What Tech Startups Can Learn from Failed Projects: A Candid Look at My First Fintech Venture

Failure in startups is not just common; it’s practically expected. The path to success is narrow, and the potential pitfalls are numerous. The more we, as founders, understand the various ways a startup can fail, the better prepared we are to set realistic expectations, control outcomes, and hedge risks. This is the story of my first Fintech venture, Cruzzie, a project that started with high hopes and a strong mission but ultimately faced the harsh realities of the startup world. Through this experience, I’ve learned invaluable lessons that I believe can help other founders navigate the complex journey of building a startup.

The Early Excitement and Vision

Cruzzie was born out of a deep desire to make a difference. Both my co-founder and I came from middle-low-income backgrounds in our respective countries. We understood the struggles of being underestimated and the challenges that come with trying to break into the business world without the resources or connections that others might take for granted.

Our vision was simple but powerful: to help underestimated founders and businesses thrive by providing them with the financial data management tools they needed to succeed.

At the beginning, everything seemed to be falling into place. We had a clear mission, a strong partnership, and a product that we believed could make a real impact. Within the first week of launching, we secured our first paid customer, which only fueled our excitement and confidence.

However, as we soon discovered, the journey from an initial idea to a successful business is fraught with challenges that we were not fully prepared for.

The Challenges that Emerged

One of the first steps we took in building Cruzzie was defining our problem hypothesis. This was largely influenced by my previous experience as a VC in Japan, where I had hands-on involvement with several portfolio companies. I noticed recurring challenges among these companies, particularly in the financial data management space. Many underestimated founders and businesses in Japan struggled to manage their financial data efficiently, often due to a lack of access to user-friendly tools that could scale with their growth. I believed that by addressing this gap, we could provide significant value, not just in Japan, but globally.

However, once we entered the market, it became clear that the challenges we were addressing in Japan did not translate as seamlessly to other markets, particularly in the competitive landscape of financial data management SaaS in the U.S. The space was incredibly crowded, with numerous well-established players offering similar, if not superior, solutions. Differentiating our product from the multitude of others became a significant challenge. While our hypothesis was strong, executing it in a saturated market proved far more difficult than anticipated.

Another major challenge was conducting effective user interviews efficiently by asking the right questions. We often spent hours internally debating what we believed users would want, only to find out during our weekly client meetings that their needs and expectations were completely different from what we had assumed. This misalignment made it difficult to develop a product that truly resonated with our target users and highlighted the importance of direct, ongoing communication with potential customers throughout the development process.

Lessons Learned: Understanding the competitive landscape and validating your problem hypothesis in the specific market you’re targeting is crucial. Additionally, prioritizing clear and frequent communication with users is essential to ensure that the product you’re building aligns with their actual needs and expectations.

Recognizing the Signs of Struggle

After the initial excitement of getting our first paid customer, we focused intensely on meeting their needs. For about a month, we worked closely with this client, refining our product to better serve their specific requirements. This gave us confidence that we were on the right track and ready to onboard our second client.

However, this was the point where we started to struggle significantly. Despite our efforts and the improvements we made based on our first client’s feedback, we couldn’t secure a second paid customer. We sent thousands of cold emails, trying to reach potential clients, but the response was overwhelmingly negative or, in many cases, non-existent. The lack of interest from new customers was a major red flag that something was fundamentally wrong with our approach or product-market fit.

As the months went by, additional warning signs emerged. We faced increasing challenges in scaling the business, and customer retention became a concern. Internal team discussions grew more frequent and more tense as we struggled to identify what was going wrong and how to fix it. The excitement and momentum that had driven us in the early days began to wane, replaced by a growing sense of frustration and doubt about the future of Cruzzie.

Lessons Learned: It’s crucial to recognize when a project is in trouble and to act quickly to address the underlying issues. Whether it’s the inability to secure new customers, difficulties in scaling, or internal team conflicts, these are signs that something needs to change. Pivoting, reassessing strategies, or even seeking external advice can be effective ways to course-correct before it’s too late.

The Final Decision to Shut Down

The decision to shut down Cruzzie was one of the hardest I’ve ever had to make. After months of struggling to keep the business afloat, it became increasingly clear that continuing to pour time and resources into the project was no longer sustainable.

One of the pivotal moments leading up to this decision was when my co-founder lost the passion for building Cruzzie. The relentless focus on API development and the specific domain challenges had taken a toll on him. The excitement that had driven us in the early days was replaced by fatigue and frustration. Ultimately, he decided to quit, feeling that the work was no longer fulfilling or aligned with his interests. This was a significant blow to the project, as it left me to grapple with the growing realization that without a committed team, the chances of success were slim.

