He attended the McGuire Center for Entrepreneurship at the University of Arizona, where he came up with an innovative business idea —- subscription based coffee —- and called it MistoBox.
Before graduating, he and his co-founder Samantha Meis launched a successful Kickstarter campaign where he received the initial $9,000 in funding to start the business — this was in April 2012. They began operations in July 2012.
Our guest and his partner recently took MistoBox onto the tv show Shark Tank — a tough show to get onto and an even tougher place to get funding. They received a $75,000 boost from serial entrepreneur Mark Cuban.
Now, let’s hack…
Connor Riley.
What you will learn in this episode:
- Why Connor purchased a $12,000 printer that he hasn’t used
- The difference between business school and entrepreneurship school
- Why you should remain focused on what it is you want to do
- How to choose what you need to do rather than what you think you should
Resources and links mentioned:
- MistoBox
- MistoBox on Twitter
- MistoBox on Shark Tank
- McGuire Center for Entrepreneurship – University of Arizona
- Show sponsor: FreshBooks (30-day Free Trial)
‘HTE30: Grind Away and Put In The Work w/ Connor Riley
Welcome to HTE, the show which reveals the fears, habits and inner battles behind big name entrepreneurs and those on their way to joining them.
Now here is your host, Jon Nastor.
Jon: Welcome back to HTE.
Again, I am so glad that you decided to join me today. My name is Jon Nastor, but you can call me Jonny.
Today’s guest is from Phoenix, Arizona and was raised in a family of entrepreneurs.
He attended the McGuire Center for Entrepreneurship at the University of Arizona, where he came up with an innovative business idea — subscription based coffee —and called it MistoBox.
Before graduating, he and his co-founder Samantha Meis launched a successful Kickstarter campaign where he received the initial $9,000 in funding to start the business — this was in April 2012. They began operations in July 2012.
Our guest and his partner recently took MistoBox onto the tv show Shark Tank — a tough show to get onto and an even tougher place to get funding. They received a $75,000 boost from serial entrepreneur Mark Cuban.
Jon: Okay, we are back with another episode of HTE and again, another amazing entrepreneur.
Connor, welcome to the show.
Connor: Thanks! Good to be here.
Jon: Okay, Connor. Let’s get right into this. As an entrepreneur, can you tell me what is the one thing you do that you feel has been the biggest contributor to your successes so far?
Connor: Good question.
I’ll say the one thing that I’ve done that has been the contributing factor to the success that I received so far honestly has been just the amount of work that we’ve put in.
My business partner and I have been really grinding for probably the past two years, working far more than a normal 40-hour work week and had to, more or less make up, as an underfunded business, having the job of four to five people just between the two of us.
I would say that that’s been the biggest contributing factor. The fact that we’re just grinding away working and being extremely efficient and extremely productive would be the biggest contributing factors that we have had on the business.
Jon: Just grinding away and going for it when you have to, right?
Connor: Grinding away.
Jon: There’s not really much else you can do.
Connor: Exactly.
Jon: As you start up a business, I don’t think so, yeah.
Connor: It’s a grind.
Jon: It is. Okay, let’s go back to when this whole entrepreneur thing started for you.
I’ve realized that there’s a time in every entrepreneur’s life when they realize one of two things.
Either they have a calling to make a difference and make a change in the world or they honestly just realize they can’t work for someone else.
Can you tell me which one of these two is you and when this happened for you?
Connor: Yeah, I would say it started out with I just didn’t want to work for anybody else. As I’ve gotten into it a little bit more, it’s now a little bit of both.
Definitely, I don’t want to work for anybody else. At the same time, I also want to be able to make a difference and be able to create products, solutions, whatever it may be that people are going to enjoy, that’s going to make people’s lives better and people’s lives easier.
I’d say it’s a combination of both, but it really just started out as not wanting to work for somebody else. Pretty much my entire life, I’ve always been doing something entrepreneurial.
As a kid, from jumping into golf course lakes, picking out golf balls, washing them and selling them on Ebay to selling baseball cards on the street corner.
It’s something that I’ve always done. I’ve always been able to come up with a creative way to try to make money.
When I went to college, I went to the University of Arizona for the young entrepreneurship program with the mindset that no matter what it was that I was doing, when I graduated from college, I was going to start a business.
