An incredible journey building Emma Cares and my role as visiting partner at Platanus Ventures.

Starting a company is hard. Navigating the complexity of the process is something that requires experience, sometimes acquired through multiple iterations.

In this post, I want to share a bit of my journey with Emma Cares and why I joined Platanus Ventures as a visiting partner to help other founders succeed.

March 2019, 7 PM in Paris, the jury's president rings a bell; I stop performing. I panicked.

I've been playing the piano since I was four years old, and at 18, I decided that I wanted to be an amateur pianist and not become a professional. Being born with ADD, the thought of dedicating myself to only one activity wasn't attractive enough, even though it was disappointing for my longtime piano "maestro". My amateur career as a pianist involved mainly performing at venues I got invited to: from Universidad Católica multiple salons to Teatro Municipal de Las Condes, and several performances while attending UC Berkeley as an MBA student. But this one was different. I was performing at the semi-finals of the world's most important amateur piano competition, selected among 100 pianists worldwide. This wasn't my first time. I attended in 2012 and only made it to the semi-finals. If by any chance I could win, I would be invited to perform with a major orchestra in Paris at the end of that year in front of more than 1,000 people at the Grand Amphitheater of La Sorbonne. Something that, as an amateur pianist, has relatively little chance of happening.

As any pianist knows, you are most likely disqualified when the jury's president rings a bell. My performance of Bach-Busonni's Chaconne in d minor wasn't going as I wanted it to. I was off. I knew I was out of the competition. But then something strange happened. The jury's president stood up and requested me to perform Mendelssohn's Variations Seriéuses, which I had already performed in the first round. In my mind, I thought they asked me to perform the piece as I was coming to the competition from far away (Chile), and they wanted to be nice. I played as I lost it all and only focused on the music. I felt connected. The audience rewarded me with standing applause. I was confused. I had no idea what was going to happen next.

What does this have to do with entrepreneurship and my journey in building Emma Cares?

I started Emma Cares out of my frustration as a customer buying online. This is a frustration I've already worked on at my previous startup,?Project YX, which I was lucky to start with Rafi Ortiz, a seasoned entrepreneur from Silicon Valley who sold his last startup at $1.2B when they weren't called unicorns. He has been a terrific mentor who helped me understand what being customer-centric is. At Project YX, we were obsessed with our customers. I still remember a digitization process (we digitized full closets for our customers) for one of our early clients. We arrived driving a U-Haul van fitted with an improvised photo studio inside it and picking up clothes from the closet to upload "the vault" to our database. We captured not only the "assets" but 10 attributes, on average, per garment. All these data then travelled to our HQs in Santa Cruz, CA, where a small team of stylists put together outfits that were later uploaded to the customer's app. In less than 48 hours, we would hand deliver an iPad fully loaded with their digital closet. The following day, the customer would open the iPad and find a carefully curated outfit that she would shine during the day. Project YX evolved to Editorialist YX and is today a referent in online luxury.

In early 2018, after four years in the Bay Area, I decided it was time to move back to LATAM to apply all I learned and help my region thrive. I joined?Falabella.com, one of the leading companies in LATAM, as a soft landing. Not long after, I realized large marketplaces are not optimized for the end-user, and customer obsession wasn't part of the daily conversation. I don't think this was a Falabella problem — they are pretty good compared to other companies — this is a LATAM problem. We just don't have that culture.

With that in mind, I proposed Falabella's Chief Strategy Officer and Chief Digital Officer start an incubation arm where we could test new business models focused on customer centricity.

We were a small team of 6, engineers and a product designer, and we tested different personalization approaches. Nothing really worked until we put together a group of beauty experts and connected them with end-users through WhatsApp. We set up a cross-dock operation inside WeWork, and without any funding from Falabella besides paying our salaries, we started to operate in early 2020. We were an instant success, and our growth was spectacular. After 10 weeks, we went back to Falabella and asked for funding. This was just after the pandemic kicked in, and they said no.

It was our time to depart and start from scratch as a newly formed company:?Emma Cares.

We raised $800k from angel investors, and in June 2020, we incorporated our company in the US. By July, we were testing the new product with family & friends, and by September 2020, we were fully operational. For the next 8 months, we were going to grow 10% week-over-week. Everything was great. We got excellent PR and a prestigious brand, Clinique, shared our customer-focused approach as an example of how the beauty industry should evolve. We were a success. Weren't we? Well, not all that shines is gold. Our business model could have been better. Even though our growth model was efficient for a B2C company, we had an extra layer of expenses as we had to compensate and incentivize beauty experts to advise end-users on what to buy. As a newly formed startup, we had to buy inventory at low margins. Our scale made our fulfilment operation expensive, and the challenges of operating in emerging markets are very different from my previous experiences in the US.

