If you haven’t read the previous part: How to start a failure startup — The Third Mistake
How to start a failure startup — The Fourth Mistake
Preface: While composing this saga from memory, I realised that there’s a lot in the details and that one post about this would be too long to read and could make certain facts and lessons insignificant. For the ease of reading, I’ve broken it up into the number of mistake I’ve made. Hope this helps!
Daredeliver. The name was a play on a seemingly common word. Daredeliver. In my thirst to find an idea to build an app rapidly, I didn’t instantly realise that there was an idea sitting right in front of me. Last mile delivery had been on my mind for years but I could never put together a solution that I deemed worthy enough … up until this point. In a city like Bangalore, traffic woes are not uncommon. In 2016, there existed 11.5 million people in the city! Traffic doesn’t begin to describe our traffic woes. Bad road conditions only amplified the problem and it was common to break ice with any stranger by talking about the city’s traffic issues.
And there I was, sitting with a phone in my hand, looking at a message from my friend — who eventually became my wife — about her eating biryani, a very popular Indian dish. She lived all the way across the city from where I lived and it would take me between 1–2 hours to travel 30km to get a few spoons of biryani in.
Honestly, for my love of biryani, I wouldn’t have minded the trip. Being a huge foodie, I’m always eager to eat something. However, in this case, I didn’t have enough money for fuel to make the trip to and from her house. And, I had some pending freelance work to take care of. How convenient would it be if someone could just pick up a packed box of biryani from her house, ride all the way to my place, and give it to me? I’d be willing to pay for that if it was reasonable. But, how reasonable was my reasonable?
Scratching my head, I pulled out a notebook to do the math. I had to figure out fuel cost per kilometre of travel plus a meagre profit margin. I assumed that a motorcycle would work with a minimum efficiency of 35 kilometres per litre of petrol. Some quick calculations later, I threw in a basic profit margin and arrived at Rs. 4 per kilometre. That sounded reasonable. I considered throwing in a flat fee of Rs. 20 for the first 5 kilometres after which, we would charge Rs. 4 per kilometre. So, if my friend lived 30 kilometres away and if she had to send something to me, I’d need to pay … Rs. 120. All for the convenience of relaxing at home and waiting for an hour to eat home cooked awesome biryani made by my friend — I was hooked!
The Daredeliver Story
In essence, all the user would have to do was to fire up the app, take a picture of what they wanted to send, select a friend from their contacts, see an estimate of how much it would cost, decide on who was going to pay for it (I considered cash-only payments at the time), and hit ‘Confirm’! A rider (I figured ‘Daredevil’ sounded cooler) would be assigned to your order and they would pick it up, verify its contents (for certain items), wrap it up in protective plastic wrap, bubble wrap, a paper bag or a tamper free bag (for documents), and finally top it off with a Daredeliver sticker and place it in their delivery bag before heading out to deliver it.
I needed to validate the idea quickly. I called my co-founder up, told him about the idea, and asked him if he’d pay Rs. 4 per kilometre and he said, “Dude, we need to charge more. What do even get for 4 rupees these days?”
But, that was precisely the point! Nobody would hesitate to spend that much. The target audience I had in my mind was every single soul in the city. Nobody, and I mean, nobody should hesitate to send an order out. I wanted everyone to DD their stuff across the city. At the time, Rs. 4 did include a profit margin, even if it was razor thin. I wanted users to start using it and enjoy using the app. Trust was going to be the key factor for such a service.
Initially, I imagined food or forgotten keys to be sent via the service mostly. In actuality, it ended up being way different. The people of the city were about to surprise us.
All of this was enough motivation for me to build the app. I spent hours late at night without sleep building every aspect of the app. I knew right off the bat that it wasn’t going to look great. But, it was going to be usable and reliable as a service. The user interface and user experience could always be improved upon at a later stage. I also considered that as a strategy to receive feedback. People had always been extremely vocal about their experience with the interface and I wanted to cash in on that conversation to not only follow their suggestion, but to offer them something in return. How about 1 free delivery, any distance, for your valuable feedback? How about a free meal from a partner restaurant for your valuable feedback? I never enjoyed the idea of reward points and I always thought it was a gimmick; this was a far better approach.
All one could hear in the quiet of the night was my tapping away on my keyboard but for the first time in a long time, my mind was loud and abound with ideas and possibilities. Eventually, I lost track of time and I didn’t care. I had the first version of the app ready in 20 days straight. I couldn’t afford Apple’s developer fees so I figured we’d put it up on the Google Play store first and see what happened. In 2016, there were significantly more Android users than iPhone users in Bangalore, so that wasn’t going to matter much.
The second challenge was going to be to find riders to do the actual delivery. A friend of mine runs his own cafe in South Bangalore in an area called RR Nagar (Rajarajeshwari Nagar). It’s a large locality that’s divided into residential roads, colleges, and commercial buildings. Several of these commercial buildings were littered with cafes and eateries and even though food delivery was a thing in 2016, this locality (and a few neighbouring ones) didn’t have a reliable food delivery service for its residents and businesses.
