Startup Failure: End of a 2-year Journey

“Running a startup is like eating glass- you just start to like the taste of your own blood.”

Coming out of a 5-year social media hiatus to update the community here on my bootstrapped startup journey of the last couple of years - and why I’m bringing it to an end. While founders build in public, I think it is also helpful to accept failure in public to make moving on easier.?

I left Zomato to start up post the IPO in mid 2021 - these were the times when the market was flush with active VC money (we were chased to take money even at pre-idea stage!). We decided to take up the audacious / idealistic goal of building a bootstrapped business without raising any external money. We narrowed down on SaaS as there were some prior bootstrapped success stories here.

Problem-Solution

As product/growth folks - we had seen firsthand how vital data was to decision-making as business scaled. Every business user – from people in departments ranging from sales to marketing to finance to operations – needs data to make key decisions, but most aren’t equipped to write SQL queries to import data from their systems. Business teams almost always had dependency on data/IT teams - we had seen analytics teams scale linearly with business teams in our earlier orgs.

At the same time, most of the innovation on the Modern Data Stack was for technical users. Business users lived inside spreadsheets and we built a data reporting automation tool native to Google Sheets that helped create & automate custom reports as well as automated send reports and alerts to inbox and Slack groups.?Every team member could have their own little control tower or a shared control tower for their team.

We built a small team of freshers and with their help & hustle built a complex data product ground-up serving 15+ API integrations (databases, data warehouses, Google Ads, FB Ads, GA, Shopify etc). Our hypothesis of data tools being very sticky (we would get instant client emails whenever our service had downtime) and highly retentive? (we saw several users continue to still use our solution after a year) also played out. We had seen similar products ( Coefficient , Equals ) from US competitors funded by the most marquee SaaS VCs ( Battery Ventures , Craft Ventures , which further drove our own conviction on the problem-solution.

Success and Failure

For our GTM, we tested both [inbound + product-led-growth] and [outbound + sales-led-growth].? For inbound, we invested in SEO. The SEO engine took 6-8 months to crank up but started bearing fruit eventually - thousands of visitors and 10s of users per day (reasonably meaningful in a B2B context).?

Our outbound-sales motion was initially India-focused and that worked well to get customer feedback and iterate fast. But we quickly understood that the TAM for efficiency-based SaaS tools in India is small and the market for selling software products >$99/month has a limited audience here.

Our outbound-sales motion to the US is where we failed completely - despite cold reach outs in the 1000s to several prospects, the response rates were very poor. Without a network to tap into, it was difficult for us to crack product-led growth in the US let alone sales-led growth. Digital marketing to acquire leads proved expensive at the 0-to-1 stage as the customer ticket sizes were smaller and we didn’t have the necessary social proofing to get larger enterprises. Given our personal context, it wasn’t possible to move to the US even if we were to raise money.

Eating Glass

Building a bootstrapped product-first startup needs you to be

• extremely high on input (effort, thinking, execution)
• with slow output (product buildout, initial sales)
• and unpredictable outcomes (retentive user behavior, business sustainability)
• personal financial stress (personal capital/opportunity cost upfront with a 3-4 year roadmap to recovery)

The [high on hustle] + [slow output] + [unpredictable outcome] + [personal financial distress] is a journey that isn’t for everyone and hence it feels like eating glass - bloody, painful, brutal.?

Why then do you “enjoy the taste of your own blood”? Creating anything from scratch - building a product ground up, running a marketing campaign, setting up a sales process, converting the initial customers - all of these are dopamine hits that you get along the way that make the adventure worthwhile. These dopamine hits are what you go on this adventure for.?Ask any successful/failed founder on any of these areas of their business building journey and see their eyes light up.

The Pivot

When it became clear that the journey to self-sustenance through a bootstrapped startup would be at least a couple of more years (epiphany happened earlier this year), we put the B2B SaaS business on autopilot and pivoted to building a B2C eCommerce marketplace. D2C India brands were using our SaaS product and were expressing business growth problems. They had challenges finding alternatives to

• Amazon: 1. took up to 40% of their revenue pool 2. Search-led behaviour favoured incumbents and led to poor discovery of new products
• Meta (Ads) + Shopify (Conversion) combo: Most brands drove their traffic from Meta with RoAS 2-3x ie Meta taking up 30-50% of their revenue pool. Standalone Shopify stores had poor retention. Most brands weren't well equipped to solve for ad optimization (outsourced to marketing agency) or site improvement (outsourced to IT agency or using adhoc Shopify plugins). This cost inefficiency led to higher prices thus alienating latent user pools.

