My Startup Rollercoaster Ride - The DOs and DON’Ts for starting a new Business

Brisbane, December 2022

Although many entrepreneurs need a few attempts until they eventually built that huge, successful startup, it still sucks to fail in the first place. Therefore, having to close a business should be avoided at all costs.

I started mine in the beginning of 2018 and we closed it at the end of 2022. From ‘conquering the world’ to ‘what am I doing here’ moments – we experienced them all. While there is no sure formula for succeeding in the volatile, messy, and unpredictable startup rollercoaster, this article attempts to find answers and derive learnings out of almost 5 years of startup operation. I hope this helps entrepreneurs, future entrepreneurs and people that are simply interested in my journey.

Entrepreneurship – is it worth it?

Hell yeah! If I would be 23, I would do it all over again. What other job at that age gives you exposure to successful people, turbo-charges your business learnings and experiences and lets you work where and when you want, without reporting to anyone other than yourself?

I was fortunate to meet Directors, CEO’s, Entrepreneurs from Unicorns, Lord Mayors, Ambassadors, Consuls, Investors and high-net worth individuals just because I was a founder and they wanted to help me in succeeding with my business. While your business might be over one day, your network will stay, and you will continue benefitting from it ever after. For example, I got my new role as Account Executive from my former startup mentor who used to be the Entrepreneur in Residence of one of the startup accelerators we were part of.

Entrepreneurship can be taught. I did a Master of Innovation and Entrepreneurship myself. However, metaphorically speaking: The tool itself won’t build the house – you still need to build it yourself. During execution, you will learn invaluable things at a turbo speed because your startup life depends on it.

When we started in 2018, we learnt how to validate needs. Once we found out the problem, we learnt how to build a product that would solve this problem. You can’t do it all yourself, so I had to learn how to hire and motivate people to join. Then, you need to motivate customers to buy. So, I taught myself how to sell and how sales processes look like - a lesson that proved to be very helpful for my future role. In the end, we wanted to sell the business, so I taught myself how M&A’s work. As entrepreneur, you must know everything – you are a generalist, not a specialist.

What are the odds of succeeding?

Question back: What does success look like for you? If it’s reaching a multi-million dollar exit to become financially independent, how do you embed this in a company’s strategy so everyone can identify with it and follows this common goal. Money alone won’t cut it. You need some sort of overarching purpose that touches people and makes them go above and beyond for your organisation. Surely, you need this for your clients who want to know why they should buy from you.

So, back to the stats: 95% fail because they don’t reach their goals / aspirations – that’s why it’s so important to know what you define as success. 70% of startups fail after 3 years and 85% after 5 years. 80% of startups never hire a single employee (founders / co-founders don’t count). If we follow these stats, Fiffy Solutions was in the top 20% since we did hire one employee and we did exist for almost 5 years. However, it should not be about how long you can exist, but how big you can become.

That’s why I identify the most with the below statistic:

• 1 out of 10 startups succeed (meaning they double revenue every year, hire a bunch of people, potentially raise capital, and exit after 7-10 years)
• 1 out of 10 fail (‘crash and burn’, meaning they burn a bunch of cash from investors and go into administration)
• 8 out of 10 are ‘walking dead’ (meaning they are still registered as business, but their growth stagnates, and eventually they don’t go anywhere)

?While I believe Fiffy Solutions belonged to the first group of startups from 2018-21, I did see it drifting into the ‘walking dead’ area in 2022 and I had no interest in joining a group of zombies. ?

Important takeaway: Know your and the company’s why and put it in writing. Ask yourself: Do I see myself running this business for the next 7-10 years? Is my passion going to last for that long?

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Where to start?

I started as student and surrounded myself with like-minded people who were passionate about entrepreneurship. I attended Startup Academy which is now part of UQ Ventures and learnt that, as entrepreneur, you need to be the most enthusiastic customer of your own product. So, I asked myself: What bothers me every day? Back then, it took me a while to find an available workstation on campus and so I thought wouldn’t it be great to have a map about real-time utilisation on campus to inform students about vacant study spaces?

Now, I had to validate my problem and gather evidence. So, I interviewed 100 students and found out that 66% had severe issues finding a vacant space. BINGO! Well, hold on. Still hadn’t worked out how to monetise this validated problem since building an App for ‘cash-poor’ students does not lead to any revenue. And that’s where our first ‘Zoom-out’ pivot took place. We made the problem bigger by not just looking at utilisation of workstations, but of entire buildings.

