We are now in our 8th year of of Berkeley’s Center for Entrepreneurship and Technology. Please join me in recognizing Andrew Laffoon and Aryk Grosz – alumni from our first year who proved 50 investors wrong and founded Mixbook directly from their CET course. Mixbook is the first of many firms launched from the CET. Mixbook has since then grown up into the landmark Groupon Building in Palo Alto. Please see Adrienne Burke’s article: http://yhoo.it/10S7XHB 

– Ikhlaq Sidhu

Mixbook founders Aryk Grosz (left) and Andrew Laffoon (right)

How Mixbook’s founders translated engineering smarts to entrepreneurial success

By Adrienne Burke

To “fail fast” is a maxim of the social media startup world: If you’re not going to hit it big, get out before losing too much money. But Andrew Laffoon and Aryk Grosz were in no rush when they started Mixbook. Grosz was still in college, and Laffoon had just graduated.

The two University of California, Berkeley, engineering students had gotten interested in entrepreneurship while taking a course with professor Jon Burgstone, who sold his own internet software company for $1.1 billion in 2000. When Laffoon and Grosz met him, Burgstone was hatching plans to create the Berkeley Center for Entrepreneurship and Technology. They joined the first class of the new program.

Five years later, their web-based custom photobook business is also its first success story. Mixbook employs 60 people and generates $25 million in annual revenues, its founders say. It is headquartered in Palo Alto offices that were once home to Groupon and Box.com.

But Grosz, now 28, and Laffoon, 30, say that if they had adopted the “fail fast” mentality, they would have bailed out after their first year in business. More than 50 venture capital firms shot them down, and every advisor they spoke to told them their plan was impossible. The duo says they heard, ‘We’re not interested in that particular market. It’s a lifestyle business. You’re competing against giants. The idea isn’t developed enough.”

So, they launched the company in 2007 with financial backing from friends and family. In July 2008 they closed a $900,000 series A financing with angel investors. And a year later the business was profitable. In 2011 they raised $10 million more from Level Equity. Along the way, they acquired a customer list from Scrapblog, and an online photo editing technology from Citrify. Last year, they acquired Yobongo, which let them launch the Mosaic application for building a photobook in minutes on your iPhone.

“We took an engineering approach to building our company,” Grosz says. If they had taken the “fail fast” approach, he says, by now “we’d probably be on our fourth company.”

Beyond opting out of that philosophy, Laffoon and Grosz share an ethical outlook on creating a business. “We did this because Aryk and I wanted to build an experience different than anything else you could find—the best experience imaginable to create photobooks and tell your stories online,” says Laffoon. The two say they reject the idea of serial entrepreneurship—“just kind of cranking out businesses”—in favor of building something that lasts and provides value for a long time. “We’re allowing people to express  themselves with these tools we provide on the web. It’s one of the reasons we’ve stuck with this so long,” Laffoon says.

He credits Grosz with coming up with the idea for Mixbook: “While eating a sandwich, he had a vision in his head of multiple hands moving photos around a page,” Laffoon says. At first, the two thought that such a technology could disrupt the massive high school yearbook industry—a market that hasn’t seen a material innovation in, well, years.

After interviewing hundreds of high school students and yearbook faculty advisers, however, the would-be entrepreneurs realized the economics of that market—with traditional yearbook publishers’ sales forces covering every school in the nation—was going to be hard to crack.

So, they shifted to thinking about how their idea could be a hit with an even larger customer base: consumers using photos to make books and tell stories. Existing photobook platforms, they say, were an easy target. Those offered “book covers with die-cut squares, terrible templates, awful designs, and you couldn’t share on social or collaborate with family,” Laffoon says. He credits their engineering training with enabling them to take a completely different approach to the problem. Now, he says, “the entire industry has followed what we’ve done.” And, it turns out, the yearbook market could be cracked. The Mixbook execs say they’ve gone on to lock up elementary and middle schools and have begun capturing the high school yearbook market.

Laffoon and Grosz recently hosted a reunion for the first graduating class of the Berkeley Center for Entrepreneurship and Technology. Of 100 alums, they say, about three-fourths have started their own businesses. Laffoon and Grosz now lecture for the program. As for the 50 VCs who turned them down? “We’ve proved them wrong,” Laffoon says.