And luckily enough, the school project in the entrepreneurship program happened to be MistoBox. When I graduated, I got a ton of good feedback. So pretty much, I launched straight into the company.
I never really applied for a job, never really even considered working for somebody else. Just always had the mindset that that’s the way it’s going to be and I was going to do something because I don’t want to work for somebody else. And now, it’s morphed into that on top of mind, to be able to make a difference.
Jon: Wow! That’s impressive. I’ve never actually heard of the University of Phoenix’s entrepreneurship program.
Connor: Yeah, University of Arizona.
Jon: Oh, yeah. Sorry, University of Arizona.
I’ve heard of the University of Arizona, I just didn’t know they had an entrepreneurship program.
Connor: Yep.
Jon: That’s really cool. I don’t think a lot of schools actually have that.
Connor: Yeah, it was an awesome experience.
Jon: What’s the difference would you say, between a business degree and going to entrepreneurship? What do they focus you on differently?
Connor: Good question. The course that we took in our senior year was a two-semester program, and it was about pretty much a full course for both semesters.
They focused on new venture marketing, doing market research, internet marketing, things like that. They did startup financing, what you have to do, financial modeling for projecting growth, revenue, margins, market size, things like that.
There’s also an entrepreneurial course where they teach you how to come up with a business model, validate a business, create business plans, create a pitch stack, be able to project how much money you’re going to need, where that money’s going to take you, different metrics on acquisition, the value of customers, things that are more specific directly towards starting a business rather than trying to set you up with the skill set to go work for somebody else.
Jon: That’s awesome because it’s weird. I never went to business school but it seems like it’s setting you up to be a high-level manager or something.
Connor: Yes. I completely agree.
Jon: It always confused me. It’s not business!
Connor: Yeah, the way that education for some works is definitely like that.
They train and teach you a skill set that’s going to put you in a position that’s going to increase the odds of you getting a job at some sort of company, doing an entry level position. Then, they put in your mind that from there you’re going to work your way up the ladder.
That’s just the way it was. They definitely teach you things that are specific to working for another company rather than letting you think creatively and do something on your own. To a certain degree, without a doubt, what I learned in the entrepreneurship program and what I’ve learned since starting that business has been leaps and bounds better than what you can learn at school and a lot more fun.
Jon: Excellent. If you had to go back and start MistoBox, your company today, what would you do differently?
Connor: I would say honestly, I would remain more focused on what it is that we do and only do that and do it really well.
When we got started, there were so many different things that we wanted to do and so many different ideas that we had that we tried to do way too much with way too little. As a result, we did a ton of things okay but nothing great.
Now, we’ve scaled back on the things that we’re doing, and just hype ourselves on one, two, three things and that’s where we’re putting all our time and attention. We are going to do these three things better than anybody else can possibly do.
I would say if I were to go back and start it today, I would just be more focused and just nail down one, two, three different things that you want to do and things that you want to do better than anybody else, where you are absolutely best at and that’s the only thing that you should be doing.
Jon: Very well said.
Alright Connor, let’s move to work.
I’m assuming you have offices at this point where you work out of and the company runs form?
Connor: That’s another thing. When we started, for about the first two years, we did have an office. We had an office in Phoenix, Arizona that we worked out of.
Things just got to the point where we didn’t really see the purpose of having an office. We do all of that outsourced. We don’t have any warehousing, we don’t do any shipping. It’s all outsourced to fulfillment centers or just drop shipped directly from different coffee roasters. There’s really no need to have a physical location.
About seven months going in April, we just said, “We’re done with the office space.” We’re just going to come and work remotely. Now, we have people for MistoBox in four different states and we all just work basically, from wherever we want to work.
As long as we all have a computer and have the internet, we can be, in my opinion, more productive than if we were in the same location.
Jon: Wow. I totally agree with you. Not the answer that I was expecting though, it’s very cool. I like that.
Connor: That’s another thing. You have these traditions in your head and these dreams of having this cool office and all these people are there working for you.
It’s really not as cool as it actually seems initially. It sucks up a lot of time and it sucks up also a lot of money. It’s really not necessary.
Jon: Yeah, exactly, a lot of time and a lot of money.
But it’s one of those things that, when you start, sometimes you feel that you need to do. I think we all fall into that trap, whether it’s offices or how we act.