Lucky for us, the Property & Facilities department of The University of Queensland was just looking into this at the end of 2018 and paid us $500 for our first prototype. As you can see, the first prototype was quiet embarrassing, but it got better over time.

?The fact that we had a ‘paid customer’ secured us a spot in the prestigious UQ ilab Accelerator program – back in 2019 the largest University Accelerator in Australia with $20,000 in equity-free funding. This gave us a huge credibility boost. We used the momentum and charged our first client (UQ Property & Facilities) $8,800 for 11 people counters, followed by another $11,000 two months later. At the end of 2019, we expanded to the Faculty of Engineering and sold them 6 devices for $8,500. For the first time, we sold a wireless, battery-powered device. An upsell and improvement to our product portfolio that proved to be a competitive advantage for later rollouts.

In 2020, we had planned to scale to further Universities after doing a massive sales campaign at the start of the year. I thought it would be our breakthrough year and the signs were very positive. And then, COVID hit.

That was the first time I realised how valuable a PESTEL analysis can be. I never thought any of those absurd macroeconomic events would ever strike me, but there I was, with no University approving a Purchase Order from March 2020 on. Luckily, we received a $15,000 Cisco grant as part of the Country’s digital acceleration program as well as another $9,000 from the Faculty to implement a tablet solution to display real-time occupancies. While COVID was certainly beneficial for some competitors who focused on capacity monitoring in offices, it was not good for us since we focused on space management in universities and planned to scale in this market.

However, plans had to change and at the end of 2020, we sold our first people counter to a Museum. It was an inbound inquiry and delivery happened in a matter of days. What a fantastic order!

But our greatest success was yet to come: Shortly before Christmas 2020, the Minister for Tourism, Innovation and Sport wrote me a letter congratulating me for receiving a $100,000 grant to further commercialise our product. After being unsuccessful in 2019, we were one of the lucky 4% of applicants that received the grant in 2020.

The grant secured our operations for the next year, and we were able to hire our first employee, expand to Universities in Victoria and close our biggest sale in June 2021. With the learnings from COVID in mind, we diversified our customer base and sold devices not just to Unis and Museums, but also to Co-working spaces and public toilets. We now had active clients across all three major Australian cities: Sydney, Melbourne and Brisbane and by 2022, we also exported devices to clients in Europe and the US.

But with the growing client base also came more support. Instead of further developing the product and spending much needed time on R&D, our engineers had to spend more and more resources on technical support. With one of our specialised firmware engineers leaving Fiffy in April 2021, we decided to not hire a replacement firmware engineer, but rather a software engineer to rewrite our backend codes and give our dashboard a fresh look. In hindsight, maybe a mistake, since we actually needed two new engineers to succeed, but funds were not sufficient to justify two hires. In the end, our software engineer was a great fit and we benefitted a lot from her expertise.

While sales were strong and always appeared to drop in at the exact right, divine timing, the tables turned from Q4/2021. We seemed to not convert clients that easily anymore and got caught up in support for our current clients. Together a demotivating drag over 12 months that ended up in the decision to sell the business in August 2022.

The Golden End

The decision to sell gave me a huge energy boost. It was hustle time again, meaning I was at my best! And so, I learnt how to sell a business on a great platform called ‘Microacquire’ and watched all of their videos in the Microacquire Academy.

After listing our startup on the platform and gathering all documents including buyers’ deck, profit and loss statements, transition steps for buyers and a full data room for the company, I created a list of 200 potential buyers. The companies listed were competitors, partners and manufacturers that I contacted up to 3 times.

The response rate was an overwhelming 24% and we scheduled 8 meetings with interested buyers of which 2 conducted a technical Due Diligence. Unfortunately, we did not receive any offers that we were willing to accept and so we followed plan B which was to offer the assets to our existing client base for sale. While one client was very interested, the timing wasn’t right and so we had to follow through with plan C, to close the company.

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What advice proved to be right, partly right or even wrong?

There are a bunch of startup wisdoms that appear like halos on the startup sky. While many of them are helpful to some degree, it’s important to put them in context of your specific situation. Remember that no one out there is exactly like you, so none of the advice or general wisdoms will apply to 100% to your situation.

