Founder Forum: Chip Terry of Oyster Tracker

[Editor’s Note: Founder Forum, a series of Q&As with local startup founders, is sponsored by the Maine Technology Institute. Read more about MSI’s sponsored-content strategy here.]

Chip Terry was born and raised on the coast of Maine, but spent his career in Boston working for a series of tech startups in various management and product roles.

After the last company he worked for was acquired, he began looking at his options.

“I sort of tried to figure out what I was going to do when I grew up,” he says.

He had worked for plenty of other companies, his kids were off to college, and he was interested in moving back to Maine.

It was while spending time in Maine visiting friends of his who ran small oyster farms that he stumbled upon a business idea. As he tells it, these farmers were running their businesses—some with millions of dollars in annual revenue—with wet notebooks, white boards and maybe an Excel spreadsheet. What he discovered was oyster farmers essentially have a big data problem. This was something Terry knew all about, so he began exploring how a software platform could help oyster farmers manage their farms more efficiently. And that’s how Oyster Tracker was born.

The company, founded in 2018, now has 60 farms on its platform across four countries. It has three full-time employees counting Terry, and two part-timers. The team is fully distributed. Terry splits his time between Boston and Castine, where he grew up, while other team members live in Providence, R.I.; Newport News, Va.; and Austin, Texas.

“So we’re a totally virtual company, which we’ve been doing for a while, but now everybody sort of caught up with us,” Terry says.

Maine Startups Insider spoke with Terry about the business, his background in tech, why he decided to raise an equity round, and his advice to new entrepreneurs. The interview has been edited for length and clarity.

MSI: What was your first entrepreneurial experience?
Chip Terry: Probably being a paper boy for the Bangor Daily News in Southwest Harbor. I had a little route and eventually took over my two neighboring routes. At one point I had the biggest route in all of MDI. But I was really bad at collecting money. You had to collect checks at that time; you learn how to deal with people.

Tell me a little bit about your professional background? What were you doing before Oyster Tracker?
I grew up on the coast of Maine. I came down to Boston for college. I thought I was going to be a college professor, so I did the full PhD in American history. It isn’t entirely irrelevant to everything I do today (he laughs). Along the way I was teaching for Princeton Review, the test prep company. I was teaching SAT, GMAT, and LSAT prep classes. And then they opened a software office in Boston, and so I started really just writing questions for them and before I even graduated from my PhD program, I was actually the product manager for their CD-ROMs, which were then moving to the web.

And so we went from not having a product in the market to having the industry leading product in the market and it hooked me. I was like, wow, this is really fun. I get to build something. I get to hire a bunch of different interesting people and make something from scratch. And, by the way, I don’t have to move to West Texas and work at West Texas State and I can make more money doing it. So all those things lined up and my wife was in medical school here in Boston, and I ended up staying, and it’s turned out to be great.

So working for Princeton Review as a product manager got you hooked on working in tech. What did you do then?
From there I’ve done a bunch of different startups: Places like HomePortfolio, where we raised $45 million, to larger companies like Forrester Research, where I was the head of strategy and VP of marketing, to companies like BzzAgent, which was acquired while I was there. We did all the data analytics behind your credit card or your Tesco card, and so I’ve done a lot of different things in the startup world.

After the last company was acquired, BzzAgent, I sort of tried to figure out what I was going to do when I grew up. I had a bunch of friends up in Castine—where I’m related to like half the town—and a couple of friends started oyster farms. They were talking about the problem of managing these farms. And so really as a side project I was like ‘I think I can help you manage this better.’ They have a wet notebook and a whiteboard and they’re trying to figure out how everything’s going and I’m like, ‘Essentially, you’ve got a big data problem. You’ve got a million oysters, you have a three-year growth cycle, you’re going to touch them each 10 to 15 times, 40% of them are going to die, 70% of your cost is going to be labor, etc., etc. You know, better data will mean better results will mean a more profitable business.’ It’s a pretty straightforward proposition.

Essentially, you’ve got a big data problem. You’ve got a million oysters, you have a three-year growth cycle, you’re going to touch them each 10 to 15 times, 40% of them are going to die, 70% of your cost is going to be labor, etc., etc. You know, better data will mean better results will mean a more profitable business.

