This article is the first in a new series called Talking Tech from the Perkins Thompson Intellectual Property Practice Group. Talking Tech features interviews with tech company founders and employees about their highs, lows, and problems they’ve solved.
Today we interview Loida Otero and Carlo DiCelico, the founders of Neon Labs, a startup in Portland, Maine. Perkins Thompson attorney Adam Nyhan is a non-legal advisor to Neon Labs.
Q: What does Neon Labs do, and who are its customers?
Carlo: Neon Labs is an online platform that supports independent workers. “Independent worker” is a term used to describe the 41 million Americans who work for themselves rather than for a full-time employer. A lot of labels fall into this category and I touch on this in my blog post “The Spectrum of Entrepreneurship”, but I see these “indies” as being on a continuum from gig workers to SMB (Small and Medium-sized Business) owners. Right now, we’re focusing on supporting female, full-time indies—about 7 million people fit these criteria—but the long-term vision is to be able to provide deep support to a broad and diverse community.
We’re building the platform around “the 3 Cs”—coaching, community, and content. Coaching is via a mentorship model, where we intend to match people up with experts in areas like marketing or sales. That’s very hands-on and somewhat didactic but mostly practical, for situations where you’re trying to solve a specific problem. Community presents peer-to-peer mentoring and support opportunities, as well as random collisions which we hope will encourage collaboration and new activity. Content is self-paced and purely didactic—if you’re familiar with business school, this is where the theory and case studies come in—where people can learn the ideas behind specific activities and how to execute those activities in the real world.
The thought behind this model is to meet the needs of the whole person wherever she is in her journey as an entrepreneur through mentorship, human connection, and education, and to be flexible enough to continue to support her as she and her needs evolve over time. Eventually, we’d like to be able to invest in teams and individuals or help those people secure investments through strategic partnerships.
Q: Perceiving a need in the market for a product is very different from determining exactly what that product should look like. How have you worked to determine that what Neon Labs is selling is what the market wants to buy?
Carlo: Great question. This can be very tricky. We started with competitive analysis, which we revisit every month. So far, we’ve identified over 50 individuals and organizations who are in the space we want to play in. We go through them and brainstorm—what are they good at? What are they not so good at? What kinds of activities are they engaged in and how do those seem to be going? This helps us clarify what we want to do and how we want to go about it by forcing us to think in terms of differentiation.
We also work backwards from our problem of providing support to underrepresented entrepreneurs. When it comes to learning, there are a limited number of forms that it can take, so product ideas follow pretty intuitively from there in terms of specific content like eBooks, courses, workshops, and so on. We’ve had a lot of specific product ideas come to us this way, like a coaching app or a SaaS platform for example.
We test our product promise to see which ideas resonate with our target market the most. We set up landing pages and run ads to measure engagement in terms of CTR, likes, comments, shares, signups, and so on. We then decide which product to start working on based on the data. This process actually saved us recently from working on the wrong product at the wrong time and we were able to reorder our product roadmap based on the results of some of these ad experiments to favor coaching first and content later.
Finally, there’s no substitute for talking directly to your prospective customers, and we do a lot of that every chance we get via interviews. All our truly interesting insights have come from—or been confirmed or debunked by—talking directly to potential customers.
Testing your ideas is so important that Loida and I put it right at the center of how we do everything. A lot of people still don’t understand that the core idea behind things like Lean Startup is to form a hypothesis and then try to disprove it—not prove it!—and if you can’t disprove it, then move forward.
Q: Where did the idea for Neon Labs come from? What’s the company’s origin story?
Carlo: Loida and I have always been really interested in social entrepreneurship. In 2016, we attended and volunteered with Maine Startup and Create Week—the annual innovation conference, now called Startup Maine—and our frustrations around it were really the catalyst for Neon Labs. Since then, of course, Startup Maine has led the ecosystem in a completely new and better direction. But at the time, Loida and I were frustrated by what we saw as a lack of support for local entrepreneurs who didn’t fit into a specific mold. We also saw at the conference that people’s entrepreneurial education was all over the place. For example, I judged on the pitch panel, and only one of the many pitches I heard had a proper TAM (Total Addressable Market) analysis, which is fundamental. Most didn’t have any TAM at all.
