The Fine Line Between Failure & Progress · aka How Unpredictable Events Impact Our Lives as Entrepreneurs ·aka An Open Letter to Founders Everywhere

I wrote this as an open letter to founders everywhere, because it's easier for me to write letters and, well, it IS an open letter to founders everywhere.

Dear founder,?

Exactly two years ago today was my Techstars Demo Day where, alongside 9 other startups, we would accelerate…right off of a cliff. The cliff was called Covid. A few startups in our cohort had wings to haphazardly stay aloft. We certainly did not.?

And so it was, 730 mornings ago, I was excitedly practicing my pitch, ignorant that the entire world was about to change forever, that every conception of “normal” would be completely derailed over the following 48 hours.

We’d just finished the whirlwind 12-week Techstars Austin accelerator program, met with 200 mentors and investors, signed a term sheet with a lead investor for our Seed round and completed the entire due diligence process. We were just a few days away from signing the final documents and transferring the money. For us, Demo Day wasn’t about finding more investors, because our round was essentially done. It was about sharing our vision.

Nearly 500 people gathered in a giant room for the pitches. We had a mini-trade show afterward, shaking more hands and giving more hugs in just a few hours than I’ve shaken or given in the entire two years since. We had an afterparty, packed into a small bar, shouting into each other’s faces over the noise.

At the time, my co-founder Zach and I had built a marketplace called Jolly up to about 50,000 users. We had around 4,000 users signing up every week—not necessarily a unicornrocketshiptothemoon, but for us, it was growing fast. Our beachhead market was the events industry.

Less than 48 hours later, SXSW canceled their 2020 conference. Literally every event on planet Earth was canceled, almost overnight. Our entire beachhead market evaporated.

Our lead investor backed out of the signed term sheet, leaving us with tens of thousands of dollars in legal bills

Our lead investor backed out of the signed term sheet, leaving us with tens of thousands of dollars in legal bills from the Seed round preparations we’d just completed. The other investors who had joined the round weren’t in a position to lead it, so the round fell apart.?

No market. No user engagement. No Seed round. I won’t even tell you how short our runway was.?

At the time, my wife was pregnant with our third daughter. Beyond the importance to our business, completing Techstars and closing the Seed round was going to have a big impact on our quality of life at home.

But, there we were, at home with our two daughters, the world shut down from covid, our lead investor walking away from us. I don’t even remember the real extent of the uncertainty and frustration I felt—I think I’ve blocked it out of my memory.

Actually, no, I remember it. It was horrible.

When you hear someone say being an entrepreneur has “low lows”, they mean REALLY low lows.?

So, we decided to QUIT. Shut it down. Give up. We emailed our investors, some of them friends and family, and told them we were sorry but we simply couldn’t do it any more, we couldn’t keep trying.?

JUST KIDDING!

We regrouped. We eliminated nearly all of our expenses. We asked our past investors to write small checks, enough cash to keep the lights on (not that we had an office with lights, but you know what I mean).

Pivoting from a marketplace to a SaaS product

We knew we couldn’t afford to keep building the big product we had been building. We knew events would come back some day, but when? So, what did we do??

Customer discovery, of course!?

This was an early part of our journey at getting good at customer discovery. Learning how to do customer discovery is one of the most important skills a founder can learn. It has completely transformed my life as an entrepreneur.

Learning how to do customer discovery is one of the most important skills a founder can learn. It has completely transformed my life as an entrepreneur.

We considered a hard pivot to a totally different model but discarded it after some testing (RIP random early-Covid food delivery business).?

Most of our previous products had been in the gig economy / future-of-work, so we stuck with what we knew. We had a hypo that there might be a niche of people who wanted to set up a simple, modern “personal” website for their freelance or consulting business. We spoke to a lot of them, and studied their pains and desired outcomes.?

Setting up a personal website sucks for a whole bunch of reasons. So, we decided to make it not suck.?

The process of making it not suck took a loooong time, not because it was particularly difficult, but because we had almost zero resources, and neither Zach nor I have any business coding. But we did it.?

