Use Every Setback as a New Opportunity to Offer Novel Services, Just Like Austin and Chris

By all measures, Austin Arts and Chris Maggio chose the worst possible time to start a travel business. In December 2019, they started an app featuring unique experiences and classes around downtown Austin, Texas. But, within months, COVID lockdowns swept across the US and threw travel into disarray for two years. So much for their months of hard work and anticipation.

Instead of quitting, they took their lineup of out-of-work artisans and created TeamClass, an events business. It catered to companies hoping to engage scattered remote teams. As newcomers to virtual events at a time of little competition, they scaled to seven figures and huge corporate clients like Google, Facebook, and Trello by the end of 2022.

While today it may seem like TeamClass was destined for success, much of Austin and Chris’s fortune came from turning bad situations into good ones. The two founders originally started TeamClass as a service for individuals to book fun classes. But they soon realized corporate clients brought in much more revenue.

After one year, they stopped driving materials to peoples’ houses and built an automated platform primarily focused on their B2B events. They grew at ten times the preceding month’s rate every month throughout 2022.

Austin credits luck, timing, and his perspectives as a former recruiter for where they’re at today. He shared with us the exact steps he took to save his business from failure and turn it into one of the most novel virtual events services in the American Southwest.

The Travel App That Nearly Flopped

Austin and Chris  worked in Austin, Texas, and networked through mutual friends in the city’s vibrant tech scene. Austin worked in recruitment and later sales at Google. Chris jumped between various local startups, including HomeAway and a coffee company called Heyday. 

Both were comfortable in their careers but wanted to try entrepreneurship. They decided on an application helping tourists experience the best of what the city had to offer. 

The cofounders raised a couple thousand from family and friends in 2019 and put together a long list of eager local chefs, mixologists, and painters all around Austin. Then the duo worked nights and weekends in feverish anticipation for their launch at the end of the year.

Chris and Austin’s dreams were very nearly crushed in 2020 when COVID-19 lockdowns and travel restrictions struck Austin, Texas, and the greater USA. All of their contacts were suddenly out of work, and tourism all but stopped. They saw little chance of realizing their app dream.

But the founders weren’t ready to throw in the towel quite yet. They created a virtual version of their service called TeamClass as an insurance policy in case COVID stuck around. All of Chris and Austin’s currently-unemployed connections needed income and were more than willing to try out the duo’s idea to host classes online.

At first, Austin and Chris’s virtual gatherings were small and personal – date nights and the like for friends and acquaintances. Locked-up citizens of Austin could book online events with different artists or chefs and receive a kit of materials to use for the class. For example, Austin or Chris might drive to a restaurant to pick up ten kits of ingredients for a cooking class before distributing them around town.

Austin and Chris made just enough money from these virtual events to stay afloat but handled all the logistics themselves. Much of these excursions happened during the Texas “snowmaggedon” where unseasonable winter snow knocked out large parts of the state’s power grid in 2021.

 “Most employees want milestone events to look forward to at a company.”

The two founders changed course when they signed up a small marketing company. The agency hoped to engage its remote team with interactive classes to combat pandemic-induced isolation. With one session, Austin and Chris brought in more attendees than one month of B2C deliveries. This was the scalable business model they’d been missing.

“When I was working at Google, every quarter we’d do something like go-karting,” Austin says. “Most employees want milestone events to look forward to at a company. Creating a more engaging work environment for the employees is very important for companies too. Since COVID hit, a lot of this stuff has become minimal.”

Throughout late 2020 and 2021, Chris and Austin found new corporate contracts by scraping LinkedIn for email addresses and leveraging their sales expertise through cold messages. Money from events went straight back into the business.

By the end of 2021, they were increasing revenue tenfold month-over-month and enticed their current CTO, Carlos Montoya, to join the team. Carlos is a Colombian with decades of experience in marketplace-style businesses to join. With him on board, they could finally start growing their business from a bedroom operation to a real company.

“Back in 2021, our biggest constraint was the number of events we could handle,” says Austin. “We were holding back on marketing because we handled so many by ourselves.”

Transforming a Service Into a Marketplace

Besides changing their target customer in 2021, Chris and Austin layered on manpower so they wouldn’t need to lead company events themselves. In their stead, they created a  team of event coordinators who hop on the Zoom calls with businesses to ensure everything runs smoothly. They also launched a fruitful Google ad campaign which Austin credits to a lack of competition (Chris and Austin are also both former Googlers).

