In 2011, things were looking desperate for Matt Altschul.
By his 30th birthday, he had sold his interest in a $40 million company he helped build and spent all his money breathing life into his own.
After a year and a half, it was failing miserably.
With investments from family and friends dwindling and his credit cards maxed out, the Arlington native had a new home in Austin and half a warehouse full of products people weren’t buying.
“I had this if-you-build-it-they-will-sell mentality,” he said. “I’d been working 80 to 100 hours per week for two years making no salary, and there was no light at the end of the tunnel.”
Altschul had just moved to Austin. His new company,
He thought the iPhone and Apple’s rumored tablet would benefit from a case that functioned as a physical controller. And Apple’s vice president of third party development even agreed, but the company declined to make an open standard CM4 could use to build one.
By the time they said no, Altschul had already designed 3D models of controllers that would work with the iPhone and a tablet.
When Apple announced the iPad to a skeptical public on January 27, 2010, no one was more disappointed than Altschul, whose last window of opportunity had just slammed on his fingers.
From bad to worse
“It’s a dark, dark time with feelings of personal failure,” Altschul said. “Friends and family cheered you on, and now you’re playing through the conversations you’ll have to have with the ones who invested money and trust in you.”
Meanwhile, his previous company blossomed. V-MODA expanded into amplifiers and durable cases for iPod and iPhone. A 2012 profile immortalized CEO Val Kolton as a visionary DJ and audiophile who designed the company’s signature high-end headphones to his own stringent standards inspired by vision quests in the clubs of Ibiza.
The article didn’t mention Altschul or Michael Martin, the industrial designer who designed all of the company’s products. Martin left the company that same year.
Altschul didn’t want to give up on CM4, but he was broke. A friend helped him get a contracting gig doing IT consulting for the Texas Department of Public Safety. It paid well, and left him with enough energy at the end of the day to spend his nights and weekends literally taking CM4 back to the drawing board.
Which is precisely how Altschul realized the device that crushed his company was the one way he might be able to save it.
A new direction
If there’s one category of electronics accessory with a very low barrier to entry and lots of room for competition, it’s iPhone cases. Lots of smartphone owners want to protect the devices they depend on, and many of them use their cases to customize a common product.
Altschul tried attaching everything to iPhone cases, from laser pointers to USB drives and even batteries.
He finally realized the solution was so much simpler. Some phone cases doubled as bifold wallets, but Altschul found them clunky and intrusive. He asked a crafty female friend to sew a small pocket onto a competitor’s case big enough to hold his credit cards, and starting showing it around to friends at bars.
It was a hit.
In November 2011, Altschul launched the Q Card Case. It was made of soft-touch rubber and premium fabric that looked a bit like stitched leather. It was rugged, but looked elegant, and comfortably fit three cards and a little cash.
It sold well throughout the holiday season that year, and CM4 introduced a range of colors the following May.
Today, CM4 has nine employees and is looking to expand in its East Austin offices. When asked if Altschul has sought funding or might in the future, he responded with a curt “no.” Twice.
Try this at home
Here are Altschul's three tips for fellow founders in the same spot.
1. Make sure you have a customer before you have a product.
It’s very rare you should make the product before you ensure you have a customer. Unless you’re a visionary like Apple making a super secret product that will change the market.
Admittedly, I’m riding the coattails of Apple and Amazon [by selling iPhone cases on Amazon's marketplace]. There’s no shame in that. I’m not literally changing the market.
2. Don’t quit your day job.
There’s more than 40 hours in a week to work. You have a lot of hours every night and on the weekends to work full time on your own venture.
If you’re the type who has to be motivated by desperation, quitting your job and forcing yourself to succeed is one way to go about it. But if you’re determined, you can work hard and do it even with a day job.
3. Pick your cofounders wisely. If possible, don't have any.
Set up a vesting schedule and get your legal affairs in order right away, instead of giving cofounders — or even yourself — ownership right out of the gate. You may all be excited on day one, but what about in six months? You may find your co-founders aren't as committed as you, or don't have the same appetite for risk, when things get scary.
That step could be worth millions or billions of dollars someday if your company is successful.
In the beginning of CM4, I had two cofounders, an industrial designer and a senior advisor who has since passed away. The industrial designer left after the first nine months because he couldn't work for free and I couldn't afford to keep paying his salary. He got another job and helped on the side for awhile until he stopped working for CM4 entirely for three years.
Now that the company's back on track, I was able to rehire him eight or nine months ago. He has some shares in the company, but not co-founder equity. That was an important decision early on that made this all easier for both of us.
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