Three Golden Lessons from My First Failed Startup
Real winners use failure as a learning opportunity.
The year was 2014. I was a wandering college student who could move from idealistic optimism to sturdy cynicism in the blink of an eye. Most of the time the world around me appalled me, especially with regards to climate change, and yet, there would always be times when the optimistic would reign in and believe that these problems were an opportunity for my generation to solve.
More than anything else, I wished to be a part of the solution, however, I didn't know of a way in which I could contribute meaningfully.
All of that changed on December 1st, 2014. The day was so instrumental for me that even today, I remember that moment crystal clear.
I was looking for an opportunity online to make a few quick bucks for my girlfriend's birthday. I wanted to treat her and I didn't have the money to do so. I thought of doing some small online gig and making a few thousand Rupees (a few hundred dollars). In that process, I ran across a simple idea that changed my life.
I learned that consumers today can install a solar panel on their roofs without having to pay anything upfront. They would then simply purchase the electricity from these solar panels at a price below their existing electricity costs. As a result, users would save money from Day 1 and the planet would be saved from major greenhouse gas emissions.
While this idea was not entirely new, the ignorant me had simply no idea about this. For me, it was a major Eureka moment and in that instance, I was no longer pessimistic. This was the big solution that I had been waiting for all along.
I discovered this idea through a small startup. A team of two young men who shared my passion for a sustainable future. I joined this company as its first recruit and without any pay. I simply wanted to work on this solution, money was not the prime attraction.
By March 2015, I had stopped attending college and had started going to other colleges and industries, asking them to install solar. I would meet whoever would let me into their offices.
When I joined the team, it had 0 in net sales. In the 2 years that followed, we shattered all expectations. We managed to deliver a net sales of nearly $25 million in under 2 years and by the end of 2016, it seemed like nothing would stop us.
However, the party ended just as fast as it had started. By the start of 2017, the company faced a major existential crisis. Before the end of the year, the entire team had left the company (myself included). It had to stop all operations and began winding down procedures. The same people who were once the stalwarts of the industry became a cautionary tale of what not to do.
I was still very passionate about the problem statement and decided to continue working on it. To do so, I started a new company with a different approach to solving the same problem. However, before I did that, I wanted to understand what exactly went wrong so that I do not repeat the same mistakes again. I took considerable time to reflect and my takeaways back then proved instrumental in my life ever since. I hope that they can provide you with some help in your lives.
Arrogance is the highway to Doom
Back in 2015, we were working ourselves to the brim. It was hard and demanding and the entire team paused everything else in life to work on this one problem. Our dedication was rewarded and the company initially grew rapidly.
However, we let it get to ourselves. We became arrogant.
In the early days of the company, we wanted to delight our customers. That was the only thing that mattered to us back then and this was one of the biggest reasons behind our massive growth. However, we soon started feeling that our customers needed us more than we needed them.
We weren't just arrogant with our customers, but it instead became the company culture. The senior management got a superiority complex and that would trickle down within the whole organization. This attitude eventually became the root cause behind our quick downfall.
Ultimately, if you wish to grow over the long term then you cannot let go of your values once you have seen the first sign of success. Instead, you need to double down on these values. Getting arrogant is the first step of losing your values.
Money is not the Key to Happiness or Success
Back in 2015, when we were beginning to see early signs of success, we desperately wanted to raise outside capital to accelerate the company’s growth. We were already growing however, we all agreed that outside investment could propel the company much faster.
Unfortunately, raising this investment became the end in itself and not the means to an end that it ought to have been.
Our growth ensured that there were plentiful offers for us to choose from and as a result, in early 2016, we managed to raise this investment from a set of angel investors. We used this money to double down and accelerate our growth.
However, we hadn't really thought it all through. We made a lot of mistakes, often expensive ones. We hired people based only on their skills and previous work outputs, often without finding the right cultural fits. We started focusing on quantity rather than quality. We started major marketing campaigns that had little cohesion or results. All of this was possible because of the money that we had raised.
The result was that the very money that we had been chasing to grow became an inhibitor to our long-term sustainable growth. In retrospection, if we didn't have that money, then we would have continued to optimize every penny that we did have. We would not have hired people so quickly. We wouldn't have run all those wasteful marketing campaigns. We would have been much smarter with how we spent our money.
I am not against the idea of raising outside investment. In fact, most companies would benefit from this infusion of capital in multiple ways. It can prove instrumental for a company’s growth.
However, before raising these funds, all companies should have a crystal clear plan of how they would use that money. Funding should ultimately be a means to an end and not the final goal in itself. Remember, it is not an achievement, it is an opportunity and unless you use the opportunity wisely, the money will do you more harm than good in the long run. So, do not raise investments until you know exactly how you will use this opportunity.
Honesty and Transparency are under-rated
When things start going bad in a business the ones running the business, usually find out early. For me, it first began as an instinct but I didn't listen. Then there were very clear indicators but I ignored them too.
I wasn't alone. Most of our core team was guilty of the same crime. We wanted our assessment to be wrong.
However, the bigger mistake that we made was that once we knew about the troubles approaching our way, we made our best efforts to hide these from our broader team. Our hopes were that we would be able to solve these problems ourselves and begin chasing our dreams once again. We tried to solve it all by ourselves.
Complete honesty and transparency are the foundation of building trust within a team. If only we had realized this earlier, we would have done things differently.
Every startup will face ups and downs and uncertainties. Most people who choose a startup role know and accept this. They deserve to know the truth and if there is a problem, they deserve to be a part of the solution. Even today, 3 years later, this lack of transparency continues to be the only complaint that my ex-colleagues have with the company.
If we had indeed been more transparent, we would have had the whole team focused on solving the crisis for the company. Maybe we would have solved it, maybe we wouldn't have but in the end, it would have definitely kept the team more united in those last few months.
Today, I am still chasing the same dreams that I started chasing as that youthful 20-year-old. The journey now has newer sets of challenges than what it had back then. My experience at my first company has proven to be critical as my team puts its best foot forward to try and build a more sustainable energy ecosystem around us.
We have made new mistakes and I am sure we will continue to make more of those in the future. However, we have also ensured that we stay true to our values. We no longer let success get to our heads. We no longer see funding as a goal in itself. We run the organization with absolute honesty and transparency. The importance of these has become clear to us due to the past experience that we learned from this failure.
Starting up is a roller coaster ride. It is a challenging journey. In order to maximize your chances of success, you don't just need to learn from your own mistakes but also learn from those that others have made. I hope that my mistakes would help you in your own journey of building something exciting from scratch.
