Yay! We just got unfunded ;)
Our thoughts on why we went for an exit even after having more than 50% funds left in our bank accounts!
Like everyone else, I think I was born to do something special. It’s a funny statement. It sets the differentiating force which drives humans, hope.
Nearly 2 years back, bunch of 22 year olds started Reach with a bold vision to build India’s first successful social-consumer product. At that point in time, we didn’t really have any work experience. Most of the founders were still in college and I was just about to complete my first rocking year at Instamojo. None of us had a real rock solid work experience, none of us had any idea about what it takes to run a company and perhaps none of us even knew what we were getting into. One thing I saw common among all of us was the desire and courage to build something great. As soon as the adrenaline popped in, we started building Reach.
It started from a simple idea to let people browse and discover content present across devices of their friends (like we used to do it in hostels, carrying USB drives to take movies, music etc)
The belief got stronger once we got our first investor’s term sheet. Our age long dream had manifested into reality and it had gotten its own wings. Japanese based VC firm Rebright was interested in investing and we already had the best lot of angel investors supporting us.
For us, more than the funding, the “Pursuit of Happiness” moment was the opportunty to probably build India’s best technology startup in social space.
In the last 1.5 years, we have built and worked on some amazing technologies. From being a part of Google Launchpad to building our custom made P2P technology, we have always stayed focussed in building a better product. When the near world was building food tech and ecommerce engines, we were figuring out how to seamlessly transfer content from one device to another!
Having shared over 2 million content pieces and hosting more than 16 million content files among our users, we recently discovered some major issues in the utility what we were building.
Key learning’s to keep in mind if you are building a Social Music platform
1. People don’t really care about FRIEND’s music.
- Music is extremely personal.
It definitely might be interesting to discover friend’s music taste, but there is a high probability that your tastes don't match!
- The ideal music discovery has to be solved by technology. There have been a lot of attempts to build a personalised music recommendation engine, though no one has cracked this yet.
- According to data, 10% of music discovery in the world is through friend’s recommendation, and 7% is on YouTube. Going by this logic, it seems Reach should have worked out. Though, this kind of discovery generally happens offline when people hang out/interact with each other and share their interests.
2. P2P won’t scale
- When it comes to music, we couldn’t really build a cloud solution for transferring content (copyright issues etc)
- When it comes to our model (a pull based concept), more than 40% of our transactions were failing because the other person wasn’t online at the same time as you are, or the other person’s connectivity broke in between (most mobile users were on 3g)
- People want instant gratification. In India, cloud-based music services have made the experience really fast. They have both the supply and audience in place. I currently doubt how the business model is going to work in this, but there is a significant adoption of such platforms in urban mass.
- Local content transfer apps (like Shareit etc) had an insane penetration in Indian audience. This was expected because of the current low internet infrastructure.
We took a hard decision to change the implementation. To offer instant gratification, we changed our P2P implementation to direct Youtube streaming. What this did was, remove the dependability of users on their friends being online at the same point in time.
Unfortunately, it was counter productive as users couldn’t consume the content locally anymore.
Even if we were to pivot to other media files, the primary use case for the current product was restricted to Music. Photos or other media files were too complex to be implemented in the current product flow.
Our app was being used for a different use-case altogether. Failed to get a product market fit.
Most of our users were using Reach as a music player!
Reach users were restricted to consume the downloaded content only via Reach App. This resulted in the unexpected behavior.
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We spent 2 good months understanding all this, and we were back to square one. We were fighting every day to figure out a pivoting solution to overcome these challenges, but it seemed that the problem we were solving wasn’t big enough. It was not creating a dent or any major difference in most of our user’s lives. These 60 days were the most difficult yet intellectually rewarding moments where we were rationally honest about our product, time and investors money.
Post putting our best efforts and brains in place, we have decided to discontinue operations at Reach. We failed. It’s as simple as that. No reasons, no excuses, no explainations.
Personally I haven’t been more pumped up than this to get back in the field and start all over again. Because hey that’s what I love doing, starting up ;)
We were fortunate to maintain a very lean burn for our company’s operations, resulting which we could save quite a decent proprotion of investor’s funds. With this, we intend to politely return the remaining money back to our investors.
Always respect the opportunity cost of your time and investor’s money :)
We are glad to choose “ixigo” as the new home for our team. Reach has been acquired (acquire-hired) by ixigo to work together in building kickass technologies for Indian travellers like travel content consumption, entertainment and personalised travel recommendation.