Today, we have a small, niche product that makes it easy for anyone who wants to sell services online to quickly create a modern, professional website with built-in payments. It’s still called Jolly, and you can check it out at www.JollyHQ.com. We stayed true to a big part of our original vision for Jolly: giving independent freelancers and consultants a way to sell their services online without someone taking a cut of their earnings. Jolly costs $5/month and the only fee is the standard Stripe processing fee. We don’t take a cut.?If you actually take five minutes to add some okay content and a good picture, you get something that looks like my page, which you can see at https://www.ShelbyStephens.com

And, that’s where the story ends.?

JUST KIDDING!

Do you really think we followed everyone’s advice that we should focus on only one thing?

Of course not! Boring.

Using customer discovery to get a new product to revenue quickly

So, in the meantime, we also launched a new product called GrowthMatch, which solves a lot of the problems we faced as founders trying to build a team with limited resources. It’s a marketplace for startups to hire part-time talent from a pool of specialists that we personally vet and approve, across skills like design, growth, sales, marketing, user research, etc.

GrowthMatch generated revenue in its very first month and the revenue is increasing each month. And, we’re adding lots of new startups and specialists.?

The reason we were able to get GrowthMatch to revenue quickly is because we used a very organized customer discovery process.

The reason we were able to get GrowthMatch to revenue quickly is because we used a very organized customer discovery process. Zach has gotten exceptionally good at customer discovery through our long, winding road as founders. For GrowthMatch, here’s what we did:

1. CUSTOMER: We first studied the target customer, their problems and their desired outcomes. We expanded upon the idea of a Need Narrative to include a range of other components that we felt were missing from it. Since we hypothesized that we might end up building a marketplace, we did this twice: once for startups (the demand side) and once for talent (the supply side).?
2. SOLUTION: We tested a few different solutions against each other using a super low-fidelity asset we created called a Solution Statement. This enabled us to rapidly iterate on what product might end up creating. We did “willingness-to-pay” pricing research modeled off the approach described in Monetizing Innovation. And yeah, we did this twice as well, for each side of the marketplace (for the record, building a marketplace is more than twice as much work as building something for a single customer).?

Because we did both of those steps in an iterative fashion, by the time we “validated” which solution we planned to make, we already had startups wanting to buy it and talent signing up. This is the power of organized customer discovery. As a byproduct, it was easy to raise another small round of financing because this organized process enables us to clearly explain that we had a solid business opportunity.?

In the ensuing three months, we’ve onboarded tons of startups and specialists to GrowthMatch. We’re learning a lot about what it takes to match the right talent with the right hiring need. We launched a beta. Now we’re ramping up growth. Still a long way to go, but it’s a great business.

And, that’s where the story ends.?

JUST KIDDING!

Do you really think we were satisfied "just" launching the new Jolly and building GrowthMatch?

Of course we weren’t!

Helping other founders learn how to talk to their customers

A few months ago, we decided that our customer discovery process might be helpful to other startups. As co-founders, we’ve now built four products, and what I’m about to describe will be our fifth. We are by NO means good at all the things founders aspire to be good at, but we’ve at least been through the fire several times together, and we know where many of the challenges are.?

Put simply, we’ve had a few reps to refine our customer discovery process, and it now works quite well, as evidenced by our quick path to revenue and funding for GrowthMatch.

One of the reasons building a startup is hard is because, in the early stages, you don’t really know if you’re making progress.

One of the reasons building a startup is hard is because, in the early stages, you don’t really know if you’re making progress. You know you need to talk to customers, but you don’t know how. You don’t know how to recruit them for conversations, and you don’t know what to ask them.

So you kinda fumble through 10 or 20 customer conversations, show them a few wireframes or a Figma prototype and ask if they’d use it. They all say yes because they don’t want to be mean, and presto, you’ve validated your customer and should now begin building.

Regardless of whether you do the that janky version of customer discovery I just described, or whether you skip it altogether, most founders jump to building a product too early. I’ve done this many times.?

As founders, we do this because it feels like progress to build something, and we believe we need product-related metrics (signups, engagement, whatever) to raise money. Most of the time, however, you’re out over your skis: you build the wrong features, or the wrong product altogether. Customers won’t use it, or buy it, and then you’re really in a pickle.?

The only pitch that’s worse than “Please invest in my idea” is “Please invest so I can spend your money trying to fix this giant sunk-cost nobody-likes-what-I-built situation I’m in, and btw I might transfer a lot of it directly to Mark Zuckerberg.” Trust me, I know, because I’ve tried both pitches, and I have all of the “No’s” to prove it.

