6 Things We Have Learned Building Encubate

Last week we announced that Encubate was acquired by Dailygreatness, a leader in personal development and productivity based in New York. If you are interested to learn more, read this post.

Today, me and my co-founder Will Dzama would like to take the opportunity to reflect on the past 2.5 years of building Encubate and share what we have learned along the way. We hope that our learnings and insights will help others in their startup journeys.

What Makes Us Proud

To kick it off, here are four things we are proud of the most:

1. Great team: 14+ people from 7 different countries, working hard through covid, remotely and across time zones to turn an idea into a functional business. It was a privilege to work with each of you, THANK YOU! Another thank you extraordinaire goes to our awesome Advisory Board - Jan Krahulik, David Siska, Michal Hudecek, Filip Mikschik and Petr Vitek.
2. Pre-seed investment: We managed to raise $300k in funding in April 2021 (pre-product, pre-revenue). Huge thanks go to Purpose Ventures, DEPO Ventures and StartupJobs for believing in us and our vision.
3. Monetization: With 10+ pivots down the line, we finally arrived at a product our users were willing to pay for. Our conversion rate (new user to a paying customer) was 6%, with a customer lifetime value of $153.
4. Exit to a strategic partner: We concluded that the nature of our market is more compatible with slower organic growth, instead of the aggressive growth that we would need to succeed as a VC-funded startup. We believe that Dailygreatness will be a great new home for Encubate and our users.

What We Have Learned

As co-founders, we tried our best to learn from the mistakes we made along the way. Below we tried to summarize our six main learnings and outline what could have been - in hindsight - a better approach:

1. Our prototype (pilot program in the summer of 2020) helped us validate the majority of our initial hypotheses and we began building our MVP. In the process of conceptualizing the MVP, we subconsciously made several additional hypotheses and under the influence of our enthusiasm forgot to validate those. As a result, the first version of our MVP sailed very poorly with our users. Lesson learned: Celebrate partial successes, but continue with meticulous and lean product iteration. Stop and think at the end of each sprint - otherwise, there is a high risk of running too far in the wrong direction.
2. Initially, we hired an agency to develop our MVP in 2 months, in line with our roadmap. As it happens, many unforeseen issues came up during the development. As we did not want to postpone the launch, we chose to compromise on code quality. This has caused quite some pain further down the line, as we had to refactor large parts of the code. Lesson learned: Make sure the MVP is truly “minimum viable” - check with the users what truly matters to them. Scope out the specs to have something to test with the users in 2-4 weeks. Expect that it might take 2-3x longer. Iterate on a small scale, so sunk costs are low and it is easy to throw things away.
3. We hypothesized that we can reach aspiring entrepreneurs through established organizations in the startup ecosystem. To test that, we approached 400+ incubators and accelerators and had 50+ meetings with them in the fall of 2020. The result was that 90%+ confirmed their interest to collaborate with us. When we launched Encubate in the summer of 2021 and came back to them to kickstart the collaboration, major blockers came up - mainly around the content of our app and our credibility. Lesson learned: Golden rule of market research - unless there is a payment or some other form of a real commitment, we shall take partners’ expression of interest with a heap of salt and continue with the validation.
4. We agreed with our investors on dividing the investment into tranches and defined OKRs that will trigger them. Quite soon (naturally) we ran into unforeseen obstacles which slowed us down, forced us to pivot etc. The tricky part was that the OKRs were still in place and as our runway was always just 2-3 months, we had very little maneuvering space. As a result, we were torn between focusing fully on the needs of our users and the (well-intentioned) requests of our investors. Lesson learned: Spending scarce resources on contradictory goals under a lot of time pressure is unlikely to be very productive. We should have invested much more effort into renegotiating the tranches and fixed OKRs with our investors and made them more aware of the implications.?
5. Since our early days, we understood that our market is very crowded. It took us more than a year to discover an interesting niche that had just one or two solid competitors. The remaining competitors we saw as predominantly not very credible “business gurus” selling various e-books and courses - we did not really take them seriously. Later on, we discovered that we underestimated them - while their offering indeed was of inferior value, their ability to sell it was very high. We found it challenging to rise above the noise and sustainably attract customers. Lesson learned: As always, the customer is king. We shall seek to understand what drives their purchase behavior and genuinely consider it - regardless of how we feel about it.
6. We are humbled that many great people joined our team. We hired them based on their personal fit with Encubate and in line with our challenges and objectives. As we evolved as a company, our vision and values remained, but our activities changed a lot. As a result, some of the roles had to be reshaped a lot, putting a lot of pressure on people carrying them out. We were concerned about the downsides of rehiring our team (especially given our short runway), so we kept improvising and postponing that decision. Lesson learned: Rehiring carries real costs and delays, but so does sprinting with a team that is not well suited for it. We should have approached the problem proactively as soon as it came up - pragmatically assessing the pros and cons and figuring out the best solution.

If you were reading the points above and saying “well, of course!” to yourself, don't worry - so are we, to a large extent :) That’s the beauty of mistakes - they look obvious on paper in retrospect, but much less obvious when doing them in the midst of a storm :)?

We are grateful for all the ups and downs of the past 2.5 years and thankful to all of you who supported us along the way. Onwards and upwards!???????