(Watch the Full Video below)
Over the years the pioneer spirit has taken a number of different forms in Denver. Portions of Jack Kerouac’s On the Road take place in Denver, and Neal Cassady, the inspiration for that story’s main character Dean Moriarty hailed from Larimer Street. Without Beat legends like Kerouac and Cassady, we would have never received the fruits of their disciple, such as Ken Kesey’s Sometimes a Great Notion.
What does all of this have to do with the Denver startup scene? Well, it serves as a preamble to the idea that notions abound to those willing to embrace them. Brett Jurgens and Ryan Margoles, co-founders of Notion, are two such individuals from the Denver start up community. Their company took center stage at the Denver Founders July meeting with Jurgens in the hot seat.
At this point Jurgens and Margoles’ story has the potential to rival the narrative of the great American novel. The main difference is that only the first few chapters of Notion’s tale have been told.
Hailing from Longmont, Jurgens founded Notion with his childhood friend Ryan Margoles. As far back as high school the two friends knew that they wanted to start a business together someday, they just didn’t know what that would be. They were so serious about this future proposition that they both squirreled away money so that when the day came they would be able to get their feet wet.
The Big Idea
The light bulb went on a couple of years ago. Margoles was working for Titleist in California, where he and his girlfriend had recently adopted a new puppy. Surely everyone knows the annoying beeping noise that smoke detectors make when the battery is low. This sound freaked out the dog, leading Margoles to ask “what good is a smoke alarm if you’re not there to hear it?”
They decided to make the ultimate smoke alarm that would send out notifications. Jurgens and Margoles didn’t originally set out to start an “internet of things” company. Once they began to research the internet of things, however, they started to gain more traction with their idea. Most connected home products only serve one purpose and tend to be highly technical in nature. What if they could make your home do more for you?
So with Jurgens as the business guy and Margoles as the tech guy had their big idea, the question then became how to execute it. Creating a startup is hard enough as it is, but creating a hardware startup requires even greater resources to be successful. Before they could do any of that, they would need a viable product. Fortunately, they got lucky and hardware design guru Sean Fendt fell into their laps. Well, in a roundabout way. This is where the second animal in this story enters stage left. Fendt is a Colorado transplant living in Hawaii; he has a pet pig named Boots. You can’t make this stuff up folks.
From the outset, Notion’s founders were attuned to the need for customer research. They conducted over 100 interviews using structured interview questions to help determine the areas where the Notion sensors would be most valuable. Customer research, both in-person and online, did not stop after this first go-round and continues to be something the company invests in. Sensors on smoke detectors, doors, and windows all made sense. This research unearthed some unanticipated applications as well; there was significant interest in using this technology to monitor gun safes.
Eventually, Notion developed a sensor about the size of an Oreo that can detect eight different metrics. The capabilities of the Notion sensor greatly expand the scope of what can be detected by a single device for home use.
While all of this was going on both Jurgens and Margoles kept their day jobs. Fendt was the first full-time employee at Notion, while both co-founders continued to work at Notion part-time. It wasn’t until the spring of 2014 that Margoles relocated from California back to Colorado to pursue Notion full time. At that point both founders went all-in on the company.
By May 2014, their goal was to raise $500k. Jurgens worked in private banking after graduating from the University of Colorado and was able to parlay that experience into quick and successful fundraising for his own company. He managed to raise about $350k before being accepted as part of the Techstars program later that summer. Notion reached their goal with the help of Techstars.
Jurgens said they made a conscious decision to avoid a friends and family round of investment, in part because pursing external sources of capital provided greater networking opportunities. Most of the investors at this point were high net worth individuals and angel investors. By March 2015, they raised an additional $1.5M. At this point one of their goals was to raise more coastal money in an effort to tap into greater financial resources than what was available in Colorado and to build up their network even more.
Jurgens was frank: hardware companies are expensive to start. He said that Notion will look to start a Series A round of funding in early 2016. Research and development of the hardware is a major cost, but so too is developing the applications and API that interface with the sensors. “In a way we started two companies,” said Jurgens.
Notion’s other claim to fame is their success on Kickstarter, where they raised almost $282k in thirty days, making theirs one of the most successful Kickstarter projects ever. Although they were advised to hold off on Kickstarter until they could get everything just exactly perfect, Jurgens and Margoles launched their campaign in a mere four weeks.
What was the secret to their success? According to Jurgens the first 24-32 hours of the campaign are crucial. They pre-sold $30-40k worth of product in order to help it get past the “funded” point and to add legitimacy to their project. They also reached out to Kickstarter directly, which helped to make their project a staff pick. Jurgens also said that having a video was critical, as was creating messaging that wasn’t far off from the value proposition people were looking for.
The range of applications for the Notion sensor is considerable, and the company continues to pursue an array of partnerships. One such working relationship is with the folks who make the Nest thermostat. There are a number of different business-to-business and business-to-consumer options and Notion isn’t limiting itself to any single base at present.
Jurgens and Margoles opted to stay close to home for manufacturing their sensors, or as discussion moderator Chris Franks put it, they’re “off-shoring to Loveland” “There are some great hardware manufacturers in Colorado,” says Jurgens. The close proximity of their manufacturing operation allows Notion easy access to continually improve their product. While it would be cheaper to manufacture overseas the convenience of having local facilities is more important at this point.
Originally, Notion planned to ship their first round of sensors by the end of July 2015, but there were still some serious bugs to work out. So the company emailed all their backers to let them know exactly why they wouldn’t meet their deadline. Was there backlash from this failure to deliver? You bet. Numerous backers sent notes of thanks to the company for their transparency and for taking the time to send them a quality product and not a piece of junk that didn’t work. The company now hopes to ship in late September 2015.
What does the future hold for Notion? When pressed, Jurgens said they plan to stay in Colorado and would prefer not to move to California. With major players like Apple, Google, and other conglomerates entering into the internet of things sector Jurgens believes that Notion will likely have “some great acquisition opportunities.” Yet he immediately tempered this statement, saying “the goal isn’t to sell Notion. It’s about making your home better.” Margoles reinforced their commitment to building a community, mentorship, and “paving your own road,” emphasizing that “the passion is entrepreneurship.”
The internet of things is quickly shifting from a notion of what would be convenient to actually realizing those ideas. And Notion is helping to pave the way. The company’s story continues to unfold, but luckily there are plenty of blank pages to record the next chapters. Jurgens and Margoles are finding that sometimes a great notion can be pretty darn cool.