After pulling:
npm installgrunt init
grunt init installs all dependencies before running the default task, so you only need to run it once, subsequently you can just run grunt to kick off the connect and watch tasks.
There are only 2 files you need to edit to build a custom theme. This repo gives you 2 sample files (borrowed from Bootswatch's Flatly theme).
styles\_variables.scssstyles\_theme.scss