Mistakes and learnings
This is the story where we explain and try to break down the mistakes that we made in our 1st launched product. We would love to hear your comments on what could have been done better and want to create an open community where mistakes are celebrated — for without mistakes, we won’t have learnings.
When I say we need to celebrate mistakes, what I imply is also that i) we take bold bets without sufficient data points to take yes/no decisions ii) the decisions made have significant thought put into it iii) there is a way to track and analyse the decisions in retrospect to understand and implement what we learnt from them.
So after we launched our ‘Hypto Business’ mobile app targeting SMEs to accept payments via QR codes, we focused on user acquisition. This is where we made our 1st mistake
Our thinking was that merchants would not say ‘No’ to a payment mode which was free of cost and at that point, we were in Chennai where not much competition was present.
Learning 1: Just because something is given for free, doesn’t mean users will use it. While I put that in obvious terms, it just needed to be said that users (in this case merchants) need an incentive to take an action where the solution is not directly apparent (if it was, they would have done it already).
So, we took this learning 1 and applied it in a way that caused our mistake 2.
We ended up giving an incentive for users to be onboarded on our platform (which almost every B2C app at that point was doing) and it seemed like a very straightforward way to get users. Engagement would be a solvable problem or so, we thought.
Learning 2: ‘Show me any problem, and I will show the incentive that caused it’ — I came across this quote by Charlie Munger sometime back and it so succinctly captures what we did wrong. We now know to think long and hard about the repercussions of any decision in terms of the incentives and take action accordingly.
So, when we had the incentive program, it caused a huge traction for us in terms of acquisition and engagement (both had incentive structures in place). But then, when we stopped it, we ended up losing almost all of the traction and the engagement was not habit forming in anyway. But I also think that habits do not get formed within the timelines we ran our programs and we stopped mainly because we were bootstrapped and losing out of cash.
Unless we raised capital from external investors, we could not sustain that cash burn and had to take a pause in running that habit forming program. This led to our mistake number 3.
Learning 3: Remove dependencies — it’s as simple as that. Be it dependencies on your supplier, partner, customer, employees, investors, anyone. Your startup is bigger than you and it is your job to ensure that your startup keeps surviving. And if there is a single point dependency on any aspect, then work like crazy to get that reduced and eventually removed.
When we started building out features and tracking metrics that would interest potential investors, it led to de-prioritization from things that would have moved the needle for us in actual cashflow terms. And speaking of cashflow, this is where we made our next mistake.
We ended up building a set of features that worked from a user experience standpoint but ended up lacking in another thing — security and fraud management. We were dealing with actual money and that’s when we realized why finance has so many hard problems and started unbundling them one by one.
Learning 4: Use expert help to augment your idea of innovation. This is especially true for certain domains such as finance. While I believe that innovation happens when you think outside the box, I also have to accept that the box exists for a reason and it is good to know what those reasons are.
We started capitulating from the operational effort in handling the disputes we were receiving while processing payments and then we made our 5th mistake.
We started then building out a set of features using tech that we can honestly say, no one in India had built before. We brought to market a set of complicated workflows that combined accounting, payments, reconciliation, viral marketing loops, shareable dynamic links, personalization, subscription systems, and all these on a mobile app which was supposed to be a basic UPI based collection app. We ended up waiting for people to start using these features and started publishing ‘How Tos’ and other supporting documents.
Learning 5: Over engineering a solution for a problem that is not validated yet is the biggest burn of your best resource, which is time. If you cannot launch something in less than a week, it should be stripped down further. This is a basic framework that we have now. When any feature has say ‘x’ weeks of effort, the first question we ask today is what should the feature not have to make the effort 1 week. The longer we delay validating our assumptions, the larger we miss out on opportunity cost of learning something that we would learn much earlier.
While in hindsight, many of these seem like obvious mistakes that no one would make, that was not the case. I do think we made a few other blunders that could have been avoided and I have not listed them here. But the ones here are something that every startup would face at some point and if even we could help one more person other than us to prevent some of these, that’s a job well done for us!
There is also the usual ‘DISTRIBUTION TRUMPS PRODUCT’ and ‘1ST TIME FOUNDERS FOCUS ON PRODUCT AND 2ND TIME FOUNDERS FOCUS ON DISTRIBUTION’.
I completely disagree to generalizing this statement and think each scenario is different and has to be handled appropriately. Well, that story is for a different time, Cheers :)