So, I started this thinking we wouldn’t make any money at this, but I sent a note out to the East Coast Shellfish Growers Association listserv saying, ‘Hey, yeah, I’ve got this idea. I don’t know if it’s going to come to anything. But if anybody is interested…’ And I had 35 farmers call me back within a day. I’m like, okay, well, there’s more to it than I thought. Now I’m going to have to go build something.

What was the first thing you did once you decided to build something?
I called up a few friends that I’ve worked with in the past. And my pitch to them was probably the worst pitch ever. I said, you’re not gonna make any money at this. You’re gonna work nights and weekends, and I’m going to give you 10% of the company. And they said, Great, this is awesome. Let’s do it. And so we bootstrapped it up and we got to a point where we had a bunch of clients, we had sort of proven out the value proposition, we’ve proven out that there is a product and there’s a market need and we can really get there and then we were fortunate enough to be able to raise money.

So in October of last year, we raised our first round of funding and then we hired on our full time people, so a full-time CTO came on board, I came on full time, one of our clients became our head of sales down in Newport News, Va. And we’ve really begun to expand it out.

That’s an interesting founding story. So what is the scale look like now? Can you tell me how many farms you work with?
We went from zero to today we have about 60 clients. Like every startup, we went through our ups and downs. Our first product was embarrassing, and wasn’t really what people needed. And so we iterated through that. But, you know, we’ve learned a heck of a lot along the way. We have clients in 10 different states and four different countries, U.S., Canada, Mexico, and Ireland. And, you know, we seem to have a good runway ahead of us.

We also just won a grant from NOAA, the National Oceanographic Atmospheric Administration, to basically take this farm data and move it all the way to the consumer. So I didn’t realize we were doing this, but it’s called traceability and building a traceability chain. When we went to visit farms—and I visited probably 100 farms in the last couple years—one of the things you see is these guys just doing endless amounts of paperwork, and they’re doing it nights and weekends and they’re just sort of stuck, because they’re in a really highly regulated industry. And it’s regulated for good reasons. The CDC will tell you that last year 30,000 people got sick from eating raw shellfish, mostly oysters. And so, you know, that’s really bad for business when your consumers get sick. Most farmers are really good and militant about maintaining the cold chain (Editor’s note: a “cold chain” is a temperature-controlled supply chain) and following regulations. Among the regulations they have to do is they have to create a harvest log and they have to tag every bag as it leaves the farm. You can’t ever have a bag of oysters, clams, mussels, scallops that doesn’t have a tag on it. That tag tells you when it was harvested, where it was harvested, and who harvested it. Bunch of key details like that.

And if I’m at Eventide or buying oysters at Whole Foods, I like to know exactly which farm my oysters came from.
Exactly. And you can embed a QR code in that regulatory tag that gives you all that marketing information. So, meet your farmer, learn where the oysters came from, learn why the Bar Harbor oyster is very different than the Nonesuch oyster. There’s a lot of really interesting things and people love that. Oysters are, in some ways, the perfect food for that because they are so different.

You mentioned that your first product was embarrassing, which can be a good thing. Reid Hoffman likes to say that if you’re not embarrassed by your first release, then you’ve released too late. So, you’re living by that Lean Startup mentality. Was that part of the plan from the start?
Definitely. I mean, when you’re in the startup world for a while it gets inculcated in you—you gotta get out there quickly; you only learn by doing. But [releasing early is] also challenging because it’s a finite market. You’re going to burn some people who are going to look, try it and reject it, and tryer rejecters are really hard to get back. And so you have to figure out how to manage consumer expectations. Because you want to ride this really fine line between “this is the best thing ever” and “but it’s a beta, which means it’s gonna have a few things that aren’t going to work quite right.” And so, the thing I like to think about is the minimum lovable product, like not just minimally viable, but what is it that makes it lovable?

Sometimes we missed the mark. An example for us is, I’m close with a couple of farmers in Maine, and they farm a certain way, and so I sort of assumed that everybody farmed the same way, and extrapolated from my example to a broader subset and then realized, I get the Chesapeake or I get to, you know, wherever, and it’s not the same thing. So, I think if we’d done a little bit more homework up front, we probably would have avoided some of those mistakes. But honestly, we were going to have to make the mistakes anyhow.