Connor: We got the office because we felt like that’s what we should do rather than that’s what we actually wanted to do or that’s what we’re supposed to.
Jon: Yeah, it’s a good thing to learn. It’s impressive that you learned it though. Not everybody does. Some people would just let it kill their business.
Connor: Yes, it’s another thing that I would change if we could go back and set the business stage, just run the business remotely and doing it the way we’re doing it.
We all stay in touch, we use some different chat software, like to-do lists or task list software that keeps everybody connected so everybody knows what everybody’s doing at any point in time.
You can chat with anybody, you can video-chat with anybody, you can find somebody to do something, they can find you to do something. It honestly works better than office interaction and it’s more efficient.
We do quarterly retreats where all of us will fly off to some location every quarter and be together for three or four days, just crank out a ton of work, have a good time, and we’re back on our way. We see each other about four times a year.
Jon: Very cool! Okay, you work independently of your team, yet you have a team that you’re running.
Connor: Correct.
Jon: Today is a workday.
Can you walk us through say, the first 30 minutes of your workday that sets you up to be productive now, without an office and keeping your team going?
Connor: Yeah. Honestly, the first 30 minutes of my day consists of getting coffee, getting food and sitting at my computer and just catching up on news and catching up on my email.
I normally do this from home or at the gym. I get some food, get some coffee, just clear all my email, get caught up in what I’ve missed over the past 12 or 14 hours I’ve been asleep or not near my computer, see what’s going on.
By the time I get into office, the only thing I’m doing is the work that I have on my schedule for that day. I don’t have to worry about getting into my inbox and reading email, doing those types of things.
There’s no distractions, it’s all about just knocking off a list and getting into a groove and being able to put six, seven productive hours into the day rather than 12, 13 unproductive hours.
Jon: Yeah. Are you working from home now, or do you go to a co-working space or a coffee shop, typically?
Connor: We work from a co-working space. Sam and I actually live in San Francisco and we work together probably like three of the five days of the week out of a co-working space in San Francisco.
Right now, I’m in Arizona. I’m here for about three weeks. It’s just where my friends and my family live. I come out here for about three weeks then I go back to San Francisco for a couple then come back here again.
I bounce back and forth and I’m constantly traveling but when I am in San Francisco, Sam and I normally get together at a co-working spot downtown.
Jon: Excellent. Okay, Connor, let’s move to struggles and failures.
As entrepreneurs and as humans in general, one of our greatest struggles is the fear of being wrong, making mistakes and failing.
Can you think back to a time in your business where you were completely wrong about something and tell us how you got through it so that the next day you weren’t still down about it and you could just move on and carry on with what you needed to do in your business?
Connor: Let me think here. So, the time when I failed or was wrong about something…
Jon: Yeah.
Connor: And what I’ve done moving forward?
Jon: You made a call as the boss and it was completely wrong and you have to ‘fess up to that, right? You have to still work through it and you have to be willing to be confident the next time again but it’s a hard thing to do.
Connor: Yeah, there’s always, in every sort of business, bad mistakes you made.
The biggest mistake that we made was about 18 months, about a year and a half ago. For every single subscription box that we send out, for every bag of coffee that we send out to a customer there is a printed insert and a label applied to each bag. We were having it done by a print shop in Phoenix and applying them ourselves and sending them out the door.
I thought it would be a good idea to buy a $12,000 printer and start to just print it ourselves to save 4, 5, or 6 cents per label, per insert. If we print them out ourselves, we’d save a couple of hundred dollars a month, at the scale that we are at that point in time.
We got the machine financed and I thought it was going to be awesome yet it turned out that the thing was just a terrible printer. It’s constantly breaking, constantly not working. It was more work than it was worth.
It’s actually still sitting in the office here in Phoenix. We haven’t used it in a year. We’re still making monthly payments on it. I would say that’s definitely the biggest failure.
From this point forward, we’ve learned that unless it’s something that you’re going to be best at, outsource it. We’re not good at printing so we shouldn’t be printing.
Don’t spend money on things unless it’s absolutely necessary, unless it’s something you think is going to bring value to the business and it is within your core competency.
Jon: Excellent. Core competency as a company. As an individual and as a person, we’re always told now the whole 80/20 rule, right? Focus on what you’re good at, your core competency and delegate all of the rest.
Connor, can you tell me something that you are absolutely not good at?
