wild how much traction.
But it was all fluff. It didn’t necessarily convert to sales and ultimately, regardless of our success in the market, we were not aligned as partners on what we were building and how we were building it together. So I was kind of the conservative one, and I had two partners that were far less so.
John Corcoran: 13:50
Were they the ones that were like, let’s do a Kid Cudi concert. And you were like, okay, let’s be a little bit more careful.
Clay Unicorn: 13:55
Yeah.
John Corcoran: 13:56
You obviously were conservative. If you’d saved a quarter of $1 million, you know, in spite of what you described as not being successful. But if you were, if you still had a quarter of $1 million in a bank account, there’s some success there.
Clay Unicorn: 14:07
Reasonably. Yeah, exactly. And so, I guess take it with a grain of salt when I look at it as failure, maybe I’m being my own worst critic, but to me, not having a successful exit, I guess that’s the thing. In hindsight, I didn’t know what exciting looked like back then. I look back with my modern lens and I think I could have done so much better, but maybe that’s what every entrepreneur does.
John Corcoran: 14:27
Yeah, yeah. So Ouray was then eventually acquired. Was this kind of like an aqua hire? Was it you just decided, well, we need to go our separate ways so we’ll sell the company. How did that come about?
Clay Unicorn: 14:44
So we had an offer on the table from another larger agency out of Colorado. And they said, look, we’re either going to spend what we need to, we’re going to have capital gains this year. We need to buy a building or we buy a business. And then they came to us, didn’t spend a lot of time on due diligence and came to the table with a $3 million offer for our business. Wow.
John Corcoran: 15:05
And was.
Clay Unicorn: 15:05
So we celebrate that valuation. That was great.
John Corcoran: 15:07
I mean, it only.
Clay Unicorn: 15:08
I think we were doing it.
John Corcoran: 15:09
Been around.
Clay Unicorn: 15:10
For a year and a half.
John Corcoran: 15:11
Yeah. Array had been around for a year.
Clay Unicorn: 15:13
Probably about two years at that point. And yeah, it was a good offer. I think we were doing about a million and a half, maybe 1.7 and yeah, revenue. So it was a good multiple. You know, it was almost A2X.
And yeah. So we celebrated me and the other two founders the night before signing, maybe got a little, maybe celebrated a little too hard because. Oh, no. One of my founders decided he ended up going through the night. Next morning, he walked into the business deal and said, we want 5 million. Just barges into their offices in the middle of their meeting and just says, we want 5 million.
John Corcoran: 15:51
After drinking the whole night.
Clay Unicorn: 15:53
Yeah. And not sleeping. Literally all nighter.
John Corcoran: 15:55
Oh, jeez.
Clay Unicorn: 15:56
You can imagine how quickly that deal was torn up.
John Corcoran: 15:59
This is like something out of a movie.
Clay Unicorn: 16:01
Oh, I could be. It was. It was wild. So our deal was torn up. We ended up. Fast forward, the band breaks up and we cobble the pieces together. I cobbled the pieces together. So basically, I walked away. I was the first to just walk and just say, you know what? It doesn’t matter what the value of this business is. That’s a lot of hard work down the drain. I’m so upset, you know, and I’m so ticked off.
John Corcoran: 16:24
You’ve lost your quarter of a million. You’ve lost the possible payday selling the company. Oh, you must have been so frustrated.
Clay Unicorn: 16:31
They wanted it exclusively as an acqui hire. They wanted our dev team. I think that was a big motivator for why there was maybe some animosity that was unseen between us as partners, I didn’t know. I think this partner was harboring a little bit of animosity towards me because they wanted our dev team we were doing, you know, before Shopify, there was like Magento. It’s a very complicated platform.
Very few developers knew it, and we were it was a specialty of ours. So they didn’t want his marketing team. They he knew that, you know, that we were going to be laying off, you know, a dozen plus people if they acquired us. And so I know, you know, it’s like, I don’t look at it. That’s why I say, you know, I don’t look back with bad blood. I realize that, man, if we had, like, counseling, you know, to, like, unpack these things, right. As founders, maybe that would have solved all that.
John Corcoran: 17:16
Would have helped. Yeah. So how do you pick up the pieces? Because you end up starting your agency unicorn later. Not too. Not too much later.
