How the Megacool journey began – A startup series
A napkin contract, a mega cool name, and the start of the startup roller coaster ride. This is the first post in the Megacool Series about how we started our company.
This series covers:
👉Part 1: How the Megacool journey began👈 YOU ARE HERE
Part 3: Embracing Failure – How we tested 10 different startup ideas over 10 weeks
Part 4: Hackathon 1-3: From AI travel agent to photo management adventures
Part 5: Hackathon 4-7: The messy middle
Part 8: How we built our co-founder team
Part 9: From idea to live product
Part 10: Our bootstrapping hustle
Part 11: How we raised $1.6m in funding
Part 12: How we got acquired
Part 13: From Alpha to Acquired: The product, growth, and business model journey
Part 14: The emotional founder roller coaster
Part 15: The epilogue: Reflections on the whole journey
My goal with this series is to inspire and help today's entrepreneurs become tomorrow's role models by increasing your chances of success.
Although my story is rooted in the video gaming industry, the advice and reflections I'll share apply to tech entrepreneurs in any field.
Regardless of your industry, I hope you can find value in my experiences. Remember to let me know in the comments what you find most valuable and what you'd like to hear more about. Oh, and be prepared for some humble and playful moments along the way!
Hold on tight. Let the journey through memory lane begin!
It all started on a frosty February morning in 2015 in Trondheim, Norway. Nicolaj Broby Petersen and I were having breakfast together during an alumni weekend for the NTNU School of Entrepreneurship1, where we'd graduated a few years prior. We had worked together for the past two years on scaling the game studio Nicolaj had co-founded, Dirtybit2, and achieved remarkable success with the mobile games "Fun Run" and "Fun Run 2." These games reached over 65 million users, with over 15% of the US population playing them. They even organically topped the US downloading charts!3
Despite this accomplishment and its potential for further growth, the other founders of Dirtybit wanted the game studio to remain a lifestyle business without outside investors shaping its direction—a fair decision. However, Nicolaj and I had grander ambitions.
We wanted to build a billion-dollar company.
We had been talking off and on for months about the future of Dirtybit. Nicolaj had left a few months prior and spent some time dabbling with different projects.
"It's time," Nicolaj said. "If we want to do something extraordinary, we must seize the opportunity now while we’re not tied down. We're young, hungry to learn more, don't have many commitments, have partners who root for us, and have the energy, experience, and naivety to jump. Let's jump together".
Nicolaj and I, both engineering graduates with complementary skills—his as a skilled programmer and product visionary, mine in organizational and business development—had learned much from each other and worked seamlessly together during the Fun Run scaling phase. We saw in each other the potential for a remarkable startup partnership. We felt invincible and ready to conquer the world.
That cold February morning, we decided to start a new company together. We didn't know what our company would do - yet, though.
As “true” entrepreneurs, we scribbled our aspirations on a napkin during our breakfast and signed it.
The next day, I handed in my resignation.
We knew that surrounding ourselves with experienced entrepreneurs and learning from them would give us the best shot at success. We craved the opportunity to meet trailblazers we wouldn't encounter otherwise. We sought an uncomfortable pace that would push us beyond our comfort zone and facilitate maximum learning. Above all, we never wanted to look back and wonder, "What if?" So, with unwavering determination, we took a leap of faith and decided to move to San Francisco.
We booked our tickets and would truly embark on our new adventure on June 7th, 2015. Until then, we needed to incorporate and apply for visas.
Thus, we needed a company name.
Finding our company name
Finding the perfect name for our company was no easy task. Fortunately, Nicolaj had a knack for catchy names—after all, he had come up with "Dirtybit" and "Fun Run." At the time, Nicolaj lived in Oslo, and I was in my hometown, Bergen, where Dirtybit was based.
To brainstorm and decide on a name, Nicolaj flew to Bergen for a weekend of intense creative sessions. I retrieved and dusted off my dad's old flip chart to aid us in the process.
To guide our search for a name, we established a set of criteria:
It needed to be tech-related.
It had to resonate with us personally.
Standing out from the crowd was essential.
Catchiness was a must.
Most importantly, a web domain had to be available.
Names like “Because YOLO,” “Crazy Awesome,” and “Air Ninjas” thankfully didn’t make it.
The weekend came and went, and we still hadn’t found a name that ticked all the boxes. It was a challenging task, and I remember feeling mentally drained. Only as Nicolaj was heading back to Oslo, he struck gold: Megacool!
And just like that, we had our company name!
Looking back, this name served us well. It made us memorable, and whenever we eventually decided what Megacool would become, people would watch our demo and exclaim, "Wow, that's actually megacool!" Other times, they would say, "That's cool," and I'd playfully respond, "Do you mean mega cool?"
As for the domain, we never truly felt the need for a .com address. The only challenge arose when dealing with government officials and people unfamiliar with the .co domain, who assumed we had misspelled our email addresses.
However, having my email address with "megacool" in it was still better than when I worked at Dirtybit and an elderly lady on the other end of the line asked, "Whaaat? Are you a porn site?"
Incorporating
With our mega cool name secured, we were off to the races—or rather, faced the challenge of incorporating the company in a foreign country.
Back in 2015, we had heard stories of Norwegian companies struggling to go global and secure funding from Silicon Valley because they weren't US entities. Some had even spent significant sums of money "flipping" to a US entity or failed to attract investors.
