In my first post, “My cofounder said “I love what we’re doing” and we shut down our startup”, I’ve covered how Dmitry Fink and I ended up with money in the bank and had no idea what to do with it. This feeling of — royally screwing up, clueless about ‘what’s next’, yet with a briefcase full of cash in our hands — is perhaps best illustrated by the above image from the cult Tarantino movie. Although, no one knows what was in that briefcase…
Admittedly, it’s odd to see Dmitry and I transform from a cute couple that are about to rob a cheap diner to the two hitmen on a verge of retirement. This is as far as analogies go. Though, I do do crowd control, and Dmitry does handle employees.
It’s Monday morning in an empty office. We laid off our entire team last Friday. Branded t-shirts and closed laptops are everywhere. We lost our jobs too. However, we still had work to do. Starting by tying up the loose ends of closing a company. Next on the todo list were:
- Investors gave us till the end of the year to find a new idea and convince them to repurpose the remaining capital. WTF do we do?
However, we first took a deep breath on a brief break. During which, I tried to explain to my mother that it wasn’t the end of the world. Not an easy task, and to be honest, still ongoing.
When I came back, Manu Kumar asked me to present to his investors at an annual K9 LP meeting. First, a dozen of K9 founders showed how everything is just up and to the right. I was the last to present. To those whose money I had spent. What do I say? An ultimate litmus test of ‘own it’…
Perhaps, one of the most difficult talks I’ve ever given.
We made mistakes running our first company, so we tried to understand what they were. Some of them I’ve alluded to in my post “Imagine Yesterday” — I’ve fallen into the same traps of fallacious allure of exponential growth.
Here’s another mistake I’ve made:
Every task at our company was led by a true master of their craft. Except running sales. I ran it. I knew I fell short running sales, as I had no prior relevant experience. I didn’t trust myself that I was doing a good job. Thus, as we desperately needed to grow faster, I decided to hire a pro.
Our VP of Sales was the first VP of Sales at OpenTable. He hired their first 45 sales managers and brought in their initial 1,000 customers. I was humbled to my core when he agreed to join our team in March/2015.
I’ve watched him work for the next four months. He drove the team to new heights, listened to customers and evolved our product value proposition. He knew what he was doing. An outright guru.
To emphasize that: while deliberating about shutting down, I had another reasoning. If he couldn’t achieve the growth we needed, no one could. After seeing his work, I couldn’t be more certain about it.
Hiring VP of Sales in the first place. Yes, he is a pro. However, not trusting myself running sales made me falsely believe that our growth could have been magically fixed just by the right hire.
I should’ve realized that me running sales wasn’t our biggest problem. We didn’t have a good enough product. No sales expertise could’ve overcome it. I should’ve continued to evolve our product instead.
I know I’m not the first one to make this mistake. Plenty of similar stories about startups trying to scale too early. Scaling before nailing a product market fit mistake should’ve been easy to avoid . Alas, it is what it is.
OK, we cleared our heads and desks, pencils are sharp and whiteboards are ready. Now what?
My wife proposed we travel for a year. After all, she works remotely and this is the last year both of our are kids are pre-schoolers. We did the math that we could rent our house to cover the mortgage and the money we’d save on daycare will cover most of the cost of travel in Asia.
We entertained that option for a few days and decided against it. As it effectively meant that investors had to accept the loss for their investment. Investors entrusted us with the remaining capital to give it another shot. Going to travel meant to betray their (and Dmitry’s) trust.
Let’s look at what we had:
- Founders committed to work together to build the next thing
- Phenomenal engineering team on standby
- Supporting investors and significant capital already in the bank
Seems like a solid list. One tiny, yet crucial, piece of the puzzle was still missing. An idea. Everything else was in place. Even some experience in what not to do was there. But what the hell do we do?
If I were to share my ‘problems’ with others, some would laugh at me. They wished to be in my position with so much cash at hand. I see how it looks from outside. Yet, if you think about it, finding and committing to an idea is analogous to finding, falling in love and marrying a person. Both demand:
- Excitement about it today and years from now
- Believing in a long term chance of success
- Commitment to persevere through unpredictable, yet inevitable, challenges ahead
- Blessing by parents/investors
As hard as it is already, we also had a 110 day deadline. One cannot always find a girl/boyfriend in 110 days. Maybe a solid second date. But marriage?
Per Manu’s suggestion, Dmitry and I, each made a list of existing companies that we could imagine building. It was encouraging to realize that we saw things eye to eye, as our lists had almost 80% overlap.
Then we tried to find common themes among these companies on our lists. Most were a B2B SaaS businesses. While, it isn’t sufficiently narrow, it helped to eliminate many alternatives, for example, B2C and marketplaces.
We had two groups of ideas. Those we’ve conceived ourselves and ideas we explored based on conversations with others. Dmitry, as the smart one, led the effort on our own ideas. And as I am a networking slut, I was focused on the second effort.
Many ideas of our own were based on problems we felt are worth solving. We tried to categorize them by the type of business and our knowledge of the space. Then we had to make sure both of us were sufficiently excited about the idea to start researching it further.
In the next phase, the idea had to be still interesting enough to be presented to Manu to get his initial reaction. The ideas that passed his scrutiny often failed the next crucial test — considering what we know now, are we still willing to commit long term to this particular idea?
Second group, i.e. ideas of others, was a way more dynamic experience. We reached out to our network and asked them to ‘pitch’ their ideas to us. We met several people almost every week.
We saw dozens of interesting concepts, yet we couldn’t see ourselves working on many of them. Others always failed either of following two tests: Is the person presenting the idea indeed a domain expert in the industry? Or, can we see ourselves working closely with that person?
That was an interesting glimpse into the pains seed investors might be going through. Need to find time to compare notes.
We even considered hardware projects that may take a significant capital to get to MVP. After all, both Dmitry and I come from 17 years each in embedded and hardware companies.  However, we’ve decided to focus on concepts that move bits, not atoms.
We also looked at concepts that relied heavily on what we’ve built at our late startup. One idea seemed like a plausible way to capitalize on our existing engineering assets. However, when I asked Manu if he would’ve funded that idea if I were to pitch it to him today, he said ‘no’. We axed that idea too.
Nothing was adding up. Too many constraints and loosening them up wasn’t possible. And we didn’t want to do something just for the sake of doing. Three months went by. Countless Excel models, googling, reading, debates, meeting new and interesting people and tons of great ideas.
Alas, the one was nowhere in sight. 
Exhausting. You can’t force yourself to fall in love. Maybe Asia after all?
One of the azimuths we explored was the specific challenges we had faced at our first company. We looked at the actual pains we had experienced and studied potential solutions.
One of these deep dives led us to build Bugsee, a mobile SDK that lets developers see videos leading up to crashes and bugs. We wished to have these kind of bug reports when we were developing our mobile app.
UPDATED: Last chapter was published at “The Deciding Deep Dive”
Armed with the lessons from past mistakes, we’re now growing our X factor.
 The t-shirt I was wearing for the occasion. Highly recommended.
 We had one audacious idea, that I hope Dmitry and I will pursue together in the future. Due to the nature of the concept, it could not have been funded with the existing capital. We had to put it on a back burner. One day…