What happened to that startup you were at?
The team, You know who you are
I found this thoughtful post about a startup I was at for a few years, and all the lessons we learned. I’ll remove the company references so that it’ll not rank. But it’s a good lesson in how startups evolve, and sometimes crash & burn. I wrote this post in the last torturous weeks I was at this startup, I knew we had no time left, and was trying to grapple with it all. ….here it goes….
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I don't know what form it will take in the future, but it won't be a fledgling startup that is fighting against the odds to make it, in short, we ran out of runway.
I've worked at startups for awhile now, but this is the first one that has failed, and it hurts frankly. We worked our asses off for 3 years (and the founders more like 10) to make it, and we got close.
Here's a timeline as I see it:
My first year- I started as their first product manager, we had 1 developer, and a VP of Dev...We had just raised $7m, things were GOOD! We built a dev team, and product team, and were off to the races building a product that helped SMB's hire better...but we were slow, really slow, our development team and process were struggling.
My second year- We finally released our version of the software (built in Ruby) for the SMB's. It was great, customers loved it. We brought in Marketing and were growing our customer base quickly. We went from bringing in thousands a month to hundreds of thousands. We raised more money.
My third year- Customer growth was flattening, and unfortunately, the cost for customer acquisition was too high. The customers we were targeting weren't buying our software for the right reasons. So we decided to see if we could raise prices...didn't work. During this time we realized that while our "new" product looked great, the performance was terrible, it was architected badly, and needed to be rewritten. We decided to rebuild in Java instead of Ruby, with that, we had 100% turnover in our dev team. We raised more money.
Mid way through my third year- After much discussion and evaluating of where we were at as a company we decided to pivot. From transactional, to subscription. From e-commerce self serve to sales driven enterprise sales. The product got retooled, and was underway. We went from a management team of 7 (including 2 cofounders) to 4 (1 founder)...it was a scary time, but we pulled through.
Early in my fourth year- MVP of new product launched, and the new sales team was off and running. Our average sale size was 10X the old one. There was momentum. But of course, we were still burning cash.
June of my fourth year- Finally, our vision is a reality, our subscription product MVP is launched...but we're out of runway. One of our investors refused to bridge us, and we have no options. And the startup is done.
How did this happen? I'll be asking myself this for years to come, but today, this is what I think:
No Technical Co-founder- I think one of the root problems from the very beginning was the lack of technical cofounder. There was no one at the technical level who fully had their skin in the game. They were always at the mercy of the development team, with no ability to fully judge whether the team was doing a good job or not. Having run that team for 1/2 my tenure, a technical cofounder could have made a lot of difference when it came to product delivery.
Competitive Differentiation- Inside of the product is patented, most excellent IP. Game changing. But our transactional customer were hiring us for a job that didn’t need that game changing IP. They had no idea that our differentiator was awesome and that it could help them. FINALLY we came to that realization, but it was about 2 years too late.
Hard Decisions- there were a number of hard questions that we needed to ask ourselves and we didn't ask them early enough. Is this the right leadership team? Will we ever be wildly successful at this model? Are we selling to the right people? Are these the right people on the bus? All of these questions had hard answers, that we didn't answer early enough. We got there, but the runway ran out before we could fully realize the benefit of making those hard decisions.
Time: All of these items add up to time, the time that it took for us to get to the right place. I think that early in my fourth year we were finally in a good place. But in the meantime, we had worn out our investors, and they didn't have the confidence that we could make it.
So with that a new chapter begins. I don't know what it will entail, but I am sure it will be exciting. That startup was one of the biggest learning experiences of my life. I loved the company , I loved what we were trying to build. I loved going to work everyday. I really actually liked my coworkers. We had good people. Unfortunately time was against us.
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So many lessons from that part of my career; make hard decisions, don’t ignore the warning signs, look brutal facts in the eye, and above all else believe in your team.