Kout, the first 4 years.

Northampton (England) to Silicon Valley, and back.

Back in April 2012, a few days before my 21st birthday I lost control of Kout (Now Ribbon) and had the product I had spent 4 years building jacked from me.

I wasn’t going to talk about this publicly, but I was grabbing coffee with Sahil (Gumroad) and he said “Shit like this happens all the time in the valley but nobody ever talks about it” - well fuck that. I’m going to talk about it.

This is the story of Kout.

In 2008 (when I was 17/18) I had just closed down my freelance web design firm I was running during upper school. I was looking around to make some passive income for my final year, and I discovered the concept of niche/information marketing, where you find a profitable micro niche, create an information product, and a one-page salespage to sell from. I did my market research, found out where my potential customers were hanging out, and then bought resale rights to a few DVD courses.

I needed an ecommerce service to help me sell this one product. I was selling it on forums, youtube (previews of the course), and the salespage site. I looked to ejunkie, 2checkout, & 1shoppingcart and despised all of them, primarily due to design and how outdated the platforms were. I ended up hacking together solution which was a PayPal checkout in an iframe with a posthook script to help me manage the orders.

During my final year of sixth form I decided to try improve on the idea. Our final year computing project was to create a program for somebody in our local town (Northampton, UK). I really wanted to play around with this concept, so I just made up a fake person with a fake address and told my tutor I was building this for him. I ended up building an early version of Kout called SimpleCart. It was a beautiful piece of software, I still ended up with an E (or a U, I can’t remember) because I didn’t bother putting any effort into the documentation.

Fast forward to my gap year, I was trying to build an email marketing app which rated your subscribers based on how responsive they were, and allowed you to do things like; send certain emails to the most responsive, unsubscribe the bottom 10%, etc. This was before all the big guys starting doing it. I quickly lost interest in this project but the SimpleCart concept was always lingering in my head.

After calling it quits on “SendIt”, simply because I didn’t give a fuck anymore, I ended up picking up a copy of Getting Real by 37Signals which resulted in a complete paradigm shift for me in regards to building products. I decided to use what I had learnt on SimpleCart. At this point I unintentionally created my first startup, Kout (the last 4 letters of Checkout).

I had spent most of my teenage life in Northampton after moving back from New Zealand. I had no idea what a startup was & I had never even heard the concept of an MVP, product market fit, etc. I was just building this for myself and thought some other people would like to use it.

I launched first version back in late 2009/early 2010 (http://technorati.com/technology/article/kout-releases-official-screenshots/) a year or two before Gumroad, that’s not a slam on Gumroad, I just don’t want to be considered a “copycat” startup. #context

Fast forward to late 2010, I managed to get into the University of Essex to study Business Management. I thought “hey i have the creative/product side of business down, let’s learn other side of it”. I started my first “venture” when I was 12, an ecommerce site called PlayAdvance were I just imported weird games accessories from Asia and sold them in Europe.

Play Advance’s website

Around 2 weeks into to uni I just got bored, I felt like the degree was just putting barriers in my head, and my time could be better spent. I loved the student life, and the partying, we even got creative (shout out to the 4 story Keynes Tower Beer Bong — Mine and Lee’s brain child), but the degree was a terrible idea, I ended up just working on Kout more in my lectures, doing the bare minimum to get through, and using my student loan to bootstrap it (Essex Uni, this is why it took me so long to pay off my accommodation costs, sorry!).

In March/April 2011 I decided to dropout run with Kout full time, uni was coming to a close, had a great year, but I was just stalling myself.

Around this time I actually reached out to Sahil after he launched Gumroad on Hacker News, saying I was working on something similar and I’m looking for a developer to help me finish it. He said something along the lines of “You’ve already built the software, I don’t see how I could help” .

I didn’t have to think twice about leaving uni, I just told my parents I’m dropping out. During my final term I was looking for ideas to bootstrap Kout, but then I discovered the incubator route. I applied to a load of incubators including YC, all of them rejected me except one.

The 10x program in Columbus Ohio had just launched and offered me a spot in their first class, $20k + equity free deal. I’m really grateful to the guys over at 10x for taking a chance on me, especially Mike Lisavich and Michael Camp. (Cheers guys!)

I reached out to 10x and asked if they could find a developer to help me, this is when they introduced me to certain individual I’m just going to refer to him using his first initial, H.

I had around 3 weeks to make the move from Colchester, Essex to Columbus, Ohio. I managed to get everything sorted fairly quickly, and just winged the rest. I stayed at University until the final night, our Summer Ball, the next day I had to race down to Heathrow Airport and my parents met me at the airport with my luggage, and I jumped on a plane.

I got into Columbus around midnight.

The next day was mortifying. I walk in late to the big opening event and I had to pitch Kout (on camera) for the very first time. I had also just met H for the first time a few minutes earlier.

