How to endure running out of money, building the right team, managing investor relationships and taking do-or-die chances.
A few years ago, I took over Dabble, which was someone else’s startup and made it my own. With the help of a community of customers that loved the product; passionate, dedicated team members who stood beside me; and Chicago- and St. Louis-based investors who believed in me, I was really able to make the company into something special and we’re just getting started.
In our case, this is powering the listing and discovery of local “how-to” classes, experiences, and tours through our curated marketplace, Dabble.
In your case, you might be an ad-tech marketing platform, digital content aggregator, cloud security app, home cleaning service, or a food and meal delivery startup. You secured the early adopters, got into a top accelerator, launched with a well-timed TechCrunch article, oversubscribed your seed round, and were growing 20% every month and had so much traffic you broke the internet. Sound familiar?
The first few months are so much fun. It’s all so new. You shared the screenshot of getting that huge investor wire into your account with friends and family. You got to work building what you truly believe would be the next unicorn. Things were good and you were killing it. Getting warm?
Well, for the rest of us, it turns out that, looking back, we hired too fast and fired too slowly. Our customer acquisition costs and retention numbers that seemed so strong early were stalling out. We were still growing but we were much more aware of the growing competition and started stalking their social media posts. We scanned Crunchbase daily for news of competitors raising their next round and when we lost a partner to them it stung.
Somewhere along the way, things got hard. You stopped paying yourself. Credit card balances stopped going down. You can’t remember the last time you spoke with an early co-founder who used to be one of your best friends, but who left on poor terms. Early investors and your board see the writing on the wall and start strongly hinting you should sell or look for an exit.
What happened? The problem for many of us is that our company is just that — a company. It is simply a direct result of the incredible and non-replicable result of your collective human energy, market timing, financial capital, and a whole lot of luck.
Just one change in the perfect recipe and the ship starts taking on water. It is so hard. Even when you think you’ve found the leak, another one appears. As the “fun” becomes the opposite, your crew leaves for all sorts of reasons. They find new boats and you start to wonder why you cling to your own tattered vessel.
Dabble makes it super easy to discover and try new things. It just makes sense and I guess that’s why I’ve not given up. Our tech lowers the barrier to monetizing your personal IP by managing marketing, payments, customer support, refunds and reviews for makers, local wine shops and even national grocery chains. We provide a great service and I’m still excited each day.
As a company, we’re doing well for a small startup with growing revenue and partners. Hell, we’re still in business after SIX years. That alone is pretty amazing. On the surface, our site looks great and runs smoothly, but behind the scenes you’d be very surprised to know what is holding together a company that has powered nearly 50,000 local experiences with over 4,500 business partners around the country.
It’s the typical startup story. We’re growing, just not fast enough to attract tons of new investors and self-sufficiency will require either more funding or a lot more time. The same story has been played out millions of times and isn’t an “if” but “when” for pretty much every startup founder, board member, and investor.
Dabble recently celebrated our 6th anniversary and I’m thinking about the year ahead. I had my doubts many times but I believed in what we’ve built. Below are some of the lessons that I learned as we grinded it out and, thankfully for Dabble and our community, we ended up raising a new round of funding just this week led by KGC Capital and Hyde Park Angels here in Chicago.
The simple fact that Dabble is still in business and growing each day speaks to the importance of bringing people together to share common experiences. It is a testament to the original founder’s vision that learning can and should happen anywhere. The new funding will be invested in marketing Dabble to a focused audience in our major markets of Chicago, Denver and St. Louis. Additionally, we’ll be investing in our API and integration technology to easily embed Dabble’s payment and ticketing widget into 3rd party websites to open up our payment gateway to anyone to drive increased sales through our platform from current and new partners.
Dabble is on pace to increase revenue this year (22% over 2016) and we’ve held the #1 position on Google for “classes Chicago” without spending a dime for years. As Jeff Carter, one of our biggest champions to date has said, “Dabble is just an idea that is too good to die.” I’m incredibly aware that Dabble is super lucky and I know we didn’t get here alone.