Loida and I started talking about these issues and realized that some of the best and most recent thinking around business is “locked up” so to speak in places like incubators, accelerators, and tech startup ecosystems and never really makes it to, for example, immigrant communities or communities of people of color. This insight led us to ask—what if we could take the same business know-how from the world of tech startups and make it available to other kinds of entrepreneurs? As we started researching this idea more, we realized that independent workers are a massive and rapidly growing group of entrepreneurs who largely come from non-traditional and underrepresented backgrounds and have a need for the kinds of attention that startups get.
Loida: We created Neon Labs to help a largely underrepresented group of people solve real-world business problems. At first, the company was formed to help other entrepreneurs just like us, who faced myriad challenges, but the company evolved to be a lot more than that. Soon after, we realized we wanted to equalize the playing field by giving them a “leg-up” and support them wherever they are in their entrepreneurial journey. Hopefully, this would break the socio-economic obstacles that inhibit growth, change, and innovation. Personally, as a serial “gigster” and entrepreneur myself, I wanted to create a company that served those that simply didn’t fit the mold or classic definition of a “business”.
Q: You both have spent considerable parts of your life in both New York City and Portland, Maine—two very different startup ecosystems. Are there aspects of either type of startup community that you think the other might benefit from adopting?
Carlo: Sure, the big advantages of New York’s startup ecosystem are directly related to its size and diversity. For example, it’s easier to get expertise—whether on a paid or volunteer basis—through places like coworking spaces, Meetup groups, and student organizations because New York is such a talent magnet and epicenter of learning and innovation. Market research is easier, too, because there are so many people you can talk to about your idea, and the culture in New York is very straightforward, so you can count on people being pretty blunt and honest with you, which I personally like and prefer. People in New York are also generally very tech savvy, which can be a catch-22 because on the one hand, they’ll understand your idea right away but on the other, they have very high expectations of tech products and services and can be quick to be dismissive. It’s also fairly easy to get funding and help at the lower end of the scale because of all the activity happening there.
The downsides of New York are that it can be difficult for smaller players to be taken seriously, again because there’s just so much happening that it can be difficult to be heard and to get people excited about what you’re doing. Everything in New York is extremely competitive and it’s a numbers game, which doesn’t really bring out the best in people. You can really lose yourself in it or become cynical and jaded over time, and plenty of people do! It’s also expensive to live and start a business in New York, so people tend to make up for that by working harder. A lot of people underestimate how introspective a pursuit entrepreneurship can be, and New York is not the ideal environment for introspection.
In Maine, it’s so easy to focus. The environment is much more natural, relaxed, and optimistic. It’s conducive to thought, focus, and clarity. It’s much more affordable to live and start a business at the same time, and if you have a strong work ethic, that’s a huge advantage here because things just don’t seem to move quite as fast. People in Maine are driven but in a much less frantic way, and a weekend of camping or exploring the coast can get you right back into a centered headspace after a hectic week.
The downsides of Maine are that it’s often hard to get people to understand an idea, particularly for technical innovations, because the ecosystem is not as technology focused as New York’s. Investors in Maine tend to be a little more traditional and risk averse. For example, it seems like it would be easier to get funding for something like a restaurant, brewery, or agriculture-based business than, say, a robotics or machine learning company. Unfortunately, this might push some great teams to Boston or New York who might otherwise thrive here in Maine.
Market research is a bit more difficult—you have to be willing to travel all over Maine to really do it well! Finally, the single biggest issue to me is that Maine is just not as diverse as New York. You have to get creative and pay a little extra attention to the makeup of your respondents and interviewees to make sure your data aren’t skewed, and just be patient with people.