By the start of 2022, the founders were ready to focus on scaling Teamclass’s technology and marketplace. The engineering team added a self-service interface to let event managers handle five times more events per person. They also created a hub for event coordinators to see how they’re doing after the events. “At first, they were just looking at thumbs up from people on Slack,” says Austin.

Teamclass regularly posts new events added to the platform on their LinkedIn account.

Finally, Austin and Chris pulled themselves out of the equation by adding features for HR teams to communicate directly with class instructors on their platform. With this feature, Teamclassofficially switched from a service business into a marketplace.

But, as you’ll remember, TeamClass also needed to fix its logistics. Driving class kits to customers’ doors was an unsustainable system at scale – especially when delivering to both corporate headquarters and their far-flung remote teams.

To take some of the load off their shoulders, Chris and Austin initially outsourced as much transportation as possible to instructors, making them responsible for sourcing and distributing their class kits. 

Today they’ve changed tactics again and begun working with third-party vendors to handle logistics. This way, teachers can focus on what they’re good at (teaching). As of Austin’s interview in October of 2022, one of Teamclass’s distributors happens to be a fast-growing gifting startup and logistics service, Brilliant, that we previously profiled on Bootstrappers.

What’s Great Marketing Worth to You?

Running a marketplace startup, the TeamClass team arguably had twice the entrepreneurial challenge of populating both customers and services. However, once the platform started working, they had a lucrative opportunity to monetize on the client and the service side. After a little trial and error, their business became quite profitable.

“We were doing a little trial and error and underbid ourselves by quite a bit for a couple of events,” says Austin. “Then we realized what kinds of budgets these companies had.”

“The more people who join our network, the more eyes on all of the classes in general.”

Today, TeamClass bills corporate teams a 30 percent markup on the event prices and takes an additional 20 percent off the payment to creators. Austin says these small class owners are more than happy to pay their fee as TeamClass events are highly effective marketing. Today, Austin and Chris don’t have to look for new events at all – creators come knocking at their door every day, hoping to participate.

“A lot of these vendors are small businesses, so it’s usually just themselves or a handful of people on their team,” says Austin. “How are they going to get customers to find them? They could put money into Google Ads or something like that, but they usually don’t know how to manage it. Our alternative is very profitable for them.”

Austin also points out the network effects of running a marketplace as an additional marketing benefit. “If someone comes looking for a painting class and they also see all these other classes that you have, they might take that one later. The more people who join our network, the more eyes on all of the classes in general,” he says.

The Future is Virtual and Asynchronous

Chris and Austin soon saw they needed to expand their roster of experiences further than just local artisans in Texas. By the end of Q4 of 2021, they began recruiting emerging businesses specialized specifically in virtual events (no kits required).

Austin believes his team’s next step is the world of asynchronous events. He envisions a product called TeamClass On Demand for employees in other time zones who can’t make live virtual events. For example, if a remote office in the Philippines misses a class, they can follow along on their own time.

“Maintaining control of your business is super important if you want to be profitable.”

To other founders embarking on a similar journey, Austin says to keep a tight focus on what kind of business you want to become. He believes there are only three routes for new businesses: lifestyle businesses, businesses built to sell, and businesses built to IPO.

“Start with the end in mind,” he says. “What’s your desired outcome when starting a business? Do you want this to be a two to three-year product, or do you think this is the next ten years of your life, and you’re ready to get on the rocket ship with a VC?”

No matter which path founders choose, Austin tells them to bootstrap for as long as possible.

“Maintaining control of your business is super important if you want to be profitable,” he says. “I’ve seen founders who want to sell their business get blocked by a VC with a board seat because it’s not the return they want. You’re locked in and married with that VC, and you have to make sure that your goals are perfectly aligned before doing that.” 

As the country reopened post-COVID and a growing number of workers returned to the office¹, Austin was briefly concerned TeamClass might go out of business. However, he’s considered this eventuality for a long time and now believes hybrid work can also become an advantage. Virtual events will only become more necessary as offices work to make remote employees feel part of the team.

“It’s difficult to get people to move for a job,” he says. “I think these kinds of teams will continue to grow because that’s what younger workforces prefer.”

Sources:

¹https://www.foxbusiness.com/economy/us-return-office-rates-hit-pandemic-high-more-employers-get-tougher


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Andrew Gazdecki
Andrew Gazdeckihttps://microacquire.com
Andrew is an award-winning serial entrepreneur with three exits. He’s the founder and CEO of MicroAcquire, the world’s most founder-friendly startup marketplace, and its rebellious child, Bootstrappers, which gives voice to the entrepreneurial underdog. When not building businesses, he writes for Forbes, Entrepreneur, and now, Bootstrappers.

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