The path to entrepreneurship is unique to the entrepreneur.
Justin Jaffe studied English literature in college and later, while DJing house parties on the side, developed a career as a technology writer—a “non-traditional” background for a founder of a tech startup, as he puts it. But Jaffe’s honed storytelling skills and writing ability have served him well in his current pursuit.
Today he’s co-founder and chief operating officer of Rapport, a Portland-based enterprise software company that offers a cloud-based platform to help companies and organizations better track a variety of sustainability metrics, from amount of water and electricity used to the total number of miles their employees commute to work.
Many people first heard of the company, which Jaffe co-founded in 2014 with CEO John Rooks, when it made headlines in October 2015 when AOL founder Steve Case decided to invest $100,000 in the company after the duo won a pitch contest in Portland when Case’s Rise of the Rest tour was in the city to promote startup communities outside the major hubs of San Francisco, New York and Boston. Since then it’s continued to grow, gaining traction in the market and raising a seed round led by Case of roughly $230,000 last year, which was used to match a Development Loan from the Maine Technology Institute. The company currently has four employees, including Jaffe and Rooks. It also has a small team of part-time developers in eastern Europe that have built the software.
In our interview, Jaffe discusses getting in on the ground floor of the online record marketplace, the challenge of being a first-mover in your chosen field, and how winning the Rise of the Rest affected the company.
Maine Startups Insider: What was your very first entrepreneurial experience?
Jaffe: I definitely come at this from a non-traditional background. I went to college first to get a degree in visual arts. I went to a small liberal arts school in upstate New York and after a year of that decided to pivot and moved into English literature. I got a lot out of that experience and started to hone my skills as a writer at that point—so not super business oriented. And so, not to jump too far ahead, but my first entrepreneurial experience was probably in San Francisco. I moved there in 1998. I had a bunch of different professional experiences there, working for some really big companies, public companies, and also working in startups, but on the side my real passion was being a DJ. San Francisco was an interesting scene. There were a lot of opportunities for DJs there, not only to play clubs, hotels and places like that, which I did, but also to play house parties, which was the most fun thing to do. I was a pretty avid record collector then and to tie this back into entrepreneurial pursuits, San Francisco at that time had world-class record stores. The online record marketplace was sort of nascent so I started to figure out there was a little bit of arbitrage to be done picking through the dollar bins in and around San Francisco and setting up an eBay storefront and selling records at a significant markup online to folks who lived in areas where they did not have the great resource of all these awesome record stores.
Are you still selling records on the side?
I’ve got too many records and they’re all up in my attic. With little kids running around they need to get a year or two older before I bust out the record player and get them some exposure. But no, that is sort of dormant. And the market for records online right now is very mature, so I’m still waiting for that market to swing back around.
When you founded Rapport, did you feel prepared?
In some ways. An important component in this was the nature of the way John, my co-founder, and I came together. It was a gradual process. Essentially, the origin story here is he’s a neighbor—we live on the same street. And so I’ve known him as a neighbor and acquaintance for a while. At the time he was starting to germinate the idea of Rapport, I was involved in another project. I was writing a book and my co-author on that project was an entrepreneur and an investor and John approached me, I think, interested in connecting with this guy to see about the possibility of an investment in this idea he had been tinkering with. So that was my first exposure to the idea and I was really struck by it. I thought it was a really interesting idea. I thought it was tackling a significant problem in a really practical, data-driven way that appealed to me. So, in trying to orchestrate that introduction, I said, ‘Let me take a look at your business plan and I’ll give you some feedback.’ And so through that process of giving feedback, giving some ideas, hammering out this idea with him, I discovered I’m really interested in this idea and hey, there seems to be a productive and constructive dynamic here. I think John brings a lot of vision and audacity and creative thinking. And I’m much more of the skeptic, the editor and I think that through that process from time to time we end up with a smart product, a strong story, a strong message.
In terms of preparation, I think my background, which was really in journalism, did prepare me in a significant way to become an entrepreneur because some of things that are so salient in journalism: writing clearly, coherently, persuasively, understanding narrative and story and how to evoke emotion—all of those things are so critical to starting a business and get people to buy in on an emotional and intellectual level to what you’re doing. When you are producing something out of nothing, when you’re first getting started, literally all you have is a story. So I think being a journalist, especially if you’re curious and can talk to people and are interested in learning from people and can synthesize a bunch of disparate thoughts and concepts into a story that’s compelling and makes sense to customers who will then pay you, or investors who will give you their money, that’s powerful.
What’s been the largest challenge you and John have faced in getting Rapport off the ground?