Clay Unicorn: 17:25
Yep, yep. So I sold it for parts. And the way that looked practically as we had agency of record with some, you know, notable, you know, municipalities, government contracts getting agency of record is really an asset by itself, you know, with certain companies, especially publicly traded or governmental. So I started selling off that agency of record to, you know, I essentially let it collapse to zero. And then I recovered it and sold it off to other agencies.
John Corcoran: 17:55
Wow. And then so you start Unicorn then and this time, do you have a partner?
Clay Unicorn: 18:01
This time I started without partners. I just started without partners.
John Corcoran: 18:05
But you eventually got a partner.
Clay Unicorn: 18:07
I did get a partner. Yeah. Okay. It’s an ongoing theme. You’ll find.
John Corcoran: 18:11
How long did you go before you added a partner to this?
Clay Unicorn: 18:15
You know, probably a full year. And I would use the term partner, like, liberally with people because I wanted people to feel equal. But that didn’t mean you had to be on the same cap table with equality. And that was the part I was kind of missing for a long time of how you are equal without being equal? Yeah.
John Corcoran: 18:31
So is there a part of you that also felt some comfort in that? In, in, you know, having a partner?
Clay Unicorn: 18:39
Yes. Yes. I would never be a great solo preneur or or just sole. I kind of like freelancing and representing myself. But I’ve never been a good boss. I’m not great with, like, hiring middle management and bossing people around.
John Corcoran: 18:53
Which is ironic given the definition of unicorn these days. What has unicorn come to mean? Right. You know that you actually are someone that wanted others around you and needed others around you, rather than being like a solo all by yourself kind of thing.
Clay Unicorn: 19:07
Exactly. Well. And to not have ego, but we were using the term unicorn before. I think TechCrunch or whoever coined it for billion dollar companies coined it.
John Corcoran: 19:16
Well good timing. Good, good use of it.
Clay Unicorn: 19:18
Now you can find these on the shelves years ago. Now they’re everywhere, you know. So yeah.
John Corcoran: 19:23
It’s become quite a thing. In fact, I went to a conference two years ago where the theme was unicorns. It was in Seattle, and they were very proud of the fact that they had all these unicorns from there. So talk about some of them that you started in 2013. So in terms of economics, you know, it was kind of after the whole 2008, 2009 downturn.
So economically it seems like maybe you’re at a good time to start a company. And what are some of the highs and lows of building and running unicorns? Because you started as a more of an agency model, building mobile apps and web platforms and stuff like that, and then eventually it moves on and you change the model. So talk a little about the early days.
Clay Unicorn: 20:04
Yeah. So early. It was just very much I watched a lot of my apps going on to be very successful and, and make, you know, entrepreneurs a lot of money. And so I always had I don’t know what you’d want to call it, maybe jealousy or FOMO, but thinking like, why can’t I do that with ventures of my own? So you start to see if you looked at my resume.
You know, in this linear progression, it’s like 2013 to this 2015, you see me start dabbling in like startups, you know, fintech startup and other things kind of in parallel. I didn’t believe in it, like being a serial entrepreneur. Well, let me rephrase that. I’ve always believed that when people say serial entrepreneur, they mean parallel entrepreneur. And I don’t think that that works really well.
Moonlighting, a startup, definitely has its merits and works, but I think that to guarantee the success of a company and have the highest success rate, you have to be all in, you know, and it has to just be your whole world. So there’s a couple of years where I started dabbling with, okay, wait, I can be an agency and service my customers, but I could be more exclusive of those customers that I could be equitably invested in. So I’d never heard the term venture studio. Don’t know when that was coined exactly, but it was very much like what a venture studio model is now today, and kind of ubiquitous with that. But at the time, it was kind of unprecedented.
Unheard of out of the half dozen ventures I invested in, one was massively successful and the other five were unfortunately, duds.
John Corcoran: 21:32
So what was the successful one, and why do you think that one was successful? What were the reasons behind that?
Clay Unicorn: 21:38
So it was Bowery valuation. Basically, we met these two founders, John and Noah, in New York. They were doing commercial comps for, for the, you know, in the city and boroughs of New York. And they’re like, there’s all these disparate data sources to, you know, grandfathered variances and all these, you know, just different things that are like, look, we have a relationship with Wells Fargo. They’ll pay us to do these things, and we can’t keep up.