The pitch was a solid shit show, probably the most embarrassing thing to ever happen to me. I couldn’t structure a sentence, I had never spoke in front of a group before, especially with TV cameras filming. I remember saying into the mic at one point “well this is embarrassing”.

H jumped in and saved the entire pitch, he pretty much hit the nail on the head with the concept/problem.

Later that day we’re in some dodgy Pizza place at Ohio State and H requests he comes on board as a cofounder. Which I agreed to, and we began working on Kout — http://bit.ly/rjDkR4

Half way through 10x, AngelPad offered us one of the last spots in their Spring 2011 class. I was in Toronto visiting my cousins, and H was in Chicago. I got back to Columbus midnight wednesday, the AP class started on thursday. I called my landlord told her I was leaving, packed my bags, we told 10x about the situation, and I jumped on a flight to SF around 12 hours later.

Me & H went through AngelPad together, I lived out of my suitcase and slept on a sofa on 7th street for 6/7 months between flights back to the UK. I occasionally spent a few nights on the AngelPad sofas in between big product pushes.

I pretty much slept where I could.

At AngelPad Kout was torn to shreds on a regular basis. Horrible at the time, but we needed it. I focused on building the product, strategy, and preparing all the fundraising materials (marketing, designing decks etc) and after the shit show in Columbus, H took charge of delivering the pitch.

We launched the new version of Kout a few days before demo day and signed up around 200 merchants in the first couple of hours. Later that year Gumroad also publicly launched.

Demo day came, H nailed the pitch, I was just standing there awkwardly on the side attempting to mouth the pitch along with him. I had spent all my time on product I didn't have anytime to work on my presentation skills, public speaking, or articulating the vision.

Demo Day went pretty well, back then the modern link based selling idea was a new idea. I say “modern”, because link based selling has been around for years.

https://www.youtube.com/watch?v=kRPo9uzH3UQ — This is our “awkward” interview with Robert Scoble.

We quickly began to fundraise for Kout, I made the mistake of ditching product focus. But after a few stressful months we closed a lead and ended up raising a $1.5m round from a lot of investors.

During AngelPad and during the fundraising period me and H grew apart, we had differing visions, differing product decisions, disputes on location, and ultimately we just weren’t a team anymore, and he did some questionable things I’m legally not allowed to talk about. I was getting annoyed he wasn’t helping me out on any product work, he was probably annoyed I was terrible at pitching at that time. But we had $1.5m committed and we were in too deep, so we just ignored the issues.

And then shit hit the fan.

Our main arguments were around location, but really that was just a front for everything else. I was actually offered a route to a green card (via a presidential family — ego point) but I was told if I ever left San Francisco to go run a London HQ in the distant future it would be a slow exit for me. I didn’t want to “sell out” for capital. The valleys a great place, but it isn’t for everyone. It sucks especially when your sleeping on a sofa, and had spent most of the year living off of $200 stipends from the company, then being told you need to stay here.

We tried working through things but everything just failed. One sentence ended the partnership for good, for me personally. I don’t want to go into detail, but lets just put it this way.

If your cofounder/partner ever uses the fact that somebody close to you trying to commit suicide and the fact you used to flying back to home during fundraising season regularly to be with that said person as an insult or pressure point. You just know you could never work with that person again. Granted he said that in heat, and did apologise later, but the fact he even bought it up.

After this last heated argument we met with our lead and with our advisors and ultimately decided to split the company in half and go build 2 separate companies. We agreed I’d keep the product, after all I had built the entire thing from branding to backend code, and took the risks with it (dropping out, H only joined full time when AngelPad accepted us and we had $120k in funding). H would keep the current corporation, any remaining funding, the provisional patent I wrote, and Kout’s legal team, and access to the backend code for Kout, but he couldn’t use any front end/design. We agreed this in front of our lawyer at the time, even emailed it over to them and our advisors. I was reassured everything was legally binding.

I was then asked to stand down from all positions at Kout Inc before I could transfer the assets over to the new corporation. We had closed a serious round of funding, and we wanted to get this over and done with as quick as possible.

Later that evening I voluntarily stood down from Kout Inc, and doing that before we had legal documents ready and my legal council ready was a terrible decision.

I fucked up here by wanting to have this closed out quickly so I could celebrate my 21st the following week without this over my head.

The next day I was locked out of all of my email accounts, deleted off AngelList, and H had told all of the investors in the seed round that I had left Kout to go start a new company in London and that Kout was rebranding. All I really cared about was the product, I mean yeah the funding would have been awesome and I tried going back to the same investors with my vision, but the product was more important to me. I started that when I was 18, I was emotionally attached to what I had built.

I confronted him saying something along the lines of “you’re using the product I created to go raise money for your new company” and he simply responded with “I’ll give it back to you when I’m done with it”.