There are a couple. One is that the nature of what we’re doing feels like we’re on the frontier of something. I feel like we’re forging a path here and doing some bushwhacking and so there’s a lot of education that needs to take place and that’s a challenge. It’s not a slam dunk that every company is going to understand the value of what we’re doing here. But it also makes for a lot of opportunity. It’s a challenge to get people to understand why supply-chain sustainability is so vital and the contour of the opportunity there. That’s inherent in our business. In terms of sustainability, you’re still dealing with a lot of progressive companies and a lot of big companies that give lip service, so learning how to sort out those that are really locked in and are integrating it into their business versus those that are using it as a marketing veneer makes it challenging.
How do you overcome that challenge?
In a lot of ways there’s a universality to this challenge, which is just being visible and getting it out there and into the hands of the people who will find it valuable. That’s what we’ve been working hard on now for a couple years. Refining our product and getting it out there. It’s fun to show people what we’ve built because it is so unlike…we’ve built a piece of enterprise software, which could potentially be a very boring thing. And we’ve really tried to distinguish ourselves in a way that’s counter to what you would expect to get from enterprise software in everything from to how we talk about it to the look and feel of the platform itself to our approach. So it’s really sort of guerilla selling, hand-to-hand combat, calling on the folks in our different markets, whether it’s municipalities, Fortune 500 companies, craft breweries and other manufactures in our region—we’re just out there.
What personal challenges have you faced in co-founding a tech startup?
It’s all interrelated, the ups and the downs. This is a risky endeavor and we’re not so far out of that nascent stage and there’s still sort of the daily stress of making sure the thing hangs together. I think we’ve done a good job of balancing costs and spending against revenue so that we’ve engineered our runway in a good way that’s going to allow us to hang around for as long as we need to to make this thing work. But it’s an all-consuming thing, which doesn’t mean I work 24/7. I pick kids up from school. I drop them off every morning, so I’m totally involved in family life and with friends and make the best use of all that’s afforded to us by living in such a beautiful city like Portland, Maine. But it also means that when people go to bed at night, I’m back on the computer, and that kind of never ends. There haven’t been a whole lot of two-week vacations where you leave your phone and your computer in your suitcase You’re always sort of on, and that can be late at night, on the weekend.
How did you and John first fund the launch of Rapport?
We did a little friends-and-family round that helped us begin work on an MVP. We also benefitted from MTI from the earliest stages. We’ve done everything you can do with MTI, from the Techstart Grant to the Seed Grant to the Development Loan. They were instrumental in helping us get this off the ground, both from a financial perspective and in helping nurture and cultivate a more coherent idea. The rigor of going through the application process really does force you to confront and articulate what you’re attempting to do. And you need to be able to do that with words and numbers, and going through that process was a forging experience.
How did winning Rise of the Rest and taking on Steve Case as an investor change things for you and the company?
That was a significant event for Rapport. I’ve called it the Big Bang moment for us. Winning that money gave us credibility, gave us some visibility, we got some press out of it. There was a domino effect. It started bringing some other investors out of the woodwork, all of which led to us being able to get the one-to-one funding necessary for an MTI Development Loan, which we found out we’d been approved for the night after the pitch. So there was a lot of good news that night and it all sort of came together in a way that it almost never does.
That as important. It gave us a pile of money that helped us build out a platform that was more sophisticated and more complete than an MVP and has allowed us to commercialize the technology. Since then, just being in the jetstream of Steve Case and Revolution has led to awesome opportunities for us. Those include just getting a heads up and probably a nudge into really cool events. I went to Obama’s global entrepreneurship summit last summer out in Palo Alto, which was fantastic. It was 800 entrepreneurs from across the world; I think there were 75 from the U.S., so tons of people from Asia, Africa, and folks like Zuckerburg, John Kerry, Obama up on stage. It was really a heady affair and I doubt we would have known about it, let alone be accepted to participate, if it hadn’t been for Steve and Revolution [Revolution is the VC firm Case runs]. And I was down in D.C. in March for the first summit of the 24 or 25 companies that have won the Rise of the Rest over the past three or four years and it was amazing. It was a really interesting event. We got to meet 25 other people who had an experience sort of like yours from other cities that are not San Francisco, New York, or Boston. And Portland was by far the smallest city represented there. It was a really interesting event with a lot of entrepreneurs, but a lot of ecosystem people too. Jess Knox came down with me. If you’re lucky, you have a Jess Knox in your city. I got to meet 25 other Jess Knoxs also. There’s a burgeoning network of these tier two, tier three cities comoing together that could be really powerful.
You’ve pursued equity investing. Why did you decide to take VC money?
I don’t know if we determined exactly what our financing was going to look like, but we knew what we needed to build to sell. And there’s a little bit of a chicken-and-an-egg problem—especially with software as a service—where you … I remember seeing Jason Cianchette give a talk and he said a lot of people do this exactly wrong, where you build this product and then go out and sell it, and that’s totally backwards. You need to go out and sell it first, then build it. I think he is 100% right. Having said that, we knew we had to build something that would show the platform’s promise, something to hang our story on and that we’d need to raise some money because the fact of the matter is there are other large software providers out there who we would be selling aginst even though we were trying to do something different. We felt like we needed to go out there with more than just a story, so we knew we needed to raise some capital to engineer this thing on the backend.