And it’s so hard to train. We’re like, wait, we can build tech around that. So we did. So we you know, we essentially said, I don’t remember the exact numbers, but somewhere in the ballpark of like they contributed like 50 to 75 K. We matched it in terms of, you know, time materials.
And so for a net investment of like 150 maybe 175. We built an MVP, and somewhere between a proof of concept and a version, one of the products that enabled them to raise $6.2 million in six months. And I think their valuation today is north of 500 million. Wow. So in effect, we were an angel, you know, but again, very much the venture studio model today and where we’re taking that risk. And we would have just been out of pocket at that cost. But yeah, we’re able to pull it off.
John Corcoran: 22:51
And so looking back on that experience now you said you had five that didn’t work out. That one worked out really well. What are some indicators that you would look to evaluate opportunities now given what you know, was it the founders? Was it their charisma? Was it their work ethic?
Was it the size of the opportunity? What was the technology that you put into it? What do you think? You know, looking back on it?
Clay Unicorn: 23:16
Great question. I’d say I’m still learning because the market is always shifting. The one constant is the operators, the people. If you know that the people are determined, they’re committed, and they’re willing to stick it out for the years it’s going to take, and they have the grit. That, to me, is the number one success criteria to measure against.
Because the technology shifts, AI tools are making it feasible to not even have development teams and to get to market quicker. Product market fit is important, but it’s not everything. Ultimately, it’s your founders and the operating team.
John Corcoran: 23:49
Yeah, there’s a little bit of a detour, but I know you’ve also been involved, had some equity stakes in brick and mortar companies, businesses, a grocery store or salon. What’s it like going from the digital world building agencies to, you know, getting butts in seats, getting people to, you know, come in the door of a brick and mortar business? What are some of the challenges that you’ve encountered around those businesses?
Clay Unicorn: 24:16
Well, I’d have to say my wife is my number one mentor on this. Again, my own ego and hubris of thinking, well, brick and mortar is going to be so much easier than running an online, fully remote digital company. So I’ve always just kind of taken profits and tried to diversify where that goes in a meaningful way. That’s how we entered into the brick and mortar space. My wife, Hannah, owns a salon she started at a young age as well, like 23, you know, fresh out of college.
And she’s been an entrepreneur ever since. And yeah, I mean, ultimately, I can’t tell you what success looks like because I haven’t yet done a successful brick and mortar. What I can tell you is that it’s way harder than I thought it would be, and it’s definitely harder than doing a digital business, in my opinion anyways.
John Corcoran: 25:01
Yeah, yeah. You mentioned AI and how that’s affecting the agency world. I want to ask you about that before we get to the shift to kind of the, the, the venture model. But what do you see as the future for agencies that are affected by AI, especially development agencies? You know, how is it affecting things now and how is it going to affect it in the future?
Clay Unicorn: 25:26
Well, I think in the immediate term we’re already seeing the results, which is that as companies embrace AI, they’re realizing they don’t need as many humans, which is a bit unfortunate. I won’t get into the philosophy of how we solve that, you know, systemically or as a nation. But what I will say is that the companies that don’t embrace AI, I think, are going to be left behind quickly. Yeah. And if you do it, if you do it appropriately, like in our case, coding AIS is not super sophisticated.
There’s a lot of room for hallucination. And it definitely does replace junior and mid-level devs. Like if I was a software engineer and I was only mid-level, I’d be terrified of AI tools. As a senior engineer, I have the equivalent of like a five person dev team underneath me at my disposal for a. For pennies on the dollar.
Yeah, I’m not scared of that, I love it. It lets me take more risks. It lets me create more proof of concept. So the number one takeaway would be to embrace it. Don’t resist it. Right.
John Corcoran: 26:28
Yeah, yeah. And let’s talk about the venture studio. So now you’re at a point where you have another company which is Scaffald, which is a Unicorn venture. So it’s part of Unicorn. And Unicorn is now more of a venture studio. So talk a little bit about what that is and how the model works now.
Clay Unicorn: 26:49
Yeah. So for the longest time I’ll start with what we learned. About a year and a half ago, two years ago I started with a thesis. I saw, you know, the Silicon Valley bank collapse. I, you know, I was watching these trends and thinking the market’s about to shift.