Even though our growth numbers were still pretty good and our customers had a phenomenal experience with a consistent NPS of +90, by Q3 2021, we could feel a growing growth pain. At the same time, pandemic-related policies started to relax in Q3 2021, allowing users to buy beauty products at physical stores and affecting demand for our service. We suddenly began suffering from not having a profitable business model and slower growth.

Our team started to burn out, and we didn't see a clear path forward. So we went back to the whiteboard and created an experimentation process. We tested dozens of hypotheses, some successful, and decided to pivot our go-to-market strategy. Instead of growing by selling products, we would develop a platform for independent beauty professionals, where they could manage their businesses, connect with other experts and brands, validate and certify their knowledge, and once we had enough experts, we would start our core business (B2C) again on top of the community.

To do this, our lead investor supported us with enough funds to release this product and achieve early traction.

We made a big mistake, however. We were coming with the mindset of hypergrowth and going all-in, and this new platform needed time to mature. We hired top-notch engineers and marketers. Our roadmap assumed it would launch in 6 weeks, but we did it in 3 months without all the scoped features. We were bleeding out, and Johan, my co-founder, and I decided to put money into extending the runway (another mistake).

Our platform was (still is) high-quality, well-designed and with excellent performance. We priced it at $10 per month. In 6 weeks, we already had 60 paying experts, delivered more than 40 workshops on the platform, and we could see that once we build the marketplace back in, we would be able to get back to hypergrowth. We started a small $250k family and friends round to extend our runway.

A few things happened. We raised a bit of cash but realized our cap table was broken. Institutional investors weren't interested enough as we were too diluted (even though we kept 50% of equity + an available option pool of 10%). Our headcount was costly, and our runway was very short, even though we cut almost all unnecessary expenses.

We let go of some of our incredibly talented employees to solve this. Still, we had to start paying severance packages, and from one day to the next, we had to face a brutal reality: we needed more cash to cover all our obligations. We stopped fundraising, and I negotiated the last cash infusion to pay employees, avoid bankruptcy, and put the company on hold (it didn't shut down, is non-operational and has zero expenses).

How did this happen with a startup that had everything to succeed??We had a strong product market fit, a community, great talent, and the best investors any founder could have.

Having criteria for decision-making and experience overseeing what can go wrong makes some of the most powerful toolsets a founder can have. These skills are built over time. As my first time at the Paris competition, I didn't really know what I was getting into.?

Emma is now in "hibernation" mode, and our strong community of experts is still active. They strongly opposed it when we told them we might have to shut down. Now they will take care of our 66k followers' Instagram account, relationships with brands, arranging workshops, and maintaining their incredibly supportive community. We are proud of them and will continue to support them.

Back in Paris that night, the jury somehow decided I should be in the finals. I ended up winning the competition and fulfilling a dream of performing with an orchestra in Paris at La Sorbonne.

Success takes time, mistakes, effort and a bit of luck. Building a company is the same. The press loves overnight successes, and they bias us. But the reality is that most successful founders, pianists or any person that constantly puts themselves out of their comfort zone will have many failures before achieving meaningful results.

I will be back building a great company soon with a more robust toolset, but for now, I will reenergize by helping others and overseeing the Emma community. That brings me to Platanus Ventures.

Why Platanus Ventures (PV)?

As I sought advice on what I should do with Emma, I got introduced to Agustin Feuerhake of Fintual and Platanus. A conversation that was supposed to be about Emma ended up being about leveraging my experience to help founders at Platanus Ventures.?

PV is an accelerator in LATAM (offices in Mexico and Chile) which has boosted almost 40 startups: Examedi, Toku, Fintoc, and many others. They invest $100k per startup and also have an opportunity fund.

What caught my attention was the community. Not only young founders but experienced ones and many others willing to help on each batch. Such a community provides a safety net that's key if we want to produce great companies in LATAM.

Entrepreneurs need a safety net. I am lucky to have a loving family, many friends and a community built over the years of extraordinary founders, investors, business operators, and so many other players that not only provides me with confidence but facilitate the journey.

LATAM needs more founders to take risks. We have been privileged, and we owe it to our region to use our talents and networks to improve every aspect of the day-to-day of LATAM's people. This is not philanthropy. Our region?will thrive?and produce tens of multi-billion dollar companies in the coming decade.

PV is uniquely positioned to provide this vital community to produce some of these companies. If you want a sneak peek at what PV is building,?apply?to become an investor at Demo Day (Nov 29).

Let's accelerate a better future for LATAM!

Sebastian