Saying Goodbye
It is never easy to say goodbye. But it is inevitable. Ultimately we all have to say goodbye to the people and things we love. In 2006 I lost my mom after a courageous 9 year battle with ovarian cancer. I remember telling my mom goodbye and that it was OK to let go. The pain of that goodbye may never be surpassed.
The goodbye of loved one will always be the most difficult for most of us. What comes next is anyone’s guess. While it could never compare to saying goodbye to my mom, I recently had to say goodbye to something I loved dearly…Bawte.
I am sure many of you who read this will think Bawte would be one of the last (Iowa) startups they would think would fail. What about Techstars? What about Rise of the Rest? Totally valid questions. Let’s dive into it.
First off, it had nothing to do with our ability to raise money. Good news midwest startups; you can raise money. The process, however, sucks. The younger your business is, the more it sucks. A lot of wasted time. A lot of lookie loos. A lot of “no’s” that came after months of talking to people (even though the reason they would give is something anyone would know just by looking at our investor deck). But I’m not here to complain about investors. We actually had access to the money we needed for this round, a significant part of it coming from an awesome investor right here in Des Moines.
The crazy thing is we decided not to take their money. I mean who does that? That was cash in the bank. Live the dream a little longer, right?
Not really. Here is the reality. In the months leading up to this decision I was having some very frank conversations with our customers and potential customers. Customers would sign up (yay!), but few would implement (boo). During that time I took off my ‘sales’ hat and just talked to customers, peeling back the layers of the onion to figure out why. As it turned out the problem we were solving was important, but there was no urgency. We were a vitamin, not a pain killer. So when we discussed implementation, timeframes like 2016 and 2017 kept popping up. Meaning implementation would ‘likely’ start in 2016, but more likely 2017. And this was almost everyone we talked to. No one was going to hold off on the Oracle ERP implementation for Bawte.
We discussed many alternatives or pivots as it is often called in the world of startups, but none of them seemed to move the dial with customers. We even looked at going straight to the user. Unfortunately our customer acquisition cost was pretty high. What made it really pricey was our customer maintenance cost. Adding the two together priced us right out of that option.
So, let’s go back to the money. Say I take the money and that gives me 12 months to make significant progress. Now, our customers would not be implementing for at least another 12 to 24 months. And since there is little urgency, 24 months could become 36 very easily. Where does that put us? Well, we essentially would’ve wasted that money. As a team we came to the very difficult conclusion that at the end of the runway we would not be in a significantly better position than we were at the beginning.
Certainly I had thought about just closing on the round. That would have been easy. At least easy in the short term. But after the first investor update the lack of progress would have been telling. Past that, things would get very difficult. Investors don’t put in money so you just survive. They put in money so you can flourish and we knew we couldn’t.
Back to winning the Rise of the Rest and getting into Techstars. Both look for precisely the same thing, a big idea that aims to transform an industry. That is what Bawte is/was. A completely new way to forge a customer relationship in the retail channel. But transformative innovation is also way more risky. That, my friends, is the gamble.
I am not ashamed to have failed with Bawte. I am sad however. I am sad for the dreams of what it could have been. I am sad for everyone who believed in the vision that I let down. I am sad for our initial investors, many of whom are good friends and family that helped me live a dream. It’s sad to say goodbye.
In the wake of this decision, I obviously had to let everyone know. The hardest emails I had to write explaining our decision were to my friends and family investors and to Nicole at Techstars. I anticipated that they all would be rather pissed off. I can imagine I would be…I guess. But they responded with concern for me. I was blown away. I still am. After investing a good sum of money they are more concerned for my well-being than for their money that is now gone. Crazy.
So what does this mean for the team? Our developers are awesome and I have the utmost confidence they will easily find other jobs. If you are looking for high quality talent, contact me I will connect you. They are all amazing and have traveled a pretty unique journey.
For me? Not sure. As I close this door, I inevitably start peeking into others. I guess time will tell. If you have any ideas, hit me up, we can grab a craft beer.
And with any failure there is inevitably a lesson. That lesson is this: there are times when you need to sell your ass off and then there are times when you have to ask the hard questions and just listen regardless of the answer. I think I wanted Bawte to succeed so badly that I was always selling and not listening the underlying meaning of what was said.
Thank you everyone for all of your support. You are wonderful. And while I will never get a goodbye from this loss, I take solace in the fact that I won’t have to say goodbye to this wonderfully supportive startup community. Reach out at @Jackovin if you’d like to talk.
