Startup Diaries Week #5: I Just Killed My Startup
February 16, 2016
We’ve had some very hard conversations this week; with each other, with ourselves.
The beginning of the week was full of gusto with the aim of growing our user registrations and releasing the app to a wider audience. The end goal of building our pilot out into a specific geographical area was within reach and it was full steam ahead.
We grew our user numbers by 73% on day one and felt re-energised heading into Tuesday.
But, I had a niggle.
You know the sort of thing: the feeling you’ve left the oven on (that old classic); the wondering whether you’ve locked the car door.
In this case, it was a deep gut sense that although we have the supply side of our business nailed down, somehow something wasn’t right with the consumer side of the business.
On Tuesday, I couldn’t put my finger on it and thankfully I was up in Lichfield visiting with Potential.co.uk so couldn’t really spend much time focussing on it. That gave my subconscious the time it needed to stew on it more heavily whilst I let it do its thing without interference.
Heading into the usual Wednesday mentor sessions, we were feeling great about the brand, the tone and the messaging we were putting together.
It’s actually a great brand message and one that we can so powerfully leverage.
But still, I didn’t feel right on something. I didn’t know what though.
During our sessions with the mentors, one specific thread kept cropping up. It was something that I think both Adam and I felt and perhaps we’d ignored it slightly to focus on market testing the consumer offer, and so that we could be completely sure that things had lined up correctly for Cavalry as it was on Wednesday.
But then we had to start putting some money, some of our pre-seed investment, into consumer acquisition.
As someone who isn’t new to business, I know that there’s nothing more powerful than a customer voting with their wallets. That commitment to spend with you shows complete loyalty in your product / service and all of the “Wow, that’s great, I definitely would buy it.” placating goes out of the window, being replaced with a solid and real-life purchase.
Voting with your money is the truest way of showing you believe that you’re investing that money wisely.
And so, backed by the views of some key mentors, we began to open up to why we were feeling willing to vote with our own wallets, into our own business.
What was it that was making us feel uncomfortable? Why were we subconsciously holding out on ourselves?
And so, we went back to basics.
We ran the numbers.
Challenges this week
Let me be clear: we have run this set of numbers so many times before.
But running them again this week was different: we were armed with knowledge of the industry that we didn’t have before; we were armed with technological statistics that we just didn’t have before and we were armed with this new mentality that we’ve both been ushered into whilst working in this very unique startup environment.
After running the numbers again, the bottom line was that we could build a business.
But that business, due to the calculated lifetime value of a customer, simply wouldn’t give us the profit we want.
It would earn, yes. It would generate revenue, yes.
And it would turn a profit.
But the numbers weren’t big enough.
We realised that there is a business in the model we’ve spent a few weeks developing, but that in order to get to that stage we would need a run up.
Right now, our time simply isn’t best spent building that model out any more.
Until such time as we have the run up we need to roll that model out with scale and, more importantly, the blazing speed we need then there is no sense even thinking about it.
The great thing here is that we have that line of business there ready to go. It’s boxed off, has the tech we need to pick it straight back up all developed & done, and we can roll with that at such a time that we’re ready to.
But right now, Cavalry as was, is dead.
Time for an infamous startup pivot.
Real Life: How The Co-Founders Are Doing
The great thing about knowing someone for 16 years is that you can have hard, very hard business conversations without those conversations affecting anything else.
Adam and I approached this week very differently. We both know that the facts, even when based on variable assumptions, don’t lie and yet we also know that killing something you love is the hardest thing to do.
That made for a week of tumultuous emotional ups and downs.
During any given day each of our emotions, at opposing times to each other, would range from “Fuck this, the numbers are bullshit – this is why we’re here, to challenge this!”, to “I want to go home.” and everything in between.
The great thing through all of this was that we never argued. We never disagreed in a way that caused tension, or a bad atmosphere. There were no feelings of dread.
There was just this weight of the decision upon us.
The emotional journey that we’ve both been on this week was underpinned by a strong feeling of not wanting to admit defeat, certainly in my case.
Failure, that trial by fire that all entrepreneurs have to go through, is no fucking fun, I can tell you that.
But here’s the thing: when I thought on this further, I realised that this wasn’t a failure. This decision was actually a success.
We’d done what startups are told to do over and over, we’d failed quickly.
Or, more pertinently, we did our due diligence and carried out a series of business experiments that validated that our gut feeling was true, something wasn’t right.
That’s exactly how you do good business. That’s the backbone of a quality, successful startup team.
Underpinning this were the guys at Ignite.
During our weekly review, we spoke to Martyn Davies (Ignite London programme director) and he quickly backed up our assumption that perhaps a pivot was on the horizon.
Martyn’s help during that 30 minutes was the best placed help I’ve ever had during my business life. He quickly moved on from the problem, and asked us:
“What else could you do? You’ve built up this fantastic supply network, what can you do with that?”
Without even realising it, we enthusiastically reeled off at least 3 ideas that we could quickly and easily validate against and run quick experiments on. The fun thing was, we didn’t realise that we’d enthusiastically reeled them off until Martyn said:
“Do you know you’ve just pitched me at least 3 solid business ideas, and you did it with huge enthusiasm?”
Martyn gave us his hand and put us back on the horse.
On Friday morning, Paul Smith, the current CEO of Ignite also praised our decision making capability and the fact that we’d pragmatically assessed “our baby” and decided that it wasn’t right.
Closing the session with:
“This is why you’re here on this accelerator, so that you can test these things out quickly and confidently. And don’t forget, we’ve got your back.”
Paul gave the proverbial horse a push in the right direction.
And let me tell you, that was the arm around the shoulder that I needed.
Cavalry is dead. Long live Cavalry. Long live, something amazing, anyway!
Lessons Learned this Week
- When it gets hard, focus on the basics.
- Talk, talk, talk and when you’re all talked out. Talk some more.
- Decide fast.
- When you have decided, move fast.
- Ask people – want to help? Spare two minutes on this teeny tiny little survey, please.
I have no idea what next week will be like. I have no idea what my business does.
Don’t forget, the more you expect from yourself the more you WILL excel!