John James felt like he was letting people down when he decided to leave Acumen Brands, the online retail company he founded in 2009.
Acumen — with its consumer-specific stores such as Country Outfitter and Scrub Shopper — was and is a success, with more than 200 employees, a 200,000-SF facility in west Fayetteville and $83 million in investment from New York firm General Atlantic. James, the CEO, felt he had outlived his usefulness and turned over control of Acumen to Terry Turpin and announced he was starting up Hayseed Ventures, a company he said that would work to turn “startups into businesses.”
James, 40, said there wasn’t an epiphany moment when he knew he needed to leave Acumen — he is still a shareholder and on the board of directors — but more of a realization over time that he needed to focus on what he was best at.
“Acumen is my baby,” James said. “A retail company wasn’t my cup of tea. I’m a technology guy. I like to start things. I enjoyed the job, but my skill set is not managing 200 folks nor reporting to a private equity firm is what it came down to. The thing that kept me from doing it sooner was the feeling I was going to let down a bunch of people.”
Hayseed, which moved into the Old Post Office building on the downtown Fayetteville square, hopes to raise $6 million to help the next generation of Acumens. James said Hayseed has already partnered with four startups and is consulting a fifth.
“We’re here to take great entrepreneurs and make them outstanding,” James said. “That’s the goal. This is not Little League. Not everyone gets a trophy here. We’ve turned away some pretty good stuff. I didn’t think we would have trouble finding deals. I thought we would have trouble finding great deals.”
James hopes Hayseed can be the support he had a hard time finding when he was starting Acumen. James’ knowledge of the startup game and some ready cash on hand — James said Hayseed plans to dole out money in $25,000-$50,000 increments as needed — could prove to be a boon to northwest Arkansas’ fledging startup environment.
“We turn startups into businesses,” James said. “Those are two different things. From taking something on the back of a napkin and turning it into a revenue-generating entity, that is hard. I believe that is why I was put on this earth, frankly.”
Hayseed’s arrival in the Old Post Office was not made in isolation. Jeff Amerine’s Startup Junkie, a full-service entrepreneur consulting firm, is next door to Hayseed, and the Arkansas Regional Innovation Hub announced it will open a northwest branch on the square.
James said the three things northwest Arkansas’ entrepreneur ecosystem needs are a community of collaboration, experienced leaders and, of course, money. Five years ago, James said, the ecosystem was a barren wasteland compared to now, although it still has a long way to go.
James said that even with his track record and connections, he finds it difficult to raise investment funds for startups.
“The area needs 20 guys like me doing this; I realize I’m a drop in the bucket,” James said. “In five years, the improvement is off the charts. Jeff and I were probably lone voices shouting in darkness five years ago.”
James said he recently had a launch party in the Old Post Office basement and approximately 250 people showed up on a rainy night. It’s a start.
“There is interest,” James said. “We’re getting community. If a bomb had gone off in the basement, we would have wiped out the entire Arkansas startup scene, and that’s unfortunate.”
‘Wealth of Connections’
Amerine, the former director of Technology Ventures at the University of Arkansas at Fayetteville, said all three groups — the Innovation Hub, Startup Junkie and Hayseed — have a spirit of cooperation that will be important to the growth of the area’s startup culture. It’s about having an atmosphere where people can meet, think, argue and create — “making the flywheel spin fast,” Amerine said.
“It’s setting up things where you have opportunities for creative collisions for people running into each other,” Amerine said. “It’s the wealth of connections we all provide. It’s about building a web of relationships so it’s not a lone entrepreneur out in the field trying to figure it out.”
When James started Hayseed, he thought it would do well to find six ventures in the first year. Three months in and Hayseed has five, so James thinks Hayseed, which has approximately $3 million in funds, can pick up 10-12 partners.
“When we first started, we thought deal flow was going to be a problem,” James said. “When you talk around the nation, [I was told] there just aren’t enough deals to do what you’re doing in Arkansas. That’s a load. It is overwhelming the number of deals we’ve looked at.”
One of those partners is Menguin, an online tuxedo rental company that moved from Atlanta to Fayetteville to work out of the Old Post Office. Another is Strong Suit Clothing of Little Rock, which has products in 30 specialty stores and which has enlisted James to run its ecommerce website.
“John knows how to get customer acquisition and build an online presence as well as anyone in the country,” Amerine said.
For the three founders of Menguin, a 15-minute phone call with James lasted two hours and led to a visit to Fayetteville. Bogdan Constantin, Menguin’s chief marketing officer, remembers when he, COO Kurt Sutton and CEO Justin Delaney met with James in the Old Post Office.
Menguin was founded in 2014 and has investments from people such as Mark Cuban who, like Sutton and Delaney, are Indiana University graduates.
“John was really passionate and knew his stuff about ecommerce,” Constantin said. “We were talking through the business model and getting excited about it. … He was immediately able to relate to our strategic value.”
James is already looking down the road, too. He believes there needs to be a $20 million to $50 million fund — “Hayseed Fund,” James half-joked — and a $100 million fund to help startups go from scratch all the way to $1 billion or more.
“I want to build five Acumens out of this thing in the next five years, and I think it’s likely, actually,” James said. “There are not enough startups getting started. We need 1,000 startups in the state. Acumen didn’t change the state. Acumen is a model for how you change the state.”