From Start-up to Close-down in Eight Steps

Trusting Yourself is the Hardest Part

Between May and September 2016 I worked full time to launch a start-up*. I closed the venture in mid-September of that year because the market research indicated to me that, while there could be a large market eventually, it would be a longer path to success than I was willing to stick out. I struggled longer than I probably should have with that decision so using this blog post to share a little of what I did, why I did it, and what I think about it now that a year has passed.

*(I'm using the Paul Graham description of start-up: "a startup is a company designed to scale very quickly. It is this focus on growth unconstrained by geography which differentiates startups from small businesses." )

Trusting myself and my instincts was harder than I thought it would be. I spoke with a lot of people for their perspective and advice. I heard so many different ideas and opinions, I had to get comfortable with my own expertise and stop discounting my own talent.

The setup: I was fortunate to have a source of income during this time that allowed me to pursue my venture into start-up land full time. I could have taken this time and traveled the world (my husband's vote), or worked on my budding interest in front-end development (still an amateur), or jumped right back into working full time as a consultant (did a little of this and enjoyed it), or joined a new team as an employee (spoiler: I eventually did this and joined the terrific team at GasBuddy); but the pull to try and launch this little idea of a company pulled me harder and I set out to join the thousands of wide-eyed optimists that dip into the start-up mania.

I had three things going for me: I had a source of income to get going on my own, I live in Boston (which I think is THE best ecosystem for start-ups and new enterprise in the world), and I had the professional experience of running a business line and developing several technology products.

This is a rough approximation of the path I followed:

Step 1: Identified multiple ideas I wanted to explore. This actually started well before May 2016, hard to pin down exactly when it began and ended, but by May 2016 I had settled on building a service that used social media behaviors to risk-profile applicants for employment in positions with access to sensitive data and information systems or with a high public profile.

Step 2: Developed an idea about the market and competition. In this early stage, I surveyed prospective users to gauge the relevance of the idea in the current market and to look for qualitative signals that the product might find a receptive market. I used Survey Monkey Audience Services and executed the survey in February 2016. It was because of the strength of the survey responses that I was convinced to continue developing the business idea and jump in full time in May 2017.

Step 3: Shared my idea widely and worked to develop connections with experts on data analytics, UX, and the required underlying technical capabilities. Through this networking I met two great professionals in the data science space that helped me refine the risk profile aspects of the product. Trevor Bass and Bruce Hoppe were super-generous with their expertise and advice in developing the risk profile report that formed the heart of the service.

Step 4: Synthesized everything I learned from the market study, the feasibility of the technological aspects, study of competitors, and the product design. I further developed the vision, value proposition, and a pitch for the minimum marketable product. This took about a month of iterations and I used my professional network to get feedback on each iteration. It was awesome to find that people were willing to share their time and extend their networks to me in order to keep developing the business and product plan.

Step 5: Networked to find prospective buyers and conducted interviews with as many as possible. I interviewed ~30 prospective buyers in different roles and organizations to help refine the go-to-market plans. This was an invaluable step of really understanding if the product solved an urgent and pervasive problem that people were willing to pay for right now, which were concepts I learned years ago from Tuned In. It turns out, that while the problem was recognized, these prospective buyers did not consider the problem sufficiently pervasive to the point they were willing to pay for a solution immediately. While the market for the service of risk-profiling based on social media behaviors was emerging, and a competitor was posting some growth, it was not going to be a fast developing market.

Step 7: I took a step back….looked at the interactive prototype, calculated what it would take to build the working minimum viable system, and examined what I had learned about the potential sales cycle, customer acquisition, and the state of competitors in the market. It was time to double down and raise money to build the working system, land some co-founders, and or cut it loose.  This is where I decided to cut it loose.

Why did I kill the dream before it took root? Because I didn’t believe sufficiently in the work. The idea had merit, the need was there, but it was not a pressing concern for the buyers.  Building this business would have taken a material amount of money - either my own or an investor's- and I didn’t believe I wanted to hack at it for the next 5 years.

Step 8: Felt the sting of pride in that part of my ego that thinks I can do anything and overcome any obstacle single-handedly. I dreaded the follow-up conversations with all of the friends, mentors, and contacts that helped me work on the business idea up to this point. Unwinding the expectations with people I hold in high esteem, especially those that had encouraged me and supported me by making connections and giving their advice on the value proposition, was perhaps the most difficult part of the journey. It may be the reason many startup founders push through the adverse signals in the market and keep working away at their idea. Instead of being disappointed or diminishing my efforts, every single person walked through the reasoning with me and said to call them with the next idea.

Where I had expected to be humiliated or written-off, I found acceptance and ongoing encouragement.

Through the various stages I spent ~$12,400 to refine the value proposition and prepare for building a working product. Here is where I invested that money and how I feel about those investments now:

• Survey Monkey Audience market survey received 245 qualified responses from my target audience; $5000. I was willing to spend this money to get an early read on the market problem and if this had not gone well I would not have pursued the project. Also, the amount of the open text feedback was priceless in further refining the value proposition and direction of the minimum marketable product.
• Reference Architecture consultant; $4800. Because the business required a technical architecture to be built to support ingesting the data feeds and processing them for the risk assessments, and this was not my area of expertise, I hired this job out. I felt this investment really helped crystalize what technical capabilities, options, and costs would have to be funded to launch the minimum marketable product. I relied on the excellent services of Syed Suhail Ahmad of Capability Management, Inc.
• Interactive UX prototype; $2600. As the service definition and reference architecture came together, I worked with Jamila Smith Gramsey of Beldwell Designs (who I met through Smarter In the City) on the initial user facing elements and overall user experience for both employers hiring the service to risk profile candidates and for individuals being profiled. Jamila delivered an awesome end product that was also envisioned to be leveraged for future fundraising to demonstrate the product before the service was built.

A funny thing....

A year after closing down my startup attempt, I am overwhelmed by the many opportunities, friendships, and new possibilities that were born from my time working on the start-up idea. In retrospect, I am really happy I decided to make the attempt regardless of how it turned out. All of my time and money that I invested did pay dividends, just not in the way I had originally set out to do.

My optimism didn’t die. I remain strongly optimistic - but rational also. There are entrepreneurs who can pull off the single-handed, "me against the world" thing and I think they are rare. That is not my path. I haven’t lost the entrepreneurial bug, I carry it with me to the teams I work with as a business professional and a mentor. Of course I have a few new ideas rattling around.....