Eventually I emailed our lead investor and a few other key investors telling them what was up, what we agreed, and what H pulled. The fact he strung me a long and made false promises just so i would voluntarily resign from the company and would have no control. This pretty much cost the round, but I didn’t care at that point. I even said to our lead at the time “I don’t care about recommitting you to the round, but thanks for taking a chance on us”

This move gave me some control over the situation, and we tried to come to an agreement but everything just fell through.

Ultimately, H didn’t follow through on the agreement and didn’t transfer anything over to me, he went off with everything and eventually renamed and launched as Ribbon later that year.

He actually even had the audacity to call me up when I was in the UK months later, and tried to get me to fix bugs. (Not for Ribbon, when Kout was still alive on the server).

So, I was forced to move back to the UK.

A few days after moving back I pretty much had the worst 21st birthday imaginable, only a few close friends and family knew what happened.

The scary/annoying thing about this whole split, is that H didn’t really do anything illegal. I was dumb and tried to rush things which put me in a bad spot, and well, he was just a dick. A bad combination.

I’m legally not allowed to talk about what happened when I was part of Kout, there’s some crazy deceptive shit. H made me sign certain agreements (ya’ know “if you want any chance of getting the product back and moving forward with any agreement”)

Now, I’m not saying I made the best decisions, was the easiest guy to work with, or did the right things. After I got mugged in SF, I would rely on Uber a lot. I’d fly back to the UK regularly. I even used the company account once to buy coachella tickets because I was living off $200 stipends (I deducted that from one of my paycheques btw).

But I never screwed anybody over, mislead, deceived, or twisted the truth to imply one thing but really mean another, just to get what I wanted, and fuck people over.

Basically I’m not a dick.

After a couple months of pretty much me just doing everything to detach myself from reality (i.e. partying, a lot), I slowly picked myself up, and starting building Kout for the 4th time, my vision for Kout, called Chec (First 4 letters of Checkout).

All I had remaining was a local codebase, and a few .psd’s left over from Kout. I rewrote the entire backend so H couldn’t sue me, and rebranded & redesigned as much as I could.

I pretty much felt like giving up every other week, it was a painful rebuild. The odds were pretty much against me, I was back in a small town in England, back in the same room I built the first version. I didn’t have the connections or the environment that the valley had.

But pushing through all the shit, and looking back. This is probably the best thing that could of happened to me.

I’ve been granted a clean slate.

I have a clearer vision of what I want to build, I’ve learnt what not to do when building a company and raising money.

In March 2013 I soft launched Chec, and we’ve bootstrapped the entire company to 1.5k merchants, and over $120k paid out to merchants, we’ve in fact processed more this month (October 2013) than we did in our first 6 months.

Chec is part of AngelPad S11 but did not receive any additional funding after the split.

I understand this post may annoy some investors or some of the guys over at AngelPad, but you can’t expect something like this to happen to somebody, and then just expect that person to forget about it.

P.S. Ribbon I’d appreciate it if you came up with your own branding and your own designs, You jacked these designs from me months after the split.

Our original logo (before the rebrand for obvious reasons) and the credit card box design I came up with for Chec

We’ll that’s it, and this is the last time I will ever talk about this. I went through a lot of shit rebuilding this company, this post could of been twice as long. I might write a part 2 post.

I’m the “friend” H mentioned was having trouble selling online when he “came up” with the idea, in one article he even referred to me as a girl.

Onward.

(Some of the) Lessons Learnt

1. Don’t rush into partnerships. You can build your company as a sole founder, granted it’s harder and lonely, but it’s possible.
2. Don’t fundraise as soon as you launch your product. Your product will get stale, because you have no time to work on it. Fundraising is a full time job.
3. If you’re raising over $1m don’t do it on a convertible note.
4. Don’t have a stupid amount of investors on your cap table (I think we had almost 30)
5. Don’t rush anything that affects you or the company in a serious way. Don’t jump on investors offer because you need the cash at a terrible valuation, don’t try and split a company in 3 weeks because you want to enjoy your birthday
6. It’s okay to be a douchebag if you have moral ground. Laws, regulation, everything dissolves when you have moral ground.
7. Don’t make a big deal about shipping, I still do this sometimes.
8. The internal battle between Designer & CEO is tough. The designer in you will never be happy and as the CEO you need to realize that. Ship.

Things I should probably add…

We both wanted to split the company asap, I didn’t force rush the split on my own.

I’m pretty sure none of my code is on Ribbon’s servers anymore (But seriously guys, come up with your own branding/designs)

I wrote this post to add context, and as a source people can just defer to instead of me explaining the backstory over and over again. This post was not to promote Chec, I hardly mention it in detail.

I left out everything that happened during the rebuild which actually adds context to why I ended up posting this.

I really don’t care if you think this post is a terrible idea. I know it’s controversial. I’m getting mixed responses from founders and investors who appreciate the transparency and the balls to post something like this, and a minority who think the opposite.

It’s the imperfections and insecurities in people that makes them real and relatable, don’t expect me to hide behind a plastic front and walk around like nothing happened.

Onward.

D.