CityPockets’ tiny team was in desperate straits this past April. The Silicon Alley startup was supposed to help users organize the flood of online vouchers and daily deals that pack the inboxes of budget foodies and fashionistas. But just a couple months ago none of the three-person team seemed likely to be indulging in discount Mediterranean brunches or half-priced Armani sportswear.
All the good press could easily have fooled you. To read the reviews of CityPockets in Forbes or TechCrunch, you might picture foosball tables, bean bag chairs, and fancy complimentary coffees. The online reviews gave the whiff of high-end Silicon Alley success.
But around the time when these articles were coming out, both Cheryl Yeoh, the 28-year-old CEO of the fledgling tech startup, and co-founder Jhony Fung, 27, were nearly broke. They had burned through most of the savings they brought to the venture, after leaving high-end consulting jobs. Yeoh was down to budgeting $35 per week for food, eating mostly kale and quinoa. (“It’s the grain with the most protein, and the vegetable with the most protein,” she explained.) Yeoh had for months been sleeping on the Stuyvesant Town couch of her newest hire, David Guthu, with only a small curtain, Velcro-ed to the ceiling, for privacy.
Guthu didn’t have it much better. He may have had the bed but he hadn’t been paid in the two months since he started, and he feared he would lose the house he owned in Phoenix, where he is from. Fung, the programming whiz of the team, was also having mortgage issues, and was close to making a move that could have squashed any real hope of getting off the ground. “I was about to tell Cheryl that I would need to go get a part-time job. My mortgage is my responsibility,” Fung said.
In the middle of April, a prospective angel investor told Yeoh (below left) he wanted to talk. But she and the team, especially Fung (below right), had been through the cycle of pitching, optimistic feedback, and petering interest so many times before.
Yeoh had started CityPockets a year ago when she was still working as a management consultant at KPMG. Discount vouchers like Groupon and LivingSocial were just starting to take hold. But Yeoh, always on the hunt for a good deal, had already signed up for eight memberships. “I couldn’t keep track of all of them. And when they expired it was a real waste of money,” she said. From this peculiar Web 2.0 problem, Yeoh had the idea to create a tool to collect and manage all of a person’s daily-deal vouchers-–-a wallet for Internet coupons. The online software imports all of a user’s vouchers into a single account where he or she can sort them by type, location, and expiration date. Users also receive alerts when the coupons are about to expire.
CityPockets would also function as a marketplace for unused vouchers, allowing users to sell each other things like spa trips before they expire. Yeoh soon pitched the idea to Fung, an old friend from Cornell University who was working as a consultant at IBM. “We would work on CityPockets after work, every night from 9pm until 2am,” she said. “With four hours for sleep.”
After a few grueling months of this double life, the two quit their day jobs last summer and were accepted into LaunchBox, a tech incubator in Durham, NC. The three-month program gave them a small workspace, $20,000, and advice on how to get CityPockets off the ground.
But then the setbacks started. Investors and potential partners offered to give the company its startup costs if only they were willing to change the business model. Yeoh’s original idea had