How long did you work on the product before you released?
About eight months or so. I was fortunate. Our team is really critical. Drew [Condon] is our UX/UI person who is also the head of UX/UI for HubSpot. So he’s really knowledgeable about B2B systems and usability. And Andy Kearney, our lead developer, was also one of the lead developers at Experian, and really knowledgeable about sort of the latest frameworks and how to really scale up stuff. And then Cat Ganim has been just a phenomenal product manager and has worked with a lot of big companies like Dollar General or Tesco or Kroger, and to really know sort of that big data world. So we have these people who are much smarter than I am, who would tell me what an idiot I was about every other day.

So you knew Andy, Cat and Drew from your previous professional experience and you brought them in?
Yes, Andy and Cat and I had worked together for about seven or eight years, and then Cat had worked with Drew and so we knew him through connections. That’s one of the critical things, if you’re thinking about starting a company, you got to figure out how to attract those really good people.

That’s one of the critical things, if you’re thinking about starting a company, you got to figure out how to attract those really good people.

Yeah, the team is obviously incredibly important, especially if you raise money. Can you tell me how much you raised and who you raised it from?
It’s right around a million dollars, and it includes the Maine Venture Fund, CEI Ventures, The Food Loft, a couple other food-focused funds out of Boston, and then a few high-net-worth individuals. So it’s a good collection of folks. And, you know, the thing about raising money is obviously you have to have a good story, you got to have some traction, you got to have the team, all that kind of stuff. But then, assuming you have that, you’re probably gonna have some choices in who you raise money from. And so for me, it was actually really critical to get people who could bring something to the table.

Right. Smart Money.
Yeah. So, for example, two of our investors are actually oyster farmers. They are actually people who know something about the industry. One of our investors, his family business is running the largest organic salad company in the world. So they know all about transportation and traceability and fresh foods. Another guy is a really top notch marketing guy. So having that sort of collection of folks has made a huge difference.

And this was an equity round?
Yes, I went with a priced round. So rather than trying to do a convertible note or anything like that, I said, let’s just keep it simple. Yeah, sure, you take a valuation number out of a hat. The reality of most fundraising is … what funders are really looking for is they want a certain percentage of the company. So you sort of figure out how much they’re willing to put in, what that percentage looks like, and then you try to narrow it down and ask how much do we need to really get to take off?

When I talk to founders who’ve raised money, I like to ask them what their philosophy is around selling equity in the company. Because there is this sexy Silicon Valley image that you need to raise money to build a startup. But there are certainly plenty of successful startups that bootstrapped and were able to scale based on their cashflow. What was your decision-making process like when you were determining whether or not to raise money?
So initially I didn’t want to raise money. I’ve been in a bunch of companies where that has been an ugly process. But ultimately, I sort of came around to it for a couple of reasons. One of which is, at some point, you need to get people paychecks. And a SaaS business can take a long time until you can generate enough cash to be able to give people reasonable paychecks. And so, that’s probably the biggest tipping point—you’re going have to build the product ahead of being able to monetize the product. You can go down the road of thinking about it as a consulting business and that we’ll pay all our bills with consulting and then we’ll eventually turn it into a product. Eventually you just become a consulting company and it’s really hard to make that transition from a services business to a product company.

So, that was the first decision point; then the next decision point is how much? One of the things that my early investors really counseled me on was, you should actually think about a bigger round. And that was really smart because, honestly, we raised it last October and November. And now COVID hit and guess what? It isn’t going so well. And so having two years of runway in the bank made it a whole lot easier to be able to stay the course.

That’s a good segue into how the pandemic has impacted your business and whether or not you’ve had to do anything to survive.
To survive so far, no. What we did is we gave every one of our clients two plus months of free service. Every oyster farm in the country sells mostly to restaurants and 90% percent of your restaurants are closed, so pretty much every farm saw a huge hit in their business. And so we said, well, let’s share the pain. We’re fortunate enough to be in a good place, let’s share the pain. So that’s been our sort of first step on this. And then the other is just, you know, trying to come out stronger, using it as a chance to build a stronger pipeline to get the right products out there, etc. And so, we launched our tagging product in March—the world’s worst time to launch a new product. But we now have 35 paying clients on that, which I’m sort of amazed by that. Because first of all, it’s above what our target was for the first year. And second of all, we did it in the time when business was really collapsing. But the whole secret was figuring out how to deliver a better solution for the same price as they’re currently paying. That’s the critical piece there.

