My First Startup Failed. The Learnings Still Make It a Personal?Success

Entrepreneurship is about doing things, not only talking about it. And when doing things, things go wrong, and you can draw learnings out of doing things?wrong.

In 2015, a friend and I launched our first startup as a side business.

At that time, the sharing economy was a pretty hot topic, and we had young kids at home. So we decided to rent out baby clothes and baby gear. With the babies growing, you wouldn’t need stuff for too long, so renting instead of buying would make sense both for financial and environmental reasons.

Being based in Switzerland, we often look to neighboring Germany for new business ideas: if it works in an economy ten times the size of ours, it might also work in Switzerland. There was a company in Germany at the time that did exactly what we wanted to do but limited its focus to Germany. In Switzerland, there were several similar concepts, yet all on a very small scale.

So we thought: Let’s not talk too much about it, let’s just do it.

We both had well-paid corporate jobs, so we founded an LLC with the minimum capital required and bootstrapped our way into this. Building a web shop, buying baby clothes and baby gear, and doing marketing. All besides the demands of our corporate jobs and our families.

The first orders came in, with all the excitement that it gives you when you see that your efforts start to pay off. Even when the order sum was just a few dollars.

We soon realized that baby clothes didn’t work well, but baby gear worked better: kids' carriers, hammocks, and the like. So we sold all the clothes and invested the proceeds into additional kids' carriers, hammocks, and stuff. Bootstrapping style.

Revenues steadied on a low level with baby gear but never took off. At some point, we decided to stop the business. We sold all the baby gear, leaving us with very little financial damage, but tons of entrepreneurial experience that I would never want to miss.

Here is what we learned during this journey.

Our Learnings

1. Why market size?matters

Even when you are operating in a niche market, market size matters. If you want sales to trickle out of our sales funnel, the funnel needs to be pretty big at the inlet.

Here, we encountered two core problems.

First, the Swiss market for baby gear is quite small. In a country of 8.5M people and an average birth rate of less than two children per woman, your funnel naturally can’t be fed with too many prospects. Furthermore, because kids grow, your average customer life span is 3 years maximum, so you’ll have to continue filling that funnel with new parents. Last but not least, making the market size bigger by going international doesn’t work too well in a country that is not part of the EU and with a business that would require cross-border shipping and return of products.

Second, even if the market for baby gear is big enough to be compelling, the renting market for baby gear might still be small: Unfortunately, only a fraction of the population with young kids considers renting baby gear rather than buying (and later selling again) it.

The market size considerations are one of the explanations for why revenues steadied at a low level only.

2. You can’t digitize logistics

Sending and receiving baby gear involves logistics, and therefore manual work. You need cardboard boxes, you need to check and clean the gear that is returned, and most importantly: you need to ship stuff immediately upon receiving an order. People don’t plan too far ahead, they are looking to go on a family hike next weekend and then order a couple of kids carriers on Thursday, expecting to receive them on Friday before noon?—?inspired by Amazon and all the other large-scale retailers out there.

That’s a tall call for a bootstrapped startup. Not only do you need somebody to run to the post office at all times, but you need to have everything in adequate stock to make sure you can meet demand on a Thursday when the weather forecast looks good for a weekend hike. In several cases, we were out of stock for suitable hiking gear in such situations, and this probably cost us many orders and customers.

Logistics is not just about shipping. The checking and cleaning of returned gear were more labor-intensive than originally assumed, especially when some kit needed repair but was already scheduled for rent to the next customer.

Summing up, competing in logistics against the established players as a bootstrapped startup is very, very hard. Customers don’t understand why they have to pay for shipping, nor do they understand why something might not be delivered the next day at the latest.

3. Some startups aren’t suitable as a side-business

With all the hype about solopreneurship and side hustles, some startups are just not suitable as a side business. Selling digital products on-demand as a side business is perfectly fine, as it can be highly automated, and product delivery is non-physical. Selling or renting physical products as a side business gets challenging at times, just because logistics can’t be digitized.

4. Your industry expertise matters

Even without deep industry expertise, starting a generating a little revenue might be possible. Neither my co-founder nor I are kids' fashion experts, even though we both have kids. We weren’t too fascinated by new trends and products in the market, so another reason why revenues weren’t growing was that we weren’t at the top of the industry trends.

Would We Do It?Again?

Absolutely. Entrepreneurship is about doing things, not only talking about it. And when doing things, things go wrong, and you can draw learnings out of doing things wrong. Plus you met tons of people you wouldn’t meet when you’d only be talking about maybe doing something, and you never know where you’ll meet those people again.

In our case, we met our later lead investor for a subsequent venture in a startup course during our baby gear renting stint.

Now, we serve a global market (aviation amongst other verticals), sell a digital product (B2B SaaS), went all-in to work full-time on our venture, and leverage our decade-long industry experience from our corporate days.

What a journey.

Growing a company ?? in uncertain times ???? is like running a marathon?—?it demands grit, strategy, and resilience.

As a tech entrepreneur ??, active reserve officer ??, and father of three ??????, I share practical insights and experience on entrepreneurship and resilience in The Resilient Entrepreneur, my weekly newsletter.

When I’m not solving problems, I recharge and find inspiration in the breathtaking mountains ??? around Zermatt ????.

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