Loida: New York’s startup ecosystem is energizing and bursting at the seams with a cross-pollination of ideas taking place at every intersection and at times in the least likely of places, like beauty salons, parks, or train rides for starters. I’ve overheard my fair share of exciting startup ideas just sitting in Bryant Park, sipping tea, while trying not to pry on someone’s next big startup idea. It’s invigorating to share these instances with perfect strangers, even though you may never see this person again. It’s these moments that strike up creativity, and I find it difficult to witness such collisions organically occurring in Maine. On the other hand, I’ve gained introspective insights from many conversations I’ve had with my colleagues, friends, and select individuals at events and workshops alike. Some of the knowledge exchange has made its way into current projects in some shape or another. Similarly, I’ve collaborated with allies, built strong friendships from partnerships, and received invaluable mentorships that would have been impossible to obtain or maintain in NYC. Maine blends the traditional and modern aspects of entrepreneurism, while remaining true to the heart of it all—people. It reminds me of the reason we moved out of NYC in the first place. We wanted to create, build, and nurture real relationships with people, which is fortunately easy to do here in Maine.
New York’s resources and communities on any given topic are heavily needed in Maine. Most things are easily accessible. If you’re looking to niche down or broaden your network, there’s a wealth of great conferences, seminars, workshops, and communities (free and paid) to further your knowledge or build your network in NYC. Similar resources can be incredibly difficult to find here in Maine. Often, I found these resources are locked up in the heads of select groups, not made readily available online, or simply not made accessible because the infrastructure was not yet erected for these communities to share the wealth. Maine’s startup culture seems to be heavily divided where certain groups disproportionately have access to certain resources, while other groups are unaware these resources even exist at all. However, I see this as a unique opportunity that can change over time as more people join the space and are willing to roll up their sleeves to create a solution that makes these resources readily available for everyone.
Q: Are there hypotheses or assumptions that you made early in Neon Labs’ life that you rejected as you learned more about the market?
A: We did recently disprove a hypothesis. Before COVID, we felt that we should produce content first to build up our community and focus on social proof, so we planned to launch some eBooks. We tested the idea by running some ads as experiments and when those performed poorly, Loida reached out to people to get their feedback. They told us that because of COVID, they really didn’t have as much interest in learning content as they did in coaching. So, the traditional on-ramp to coaching and consulting that worked pre-COVID was completely backwards post-COVID, because people had more immediate concerns and wanted to solve specific problems immediately.
Q: You both began putting significant time into Neon Labs shortly before the COVID-19 outbreak. Did that outbreak significantly change any part of your work? Did it affect marketing, daily operations, customer development, product testing? All the above? What did it affect and what did it not affect?
Loida: COVID-19 didn’t change how we operate, but our delivery of content and types of content needed to change. For instance, we noticed certain people needed more accountability, while others were overwhelmed with so many digital solutions out there and needed a more hands-on approach. We noticed a lot of analysis paralysis and realized quickly that some people needed a more customized experience to help them along the way, which for us was exciting. We were able to get more creative and craft a solution that was tailored directly to them.
Carlo: The big change was that we couldn’t do in-person networking anymore. In many ways, it made things much easier for us because we didn’t have the distractions that come along with daily office work. From a customer perspective, before COVID, people were more interested in learning content because they were being more deliberate about their transition from employees to independent workers. After COVID, though, a lot of people found themselves suddenly in the transition and needed mentorship to get started solving problems right away.
Q: You both have owned businesses before forming Neon Labs. Are there any lessons learned from your previous businesses that you’ve applied to Neon Labs?
Loida: Just get started and continue iterating as you go. Some entrepreneurs suffer from this “perfectionism” mindset, where everything must be perfect before launching. Our philosophy is to break things first and break things fast. You won’t learn what to fix and how to improve anything if you don’t get that idea off the ground. Often, we are our worst enemy, but if we relinquish control of that feeling of needing to know everything and be perfect for everyone, then we’ll be able to listen to people’s feedback objectively, see the issues as they occur and even preemptively anticipate them, and provide a better overall experience for our customers. It takes time to let go of these preconceived notions that you must be an expert in everything. But by doing so, it will help you to become exceptional in your “zone of genius” and hone your craft.
Carlo: The most important lesson I took away from the small businesses I’ve started and startups I’ve been involved with is the importance of purpose, focus, and openness. It’s critical that founders have a crystal-clear idea of the change they want to bring about in the world and ideally, that should come from the heart. It must be about more than just making a dollar, in other words. It really needs to be about who you are and what you were put here to do. I’m shocked every time I chat with someone and they’re not able to articulate to me what their values are, what their mission is, or why they even care about what they do at all. To me, these are the first principles that every decision you ever make as a founder will be built on, so it’s important to understand them from day one.