We could identify a whitespace for a [discovery-led marketplace product] built with [challenger brands] with [a zero-inventory model] using [3rd-party logistics] with our focus on [customer acquisition and retention]. A superstore of new brands as it were.

We built a product similar to Cred Store (discovery of new products and deals on new-age D2C brands). Our initial execution led us to believe that there is a huge untapped market waiting desperately for alternatives to horizontal and mass ecommerce platforms like Amazon and Flipkart. ?

However, building anything in ConsumerTech in India is very expensive and even as we proved we were 30-50% more cost-efficient than similar businesses, it still wasn't good enough to build deep conviction that there was a near-term path to making money here. We had weak signals from the few VCs we spoke to and were left with half-conviction ourselves.?

Apprehension

As I neared the 2-year mark of this journey, my cynical side started taking the better of me. Most startups fail but pivoting again without an optimistic mindset is a sureshot recipe for failure in entrepreneurship.?

I decided to end my startup journey a fortnight ago - with a promise to myself to do a V2.0 sometime in the future.?

Reflections

Personal lessons-

• Loneliness: Starting up is the most lonely thing you will do for the first few years of your journey. Your friends won't “get it”, your network will (rightfully) focus on output not input- when all you will have initially to discuss is input. Your candor with employees will be calibrated and you will need to be OK being a loner. 90% of your professional network will disappear as you no longer have utility to them. The remaining 10% who push you along and help you earnestly in any small way are the keepers.
• Humility: Entrepreneurship is the biggest lesson in humility - You will learn to get rejected very fast - by prospective hires (especially software engineers!), by vendors, by customers, by investors.?
• Dhandha FTW: It takes? immense courage to build any self-sustained “dhanda” business - and if someone has built their life out of it, even if small, respect her as much or more than any professional in a blue chip job?
• Bahot Hard: A founder's journey is playing the game of life on “hard” mode - there is no shame in living life on “easy” mode as a professional; to each his own.?Chasing passion is overrated - if the destination (fame, money) is your sole motive for why you start up for and not the journey (new adventures everyday) you will be dispirited very soon.
• FI: Focus on financial independence very early so that you equip yourself to take bigger swings in entrepreneurship with more patience.

Market lessons-?

• Building in consumer eCommerce in India means raising large amounts of money, valuation based on topline, intense cloning & competition, very limited future profit pools (next set of growth will come largely from tier-2 markets); I will be the biggest cheerleader of a capital-efficient, tech-first, meaningfully profitable consumer company coming out of India, but basis my experience I remain skeptical of this for the next decade.?
• Building an India-to-US SaaS business is extremely lucrative but only build if you have a differentiated sales edge in those markets. There will 100% be large value creation in this space from India.?A uniquely Indian [product for entry+ services for moat] business might well be the sweet spot.
• External money: If you get VC money - take it. Bootstrapping is like aiming to crack JEE on your own without taking any coaching, possible but the odds are against you significantly.
• India market depth: There is way more VC money in India than market depth - we’re all in a bit of our own bubble.?
• Ecosystem: The Indian VC ecosystem still has a long way to go - no doubt there are some exceptional folks with deep experience backing great companies, but in most quarters there is a serious lack of depth, a limited willingness to go deeper to learn more (shallow 15-30 min conversations), and low empathy (meeting no-shows; incommunicado or AWOL behaviour)

These reflections are but a few initial thoughts and they may evolve with time.?

Closure/What Next

I hope this post gives me the closure it was meant to. I also hope I don’t come across as cynical - I only hope to show the other side but there are many highs to entrepreneurship that you see and it’s good to have perspective from the other side as well.?

As I evaluate career next steps with an open mind, I would love to engage with fellow builders (who empathise with this journey and can learn from it) and prospective employers (who might find a failed founder useful).?