Connor: Yes. I am not good at content, like creating blog posts, designing emails. Pretty much anything that’s user-facing in terms of design and the context it’s created within that, is definitely not my strength. I leave all that stuff up to Sam.
Jon: Nice, but you see the value of creating good content these days?
Connor: Yeah, it’s extremely valuable. I know good content from bad content and good design from bad design, but I can’t come up with it myself.
Jon: That’s a good thing to know.
Connor: Yeah, exactly.
Jon: You’ve got to learn these things.
Connor: You have to know what you’re good at and you have to know what you’re not good at.
You make sure that you’re only doing the things that you’re best at and the things that you’re not best at, leave it for somebody else to do, and trust that they’re going to do it better than you, in order to do an awesome job.
You don’t have to worry about whether or not it’s getting done, whether or not it’s getting done right.
Sam does all the design and all of the content. I don’t really need to look it over, I just know that she’s going put out something awesome and not terrible most of the time. It’s one less thing on my plate that I have to think about and allows us to get much more done. All that stuff I don’t even touch. Sam controls all that stuff and it’s working out awesome for us thus far.
Jon: Excellent. I love the confidence you have in the people you are with. You have to, yeah. I agree.
Okay, let’s move to habits. You mentioned, in the morning you get coffee, food and maybe go to the gym, which is obviously a good habit.
Can you tell me about a habit you’re trying to adopt into your life but you have been struggling with?
Connor: I would say getting up earlier and getting up the first time when my alarm goes off. I tend to sleep in a little bit more just because I’m up so late at night.
It’s difficult to get to bed as fast as I used to be able to get into bed. I would say getting up in the morning and getting up the first time when my alarm goes off, and just setting a precedent for that day, that you don’t let things slide.
When you set the goal the night before to get up at a specific time, get up. What makes it difficult is I don’t have to be anywhere at any one time in the morning, or have to report anywhere, not late if I’m not there by 8.
Knowing that in your head, it makes it a little bit easier to not get up as early or sleep in. That’s one habit that I’m looking to break is getting up in the morning, the same time you get up the morning before.
Jon: What is not early? What time do you get up in the morning? I need to ask.
Connor: Yeah, it’s a good question. It fluctuates. It depends on what I was doing the night before. I’m up from anywhere as early as about 6 in the morning to as late as 8 in the morning.
Jon: To as late as 8? Oh, man. I thought you were actually going to say “late.” I woke up at [9:30] this morning.
Connor: That’s nice. There’s nothing wrong with that.
Jon: But I was also up until almost 3 in the morning working. I just happened to be in it at that point and I just wanted to keep doing it and it was good.
Connor: I completely agree, I do the same thing when I get into a project. I can’t stop halfway through or three quarters through. I have to be there until the end.
Jon: Yeah. Sometimes, you’re just in that zone, right?
Connor: Yeah, that’s how I’m up until 3 am, yeah.
Jon: I don’t know if this has to do with habits, but I read in your bio that you are universally feared by to-do lists.
Does this mean that you structure your day like that, within a to-do list and then you just bang them off? How do you do this?
Connor: Yeah, this goes back to the way I look at different projects.
Every day, I have a to-do list that I organize by things that I absolutely have to get done today, and then they’re just ordered in priorities.
I’ll start at the top and knock my way down to the bottom. No matter what happens or how long something takes, the last task on the to-do list that day is going to get done regardless. Some days it may end up 4, some days it may end up 3 am.
I can’t stop in the middle. I have to get all the way through. It’s something weird with the way that I work, but I have to get done absolutely everything. I cannot stop at the middle of something.
Jon: When do you set this to-do list, the night before or the morning?
Connor: I set to-do lists in the morning. This is another kind of thing we do.
We do a thing in the morning, it’s called stand-ups. We all just do a Google Hangout where the six of us are all on video and we go through and we say what we want to accomplish that day, what the roadblocks are for accomplishing those things.
Then, we go over what we wanted to get done yesterday and give an update on whether or not we completed or we didn’t complete it. Pretty much right before that stand-up every morning is when I set my to-do list for the day.
I tell everybody what my to-do list is, what I’m going to get done, what my roadblocks are, and if my roadblocks are something that somebody else on the team can help me out with, and they help me out with it.