You were worried about selling it based solely on an MVP?
That’s right. I mean, we did. We sold it accidentally a few times when we just had an MVP, but we knew we needed to invest in the technology and that we were going to need to raise a pile of money to do that, especially because neither John nor I are technical in an engineering way and somebody was going to have to build this thing.
Any advice for founders who may be weighing the pros and cons of selling equity? When is it a good idea to take VC money and when should they try to avoid it?
I don’t feel qualified to expound on a universal lesson, but what I can say is that in the aftermath of the Steve Case investment, we had interest from a number of different people and in the process of them vetting you, you’re also vetting them and I couldn’t be more happy with the folks we ended up taking on as investors—and this goes for advisors too. I think you want to be partnered up with folks who see the vision, who are going to be patient, and where there’s mutual trust.
Have you benefited from the local startup community?
I think the community has absolutely been vital to us. There is a very energetic core of people in the Greater Portland area who are doing all kinds of interesting things and who I think are really supportive of one another. There are a ton of events where you tend to see these people over and over, and I’m grateful for that. And that goes for institutions like the MCEDs and MTIs, and the people like Jess Knox, the people at Venture Hall, who we’ve recently started working with. I do believe you need that.
One place I’d love to see more energy is with the handful of big companies we have in Maine. I’ve started to see little sprouts coming through the soil in terms of them being interested and willing to work with startups, but I do believe we are hampered by the economic landscape that we’re in and that the big companies here I believe have a responsibility, and an interest, in nurturing and helping cultivate the startups in Portland. I truly believe it would help them as much as it would help the startups and the broader community. Some companies have a great track record with that and some are totally absent. I do wish there was a little more energy from the big companies here.
What are your long-term goals for the business? That could be goals for revenue and size, and also long-term goals related to any exit strategy you might have talked about.
We have discussed exit strategy. Our focus now is on building a profitable company with a large team of people who live in Maine. I would love to bring our technology, engineering and development into Maine and not have to outsource that, and so that’s the vision for now. We are just heads down, grinding on building and selling the platform. I think if we got it to the place we envision it in four or five years, where it potentially got too large for John and/or I to manage effectively and efficiently we would start to consider what the options are. But we think it makes a lot of sense for Rapport to be based in a state like Maine where there’s technology and an focus on the environment, and so yeah, we are trying to build a world-class company here.
Acquisition by a larger software company wouldn’t be out of the question in five years if you’ve grown it significantly?
That would not be out of the question.
You mentioned trying to build a profitable company. Are you profitable yet?
We are not profitable yet.
How far away do you think you are?
I think I’ll leave it there for now.
That’s fair. Are you able to give me any sense of your revenue yet?
I’ll tell you that we’ve deployed the software at about 200 sites. We have customers from California to Maine and we are really focused on getting into the supply chains of those large corporations.
We’ve gotten a lot of traction in the municipal space, which is really exciting. Because I think that, especially in the current political landscape, the responsibility will really be on municipalities and corporations to push sustainability and address climate change. We know without a doubt that the supply chain of the largest companies, and even the small and midsize companies is where the vast majority of carbon emissions are embedded, that is the big hairy problem we are trying to tackle here, and that’s absolutely the mission.
Your municipality customers include Portland, correct?
Including Portland, South Portland, we have a whole bunch in the Mount Desert area, Acadia National Park is on the platform.
The product or vision hasn’t changed since you founded the company, but have you been surprised by what markets you’ve found traction in?
The vision from day one has been on the supply chain. We believe that is where the great opportunity, and great climate change challenge, lives. Having said that, we’ve been surprised a few times at other folks who are interested. Municipalities were not something on my roadmap when we got started on this. But it’s a trend.
If you could give two pieces of advice to someone thinking of starting their own business, what would they be?
I think a capacity for chaos and maybe a pleasure in it. And I think curiosity is a big part of being an entrepreneur. Being able to understand and talk to a customer or prospect, understand what their problem is and potentially help them. That’s core. But also the curiosity in understanding how to run a business. There’s so much to do, from the most granular, clerical details to the largest most macro questions of vision and mission. So if you’re interested in a professional experience where every day is so different and there really is a vacuum of busy work—I’ve been totally liberated from busy work since I started this company because you wake up every day and you decide here’s what’s going to make the most salient impact on my business, so I’m going to do that. And that’s a joy. If you’ve been in a job where you had to fill out TPS reports that just don’t mean anything to anybody and you know how soul crushing that can be, there’s a real liberty and joy in only doing what the most important thing is every day.