Emotionally, the impact of this decision was profound. I felt a deep sense of failure and loss, not just for myself but also for our mission and the potential impact we had hoped to achieve. However, shutting down Cruzzie also provided clarity. During my time as a VC in Japan and Taiwan, I had seen many startups fall into the "living dead" category—businesses that continued to operate without real growth or prospects, kept alive only by the founders’ unwillingness to let go. These startups often carried the burden of ongoing maintenance and lost opportunities, limiting the founders' ability to explore new ideas or pivot effectively.

We chose a different path. Rather than allowing Cruzzie to become another "living dead" startup, we made the hard decision to shut it down right after recognizing the signs of its unsustainability. I firmly believe this was the better approach, as it freed us—especially the founding team—from the weight of a struggling venture. This decision allowed us to conserve our energy and resources, and ultimately, it opened the door to new opportunities and growth without being tied down by the burdens of a failing project.

In the end, shutting down Cruzzie was the right choice. It allowed us to preserve our remaining resources, both financial and emotional, and to reflect on the lessons we had learned throughout the process. While it was painful to let go of something we had invested so much in, it also provided the freedom to explore new paths with a clearer mind and without the burdens of a struggling venture.

Lessons Learned: Knowing when to let go is just as important as knowing when to persevere. Sometimes, the best decision for the long-term success of a founder is to close one chapter and move on to the next. Recognizing when a project is no longer viable, especially when key team members lose their passion, is crucial for preserving your energy and resources for future endeavors. Avoiding the trap of becoming a "living dead" startup can provide the opportunity to explore new ventures with renewed focus and energy.

Key Takeaways for Aspiring Founders

Reflecting on the journey of Cruzzie, several key lessons stand out:

1. Validate Your Problem Hypothesis Thoroughly: Your initial problem hypothesis might be based on solid insights, but it’s crucial to validate it within the specific market you’re targeting. The challenges we identified in Japan didn’t translate as easily to the U.S. market, emphasizing the importance of thorough market research and validation.
2. Prioritize User Communication: Effective and ongoing communication with potential users is essential. At Cruzzie, we spent a lot of time internally debating what we thought users wanted, only to discover during client meetings that their needs were different. Regular and direct feedback from users can prevent misalignment and guide your product development more accurately.
3. Recognize the Signs of Struggle Early: Whether it’s the inability to secure new customers, difficulty scaling, or losing key team members, it’s important to recognize these signs early and address them head-on. Ignoring these issues can lead to further setbacks and missed opportunities for course correction.
4. Don’t Fear Shutting Down: Sometimes, the most strategic decision is to close one chapter and move on to the next. Avoiding the "living dead" scenario, where a startup continues without growth or prospects, can free up resources and energy for new ventures. Shutting down Cruzzie allowed us to explore new opportunities without the burden of a struggling venture.
5. Embrace Team Dynamics and Alignment: Building a cohesive and aligned team is critical. When team members lose passion or alignment, it can severely impact the project. Recognizing this and making tough decisions, like shutting down or restructuring, can be vital for long-term success.
6. Actionable Advice: For aspiring founders, conduct thorough market research, stay closely connected with your users, and be willing to make tough decisions. Remember, failure is not the end but a step in the learning process. It’s better to shut down a struggling venture than to let it drain your resources and limit your potential for future success.

Conclusion

The experience with Cruzzie has profoundly shaped my approach to building startups. It taught me the importance of validating ideas within the specific market you’re targeting, maintaining open and regular communication with users, and being willing to make tough decisions when necessary. Shutting down Cruzzie was a difficult but ultimately freeing choice that allowed me to preserve resources and refocus on new opportunities without the burden of a struggling venture. These lessons have been invaluable as I continue my journey with Syval, where I’m applying what I’ve learned to build smarter, more resilient solutions.

Recognizing when to pivot, when to push forward, and when to let go are critical skills for any founder. The key is to remain adaptable, learn from each experience, and use those lessons to drive future success.

Call to Action

I encourage fellow founders to share their own experiences with failure and the lessons they’ve learned along the way. By fostering a community of shared learning, we can all grow and improve, turning setbacks into stepping stones for future success. Your story might just provide the insight someone else needs to navigate their own challenges, and together, we can build a stronger, more resilient startup ecosystem.