The Rise & Fall of a Global Start-up
Start-ups are hard. After 2 years of building Trevolta, we’re wrapping it up.
In September 2013 the idea was born to introduce crowdfunding to the travel industry. To validate the idea we launched a simple splash page introducing crowdfunding for travelers: “Plan an extraordinary trip and get it funded by inspired people, amazed friends and generous sponsors”. Interested users were prompted to leave their e-mail if they want to try it out when we launch.
I put my last $10 on Facebook ads to measure the conversion rate. Every second visitor was leaving his e-mail address - 50% conversion. To avoid spending more money on ads, we implemented referral mechanics — share the link on social media and get $50 towards your first trip (with a minimum raising amount of $1,000 per trip and a requirement to reach that minimum, this offer would simply eat our commission, which was between 5% and 9%).
That’s when we got the first spike - 70,000 sign-ups in 3 days, mainly from India and Europe. After that sign-ups started slowing down, and we started receiving e-mails from people asking when they will get access. That gave us an idea to implement a queue.
The queue’s purpose was simply to divide everyone into 3 batches — if you invited more than 3 people through your referral link, you’d be in the first batch to get access to the website. If you invited exactly 3 people, you’d be in the second batch, less than 3 — third batch. And that’s when it exploded. We started signing up 1 person every 1.2 seconds.
To heat things up a bit, we added a counter on the splash page saying how many people signed up in the last 24 hours. The record was 105,000. All in all we signed up around 400,000 people in just 2 weeks.
The majority of sign-ups were from North America (35%), followed by Europe (29%) and Asia (22%).
Unfortunately for us, we are located in South Africa. And that was one of the biggest problems to make this company work. You’d think that internet makes everything global and location doesn’t matter. Well, it does when it comes to raising investments, setting-up a company and opening bank accounts.
We were fortunate enough to quickly raise seed round from a group of local investors (14 in total — mainly Angels, plus one VC). For $70,000 USD we gave away 30% of the company — welcome to start-up life in South Africa. Later on we proceeded to raise a follow-on round of $80,000 USD, all in all raising $150,000 and giving away half of the company.
Now it’s time to build an outstanding product. Between giving interviews to the likes of The Wall Street Journal, Yahoo! and others, as well as managing some interest from the massive brands in the USA and Europe (including fast-food chains, airlines and hotels), we were frantically building the first beta and released it on January 3, 2014.
From there — feature after feature, after feature, hundreds of different strategies, approaches and ideas on how to grow the business. In 2014 alone we launched 3 new versions of Trevolta. In reality we hit the ceiling on both user growth and revenue growth. Around 100 sign-ups on a good day, and $24,000 in trip contributions per month. No matter what we did, we could not make those numbers grow. To date we processed $385,000 USD through the system — not much for crowdfunding industry, but enough to make some travel dreams come true.
In September 2014 we made an attempt to raise investment in the US and set-up our presence there — that would give us flexibility in setting-up the structure of the business right, and also put us face to face with the brands we were in communication with over e-mails and Skype. All those brands wanted to get involved as trip sponsors in one way or another, but inability to meet in person didn’t help either — weird team from South Africa trying to do something that no one has ever done before.
Here comes catch 22 — we needed to raise capital to set up presence in USA, but in order to raise capital in USA, we already needed to be incorporated there. In the eyes of the foreign investors our shareholding and business structure also didn’t look right — founders lost control over the company that was operating under SA tax laws with it’s IP residing in SA as well.
Given we had an impressive month to month growth, it probably should have been easier. In reality it was meeting after meeting after meeting, pitch after pitch, investor deck after investor deck, projections after projections. Ending 2014 till mid 2015 was all about fundraising.
Business ran out of money by November 2014, and since then in good faith founders have been funding the operations themselves.
Failing to raise a debt round in SA, founders of the company resigned in May 2015. To summarize our experience, and as a reminder to myself when I build a new venture, this is what I’ve learned:
- Avoid raising investments for as long as possible.
Giving away too much too early, being influenced by the board in your decisions — it just doesn’t worth it. Rather do some freelance/consulting and keep building what you’re passionate about until it grows exponentially and you need funding to support that growth. - Don’t build 1,000 features and try to please everyone.
We were constantly building and improving our systems, while trying to collaborate with other partners and start-ups, launching new campaigns and doing million different things all at once. When people learned that Trevolta was run by only 3 people, they were impressed. Now I would rather build something simpler and get 10 people to run it, but run it properly. Look at Slack, or WhatsApp — they don’t overload their product with features like their competitors do, they keep their focus and priorities right. - Avoid launching global companies from 3rd world countries.
But if you do, make sure the structure of the company is clean, and it’s incorporated where it strategically makes sense. Also, if you do, make sure there is someone out there on the ground who got your back and can help with setting up bank accounts, getting all the legal work done, etc. - When raising investments, make sure investors can bring more to the table than money.
Money is probably only 10% of what you need for your business to succeed. Networks and resources can give you another 40%. If you don’t have them, make sure your investors do. We struggled with a lot of admin where our investors couldn’t help us. They did help with some of it though, but none could open any doors to the global maarket when we desperately needed it. - When getting investors or advisers, make sure they’ve played in a similar space as your start-up.
Otherwise their advice is just an opinion, but it may influence your decisions and vision big times. - Don’t hire unqualified and unmotivated.
We did, because of a lack of experience in hiring people, as well as hiring locally, where quality of education and start-up culture virtually non-existent. - Remember to have fun.
It’s easier when you’re not under pressure from investors, customers, partners and tax collectors. Drop this pressure by following rule number 1 and 2. Otherwise building what you like may not be enjoyable, no matter how much you like what you do.
All in all, that was an amazing experience. We helped some awesome travelers to realize their dreams. We got involved in saving South African rhinos from extinction. We worked with over 56 brands on sponsoring some trips and running campaigns, including Hampton Inn, Samsung and Hertz. We met some awesome people, and leveled up our entrepreneural skills.
Follow me on Twitter to see what I’m working on, and stay positive. :)
Love & Light,
Mark Karimov
