Today’s interview is a little different, because it is probably the only one I’ve done that is not with a long-term traveller. Jun Loayza is a consumate entrepreneur that has been hustling his ass off for as long as I’ve know him. He talks about what it takes to build larger companies and gives an intimate look into the profitable lifestyle business he is working on with his girlfriend. Jun has plans for a more nomadic future, but for now it is all about growing the businesses.
Please tell us about yourself
My name is Jun Loayza and I’m the Co-Founder of RewardMe, a customer loyalty platform startup based in Silicon Valley, CA. I graduated from UCLA back in 2007 with a degree in Economics and Philosophy.
Post-graduation, I joined a corporate finance consulting firm in downtown Los Angeles: I wore a suit and tie and had to fill out time sheets (the legit corporate lifestyle). But the corporate job just wasn’t for me – I felt confined, uninspired, and day-dreamed constantly about building and running my own company.
3 months in, I abruptly quit my corporate job to build a startup with my friends from college.
During the past 4 years, I’ve failed two companies, successfully sold two companies, lead social technology campaigns for brands such as Sephora and Whole Foods Market, and raised over $1M in Angel funding.
Please tell us about RewardMe
The concept of RewardMe started back in the Fall of 2010. At the time, Groupon and Living Social were the hot startups and my team and I looked to capitalize on the trend. We saw that Groupon drove an initial burst of traffic to a local merchant, but that a local merchant had no power to capture the burst of traffic and make customers loyal.
Large corporations such as Starbucks and Best Buy have rewards programs, but the local merchant has neither the technical knowledge nor the capital to create one. RewardMe was born to solve the customer loyalty pain for local merchants.
We have raised over $1M in Angel funding thus far. We have 10 full-timers on the team: 6 engineers, 1 designer, and 3 business-focused people (sales, marketing, fund-raising).
Most important lessons-learned:
1. Build a startup in an industry you’re connected to: our first startup was a virtual world that makes this world more productive. We failed because none of our team members had gaming or virtual world experience. With RewardMe, our founding team members had connections to large franchise brands, allowing us to get clients from the very beginning.
2. Sell before the product is built: our second startup was a product recommendation engine for e-commerce stores. The product worked great, but we failed because I started selling way too late. With RewardMe, I started selling 6 months before the product was complete, which positioned us to launch with 3 paying customers.
Can you give us some advice on raising venture capital for a startup?
To be clear, my team and I have not raised venture capital yet. We’ve raised Angel funding from wealthy professionals and public companies across the globe. Our list of investors include:
- Telenav – a public company based in Silicon Valley, CA
- Wealthy professionals from the Philippines, England, and China
- Stock trader from New York
How we raised funding
What is Minted Republic?
I’ve always wanted my girlfriend to build a company so that we can both eventually live a location-independent lifestyle. She has always wanted to own a fashion boutique, but unfortunately neither of us have the time or experience to open a brick-and-mortar store. Minted Republic was born when I suggested that I help her open an online fashion boutique that she can run on her own time during nights and weekends.
How we set it up
I recruited two partners for my girlfriend to work with: an online marketer and a developer, both of which went to my alma mater. My girlfriend therefore never had to worry about setting up the website or driving traffic; instead, she focuses on the things she loves – selecting the style of clothing and selling her collection online.
We utilize Shopify as the e-commerce platform, which is cost-effective and easy to use. Through her network, my girlfriend found a manufacturer and distributor located in Los Angeles, CA.
How it works in detail:
1. Customer orders an item via the website
2. The product invoice is handled by my girlfriend and emailed to her manufacturer
3. The manufacturer takes the order and ships the product to the customer
Initial cost structure
- Shopify: $60/month
- Premium Shopify theme: $200
- Model: $400/day
- Photographer: $3,500/day
It was a lot of work for her in the beginning, but now that it’s set up, it runs very smoothly. I estimate she spends about 5 hours a week on the company.
