Hi. My name is Vladimir Polo. Three years ago I launched my first startup. We had everything a new company wants: a small team, initial funding, first clients, first partners, conferences, and trips. We happily received our first annual payment. We had traditions and inside jokes: for every bug we found, we charged each other one slice of pizza. We endured stressful situations: our servers went down (because of a DDOS attack) right as I was boarding a six-hour flight with no wifi.
Overall, it was an exciting but difficult time.
However, as it often turns out for first-time startupers, after three years I must admit that my startup didn’t reach the KPIs I’d planned for. Let me be more specific — here are the main reasons for my failure:
1. I didn’t focus on one audience
I tried to grow my startup simultaneously in four countries while we were still a small company — and we were targeting different audiences, from marketers to agencies and entrepreneurs.
My advice: While you are still small, focus on one target audience.
2. I didn’t choose my cofounders wisely
If you have doubts about cofounders, don’t go into business with them. Remember, you’ll be spending hundreds and thousands of hours with these people. Think twice.
My advice: Be very wise when choosing your cofounder — and get your agreements in writing.
3. I didn’t nail one niche
We started developing our first startup without doing any real research. We thought, “People will need it, so they will buy it”, but we didn’t actually do our homework.
My advice: Don’t start development before you’ve spoken to dozens of potential clients, and not just your friends.
I didn’t want to back out of this endeavor when I noticed it was failing. Nobody likes to admit that they didn’t reach their goals. No one likes defeat. But all attempts to decrease customer acquisition cost (CAC) and build a pipeline for my previous startup, Q-page, were not successful. Every day was totally stressful, and I felt confused and out-of-sorts. I even stopped listening to music (except for my favorite band, Pink Floyd).
I talked to my mentor and investor and decided to give it one last shot — an ultimate attempt to get as much out of this as possible. I set a deadline — four weeks (28 days) from that date. If I didn’t have any breakthroughs or come up with any pivotal ideas in that time, then we’d shut down the company. Knowing that I only had one last chance was a bit scary but pretty motivating.
So here is what I did in the 28 days following this decision:
During the first two weeks I did a lot of research on successful startups, using Angel.co and Crunchbase. I explored hundreds — or maybe even thousands — of startups. I wanted to expand my thinking by browsing other ideas. I found a few nice ideas this way, but some of them were too difficult to develop. Others were not about SaaS (and I wanted to create SaaS only, because I truly believe in it).
After 14 days I realized that looking through other people’s ideas isn’t the best way to find a new idea for yourself. At least it didn’t work for me.
Two weeks before the moment of truth. On this day, I told a few friends from other companies that I was looking for new ideas for my startup, and this got us talking. They said to me, “By the way, you have a nice Academy in Q-page. How could I have one like that for my SaaS?”
Wait a second.
If I just discovered a couple startups that want Academy like this, maybe there is a demand on the market. I should check out this niche!
An Academy is a separate part of your website where your customers can learn more about your product or some certain topic. An Academy consists of lessons, and after completing them your customers get a certificate or another reward (a coupon, discount, etc). It’s a good way to deliver your educational content and increase customer loyalty and engagement.
I thought deeply about this new idea.
Over the next four days, my team wrote texts, created a new landing page, and collected the contact info of future prospects. Working as a team of four, we were able to get this done in three days.
Here is what our landing page looked like:
An updated version of this landing page is now live on our website — AcademyOcean.com
By this point I had a landing page that looked like we had already developed our product. Next, I needed to show it to my target audience in order to validate this idea of an Academy builder. If people asked for a demo of this product, then they may want the actual product in the future.
Starting on Day 22, I decided to send personalized emails to SaaS CEOs. I looked for SaaS companies that don’t have a customer academy yet but may need one.
Until this moment I had zero experience with cold emails, so I created an A/B testing using several variations of my message.
Truthfully, I didn’t like either of them. There was nothing special about them, nothing that my readers would be able to relate to. That’s why I wrote the third one, where I talked outright about my first startup. I decided to tell everyone about my failure, and thus the third version was born:
I spent two days sending out each version of the email 40 times. I used a MixMax tool to track my emails. Here are the results I collected 24 hours after the emails were sent:
It was not a very large sample, but the results revealed a lot. They led me to throw away the first variation and focus on the third one, remembering the second one for its high open rate.
As this was happening, I did something very important: I drew out a KPI chart on a whiteboard.
Unfortunately, I didn’t take a photo on the first day, when the chart was empty. I’ll show a version of the nearly filled chart with the data blurred out to represent the blank chart, as in the photo below.
The columns were very simple:
- Emails collected
- Emails sent
- Emails opened
- Positive replies
The first thing I did every day at work was fill in this table with the previous day’s numbers. We were a team of four in those days, so it was very important for me to show each member the progress we’d made in reaching our goal of 15 positive replies. A “positive reply” was defined to mean a demo request via our landing page or an email.
At this point, we were hard at work collecting contacts and sending emails. It took time to choose startups that looked like they needed a customer Academy, based on what we could see on their websites. Then we had to manually email them, sending up to 100 emails a day.
This is what our table looked like on the penultimate day of our research:
We worked for thirteen hours that day. What would our whiteboard look like on the morning of our last day?
On the morning of April 6, I came to the whiteboard and wrote in the following numbers:
Thirteen demo requests out of our goal of fifteen.
Let’s dig into these numbers:
- I’ve sent 400 emails in total. 235 emails (59%) have been opened. Let me note that these statistics are from twelve hours after sending the last email of the day. The chart was updated after three days, and the open rate jumped to 63%. Let’s take this as the final open rate of this campaign.
- 24 replies out of 400 emails. 6% reply rate.
- 13 positive replies from 400 emails. More than 3% of the emails made people actively curious about my product.
Although we only reached 87% of our goal (only 13 of 15 requests received), this test showed me that my idea could have success in the future. I identified a problem and found a solution: Startups suffer from a lack of customer education, and these companies are eager to find solutions to this problem. My product can help.
From that moment on, there was no room in my head for my previous failure. Maybe this is because more than 200 people opened my email and read a part of my story.
Now I have a new goal: To create a new SaaS that will help other SaaS companies solve the problem of poor customer education.
Most of the replies to my emails were very positive. Even though some of the recipients had no interest in my product, they still offered words of encouragement. Some of them even replied that they want to teach their sales reps to write emails like mine. It was inspiring. Of course, there were a bunch of negative replies, but they helped too. They helped me teach myself not to worry about negative responses. : )
After that came an even more interesting period. I’ve started having Skype calls with every person who had requested a demo. It’s very important for me to understand the characteristics and problems of their businesses. This helps me understand the core features of my future product. I will talk more about the Skype calls I made in a future post.
- It’s okay for your first startup to fail. More than 90% of first startups fail.
- Admitting your failure is an important part of self-development.
- Browsing hundreds of other startups is not a good way to find an idea for yourself.
- Solving an exact problem (yours or somebody else’s) is the best way to find an idea.
- Talk to people. Be honest when describing your goals and intentions.
- Set your goals, be they weekly or monthly. And use whiteboards.
- Don’t give up after failure. Failure is nothing but the beginning of a future success. Just keep working!
If you are in a similar situation right now, please describe it in comments below, or write directly to me: email@example.com.
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My team and I are continuing to working on our new startup. Soon there will be new traditions, new happy clients (whose problems we’ve solved), and new happiness about first payments.
Thank you for reading. May your endeavors be successful!