Closing down. Shutting the doors. Dissolving. Folding. Gathering. Saying goodbye. Wrapping up. My startup of the last 2 years, Saveby, now belongs to the past, or to the future of someone else. All this silence on my blog recently is due to the fact that I find it is so hard to say the words, reveal the truth, admit a failure.
Although, some good may actually come out of this failure.
We gave it our best, my partner and I. We believed, and still do, in the power of the crowds in ecommerce. We still believe that buying is an action carried out by a consumer, and shouldn’t remain a re-action to a merchant’s action, as it still is today.
But what we believe in, or how fantastic is the system that we’ve built or the patent we designed, is irrelevant to our decision to quit.
Recently I had a conversation with one of the top entrepreneurs in Israel: an experienced, seasoned, diversified and daring man. He has closed his startup just a short while before we have decided to part from ours. It was a funny meeting, in a way. Me, mourning the loss of a few tens of thousands of dollars that my partner and I have poured out of our pockets into this startup, and him, counting a loss of several tens of millions of dollars put into his startup by a lot of good investors. I thanked god, at this stage, that I haven’t lost anyone else’s money.
But we spoke about the analysis of failure. Things look so much clearer when you look back on them. There are some mistakes you know you have learned from, and other mistakes you know you can’t always avoid. Still, next time, you’ll be more aware of the dangers.
It brought back a conversation with one particular VC who said how they prefer to invest in an entrepreneur who has experienced failure, as opposed to one that has only experienced success. “Those who have failed will always analyze what they have done right and what went wrong. Those who have succeeded could be just lucky”.
So, we were not lucky. One mistake I feel that is particularly important to share is that we believed the further we advance without the involvement of strangers’ money, the better chances we have of getting any investment and a good valuation.
We should have known better. Get investments as early as possible, even if those are small and expensive –will cost you a large percentage of your startup. The further you go on your own the bigger is the risk that you will run out of funds before you reach your goal. Which is basically what happened to us.
The other very important thing we learned is that it is better to recruit active partners, who would be in it for the long run, then to hire freelancers who are in it – best case scenario – for some stock options. Depending on freelancers or outsourcing is really dangerous. Although, I recall, our search for a third cofounder took too long and was unsuccessful. Should we have waited longer? I don’t know.
But depending on outsources is that sort of mistake which is hard to avoid. At least I am now better aware of the danger in it and would manage it differently next time.
Yea, I’m right back on that horse.