So the first product was was that was actually a SaaS product just for managing the farm keeping track of everything. And now the tagging is a separate product on top of that.
Yeah. If I think about our trajectory, our first product asks, how do I manage my farm? What’s my inventory? What  did my team do yesterday? Where’s everything located? How do I make it better? And then shellfish tagging is really about how do I reduce my paperwork? You take your phone, you put in the information, most of this pre-fills you’re connected by Bluetooth to a wireless thermal printer, and then it prints out a nice waterproof tag. That one launched in March of this year.

Do you have plans for other areas to build on, other products, product lines, other directions?
Yeah. So each of these products sort of spawns off different directions so we can get better at farm management because we’re already heading that direction. There are a few things you could do around the tagging, particularly marketing, meet-the-farmer, tasting notes, salinity notes.

But the real idea is actually distributor workflow improvements. So what happens today is this top shelf oyster company shows up with a bag oysters at my loading dock in Boston and I have to take this tag off, put on my own tag, basically retype all this information and put it on there and then that might happen three to five times between the time it leaves the farm to the time it gets to the restaurant and that’s error-prone and expensive. So what we’re basically building right now is the ability to scan a code, pass all the information up and down the chain, and make it easier for that distributor to do their workflow. And that’s the grant we just got from NOAA, which is to build our tide-to-table traceability system. And this is one of those places where technology has caught up with an idea that’s been in the industry for a long time, but even three or four years ago you didn’t have phones that were nearly as powerful, printers would have been $1,000 instead of $400, waterproof paper really wasn’t available that you could print on. A whole bunch of things that had to line up for this to actually become a capability.

What’s the competitive landscape look like in this area?
We’ve got a bunch of different things we compete with, one of which is the current ways of doing business. I order pre-printed tags, I manage everything on a wet notebook and a whiteboard, maybe an Excel, and if you’re a small farm with one or two employees, that probably works.

Then, in terms of technology startups, there is a company out of Australia, there’s a company out of France, there’s a company out of Canada, we’re all sort of directly in the same space. We’re, as far as we know, the only U.S. company. We’re on each other’s turf a little bit, but we’re all at the same stage and quite honestly all together we might have 5% of the market and 95% of the market is still business as usual. It’s actually really helpful to have those competitors out there singing the praises of doing it digitally.

For sure. So your product is specifically just for shellfish farms, right? Is it just oyster farms or do you do mussel farms, as well? Any plans to expand to other farms raising fin fish?
It’s all shellfish. We will probably expand to other seafood products as well. So we’re likely to rename ourselves. Stay tuned.

One of the benefits of oysters and what I really like about it is there’s a lot of small farmers. Maine went from probably less than five when we were growing up to 190 right now, and another hundred or so in permitting. So a huge uptick. And every state in the coast of the U.S. is seeing the same uptick, and by the way, every coast globally is seeing the same uptick.

It’s a very similar trend to craft brewing. It’s just a trend toward locally made, locally sourced products. 
Right, the benefit of shellfish farming is the capital investment is pretty small. You gotta get a boat, you got to get some bags, you got to get a lease. But for a couple hundred thousand dollars–and probably quite a bit less depending on what you already own—you can get into this. And there are some big players in the world, but by and large it’s all local small players.

What have been the biggest challenges you’ve faced in getting this far with Oyster Tracker?
Depends on the day. I mean, part of is just simply bandwidth. Do you have enough bandwidth in the day? One of the most important things is making a decision and sticking with it because there’s sort of the mosquito in the nudist colony problem. Oh my god, there’s so much opportunity, where do I start? And then, more specifically, it’s been reaching farmers who are non-digital, who are often offline, or maybe suspicious of outsiders, and figuring out how to get into that world.

One of the most important things is making a decision and sticking with it because there’s sort of the mosquito in the nudist colony problem. Oh my god, there’s so much opportunity, where do I start?

How have you marketed it given those challenges?
Well, up until recently, it was a lot of events. We built up probably the best list of oyster farmers in the world, and so we’ve got most of them on some sort of email list. Instagram in particular seems to be a good source for us. And then it’s word of mouth. This is a pretty tight knit small group.