Some of my friend’s ex-staff were on a job hunt and he put me in touch with them to see if they would be interested in riding for Daredeliver. They were, but, paying them was going to be difficult. In a prior conversation with my co-founder, we made the first mistake of deciding on a bad payment plan: a fixed salary.
The intention was good: we wanted to pay them higher than the market salary for delivery guys, pay extra for fuel consumption, and pay for their accident insurance. The reasoning behind this was that Daredeliver was a new idea and I had no idea if it was going to work. There was absolutely no one in the space of on-demand delivery of any item at the time in Bangalore. Part of the challenge was also that I wanted the service to be a — wait for it — 24x7 service. You could never define when someone would want something delivered and I’d also coded in an additional fee for early morning or late night deliveries.
But, I had no idea about how many people were going to place orders and with what frequency our Daredelivers were going to have to do trips. Due to this, we recruited just 3 riders and limited our operational areas to RR Nagar and a few surrounding localities to begin with. I assumed that they wouldn’t agree to a trip-based commission pay (a percentage of each trip would be their pay) because initially, we may have zero orders. The last thing I wanted in my grand plan was demotivated Daredevils. So, the fixed pay plan stayed.
In retrospect, I should have worked out a payment plan on some middle ground between fixed pay and commission based pay. It’s 2020 now and the idea of on-demand delivery is abound with every million dollar logistics startup diving into it. It’s not news to potential delivery guys and they know what they’re getting into. Back in 2016, however, everyone was scratching their heads about the viability of such a service. But, the curiosity was evident: everyone wanted to see it work.
Launch
On the first day, we got 3 orders. On the second day, we got none. One the third day, we got 7 orders. On the fourth day, we got 4. On the fifth, we got 9 orders. And so on.
It was sporadic but if one plotted the orders on a graph, the line was rising, slowly. We reached out to several newspapers and magazines about our new venture and few of them helped boost our brand. We reposted our media coverage on social media and I’m not sure if anyone actually read the article: but, they did appreciate the fact that we had media coverage.
The moment the articles were out, we had people downloading the app and rating it on the Google Play store. This was new territory for the team and I wanted to leave no stone unturned. Orders began to pour in from all over the city. People began writing to us to ask about why we hadn’t expanded our services to certain areas of the city, yet. They asked about inter-city deliveries and a few even asked about international deliveries! Actually, that was pretty weird, but it felt nice.
Even though Zomato and RoadRunnr (that’s what it was called back then) were ‘officially’ active in RR Nagar, the locality’s restaurants had all had terrible experiences with their services and had decided to turn it all off. Some restaurants still used Zomato’s services for receiving delivery orders but the onus of actually delivering the food itself would be the responsibility of the restaurant. But, not everyone could cope with the order load at all times. This saw restaurants haphazardly using Zomato to receive orders and customers weren’t always sure if food was going to be delivered to them.
That’s where we stepped in. We promised restaurants that we would handle deliveries for them. We told them we didn’t care what the bill amount was because at the time (it’s true in the current sense as well), Zomato charged a percentage of the bill value as a commission for their services from the restaurant. They also charged (still do) an additional packaging and delivery charge from customers while occasionally forcing restaurants to reduce their profit margins to promote discounts. This is still a concern: https://www.reddit.com/r/india/comments/8wwe7q/swiggy_and_zomato_deliverys_manipulative_pricing/
I understood the problem with this from the very beginning since I had a friend who ran his own cafe in the locality and I knew that margins would always be thin for a fledgling cafe or restaurant. I was very precise about what DD wanted to offer: we would do deliveries for you and the customer and we would charge a delivery fee accordingly. The fee would be the same as what it was for any user who downloaded the app. If we were sending food for a restaurant, we wouldn’t even look at the food bill. Our only concern was to establish who would pay our delivery fee; sometimes restaurants volunteered to absorb it on the customer’s behalf and sometimes, they would let their customers know about an additional delivery fee. This allowed restaurants to enjoy complete freedom and margins for their food while we got what we wanted as well. It was a clear win-win and everybody started lapping us up.
Initially, getting onboarded was super easy for cafes and restaurants. A customer would order on Zomato. The restaurant would confirm the order and use DD from their official DD account (on desktop or app) to place a delivery order with us. Our Daredevil would then ride to the cafe, pick the order up, and deliver it to the customer. The customer would pay for the food bill plus our shipping cost. We would keep our shipping fee and return the food bill to the restaurant either at the end of the day or immediately.
This went on for a couple of months and I was getting swamped with the number of orders we had. Aside from restaurant deliveries, we were dealing with personal couriers, and midnight birthday special requests. We had industrial materials being shipped from the city market during the afternoon and we had offices sending official documents to one another throughout the day.