I picked out 5 wisdoms that I was prone to and assess to what degree they were fitting to my specific situation. Remember that Fiffy Solutions was a Hardware, Internet-of-Things (IoT) company.

1.?????‘If you’re not embarrassed by the first version of your product, you’ve launched too late’ Reid Hoffmann – Founder of LinkedIn

2.?????‘Fail fast, fail cheap’ – Lean Startup methodology

3.?????‘Hire the right people’ – common sense

4.?????‘Take out the competition by disrupting the market’ – Clayton Christensen

5.?????‘Validate before you build’ – Lean Startup methodology

All of these wisdoms are helpful and inspiring. Below some comments derived out of my personal experience:

To 1: Reid Hoffmann said this in the context of SaaS businesses. You should not launch a medical product too early because you might kill people and end up in jail for it (see Theranos). For hardware, we launched early prototypes and got paid for it, which was great and correct to ask customers for money because that’s the highest form of validation. However, I believe we launched too early for our second customer and should have spend six months more on R&D to increase quality and customer experience and to further automate the onboarding process. We spent too much time on support and fixing bugs instead of being ahead of it. We were passive, no longer active. And that’s always a bad place to be in.?

To 2: To sum up the lean startup approach: Don’t waste your time building products that no one wants. Instead, embed client feedback and progress with your product development in build, measure, learn loops. We noted from our client conversations that they valued privacy protection and simple installation. That’s why we picked thermal sensors that are safe and energy efficient to offer wireless solutions. In hindsight, many of the same clients chose cameras that are unsafe and costly to install simply because cameras are in the market for 30 years and don’t require any ongoing maintenance. So don’t be fooled by their statements. Always cross check with their actual decisions and adapt accordingly.

To 3: Hiring the right people especially at the beginning can make or break your company. In a small team, you notice immediately if someone slows down the company. While you should hire for attitude, you can’t afford not to hire for skills either. We hired a great employee. Our software engineer was a great cultural fit and she had a lot of software experience. The problem was not to hire the right people, but to hire for the right position. In our case, we should have replaced the firmware engineer with a firmware engineer to further progress R&D instead of shifting priorities to software development. Ideally, we would have hired both, but entrepreneurship is the pursuit of opportunity beyond the scarce resources apparently to hand…

To 4: When I speak to first time entrepreneurs, they often show disrespect or at least a certain devaluation to their competition – I was no different in 2018. On the other hand, if you talk to experienced entrepreneurs, they tell you something like ‘I meet my competitors on a regular basis, and we appreciate each other. We know each other’s strengths and know that as long as the market grows, we will both have great futures ahead’. Therefore, it’s more important to be in the right market than to take something away from your competitors. Remember they have been in the market for longer than you, so you should be humble and try to learn something from them. From 2021 on, I organised a bunch of meetings with my competitors, and I wished I had done it earlier.?

To 5: DON’T WASTE YOUR TIME BUILDING PRODUCTS NO ONE WANTS. This is the only wisdom that you should follow 100% of the time no matter what market you are in. Do at least 100 interviews with your target group, map out the market, know what your competitors do, and ideally get a client to put down a deposit for your product before you do any engineering.

If I would need to do it again – how would I do it?

1.?????Be aware of your passion or a topic that gives you energy for at least 7-10 years

2.?????Validate a problem around your passion before you start building a product (conduct 100 interviews and market and competitor analysis, identify target customers, take a deposit of your client)

3.?????Assemble a co-founding team of 2 or 4 (you should know them way before you start your business, skills should be diversified, solo founder can work but it’s hard, 3 can work but you end up in a 2 vs 1 situation that could lead to conflicts)

4.?????Define your Why and what your ‘End Game’ looks like with your Co-Founders

5.?????Build the company (Sales, Technology, Finance, Strategy, Legal, Marketing and Operations)

6.?????Grow the company (Hire, check if you need investment, diversify client base, diversify locations)

7.?????Sell the company (create a list of buyers long before you intend to sell it, build relationship with the buyers long before you need to sell it, know your price)

8.?????Enjoy your life for 6 months before you get bored and start the next, bigger thing ??

Most importantly, have a support network of friends and family around you and take care of your mental and physical health. My biggest source of energy is my wonderful fiancé Martha who always stood by my side in moments of despair and cheered on me in moments of success. Thank you!