The professional challenges of building a startup are well documented. What have been the personal challenges you’ve faced?
Part of it up until COVID is that I’m working from home. We’re all remote, so it’s very isolating. And so I’ve forced myself to once a week, I make a trip to some farm somewhere, or distributor or something, I just make myself get out. So this week, I’ll be going down to Cape Cod. Last week, I was up in Frenchman’s Bay. Now, it’ll be one of those things every week.

You know, it’s … you’re all in, right? You’re not making much of a salary, if any, and it’s going to last for quite a while and the risk profile is pretty high. Up until my kids were off in college, I didn’t have that risk profile. I was like, you know, I need to earn a living. I need to be able to pay for college. I need to do some of these things. So if you really want to do this in a way that you’re comfortable with, you have to decide what kind of risk profile you have. For me, I wanted to be able to know that, jeez, if it doesn’t work at all, I’m going to be okay, and my family will be okay. And I see some startups where that’s not the case and I think people get a little overly stressed. Because sometimes the right answer is, yeah, we’re going to go back to the drawing board and spend another month or two figuring this out, versus I’m going to go sell whatever piece of junk I have right now.

What are the long-term goals for the business? Whether on the revenue side or even goals related to whether you’re already thinking about an exit strategy.
It’s too early to really be thinking about an exit strategy. Our long-term goal is to stay in business, build a profitable business, all those kind of things. Really, we want to help this industry be more successful. Because I look at this industry and I see some things that really excite me about it. Number one is particularly shellfish, but seafood in general, is one of the most environmentally friendly foods you can have. If you compare the profile of an oyster to the profile of a hamburger, it’s not even comparable. And this is a food that doesn’t require feed, doesn’t require fertilizer, doesn’t use fresh water, all the things that are problems with terrestrial agriculture. And, by the way, it removes nitrogen and phosphates from the water, it provides reefs for fish, it does a whole bunch of things that are really good for the ecosystem. So from an environmental perspective, I love this industry. And from an economic perspective, I also love this industry. We’ve, as a country—and really as the world—left too many rural areas behind. And there really haven’t been good jobs for many rural folks for quite a while. And you’re seeing with oyster farms, whether it’s in Baja, California, or in rural Ireland, or Prince Edward Island or the coast of Maine, you’re seeing small-scale farms building really good businesses. They employ five, 10 people, they pay good wages, and they deliver an environmentally friendly product. It’s not extractive. So, it’s great for those local communities. And it’s good for us health wise, it’s great for the environment, and it’s great for us as a culture, as a company, and as the world to have this. You find very few industries that sort of line up that way. That’s what really excites me about it.

Did you mention earlier that you have 5% of the market or that all those tech startups have 5% of the market combined?
I think all those tech startupss together have about 5% of market.

In five years, what number would you like to see Oyster Tacker at as far as market share?
I’d like to see 100% but that’s unrealistic. I mean, I think it’s feasible to see us at 30% market share in the next few years, depending on how we define the market. But, I think it’s easy to see a lot of folks sort of raising their hand saying, ‘yeah, we want to get to a digital solution. And as we get our product easier to use and more powerful, we’re seeing better transformations.

If you could give two pieces of advice to someone who’s thinking of starting their own company, what would they be?
I mean, the first is really figure out whether this is right for you personally. There’s a lot of people who get sort of excited about entrepreneurship, but then realize it’s not really what they want. Maybe they’re better off in a bigger organization with more support. You can do really interesting, great things in a bigger organization too. Not everything has to be about being an entrepreneur, so make sure you’re really comfortable with it.

And what you really need to find is what’s the problem people are trying to solve.

And number two, if you’re going to do it, make sure you’re solving a problem. It’s all about finding the problem in the world—not the technology, not the market size, any of that. Find where people are really struggling and looking for a solution and not finding it. Because if you can find that and provide a solution, then people will be willing to pay you. But there are lots of examples out there of, ‘Oh, it’s a big market—the Chinese market is massive, so if I just sell something worth $1 to every Chinese person, I’ll be rich.’ Or it’s about technology—’I know something about blockchain, so therefore blockchain is everything.’ And what you really need to find is what’s the problem people are trying to solve.

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