A friend confessed to me the other night that his funded startup had failed.
“It was growing,” he said. “We were getting customers. We just weren’t getting them fast enough to continue getting funding.”
This is a familiar refrain with startup founders, and I personally know several founders whose businesses fit this bill (including my last funded company.) They have a business that works, with customers. It just doesn’t fit the ridiculous growth profile that most VC’s (venture capitalists) expect.
That’s the untold story of the estimated 80%+ of funded startups that fail. Most of them don’t fail because of a complete lack of acquiring customers. They fail because they stepped on the funding treadmill and hired ahead of revenue for anticipated growth–and that growth either didn’t happen, or didn’t happen fast enough.
Fab.com — From Billion Dollar Valuation to Bust
Perhaps nowhere is this more obvious than in the painful story of Fab.com, the e-commerce startup that raised over $330 million and then sold for a comparatively paltry sum ($15-50 million, is the estimate.) In the story of Fab.com’s death, these quotes stand out:
View full post »
I haven’t posted in a few weeks, though, as you’re about to find out, I have a really good reason for that! Also in this post, I share with you a (somewhat embarrassing) story about how I figured out what I really wanted to do most in my life.
My boyfriend, John, owns a retail store called 1Up Repairs. He fixes cell phones, Xboxes, PS3s, and computers for a living. I’ve been helping him out with it for the past few weeks, and it’s been an eye-opening experience, as you’re about to find out.
For the entire time I’ve known John, his store has been located in a rather industrial, seedy part of town. It made sense to him when he started — he wasn’t sure the idea would work, so he wanted the cheapest rent possible while he tested it.
I helped him review his financials, and was impressed by the amount of business he was doing despite being located in a bad area of town. He had built up a steady stream of loyal customers, with over 40 positive reviews on Yelp and Google (and 0 negative reviews!)
John had realistically hit the limit of the number of people who were willing to drive to his side of town to get their cell phone fixed, and needed to secure a better location in order to grow. In December, we entered talks to secure a location right across from the University of Texas-Austin campus. There was a real dearth of cell phone repair shops there, and with the combination of college students without cars and a large amount of foot traffic, I thought the location was a winner.
It took us two months of negotiations to finally sign the lease; we moved in February 1:
John and I in front of our store, 1Up Repairs, during opening week.
I’ve learned a huge amount since I helped him move in here. One thing I’ve never done before is retail. I worked in a restaurant when I was 15, but I also found a work-from-home job doing SEO (search engine optimization) that year. By the time I was 16 and could drive, I had secured a job doing web development for a design firm.
That was in 1998, and I’ve been in web dev, marketing consulting, and running tech companies ever since. Retail, as anyone who’s worked in it or run a retail store will tell you, is an entirely different beast from the type of entrepreneurship I’m accustomed to.
At the end of the day, any business comes down to serving your customers, and that’s what John does well. Great customer service wins the day no matter what business you’re running. I learned that running my hosting company — we only had one negative review in the entire 6 years I ran that business. I applied that philosophy here and found myself happily serving customers in a retail environment, fixing computers, running the register, and answering all sorts of random technical questions. (Actual question I got today: “I want to get an iPhone, but I can’t take the battery out, and the government is going to track me if I leave it in. Can you rig an iPhone so I can take the battery out?” Yep, welcome to retail!)
I was surprised to find out I enjoyed helping John with his retail store. John and I share a passion for making sure the customer is happy first and foremost. We’re also both driven and motivated workers, so we work well together. That’s not to say we don’t ever fight — we both have years of experience running businesses, and we’re both smart, opinionated and stubborn, so we’ll verbally spar on occasion. But over time, we’ll balance back out into remembering why we’re here (to serve customers and make them happy), and we’ll make the decision that best serves our customers.
An Embarrassing Story Serves as a Catalyst
I promised you with this post that I’d share how to find out what you really want to do with your life. The best way to do that is with a story from my personal life. Even though that story is a bit embarrassing, I’ll share it with you anyway, because it has a good lesson in it. Here goes:
Last year, I was on a plane headed from LA to Austin on Southwest. I hate being stuck in the back of the plane, so I always buy the “automatic check-in” upgrade so I can board first.
