Why I do not regret the one year I invested on a startup that failedChirag Dodiya
In 2014, I met some amazing young guys from Mumbai and an entrepreneur with a vision to build a company that will focus on making a positive impact on the Indian startup ecosystem. We were focussing on building a startup services company via various projects. I was hooked. While I was young and naive, I always had this little urge to do anything that will scream 'progress!' not only for me but for the whole ecosystem.
In no time, I was in, and we started recruiting. We hired five young bloods in 30 days and rented an office in Mumbai. Everything was going good. So it always seems. In the first three months, we had a team of 15 people and we were nowhere close to making an impact. We focussed on organising some events on the burning topics of entrepreneurship. That got us some good exposure with the community in Mumbai but, nonetheless, if you don’t have a monetisation or up-sell model in place for organising events, it usually is a waste of time.
So before we get into the story of why it failed, I’d rather focus on what I learnt.
Lesson no: 1 – Focus on one idea at a time
We already had four projects going on in the first four months. We were focussing on making many buckets of income that it ultimately got us nowhere close to even one. We didn’t see even one project to the finish and actually do some work.
Lesson no 2 – Steady recruits
Yes, no matter how important it seems to hire some more people to help you with that big project, the scenario is never that dire. You can always improve the productivity of the current team. Before thinking about hiring more recruits, make sure that business is in place and is actually growing, with a working revenue model in place. Without that, you are doomed for failure. We learned that the hard way.
Lesson no 3 – Work culture
If a startup that doesn’t have a work culture, you are already on the losing side. We faced many problems because of co-founder clashes and employee trust while going through the bad times. Office politics is the last thing you need to worry about while working on a startup. Make sure your foundation is built on trust between co-founders and the employees.
Lesson no 4 – You should be out in the field, always
We made the big mistake of wasting our time in the management of the startup while we should be out in the market doing some sales or marketing. That's what keeps the startup running, in the long term. The team should have clear concise information on what the goal of the venture is and how it is going to achieve targets. Always be in the field if you are running a startup. That's where the customer is.
Lesson no 5 – Everything works in theory, unfortunately not in the real market
“In theory, there is no difference between theory and practice. But in practice, there is.”
Every startup makes certain assumptions in the beginning to get things running. The worst part is when the assumptions are not even close to reality. Focus on feedback approach. Understand the market scenario and build your startup across that market and not the other way around.
Lesson no 6 – Financial backup
A general rule of thumb most startups follow is keeping six months financial as a backup to survive, because well, we all know that it takes months to get your first paying customers usually. It's better to keep at least six months or even a year of financial backup to survive. There will be bad days ahead. Better to be safe then sorry.
Lesson no 7 – Keep it legal, stupid
Isn’t that a no-brainer these days? Yeah, it wasn’t that easy a year back. We did get into some complications between co-founders that led to problems and ultimately the dissolution of the company.
Every startup goes through the good, bad and ugly days. Those were still probably the best days of my life because I learnt and executed so many things. Entrepreneurs keep asking why not push it a bit forward and focus on surviving a little more. That seems like a reasonable argument but it all depends on what stage your startup is and on the traction. If you are sure about the team and even the basics of the product/service, you can push it as much as you can. For us, that was not the case. It took around a year to dissolve the whole company. But we will always continue on our quest to building amazing startups. Keep going and keep hustling.