If not, then I go on to the to-do list as in the next day, a report on my previous to-do lists and where I left off which, as I said, I have to finish every single item and then, set my to-do lists the next day. So, in the mornings.
Jon: Nice. You guys are awesome. It sounds like…
Connor: It’s cool. It wasn’t always like this. It’s just something that we learned as we’ve gone is the best way that we work. This is the best way that we work. I may not be for everybody but it’s the most efficient way for us to operate, the most lean.
There’s really no expense, everybody works from where they want and it’s efficient. It’s nice.
Jon: That’s awesome. Okay, Connor, we’re sitting here one year from today and we’re celebrating the amazing year that MistoBox had. Can you tell me what you guys did to accomplish that?
Connor: In terms of financial figures or…?
Jon: It depends on what your metrics are. Every company has a different metric but if you have a vision for the next year what you’re trying to accomplish, what is that?
We can sit here a year from now and be like, “You guys did it. Well played.”
Connor: I would say, a year from today, we’re just launching a brand new website and figuring the ways how the system works. It can be a lot of work that’s going into, not only migrating customers but acquiring new ones.
I would say that a year from today, our goal would be to have 10,000 active MistoBox customers with a churn rate of less than 5 percent. Churns are on top of acquiring customers and maintaining customers.
Churn retention is the most important metric that we look at. We want people to, when they sign up for MistoBox, they’re going to be with us forever. The only reason that they would not, that they would cancel or not want MistoBox anymore is there’s some health-related reason, whether it be doctor’s orders or they’re pregnant, for the most part, or they just stopped drinking coffee in general for one reason or another.
But we want there to be no reason that anybody would ever want to end the service. We want it to be that good. We want it to be absolutely perfect. We only want people to cancel because of health-related reasons or they just stopped drinking coffee.
So, 10,000 customers, active customers and retention rate greater than 95 percent for a churn rate of less than 5.
Jon: Awesome. With your vision and your organization, I think you guys will achieve this.
We’ve talked a lot about you and your business, coming to it here and there. Earlier you even said you wanted to remain focused on what it is you do at MistoBox. Can you tell everybody now what MistoBox does and why they should look into it?
Connor: Yeah. What MistoBox does is we make amazing coffee easy and accessible.
The way the new system is going to work in the new website that I mentioned earlier, is you can come to our website and you build a coffee profile. It’s almost going to be like a Netflix for coffee.
Based on your coffee profile, we’re going to know exactly what types of coffee that you’re going to like and exactly the types of coffee that you’re not going to like, and we’re going to know how much coffee you’re consuming on a daily or weekly basis.
Our goal is to send you an awesome coffee on a recurring basis that makes sure you never run out.
We want to make it easy, and we want to make it approachable, accessible and unintimidating because some people these days are intimidated by walking into a coffee shop and ordering something, getting scolded by a barista if they don’t know what the terms are and what they should say. People are intimidated.
We want to make it extremely accessible and extremely easy by providing just the easiest way to get it, and awesome customer experience, and awesome customer service.
You just go online and just tell us what you like and how frequently you want it and the rest is up to us. It’s almost like “putting your coffee on auto-pilot,” is what we call it.
Jon: Nice. “Netflix for coffee.” I love that. As soon as you said that, I was like, “I get it.” There it is.
Connor: Exactly. You’re going to be able to come online and create your profile. We’re going to start sending you coffee.
You can fix the frequency in which you receive coffee down to today, anywhere from you receive coffee every day, or you receive coffee every 40 days, and anywhere in between. You choose how frequently you want us to send you coffee.
As you come back online, let us know what you thought about the coffee we sent you. The system gets a little bit smarter and starts to optimize your profile that you have. The coffees that you get sent from that point forward are going to be more optimized from what you liked earlier.
Jon: Nice. The Canadian in me wants to know if you deliver to Canada.
Connor: Yes, we do deliver to Canada. We’re working on some different options right now to try to get more affordable shipping, but through the postal service, there’s just no way to get a package to Canada much cheaper than $10 whereas in the states, it’s $4 to $5.
Jon: Exactly, yeah.
Connor: We do ship to Canada but there’s a little bit of an increase in cost.
Jon: Cool. But you ship here, because I love coffee so I’m going to look into it. That’s MistoBox.com?
Connor: Correct.
