Javaya Post-Mortem: How I Failed to Grow My First Startup as a Full-Time Founder
In February 2019, Built In Chicago named Javaya one of Chicago’s Startups to Watch. Two years earlier, I co-founded the e-Commerce marketplace for craft coffee after becoming convinced there was a fresher way to shop for our favorite local beans.
But by the time that Built In article dropped, we had already burned through nearly 90% of our funding searching for — and failing to find — product-market fit. And six months later, we officially shut the business down.
Having ensured our customers and partners had soft landings post-shutdown, I’m turning my attention to reflecting on how we ended up here.
What was Javaya?
Javaya was an e-Commerce marketplace for craft coffee. Our website recommended coffees from dozens of U.S. roasters, tailored to your tastes. Our direct-to-consumer model eliminated manufacturing waste, reduced transport waste, and delivered beans that were fresher (and therefore tastier) than from literally anywhere else.
Javaya marketed to customers through Ads (Google and Facebook), SEO (educational blog), Social Media (engaging posts focused on Instagram and later Pinterest), and Offline (coffee events and pop-ups). Later on, Javaya also tried B2B sales (office coffee tailored to employees’ taste preferences). Our angel funding came from incredibly supportive friends & family (see credits at the end of this post).
Why write about Failure?
Reason #1: It’s healthy.
Every day, founders make dozens of decisions that existentially influence our startup’s health. Failure feels personal. So we don’t talk about it. Or worse, we re-frame failure as something else to avoid acknowledging it. I hope that my public reflection will help other founders coping with failure to do so in a healthier way. This post is also my way of paying forward the help that my friends Avni (podcast) and Colin (blog) gave me during this challenging time.
Reason #2: To learn.
In many other aspects of startups, we embrace — even celebrate — failure. Radical transparency. Move fast and break things. This philosophy facilitates better learning, which leads to better outcomes. I hope that this post becomes a learning tool. I hope you learn 1/100th what I learned from Javaya’s failure.
If you feel compelled, connect with me, and we can continue to learn together.
What didn’t work?
Fundamentally, Javaya failed because we were running out of money. We were default-dead, meaning that — although we were growing — that growth was too slow and that we’d run out of money before we’d become profitable. (If you’re not familiar with the term, here’s a very important explainer). According to growth calculations that I did as part of this post-mortem, we would’ve needed approximately 2.5x as much investment as I was able to raise to be default-alive on paper.
Operator Error — Even though I was highly analytical about our entire operation (I refreshed every important KPI monthly and had them all memorized), I was overly-focused on near-term gains at the expense of long-term strategy. In the course of operating Javaya, I was guilty of all of these (and much more):
- Implementing a tactic (like a new retention tool for our Shopify site or new social media automation) without asking myself if it aligned with our strategy.
- Running a promotion without considering how discounts impacted brand perception or customer lifetime value (LTV).
- Driving broad, untargeted traffic to our site when we should’ve been iterating closer to our core customer.
- Spending time and money on things (like IP protection) that didn’t drive customer value.
Competition — Although we were first-to-market with our novel marketplace solution, we didn’t have a plan for how to stand out once competitors appeared. Worse, we had leaned hard into the Marketplace value proposition, which proved simple for competitors to imitate. We hadn’t invested enough in harder-to-replicate Education or Curation. Our business model relied on repeat customers, but those customers’ loyalty became harder to earn with every lookalike that entered the market.
Scaling Growth — We knew that we had to start with things that don’t scale. Early on, it was easy to form relationships with customers, learn from them, and fine-tune our offering to please them. We banked on being able to automate more of this handcrafted experience over time. For example, we replaced our “human recommendations” with a taste preferences quiz. However, almost from the instant that we started pulling growth levers, CACs spiked and conversions plummeted. Worse, none of our copy, creative, or channel tests revealed a winning hand. We limped back to square one after that failed experiment — financially wounded and without many learnings to show for it.
Fulfillment Model — One of the hardest lessons I learned building Javaya was that you can be the best at something and still not meet customer expectations. Because we relied on repeat purchases, every customer touchpoint was critical — our fulfillment model most of all. Because we didn’t own every touchpoint, issues would crop up. Mathematically, at a 95% service level, a customer who ordered 1x/month had a 1-in-2 chance of experiencing an error with our service within the first year. Problems with a previous order were our #1 customer churn reason, but it wasn’t evident to us until too late because customers who defected rarely told us why. Ironically, catastrophic issues (e.g., Wrong coffee shipped) were preferable to minor ones (e.g., Coffee was ground instead of whole bean) because the former allowed us to perform some win-back while the latter went unrecognized.