One of the major criteria for us to choose ixigo was to work with amazing entrepreneurs and handling things at scale. Aloke and Rajnish have been an inspiration to all of us and it feels great to have that opportunity to build consumer products for the masses.
Our whole product team will be joining ixigo and contribute towards its growth
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A note to people who are thinking why could’t we pivot to a new idea all together? Or did we give up too soon?
It was quite overwhelming to know that mostly all of investors were supportive for us to solve a new problem statement. Post 2–3 months of contemplating on this, our schedule was pretty much the following:
We used to wake every day, search for ideas over tech crunch (we badly wanted to find a problem statement to solve), like a problem statement in the morning, and by the end of the day, find enough logical reasons not to pursue it.
Post all this time, we realised that we couldn’t just generate a problem statement to solve. We had to organically feel it. As founders, we owe the responsibility of taking the most rational call for the company, and not just for ourselves.
For the first few days it was quite difficult to think about going this route, because as the DNA goes, we wanted to fight. We still do. During this time, a lot of start-ups were shutting down for not raising another round of funding or for other reasons. It was difficult as well as painful for us to take the decision, as we still had quite a decent proportion of the money left. It even seemed unfair in the beginning, considering all this time we were saving every peny to stretch the runway of the company.
At the end, imo, this call was probably the most wise decision of our age.
Post 3 months of constantly battling with ourselves, these were our most learned learnings out of the lot for people who are starting up :)
1. Involve your investors in much more than just monthly updates.
They need to know what you are going through. One of the biggest mistakes we did was to tell them to post our 2 months of solid research about what’s wrong. As an entrepreneur, we wanted to be sure of what we are sharing with the board, but for an investor, it was quite sudden and a lot to absorb right away!
2. Hire T+1 engineers
We had a lean product team. We only used to hire when there was an urgent necessity. As founders, we tried doing a lot ourselves, so as to avoid further hiring. This sometimes affects the overall progress inside the company. As a founder/CEO, your job is to make sure that this company reaches the top. Hiring an extra engineer might add more value and new perspective to the company.
3: Take a break. Or plan breaks for your team.
This entire time, we never took a break. Please care to initiate regular break sessions, team outings etc. Working with 24*7 loaded mind is not good.
4: Go out and meet.
We used to spend fairly 99% of our time sitting inside the office and working on what we are building. Go out and talk to the world about it. It gives you different perspectives and helps you get out of your bubble.
5. Please be realistic. And experiment!
Please don’t live in false positives. Be a critique to your work, to your company’s growth and most importantly whether you have attained the product market fit. No funding, team or advice can build a unicorn for you. The actual work starts post funding. That isn’t a benchmark for your company’s success. They just increase room for you to experiment and grow in the right direction.
6. Don’t live on What Ifs?
Reliance JIO has recently launched. We don’t know “what if” post 2 years Reach might have worked. What if we are ahead of time. The opportunity cost of thinking over your decision after it had been taken is more than taking a wrong decision. You never know what if anything is right or wrong, when to stop fighting for your idea or when not to.
7. Don’t be scared of screwing up (cliche for a reason)
Trust me, the biggest of companies (if the benchmark is funding, Series A/B/C) are still figuring out how to crack indian market. Don’t take failure or success too personally. Your learnings need to be a reference point for someone to not committ the same mistakes again.
8. Consider every funding (equity or debt) as a loan
Even if you don’t have to repay the money, you would have to repay the baggage of handling it. Respect it. Don’t treat it as your safe guard.
We all need to grow! Hence a honest word to all investors in Indian Startup Ecosystem:
- As a 24-year-old young entrepreneur, yes we will commit a lot of mistakes. Just being an investor on cap table isn’t enough. On a high probability, we would need your time and advice to have a wiser outlook.
- There are many entrepreneurs out there who believe they are “changing the world”. When an entrepreneur is being intellectually honest with you at the stake of losing his company, you know how to spot the difference.
- Give that room to entrepreneurs to be able to come to you and say, hey it’s fucked up. Most of the time, a lot of fellow entrepreneurs gave us the suggestion, that we must be very careful about what we tell our investors. Initially, we used to be really conscious and scared of what if we tell too much too soon. Please make us comfortable to trust you to respect our thoughts. Have a real talk.
- Please try to be a part of the emotional journey of this ride.
Probably my company is one of your portfolio, but for us, its the only bet.
Don’t take failure or success too personally. Don’t let anyone define these for you.
Just keep hustling ;)
p.s share these learnings with anyone who is thinking or has already begun entrepreneurial journey.
Can learn and avoid the mistakes we did :)