Q: Neon Labs recently formed an advisory board of non-employees. Why did you decide to form a board, and how does Neon use its board?
Carlo: We started forming an advisory board in late autumn of last year, right after we decided to accelerate our work on Neon. I wanted an advisory board primarily as a way of offsetting my being a first-time CEO. I’ve seen a lot of examples in my career of how not to be a CEO, and a few examples of how to be a good CEO. Good CEOs surround themselves with smart, capable, honest people and then listen to what they have to say.
I see our advisory board as a kind of accountability buddy and coach or mentor. I send monthly and quarterly updates to the board. I share things we got right or wrong, how we’re doing, and so on in a very transparent way. This level of transparency is a great check against the risk of self-delusion. If we tell our advisory board we’re doing this thing, I have to see it through or be prepared to explain why we didn’t. You can tell yourself whatever you want, but at the end of the month, when you sit down and write that update, you have to tell it like it is. The dialog created around our updates often leads to critical insights, perspectives, or advice that we otherwise wouldn’t have considered.
Q: Every day in a startup you have to decide where to spend your limited hours—customer development, product work, marketing, fundraising, etc. How do you try to ensure you’re spending your time in the right places?
A: This is one of the most difficult aspects of starting up. It comes down to creating blocks of time when we can tackle things and then prioritizing properly. We try to meet regularly to go through where we are in our plan and decide what we want to accomplish for a given week, and then we check in with each other to see how things are going. We rely on ClickUp and Slack for our workflow and those tools help us keep our efforts organized and tied back to strategic goals.
Q: Many founders (and investors) advise startups to bootstrap for as long as possible, because outside money comes with costs and strings attached. Has Neon Labs considered seeking outside grants or equity investment? If so, how did you determine that the benefits of outside money would be worth the potential costs?
Carlo: Yes, we’re talking with Maine Technology Institute (MTI) now [Editor’s Note: Maine Technology Institute is a state-funded nonprofit that provides loans, grants, equity investments and other assistance to innovative Maine companies] and trying to see if there’s a fit there, and we’re evaluating a number of other grant opportunities, but we’re completely bootstrapped at the moment and are not currently interested in pursuing equity investment. This is the third startup I’ve co-founded and the fifth or sixth one I’ve been directly involved with, and I’d agree wholeheartedly that startups should bootstrap for as long as possible. With investment comes pressure, which can create all kinds of problems from tension between the founders’ vision and the investors’ drive to make a profit to irrational decisions and actions based on unproven assumptions or poorly understood customer behaviors. Avoiding investment allows us to take the time and care to do what we genuinely want to do in a way that makes sense to us with no distraction.
Aside from capital to work with, the two biggest advantages of pursuing outside resourcing for me are advice or feedback and introductions to more people who might be interested in what we’re doing. Many experienced entrepreneurs end up later in their careers as investors or in roles where they are facilitating investments, and so much wisdom is locked up in their heads. Being able to tap into that is a complete game changer.
Q: If Neon Labs succeeds—however you define success—what might the company’s success mean for Maine?
A: We have always had Maine’s economy as the foundational context for the idea itself and the strategic approach we’re taking. We love Maine, care a lot about its people, and feel like we have something a little different to offer into the mix. We hope Neon will become an engine of economic growth, supporting independent workers across the state and helping them succeed and go on to make economic contributions of their own.
There are a lot of other organizations in Maine who already do a great job at helping people who are ready for their help. We also see Neon as potentially being an on-ramp to some of these organizations for people who aren’t quite there yet. If we help 100 people, most of them ultimately succeed in their business goals, and 1 person decides to make the leap from independent worker to startup founder and launches a major company in Maine, that’s the kind of outcome we’re looking to create.
Q: Is there one book or blog that each of you would recommend startup founders read or follow to help make sense of startup life?
Loida: Start with Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones by James Clear and Rework by Basecamp founders Jason Fried and David Heinemeier Hansson. For online marketing advice, I recommend Amy Porterfield’s podcast, Online Marketing Made Easy.
Carlo: For me, it’s a tie between Peter Thiel’s Zero to One and Disciplined Entrepreneurship by Bill Aulet, which would be my top pick for new founders.