Not everyone raises the new round when needed and many great ideas never even raise a dime, so I want to share some lessons learned along the way. Much of this I learned (or am still learning) after the fact, by making mistakes, but here are 11 tips on how to survive those dark days of being a founder:
- It’s been said many times, but don’t hire until you absolutely have to and when you do, hire the right people. Invest more in the great people you have before adding headcount.
- Make 110% sure your team isn’t just passionate early team members. You may want to grow with your original team but they have to have the skills to scale. If not, make hard decisions early to move on before things get ugly and you lose months of progress. I asked Phil Libin a question about this at Founder’s Lab in 2015 and he responded, “I’ve never regretted letting a person go too soon when I knew something wasn’t right.”
- This can be the hardest part, but you have to have the self-awareness to know when you, yourself, don’t have all the skills. When a bad month turns into a bad quarter, it might be too late, but it is never too late to tap into your own emotional intelligence to embrace humility and ask for help. You are not the first founder to struggle and your problems are not unique.
- When they say you will always be raising money, they mean it. Even after you’ve closed a round, keep forcing yourself to have coffee or lunch once a week with investors, partners, and potential team members that can open doors, give feedback, or just keep you inspired.
- Know your runway and never let your bank account have less than six months in it. Over the last eight months, Dabble had less than one month of runway on average. IT SUCKED.
- Keep providing amazing service and supporting your product, even when you just want to crawl under a rock and not get out of bed. If you can’t take care of your customers, someone else will.
- Don’t be selfish. If shit is really going to hit the fan, have your top partners in mind and communicate the possibility so they can plan accordingly. Don’t let friendly fire bring down anyone else if you can avoid it. You’ll have a life after this startup and they’ll respect you for it.
- Be transparent with your team but don’t use the situation to make unreasonable requests of them. No one really cares if you haven’t paid yourself in nine months except your loved ones, debt collectors, and your bank account. You are a founder and this is par for the course. Pay your team as much as you can and give them adequate notice if their compensation is going to change. They have mortgages, kids, and bills.
- Don’t be too proud. I’ve been driving Lyft and Uber for the past six months to pay the bills. You’re not a CEO or founder all the time. Sometimes you’re just a ride-share driver and you do what you have to do. Thankfully, riders are genuinely curious and kind and I was able to share Dabble with over 500 new faces, while getting paid.
- Communicate with your investors at least once a month. If there is cause for concern, don’t hide it. If there is a silver lining, share it but don’t ever sugar-coat problems. Investors are partners with life experiences and connections that you might lack. Yes, they wrote a check but don’t let the relationship just be about money. Learn from them.
- Have fun and enjoy the ride — all of it. Investors are adults and are prepared to lose their money. Great team members will find new opportunities. Partners will find new solutions. Customers will move on. Make sure you can as well. Try to eat better, exercise, and put down your phone. Unplug. It’s a big, beautiful world. As Pema Chödrön says: “You are the sky. Everything else is just the weather.” This too shall pass.
Whatever happens, we all took a chance on something we believed in — and that alone is really amazing. Do this for me: Look in the mirror and tell yourself that you’re proud of yourself. This is really hard, but it isn’t unique. Accept that you can start all over again tomorrow. You can also keep working on what you’ve built. You’re incredibly lucky to have a choice. Either way, be smart and ask for help…but keep taking chances.
Founded in 2011, Dabble continues to grow across the US from its base in Chicago with over 100K users and 4K event hosts to empower users to learn how to do anything from calligraphy and glassblowing to knife throwing and sushi rolling. Have an event to ticket, a great space to share or an idea for an experience? As the Chief Dabbler, I seriously look forward to seeing you in the community trying something new or sharing your passion. #LetsDabble
If you enjoyed this story, please recommend and share to help others find it! Feel free to leave a comment below.