Jon: Connor, thank you so much for joining us on the show. I really appreciate your time and just keep doing what you’re doing, man because it’s awesome.
Connor: Awesome! Thanks, Jon, I appreciate it.
Jon: Connor, thank you so much for this conversation. It was a lot of fun and you’re a really smart guy. You and your co-founder Samantha are doing some really impressive stuff. I look forward to trying out your coffee as well, as I hope everyone does too.
But there was that one point in the conversation, wasn’t there? That one point where Connor said something, did you hear it? Did you get it?
Let’s do it. Let’s find the hack.
Connor: Unless it’s something that you’re going to be best at, outsource it. We’re not good at printing so we shouldn’t be printing.
Don’t spend money on things unless it’s absolutely necessary, unless it’s something you think is going to bring value to the business and it is within your core competency.
Jon: And that’s the hack.
Jon: Beautifully said, Connor. I think that there are two things here that are really important.
He starts off by saying, “Only do things that you’re really good at, and outsource the rest.”
Which is fine and we all understand that to a certain degree, but it’s not really the hack.
I think the hack is what he says later, where he says that we need to not spend money where we don’t need to spend money. I think this is something that a lot of businesses have proven. This is where they fail.
Where they start to spend money in a way that they think might save them money or that they think it just necessary, like, “It’s the cost of doing business,” and it’s not necessarily the cost of doing business.
When you’re working online, there are amazing tools and things that are available for free. It seems everywhere I go on Facebook and stuff, people are saying, “Oh, did you get this new thing?” Black Friday just passed, so everyone is buying all this stuff that they absolutely don’t need.
For one thing, I think it’s a distraction, because your business is working, and you really just need to put yourself in the chair and work. Most of the time, you don’t need a new app or a new tool to make things easier.
Just do the work. It’s just absolutely key.
I used to not think this way, but my business partner, Bill, when we worked into Velocity Page, he had a better concept of things we need to spend our money on and things we don’t.
With HTE, recently I got to hire an editor for the show. He’s amazing. I got to hire an assistant now who does a ton of work for me. But I didn’t hire those people before I got revenue.
It was absolutely key to me that I was not going to run a deficit for this show just because I thought that was the cost of doing business. I think that’s silly and it’s dumb and it causes me make bad choices.
I got offered sponsorships for this show. I was ready for sponsorships and I thought the show was ready for sponsorships, but not ones that weren’t congruent with my message, ones that I didn’t believe in.
Now, I have FreshBooks. FreshBooks is something I use, something I truly believe in and I use in my business all the time, and it’s also Canadian. I’m Canadian. That’s pretty cool to me. That was a neat, cool thing that was very true and very well-aligned with my message and what I’m trying to do with HTE.
But if I had been spending money for months ahead of time, I couldn’t have made the choice that was the best choice for my business. I would have just made a choice to bring in revenue because I had already taken on expenses.
I love the way Connors says that. He struggled with this one. He struggled with the fact that his biggest mistake was buying this printer for $12,000 that they’re still paying for and they don’t even use.
It’s just because he thought, “It’s the cost of doing business, I’ll pay this money up front.” But no, it’s not really because when you can get a bit creative, you can see, actually there’s this printing company who’ll just do it for me.
I love that, Connor, I just appreciate so much the fact that you even looked inside for that really hard mistake you made and you seemed a bit apprehensive telling it. I’m so happy you did because those are the things that we need to know, those are the things that we are looking for and those are the mistakes that we make. We make them all the time and it doesn’t matter who we are. It’s just something that happens. It’s a part of business, but he learned from it and he’s grown from it and him and MistoBox are better for it. Thank you.
Again, this is such an amazing time because you have no idea how much this means to me that you’re all out there listening. I am having so much fun. Thank you, thank you, thank you.
Stop by the site, Hacktheentrepreneur.com. You’re going to see a nice picture of me right at the top. That’s me, we removed the background but that’s me in the Tokyo subway a few months back. My daughter actually took that picture. It was just a lot of fun.
Get on the mail list, I’m sending out an email once a week to everyone. It’s the best stuff I’ve come up with in my business, what’s going on with HTE, all that sort of thing.
Reply to me. We can have a conversation. It’s two-way, this whole thing. I hope you’re enjoying it as much as I am. This has been great! Again, we’re back Monday, Wednesday and Friday three times a week now.