We were determined to avoid such hurdles and go global from day one.
That meant we needed to establish a US company, specifically a Delaware C-Corp. However, as foreigners in the US, this was easier said than done.
Our solution4 was to establish both Megacool AS (Norwegian entity) and Megacool Inc (US entity) on the same day. Nicolaj and I would own 50/50 through our Norwegian holding companies. Within that same day, before any IP was created, we sold Megacool AS to Megacool Inc.
We also prepared all the necessary legal documents. Reviewing them was a painstaking process, and I wish we had read Venture Deals5 to understand the terms better and be more prepared.
When incorporating, most firms would defer their fixed fee until you close your fundraising round. In 2015, the standard amount was $3,000. We learned the hard way how vital it is to clarify what conversations and asks are included in that "package" versus what will be billed separately once your funding round concludes. Handle discussions with your legal team with great care—they might seem friendly but are not your friends!
Today, having a US entity may not be as big of an issue for fundraising, thanks to the maturation of the European startup ecosystem and US investors gaining more experience investing outside the US. However, as long as we want to operate from the US, there’s no way around incorporating in the US.
Incorporating and maintaining a US entity is also crazy expensive. Compared to Norway, considered a high-cost country, the fees were the same, just with NOK6, rather than US$, in front of each number—making the US outrageous. Just base costs to keep an idle US Delaware C-Corp in San Francisco alive is ~$7500/year!
Getting visas
Initially, we applied for B1 visas as employees of Megacool AS, allowing us to spend more extended periods of time in the US beyond the maximum three-month ESTA7 allowance. The B1 visa is specifically designed for conducting business in the US and permits stays of up to six months.
During the visa application process, we emphasized the need for continuous time in the US to build our network, raise funding, and meet potential customers. We planned to apply for E28 visas once we secured funding. With E2 visas, we could stay for up to two years at a time, with a total duration of five years, and become employees of Megacool Inc.
We had heard horror stories from other entrepreneurs having issues at each border crossing. Although we were following the rules of the B1, it was always highly stressful to enter as we'd be at the mercy of the respective immigration officer, and we would always have to argue our case for entry. This changed once we switched to E2 visas a year later and made the border crossings less stressful.
Financials
We estimated that we had personal savings to last two years as bootstrapped entrepreneurs in San Francisco. Nicolaj had savings from Dirtybit's success, and I had saved as much of my salary as possible by living with my parents in Bergen.
We meticulously prepared the next two years' worst-case, mid-case, and best-case budgets. Little did we know that the NOK would weaken from approximately NOK 7 to 9 per USD, and we would later bring on another co-founder whose expenses we needed to cover. As you'll discover in a future post, this meant we would face financial challenges even beyond our worst-case budget.
To help boost our initial financials, we received an Etablerer stipend (establishment grant), a soft funding grant from Innovation Norway of NOK 100k, and later NOK 500k (in total, roughly USD 70k at the time). This was a grant that Norwegian startups could apply for to help kick-start their startup journey.
To save money wherever we could, we initially shared a single bedroom in a larger house for a "mere" $1,6009 per month. Thankfully, we had the trust and understanding of both our partners, who were ok with this arrangement.
In my previous post, I explained how we gamified networking during our flight to San Francisco, resulting in Nicolaj winning the bed while I settled for a mattress on the floor for the first few months. We also created a makeshift divider using a blanket draped over two white chairs for privacy.
Living with your co-founders isn't the ideal scenario, though. It can become intense, making it challenging to "switch off" and have personal time. In our case, we ended up living together for the first year. While it was fun and a self-awareness experience, neither would recommend it.
Sooo, what did Megacool actually do?
There’s a lot of “what if..”. I’m trying to remember how I felt when I chose to leave my first startup and how everything ahead of me was still a blur. I try to focus on how everything played out nicely — even without having all the answers. – One of my early diary entries
With June 7th approaching quickly, we definitely felt the mental burden of entering the unknown. Especially since we didn’t know what problem Megacool would solve – yet.
👉 Continue reading part 2: Why we chose San Francisco to start our new company,
A special thanks to , , , and
for helping me shape this.Visit dirtybit.com to see what the game studio is up to today
While the games are no longer available on the App Store and Google Play store, you can read my blog post about how the games got their breakout success https://medium.com/thoughts-from-dirtybits/the-fun-run-formula-ae71dcfdd835. You can also download Fun Run 3, which launched in 2016.
With lots of help from Sarah Lerche from Escalon Services
Norwegian Krone (Norway's local currency)
ESTA is an automated system that determines the eligibility of visitors to travel to the United States under the Visa Waiver Program (VWP).
The E2 visa is described as the investor visa as you need to show sufficient funds to apply for it, and over 50% of your company needs to be owned by your nationality. How much funds are unclear and seems at the discretion of the immigration case reviewer, but if you apply following raising seed funding, you should be ok.
At the time, and now, the rule of thumb is $2000/month/bedroom, unless you’re renting a one-bedroom apartment. Then you’re lucky if you’re paying less then $4000/month!
...been living in the basement of my cofounder's house off and on this year...totally feel you on the oddness of that arrangement...supercool start of the story and looking forward to the rest...