And it wasn’t just a Covid thing. It was, you know, Covid just brought things to light and I think was a catalyst. So I sat back. I like to take my time again. I think conservative minded, and I wanted to redefine what a good startup would look like, or what incubating a good startup would look like into the future.
And I’d worked, you know, with Techstars years ago, early on in my career, you know, kind of fractionally and, and others. And so I saw what good incubators could do. And I had this idea for, you know, what, if there was a framework like private equity firms, what they’re really good at, the best ones is like keeping a central ops team and using that ops team to like, take off, you know, all the back office and admin, for example, that that might represent 20% of time spent on an adventure, right? So if you can centralize all that, it’s a huge advantage. So I started looking around and thinking, well, that’s cool.
And then I heard the term venture studio. As I’m talking to investors and private equity firms, I’m learning about some of the early venture studios. And I go and interview a few and talk to them, pick their brains and. And what I saw was a lot of agencies still charging agency rates, but getting equity on top, like when we did it, we were literally operating at cost. You could audit it and we would pass flying colors of like, we’re in the black or the red and we’re truly doing this at cost.
So we’re shaving off the margin to be investors. A lot of venture studios are flexing either their fund or, or just kind of duping. I think their customers with, you know, over exorbitant, you know, prices of like, oh, instead of $400 an hour for the agency rate, we’re a $200 an hour rate, and their margin is still 20 to 30% for every hour worked. You know, that’s tragic. So we started calling it private Equity Studio just to differentiate ourselves that we don’t want to be associated with that term. And Scaffald was our first product born out of that studio. So almost a year ago today, or just over a year ago, we went.
John Corcoran: 29:05
And Scaffald.
Clay Unicorn: 29:07
Yeah. Scaffald. Thank you. It’s basically a job procurement platform. So think of it as like LinkedIn for construction.
It’s very skills based, skills focused. We want to be what Zillow did to like real estate lets you let you window shop. Employers should be able to come in and find exactly the trade they’re looking for. We say construction because that’s the vertical we’re focused on right now. But you can imagine white collar skills, software engineers, you know how many layers are like a stack.
You know, I’m a TypeScript dev that uses react as a framework that uses Node.js. You know, like these are very specific skills. It’s not enough to just say, I’m a senior software engineer. What type what’s your stack? What are your tools? And LinkedIn doesn’t get that specific. So Scaffald is built with those types of things in mind to be a more modern digital, you know, resume and, you know, job seeker platform.
John Corcoran: 30:00
Yeah. One more kind of cautionary tale along the way is. So we mentioned earlier that you got a partner in Unicorn, and that partner ended up having a problem along the way which affected the viability of the business. So tell us that story.
Clay Unicorn: 30:17
Yeah, it’s a tragic story. It’s one that is actually still even relevant to this timeline. As of last week, I had my, like, multiple business accounts frozen from this fall out. So I’ll start from the beginning and bring it forward.
John Corcoran: 30:30
Not in the far distant future.
Clay Unicorn: 30:32
Jeez, no. Still relevant. This is the echoes and ripple effect of, you know, bad choices. I’ve always struggled to be, you know, in the driver’s seat alone. I always want at least somebody riding shotgun with me.
And I gave freely to a friend that I knew wasn’t qualified to run a venture with me. But I trusted him as a friend. We had a very, very successful couple of years. We were calling it, you know, it was still a unicorn. It was kind of our second edition of unicorn and we did really well.
- You know, a couple million in revenue. We were paying ourselves well, and I’d call it a death by success. That ultimately led to him having made more money than he ever had in his career and all at once. And that led to him investing it into NFTs, which were all the rage at the time.
Which then led to, you know, net worth going to zero very quickly. And then I think about the shame and the guilt of that. He poured in, then his life savings to try to recover, thinking, oh, I’m buying at the bottom. Problem with NFTs, you know, and the irony of not asking your dev partner, you know, who knows tech really well. I can tell you the problem with NFTs.
He just buried it. And because he buried it, it led to bankruptcy, which then affected me. It was his personal bankruptcy. But, you know, I had to negotiate with the bankruptcy courts to buy his half of the business that, you know, the one that’s most recent is, you know, states that, you know, he hasn’t paid taxes on, you know, for three years now. You know, it’s like they’re trying to come after the business.