I also know for sure that sending money to Mark Zuckerberg usually does NOT help you build a product customers love.?

Zach and I realized that our customer discovery process solved those, and many other, problems that we’d experienced as founders. We started thinking perhaps other founders might appreciate using the same process.?

We also reflected on our experience going through Techstars (which, for the record, was incredible) and started thinking about how much better prepared we would have been if we’d done the right kind of customer discovery BEFORE doing Techstars, back in mid-2020.?

We packaged up our customer discovery process into a little system that other founders can quickly learn and use for their own startups. And just like that, 1DA: The One Day Accelerator was born.?

I’ll write a separate, more detailed post on how 1DA works, but for now I just want to say that we’ve put 8 startups through it over the past three months and they loved it. It’s been so incredibly rewarding to play a role in these founders leveling up, becoming TRULY customer-focused, and to watch how it directly impacts their growth after going through 1DA.?

1DA has attracted attention from some amazing people, including other accelerator programs and investors who want to meet the founders who complete 1DA. But most importantly, it brought us together with Evan Shy, an amazing founder, alum of YC and Techstars, and an EIR at P33.?

With Evan’s help, we’re transforming 1DA into a methodology and program that many more startups—from the earliest stages through Series A—can use to solve the root cause of so many of their challenges: insufficient or inaccurate understanding of their customer.

We want to create the world’s best methodology for founders to de-risk their business and shorten the path to revenue and funding, or both. Then we can send them to someone like Amos Schwartzfarb for their launch to the moon.

We're also considering adding a funding component that would be entirely progress-driven: that is, the funding would be guaranteed when founders hit certain metrics, no (biased) human required. More to come on this later.

Conclusion, for now

All along the way, we never threw any of our investors off the train. Over and over, at each pivot, we received advice that we should close out the old business and start fresh with a new cap table. We ignored this advice every time.

Does it make raising money harder? Absolutely. There’s plenty of dead weight on our cap table. But I don’t care. I know it was the right thing to do.?

Now, every one of our investors has a stake in not just Jolly, but now also GrowthMatch and 1DA. I’m not saying we’ll keep the same structure forever. Maybe we’ll spin off 1DA into a new entity and give everyone on our cap table a proportional stake. Who knows.?

But I do know that we’ve done right by all of our investors, especially the earliest ones, who invested NOT in our idea, but who invested in us as founders, in our ability to persevere and adapt.?

I also know we’ve made a ton of mistakes along the way. There are definitely plenty of things I’d do differently if I could go back. For one, I’d have kept that dadgum marketplace alive because now, two years later, it would be absolutely crushing, considering how hard it is for restaurants, retail and event businesses to find staff (and yes, I’ve considered reviving it, but it’s too much work…for now).?

Someday, if you’re interested, I’ll share the previous chapters of my journey that led up to that moment, two years ago, when I was energetically pitching a startup that would essentially die 48 hours later. Well, not die. Maybe “multiply” is a better word.?

If you liked this story and find any of these projects interesting, just reach out to me and say hello.

Regarding GrowthMatch, we are always looking for great startups and talent to onboard. We're also looking to partner with more accelerators and investors.

Regarding 1DA, we’re doing it for free again for founders later in March, so just head to the website if you or another founder you know wants to do the program; and if you love helping startups and want to be involved in 1DA, let me know; we’ll probably add more workshops and modules later and would love to bring you into the fold.?

And regarding Jolly, we’re planning to launch it a bit more publicly later this month, but we’re not sure where it’ll go from there. If you find the product and market intriguing, let’s discuss!

One last note

There are many, many entrepreneurs in Europe who are facing a catastrophic situation because of the war, including two of the the founders who went through Techstars with me. The disruption they are experiencing is infinitely worse than what Zach and I went through. I share the story above not for pity or to brag about our resolve. I share the story because 1. It’s timely, with the two-year anniversary of our Demo Day, and 2. I hope it might inspire other founders (who are experiencing wild, completely unpredictable externalities) realize that there is indeed a path forward, it just may not look anything like the path you thought you’d be on.?

Fuck war. Stand with Ukraine.

Onward and upward,

Shelby