The Mistakes Began
Eventually, some of the restaurant managers began to directly contact our Daredevils for deliveries instead of using the app and that was a big no-no. Our boys did it, too, because they never understood the bigger picture. Some managers began to lie to them saying that they had taken my permission to allow that sort of thing and so they never cross-checked with me. Some restaurants also began to charge Rs 10 higher than what our delivery cost was and list that in their bill as a ‘delivery convenience fee’. One particular manager would purposely delay food preparation and when the order delivery was delayed as a result, the compensation would be expected from Daredeliver.
I began to meet with every one of the defaulting managers and I gave them all a piece of my mind. We’d signed agreements with every restaurant and I reminded them of the consequences of breaking the terms we’d all signed on. They had moved on from eagerly using the service to abusing it. Some users contacted us via the app as well and let us know that it was confusing at times for them because they’d place an order on Zomato and receive the order through some service called Daredeliver that they never signed up for. Some restaurant managers also wanted to move away from Zomato altogether and let us handle the order-lead generation for them.
That was a game changer. I knew it had to be done eventually but I didn’t expect it to happen this rapidly. We were 4 months in and people wanted to switch from a multi-million dollar platform to our unfunded venture. We began listing restaurants, cafes, and interested business in another section of our app. Users wouldn’t have to use another app or call the cafe to place an order. They could do it directly off of ours. The difference between our app and the other instant delivery apps was that you could order street food from ours as well. A roadside vendor could be listed and if they were making roasted groundnuts, you could order that! And, our pricing was transparent and we were far more economical and reliable.
While things were picking up, the cracks that had started to form at the very start of our journey were beginning to show. My co-founder was held up with some personal work and was mostly unavailable during the last few months of Daredeliver. This means that I had to do all the weightlifting for the company. I was now the guy who had to manage day to day planning, coding, finances, marketing, support, and testing of the app. The fact that I lived halfway across the city from where we started our services didn’t help. I’d leave home at 9–10 AM and return by 930–10 PM at night after a 60 KM motorcycle ride.
I would then work all through the night — to either introduce more features or fix bugs in the app — till about 2–3AM and then go to sleep. Wake up at 7–730 AM and repeat the previous day’s duties. Weekends were worse due to the number of delivery order we’d receive.
Eventually, the failure came. The biggest mistake of them all — almost as if to summarise the ones we’d been making — was that I did not plan anything out financially.
Yes, we had a planned term sheet. Yes, we did project revenues and we did anticipate the pitfalls. What I didn’t anticipate was my family pulling out after I’d started everything. The truth is, before I jumped into starting Daredeliver, I knew we’d need a seed amount of some kind; something minimal to pay the Daredevils a monthly salary until we generated enough revenue to pay them ourselves. There was also the matter of paying for packaging material, bags, branding, fuel expenses, and a few other things. My parents are in a good place financially. I mean, they aren’t rich but they’re definitely upper middle class people in an Indian society. They initially agreed to pay about $8000 dollars (split into 2 payments) to get me started. That was straight out of the college fund they’d set aside for me if I ever wanted to study abroad. But, I’d completed my master’s degree as well at a fraction of the cost and I never wanted use a single rupee of it. For Daredeliver though, I believed it was needed. It was going to take time to reach out to investors and back then in Bangalore, no investor would fund you for just an idea. They wanted, “proof of concept”, “an MVP”, “the numbers to show everything”. So, my parents it was.
By the end of everything, they had paid about $1400 and decided not to pay any further. This was after we’d launched and after we’d begun to establish ourselves as a brand. However, this was also after one major turning point in DD’s story. It was almost cinematic, honestly, but it’s something I can’t avoid writing about. So, here it is:
We’d spent months getting restaurants and cafes to sign up with us. During this time, one restaurant had been using our services. They were 14 branches strong in Bangalore alone and they were a very good chain of restaurants. One of the managers in the branch (the one that was using our services) reached out to me via the app and called me in for a potential long term deal. I met with the vice president of the chain and it was — to say the least — super intimidating.
He was this pretty old guy — like an ageing lion — sitting across this massive table behind a pile of documents and record books in a grand suit. He lifted his eyes in the middle of his cheque signing and said, “I’ve seen your documents and presentations; they look good. You have quite a few restaurants and businesses under your belt for a company fairly young. However, all that doesn’t matter as much as what I’m about to ask you. I’ve seen several others sit in the very chair you’re sitting in and fail at giving me a satisfying answer. I’m very good at reading people and I want you to look me in the eyes and tell me honestly: We have 14 branches in Bangalore. Can you manage all our branches as the exclusive delivery partner for the next 6 months while ensuring that we have at least 5 delivery boys dedicated to each branch? I’ll pay whatever you quote per month to ensure we retain you. And make no mistake, I’m not asking about whether it can be done. I’m asking, can you do it?
“Think carefully before you answer; there’s no going back from it.”
I should have thought about it. I should have bought myself time. Who cares about what some old judgemental dude was going to say? Who knew that that would be the last commitment I was going to make as a CEO? I didn’t.
I boldly looked him in the eyes and said, “Yes. Yes, I can.”