What went well?
When we launched, we decided that our north star metric would be Repeat Customer Rate. We knew that in e-Commerce, second-time purchases are a leading indicator of long-term loyalty. Our repeat customer rate would hold pretty steady at 40% — well above the industry average. In isolation, we were very proud of this (of course, one good KPI doesn’t a company make).
Here are a few other things we did well:
- First to market — When we launched, we were the first a-la-carte concept in our category. We felt the “subscription box” approach was becoming tired; we didn’t enjoy our experiences with those types of services. While it didn’t guarantee victory, being first helped us clearly articulate our point-of-difference early on.
- Innovative — We created a concept called the Future Fresh Date that required customers to pick a future date for roasting & fulfillment. This technology-enabled solution was a win for roasters (more predictable orders from Javaya) and customers (freshest possible beans).
- Built both sides — Building two-sided marketplaces is complex. When we publicly launched our MVP, we featured ten incredible roasters and had bootstrapped the demand side through hustle. And as we grew our customer base, so we expanded our roaster roster.
- Operations — Our partners regarded us as the most accessible retailer with whom to work. Not only did we care (one of our core principles was “respect the craft”), but we built an operating model that made partnering with us delightful. As such, even though we weren’t generating them massive sales, we always had satisfied partners and a waiting list for new ones.
- Education — We knew that the key to creating loyalty was empowering everyday coffee drinkers to make bold choices on our site. The highest compliment you could’ve paid us was, “I tried something new, and loved it, thanks to your website.” Contrastingly, one of the most painful parts of shutting down was responding to customers who now felt helpless without Javaya to guide them.
- Personalization — Did you know that coffee has almost 500 recognized flavor compounds? By comparison, wine has about 200. We built a technology-enabled matching system between customers’ taste preferences and coffees they’d love; it worked for everyone from the beginner to the connoisseur.
Words of wisdom?
Co-founding and running Javaya for over two years was an invaluable learning experience. Having been lucky enough to stay in the startup world post-Javaya, I’ve continued to learn a great deal from smart people and new perspectives.
What I’ve learned is that most startup advice is either transitory or biased. You have to mine for the immutable stuff. So take it all with a grain of salt, but here’s what I think is material.
- Co-founders are like spouses — Yes, marriage. You must learn to complement one another, resolve arguments, and put the business and the customer first. If you cannot find this level of partnership in your co-founder, then you shouldn’t start a company together. Period. I am thankful that I still have a warm friendship with my co-founder, despite some (rare, but intense) Javaya-related arguments.
- Understand your funding options — Not every startup needs to be venture-backed. The cost of equity is 5–20x the cost of debt and reduces your range of possible successful outcomes. Not to mention, fundraising can be incredibly distracting. There was probably a different version of our startup that could’ve subsisted on founders’ sweaty equity, grow more slowly over time, and with a smaller burn. Once we raised money, we lost the optionality to do it that way.
- Don’t take it (too) personally — I dreaded the final calls I made to our investors; their equity was now worthless. I admit I was 100% that founder that, as things got worse, stopped communicating with them. To my surprise, every single investor not only understood the situation with perfect, objective clarity (“we’re investors, we knew the risks”) but thanked me for the opportunity to be a part of Javaya. In retrospect, I realized I had placed unreasonable expectations on the success of Javaya. Objectively speaking, 90%+ of startups fail. If I understood that, I would’ve saved myself (and my loved ones) much unproductive anguish.
- Don’t let it claim all nine lives — There is a myth in startups that you need to leave it all on the field. While it’s true that founders should have more skin in the game than any other stakeholder, they shouldn’t be leveraged to the point of personal ruin if/when their startup fails. Entrepreneurs are the bedrock of our economy, and we should be doing more to help them succeed and to help them recover when they don’t.
I’m staying in startups, having joined a team building something that ignites my passion for empowering founders. It’s my dream job.
I’m also working on something to help other founders with their growth challenges. Stay tuned for that by following me: @nickselman or drop me a line at hello at nickselman dot com.
There are so many people to thank for supporting Javaya and our team along the way. Our customers, our roaster partners, and all our other business partners — thanks for working with us! Gaby, Nicole, Ade, Dr. Jim, Kurt, and Jon — thanks for believing in us! Our friends and family — we can never repay you for your patience and support while we chased this dream. We love you all!