Does your girlfriend design the clothes or she just selects inventory from a distributor?
The clothes are not branded Minted Republic. Minted Republic is a hub that sells styles that my girlfriend hand picks herself. Every three months, Kim will select ~50 items for the new season’s collection – she selects inventory from a distributor.
How do you find customers?
It’s actually not that difficult. We advertise with fashion bloggers in the following ways:
- Banner advertisements
- Sponsored clothing reviews
- Giveaways and contests
We are also in the process of hiring a Social Media Manager that will lead the social media efforts for Minted Republic.
Do you recommend retail sites like this for other aspiring entrepreneurs?
Yes, I highly recommend an e-commerce store where you do not have to hold inventory.
The biggest pitfall is whether or not there is a demand for your product. We did not have to test demand because women always buy the latest fashion and the styles that Kim chooses are proven to sell well.
Including photography and cost for models, our initial cost to launch everything was just over $10,000.
Why start another business when working full-time on a startup?
I want my girlfriend to join me in the location-independent lifestyle. We plan to make the transition in 3 years, giving her enough time to establish a stable income for herself through Minted Republic.
I help my girlfriend with her company when I can: nights, weekends, during lunch. Because I know how to drive traffic to a website, increase conversions, and negotiate deals with media sites, my girlfriend can use my experience and knowledge to increase revenue for her company.
The end goal is to live a lifestyle together where neither of us HAVE to work, but instead, CHOOSE to work on only the projects that we love.
I remember a post where you spoke about wanting to be location-independent. Do you still feel the same way?
Yes, it is a future goal of mine.
However, right now I am 100% focused on RewardMe. I have sold two companies in the past for smaller amounts; with RewardMe, our goal is to change the face of an entire industry (the loyalty industry) and exit within 3 years for $50M+.
RewardMe is the big one, the startup where I’ve leveraged absolutely everything I’ve learned in the past 4 years to build and sell a multi-million dollar company.
Once I accomplish my goal, I can happily live a location-independent lifestyle with my girlfriend.
What does it take to have a successful internet startup?
Internet startups are very different from lifestyle businesses.
- Internet startup: sell for millions of dollars within 3-5 years
- Lifestyle business: generate a target amount of revenue each month, allowing the founder to choose to live the life that he or she wants
- Internet startup: founding team should consist of a business-person, designer, and developer
- Lifestyle business: usually 1 founder that can choose to outsource development, design, and admin work to other countries
- Internet startup: team aims to raise millions of dollars to scale the company
- Lifestyle business: no need to raise any institutional money
- Internet startup: sell for a 10x return on the investment
- Lifestyle business: streamline operations to turn all income into passive income (work as little as possible)
In my experience, there are two factors that determine the ultimate success of an internet startup:
1. An A+ team
Absolutely nothing is more important that assembling a founding team of A+ people that compliment each other. If you’re building a tech startup, then you need to have an A+ developer as a co-founder. Investors will not invest in a tech-company composed of all business people.
The startup life is a roller coaster. In January we secured our first million-dollar deal with a nation-wide chain; in February we found that our implementation partner could not execute across the US, causing us to delay implementation by 2 months.
For every up there is a down. The goal of course is to secure more ups than downs.
But there WILL come moments when all you encounter are downs: you lose clients, current clients won’t pay, team members leave, investors won’t invest, competitors will launch a better product. Only through sheer die-hard perseverance will you and your team make it through the bad times and hopefully to success.
What is next for you?
The next three years are very clear to me:
- Have a successful exit with RewardMe
- Help my girlfriend reach a point where Minted Republic gives her $5,000 in stable income each month (after all expenses)
- Leave the country and begin our location-independent life
All I need to do now is execute 🙂
Jun Loayza is the Co-Founder of RewardMe, a customer loyalty platform for restaurants and retailers. In his entrepreneurial experience, Jun has sold 2 internet companies and lead social media technology campaigns for Sephora, Whole Foods Market, Levi’s, LG, and Activision.