And I have to like it so that by default, they get to just send a letter to the bank, freeze all your assets, and then you have to go prove why they can’t do that, you know?
John Corcoran: 32:16
Jeez. It’s insane. It’s heartbreaking. You seem so positive in spite of what you’re describing as being so painful. Yeah.
Clay Unicorn: 32:24
I mean, always look on the bright side and you know all that. There’s a silver lining. I, without doubt, have learned more from failures, and I categorize them as failures. I was sharing with you earlier. I heard I always loved them.
I think it was Bezos, you know, who coined the fail early. Fail often. And then somebody shared with me because I used to quote that all the time until, you know, I fell out of love with Bezos. But I quote that all the time. And then somebody added that they were like, look at, you know, Will Smith’s TikTok.
He said, fail early, fail often, fail forward. And I realized those were things that I was always like, I wish I could have said it that eloquently from the beginning of my career to now, because that’s what I’ve been doing. So as I look at this, I just look at it as like a linear progression of like, now I’m just constantly moving in this very forward positive momentum, regardless of the failures.
John Corcoran: 33:14
So about to wrap it up. But second to last question, what is something that you are excited about now? Of all the different things that you’re working on, positive impact.
Clay Unicorn: 33:26
I think again, I won’t go too political, but I think when we experience turmoil and when we experience division, that’s a calling. That’s an opportunity to find solutions together. I’m very passionate about just impact businesses, impact statements. To quote my mother, be the change you want to see in the world. And you can channel all of that bad energy, bad juju into something really productive and really positive.
That’s what we’re doing with all of our ventures. I don’t think we’ll ever have an interest in something that’s just a To a money play or just a, you know, it’s got to be holistic or nothing at all. You know, it’s got to be impactful.
John Corcoran: 34:04
I’m a big fan of practicing gratitude. And so I give this space at the end for guests to express any gratitude that they have, particularly looking for peers, contemporaries, maybe mentors who’ve been through different ups and downs with you and maybe, hopefully are still there with you. Anyone in particular you’d want to shout out and think.
Clay Unicorn: 34:25
What comes to mind is it’ll be a pin of that company. Room 214 I told you about that. I was fired from Jason and James, the two founders. Fast forward all these years and I was given the opportunity to. I was just reaching out with gratitude to Jason, just saying all those years, I don’t think I ever thanked you and told you that you were such an inspiration and mentor to me, and that led to an opportunity to help, you know, Jason and James find an exit for their their venture, which is still, you know, in its in its infancy right now, but Now instead of, you know, where I was once an employee, I’m now, you know, kind of an equal to.
And I just feel honored and privileged there. So people really I think my gratitude is, if they come to mind immediately. My partners, obviously, but I’d say there’s an unnamed individual out there that I forgot to say thank you to. And my gratitude is that person. And I hope it dawns on me.
And I wake up one day and pick up the phone and call that person, because I think we just forget sometimes how many people got us our successes and got us wins. And yeah, so that’s.
John Corcoran: 35:29
That’s a great answer. I’ve never gotten that answer before. So I think that’s a very creative answer. And, you know, I too recently had a conversation with someone who I interviewed on this podcast maybe 13 years ago or something like that, maybe a little less than that, maybe ten years ago. And I’ve told many other people over the years how impactful that interview was, because it just gave me an epiphany and an idea and a new focus and a new energy.
But I never told him. And so we reconnected and we were on a call and I said, I’ve never told you this, but do you realize how impactful that interview was? That conversation we had was. And it was, you know, clearly moving for him to hear that. And I’m really glad that I was able to do that.
So I totally agree. You know, take the time to reach back out to people that had an impact. You probably know who they are, and you probably haven’t gone around and done that and told them that. So I think that’s a great idea. Clay, where can people go to learn more about you and check you out and maybe reach out if they have any questions?
Clay Unicorn: 36:28
Unicorn.love L-o-v-e. And [email protected].
John Corcoran: 36:33
Excellent. Unicorn clay, thanks so much.
Clay Unicorn: 36:37
Yeah. I appreciate it. Thanks so much, John.
Outro: 36:42
Thanks for listening to the Smart Business Revolution Podcast. We’ll see you again next time and be sure to click subscribe to get future episodes.
Thanks for listening to the Smart Business Revolution Podcast. We’ll see you again next time and be sure to click subscribe to get future episodes.