More Bootstrapping: VirtualTourist.com Co-Founder J.R. Johnson (Part 2)

SM: When did you launch VirtualTourist.com?

JJ: In 1999 I started talking to Tilman [Reissfelder], who is now my partner. He had the website, which at the time had a clickable map, some open source content, and some paid links. Reflecting back on my travel experiences, I suggested we build something that gave people a platform to share their travel-related experiences, ideas, and desires. At the time the only community sites were GeoCities, Tripod, and sites like those. It was unorganized user-generated content. We did not want to do that. We wanted it organized so it could be useful to third parties when they were planning a trip.

We put together 13 different categories that we felt would be useful to travelers. We modeled it after the travel guide books at the time. We met in 1999 and Tilman ended up moving over here in late 1999. We launched the site on January 3, 2000.

On the business side of things, before I quit my job at the law firm one of my partners invested $50,000 into the business. We raised a friends and family round of $263,000 in November of 1999. That is the only money the business ever raised.

SM: When you raised a friends and family round, who was willing to bet on you?

JJ: My parents did not have any money. My grandfather put a little bit in. We raised it from 17 different people. There was a girl from high school, a friend from Westlake, and it was literally a hodgepodge of people who put money in.

SM: So your total startup capital was $313,000?

JJ: That was it. It was my strategy at the time, because I had talked to a few people and come to the conclusion that people did not understand user-generated content back then. A lot of the responses I got were, “Why would somebody want to read what somebody else has written? Isn’t that what we have professional journalist and authors for?” I decided to launch the site in January, let it run for three months and then take some of the user-generated content to raise a large professional VC round. I set up a bunch of appointments for April of 2000. It just so happens that in March of 2000 the Internet bubble burst and everything started falling apart. Not only were people not investing in Internet companies, they were avoiding investments in Internet content companies. Nobody would touch us with a 10-foot pole.

We had a little office in Santa Monica, and we ended up moving out of it. We had hired nine people, investment banker buddies and lawyer friends, to come on board and build out our team to go raise money. I had to tell my friends to go back to their real jobs, and we moved out of our tiny office and into an apartment. I was kicking myself for a long time for not taking $2-$3 million earlier, which we could have done, but we wanted the higher valuation. Giampiero Ambrosi, who is still the general manager, moved into Tilman’s apartment. From there on it was just the three of us, plus my mother who helped out by doing the books. It was very depressing. My mom brought food from Costco once a week to feed us while we tried to figure out what to do with this website we had built.

This segment is part 2 in the series : More Bootstrapping: VirtualTourist.com Co-Founder J.R. Johnson
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