It’s been an Amazing Ride! Now My Startup is Dead and Here’s What I’ve Learned
The obvious, enlightening, and reassuring lessons drawn from my 15-month tenure as co-founder and CPO at Klimpr
Klimpr is no more. The company that I joined as a co-founder and that I believed could make a dent in the (payments) universe is shutting down after a mere 15 months. How come?
I originally intended these notes to be personal — some kind of advice to my entrepreneurial future self if you will. My hope in sharing them here is that I can keep fellow entrepreneurs from stumbling into the same pitfalls that I did.
Let me give you some context first. Klimpr started in Switzerland with a simple, yet ambitious goal: enable everybody to make purchases and money transfers using just their mobile phone. No need to carry around any cash anymore. No climbing up six flights of stairs anymore just to retrieve the forgotten wallet. We wanted to bring mobile payments to the country of banks, chocolate, and cheese 🇨🇭.
We failed. Instead of making a dent in the universe, we had to shut down not even a year after we launched our first product. As sad as this is, it also taught me at least three invaluable lessons.
The Obvious: Start with the Business Model
Starting a company is exciting. There’s a lot of uncertainty involved, which, depending on who you are, may add to the excitement, or may make it scary as hell. I loved every bit of it. In fact, I would do it again, only this time I would approach it differently.
I would put more emphasis on answering the tough questions early on. Who’s going to be my customer? What value will I provide to them and why should they care? How much money are they going to pay? What does it cost to create value? How many paying customers will I need to become profitable? You know, the things Alexander Osterwalder is talking about in his Business Model Generation book.
It’s not that we didn’t have answers to these questions. In my opinion, they were just not good enough. For example, our target customer was between 16 and 34 years old, lived in a city, and had many friends whom he or she could party and share meals with. Did I talk to real people matching this profile? Did I learn about their wants and needs? Did I show them what we were about to build in order to understand whether it’s of any use for them? No, at least not before we went on to develop our initial product. All the answers we had were in fact hypotheses — untested, verbalised beliefs about the world our users lived in.
All the answers we had were in fact hypotheses — untested, verbalised beliefs about the world our users lived in.
I think that many of our discussions would have been resolved quickly, if we had collected some data about how our target customers viewed the world.
Here are my takeaways with regards to business modelling:
- Find answers to the tough questions first: Answer the questions on which the success of your business depends on. Then, go talk to your target customers. Learn about their wants and needs. Refine your model until you’re convinced that the product you’re about to build is something they will love and pay for. (Maybe you need some sort of prototype to support your customer interactions. Whether it’s sketches on paper, a clickable high-fidelity mockup in InVision or something else, make sure that you only build the absolute minimum required to get conclusive data. Everything else is a waste of time.)
- Develop metrics supporting your model: Now that you know your target customer, nailed your value proposition, and have an idea about how to make money, it’s time to develop metrics making the model more actionable. (The guys at a16z have compiled an excellent list of the most important startup metrics. See here and here.) Find the ones that are most relevant to your business and make educated guesses on how they should develop over time. In my experience, putting together a spreadsheet describing month-on-month development works best. Once your product is live, you can start collecting real data and refine your forecasts. The metrics, the data, and the forecasts will act as a compass to achieving your vision and will feed the product improvement engine.
The Enlightening: Invest in the Beginning
I came to realize that building a digital consumer product is a lot like telling a good story. Like any good story, great products too have a beginning, a middle, and an end. When we built Klimpr, we started at the middle. Our product was designed based on two implicit assumptions:
- The assumption that people knew all about Klimpr and why it’s useful.
- The assumption that everybody — yes grandma, I’m talking to you too :) — had already signed up to Klimpr as well.
Klimpr was great for people for whom these assumptions were true. If you wanted to send money to a friend, if you had Klimpr installed on your smartphone, and if your friend had Klimpr installed too, sending money with Klimpr was indeed as simple as sending a text. If none of the above were true, things got a bit more complicated.
Nobody cares about the thing you’ve [built], unless you can get them past the beginning. — Julie Zhuo
The beginning is where you tell people about the fancy new thing you’ve built. It’s where you convince them of its usefulness, make them install and sign up for it, and, most importantly, it’s where you make them advertise it to their friends (because, you know, expecting them to also tell grandma about it would be too much to ask for right now 😉).
Getting people past the beginning is hard. It’s where you have to bring your storytelling a game.
My lesson here is to invest much more time and resources into the beginning. I would ask myself (even before writing the first line of code):
- Where and how will people first hear about my product?
- What should people understand about the product at a glance, and is what they see compelling enough for them to go through the trouble of trying it out?
- What should people’s first-time experience using the product be, and how will I demonstrate its value within the first minute of using it?
- What would compel somebody to come back and use the product a second or third time, or even recommend it to a friend?
Again, I would test my answers on real people and refine them until I got the results I wanted to get. I guess, in retrospect, this was the most instructional thing I’ve learned from building a consumer product.
The Reassuring: You Are the Product
We’ve all heard the saying “We learn from our mistakes”. And while I believe that to grow we must, indeed, fail from time to time, I also think that there are other ways to learn. My third lesson, for example, I learned not by failing but by having my intuitions proven true by our users.
I’m an early adopter. I’m always on the lookout for the next big thing. Whether it’s some gadget, a new programming language, or a fancy iPhone app, I want to get my hands on it immediately and check it out. What I get out of this, besides of course satisfying my hunger for the new and unknown, is a growing sense of what makes a great product. I guess that’s the primary reason why I became Chief Product Officer.
As CPO I could leverage my intuition about what makes a product great to shape Klimpr into something that really was a delightful experience for our users. Make no mistake, Klimpr wasn’t perfect, far from it to be honest. However, many of the things we did based on our intuition were later supported by our users, either implicitly (through their actions) or explicitly (via feedback).
Here are the three most important:
- Be human: The one thing that startups lack even more than money is brand recognition. Because of this, people will look for something else when assessing your product (assuming that the product provides some value for them). That something else is often the people behind the product. Do I trust this person? What’s he in it for? Does she believe what I believe? If they can recognise themselves in you, chances are that they are going to choose your product over your competitors’. So, be yourself, be authentic, and don’t hide the shortcomings of your product. Be human.
- Be loud: As soon as people become your customer, whether they buy from you, install your app, or signup to your website, they buy into your raison d’etre. Once they do, it’s important for you to start a meaningful conversation with them. Inform them about new features, ask them for feedback, or share your insights with them. They care about the same problems you care about. Show them that you’re making progress in providing a solution to these problems and that you have their best interests at heart. Communicate often. Be loud.
- Do care: Show your customers that you care about them. Listen to their complaints and address them quickly. Make making your customers happy your top priority. If they feel that you care about them, they will spread the word and tell their friends about your cool new product.
It’s been an Amazing Ride, Thank You!
I’ve been asked many times whether I would do it again and my answer has always been yes. It always will be. Building something new, from the ground up, is exciting! Starting my own company has taught me many things and, at the end, learning is what I’m in it for. It has also introduced me to many wonderful and brilliant people whom I want to thank for their support and advice. Above all, it was extremely satisfying to see that Klimpr was part of many lives. Thank you, brave early adopters, for riding with us!
Success is stumbling from failure to failure with no loss of enthusiasm. — Winston Churchill
I’m still hungry (and foolish) and certainly have not lost any enthusiasm. If anything, my enthusiasm has grown. What’s next? I guess, I’ll find out soon enough 😉. Thanks for caring!