I got on the plane and sat right at the front — yay! Next to me was a guy in a suit who was reading on his phone. When I sat down, we picked up a casual conversation. He revealed that he was an investment banker, and was scouting for series B or later-stage startups to invest in.
He asked me what I did, and I said “I’m a startup founder.” The words were barely out of mouth when my brain turned on me. “Your company failed a few months ago!” it said. “What are you doing?”
The words had come out of my mouth before I had a chance to think about them at all. I knew that the startups he invested in were way later-stage than mine had been, so I wasn’t trying to “make an impression” on him.
The conversation eventually trailed off as we got in the air, giving me ample time to think about why I had said that when my startup didn’t exist any more. And then it hit me, with a gigantic THUD:
Running a startup was what I most wanted to do!
I had said I was a startup founder because that’s what I wanted to be. That’s what I was, but mine failed. And right then I knew I was going to try it again, that I wasn’t going to be a coach forever, that I was happy I’d tried some other things like coaching and consulting, but that being a founder was where I was going to be happiest.
A feeling of relief swept over me like a tidal wave then. Now, I want you to think about what you’d really say to someone in a completely unedited, spur-of-the-moment manner when they ask you what you do. What would you say there?
Stop editing yourself. Release all your fears and all that junk that’s built up around that question and just answer it with a free conscience. What do you do?
What do you do?
I’m a startup founder. Nice to meet you.
The Business Idea We’re Pursuing
As we were negotiating our new office in December, John told me about a product idea he had, based on running his own store, that we can sell to other retailers. (And no, it’s not a point-of-sale system–but it’s another thing all retailers need!)
I talked the business idea over with some people I trusted, and I received an unbelievably positive response. I’ll be honest — it’s a way more positive response than I ever got around the marketing software we sold with my last company! So I told John I’d build a prototype.
I’ll be sharing more about this idea soon. It’s patentable, so John’s asked me to keep it under wraps while we work with a patent attorney to secure provisional patents on it. Once we’re able to secure our intellectual property (patents and trademarks) and to build a prototype, I’ll share in detail what we’re building and why.
In the meantime, I’m running a retail store with John.
Why Not Just Hire Someone?
There’s a story that’s stuck with me for nearly a year now. Last year, at the Female Founders Conference hosted by Y Combinator, Adora Cheung of Homejoy got up on stage. Homejoy is a cleaning company, and for several months, Adora worked as a janitor, commuting insane hours to clean for a pittance while continuing to build Homejoy on the side. Why would she do this? She felt strongly she needed to understand the business inside and out in order to build a business in that space.
I didn’t set out with the intention to run a retail store. Other people (and maybe even the “me” of a few years ago!) might say it’s a waste of time to be answering phones, manning a counter, handling a cash drawer and credit cards, and answering questions about broken phone screens all day, when we could easily hire someone to do the same. But if I’m going to start a company that sells product to retailers, what better experience could I ask for than actually running a retail store? The empathy I’ll gain for our customers is massive. I’ll understand them in a way I never could have before.
So, to Adora and all the other startup founders who took a leap off a cliff and dove enthusiastically into low-paying jobs to better understand their customers, this one’s for you.
I’d better get back to work. I’m sure there will be a customer coming in soon!
View full post »
It’s week 2 of my adventure in 2015 to start a business. I started out last week not knowing what kind of business I wanted to start. This week, I’m taking an introspective look at another common issue people have when they want to start a business–and one that plagues me as well! It’s all about the feeling of not having enough time to start a business.
Technically, I work part-time right now; I’m wrapping up a 3-month consulting gig with Help.com, building their launch plan, website copy, an ebook, and more. (My work will be live on Help.com soon!)
But, when you factor in my coworking space, this blog, finishing taxes and other miscellany of my business that failed/got acquired last year, and helping my boyfriend (who is also an entrepreneur) with his business, the hours I spend working pretty quickly ramp up to full-time.
So I’ve been exploring: How do you build a business when there are so many other things that compete for your time? (more…)
View full post »