How betrayal, near-failure, and a vacuum saved my $19M startup
One of the lowest points in my startup career revolved around a dirty office and a vacuum cleaner.
It was back in 2013. Mark McDonald and I had launched Appster in 2011 and the business was gaining traction.
We had aggressive growth targets, so neither of us were taking a salary. Instead, we reinvested every dollar right back into the company (except for what we spent at our local McDonald’s).
We were living on the fourth floor of an 1800s-era distillery tower that was also our office — and it was a mess. To make matters worse, our old vacuum cleaner had broken and we desperately needed a new one.
Thanks to our dogged focus on growth, cash reserves were at an all-time low. We had just slipped through a couple lean months and 3 out of 4 members of our sales team recently quit.
We hadn’t managed our balance sheet properly, and suddenly, we found ourselves struggling to make payroll. The business was hovering near the edge.
The light at the end of this big, black hole arrived in the angel-like form of one of our previous General Managers, who knew our bank balance was pitifully low. He surveyed the crumpled takeout bags and massive dust bunnies and offered to buy us a vacuum.
We were humbled (and honestly, pretty embarrassed), but we accepted — and we soon scraped ourselves out of that mess, both physically and financially.
The crashes test your commitment
It’s easy to generate startup ideas. If you’re smart, creative and entrepreneurial, I’m betting you have a notebook or app filled with middle-of-the-night inspiration. I would also guess that a lot of those ideas are pretty good. You could probably put your head down and create a product or service that fills a decent niche.
The challenge, however, is to choose a project that you’re willing to take on a very long and bumpy ride. The prevailing startup narrative celebrates unicorns and seed-round superstars, but the accolades are hollow when you’re staring down serious trouble.
We’ve had other close calls in the last six years. In 2013, we decided to set up an engineering hub in Gurgaon, India, where we could grow a team of dedicated developers, technologists and support staff. We knew it would be a major asset for the business, but quite honestly, we had no idea what we were doing.
A good idea with bad execution
Mark and I realized early on that the five biggest players in our industry had development delivery centers — and the majority were located in India. But there was one major difference between us and them. Most of these companies had a founder who hailed from India, or at the very least, a strong Indian background and solid local connections.
Mark was a 19-year-old Anglo kid from Geelong, Australia and I’m a half-Chinese Kiwi who grew up in Stratford, New Zealand. It would be nice to think that business transcends international and cultural boundaries, but when you have no local contacts, you don’t speak the language, and you don’t understand key social nuances, it’s an uphill climb.
Luckily, we were young and naïve and eager to make it work. Armed with a $100,000 budget (probably the most pitiful amount ever earmarked for an international delivery centre), we met a local firm and attempted to buy out some of their core team members. We also thought we could open an office, begin hiring and quickly build the infrastructure we wanted.
Nothing worked. It was a total failure.
We revised the plan and hired a Melbourne-based Director with an Indian background who could work on the ground in Gurgaon. It started off well and we were feeling pleased with our own ingenuity. Soon, however, the wheels flew off the bus.
The situation hit rock bottom when we flew to India to investigate. Our driver insisted on taking us back to the “scene of the crime” and pulled over beside the river. With broken English and animated hand gestures, he explained that this new, trusted hire had recently torn up thousands of receipts and tossed them in the water.
I’ll spare you all the tedious details, but we eventually learned that our new Director had committed fraud and stole hundreds of thousands of dollars from the company.
Back to square… three
The betrayal was devastating. We had lost money, time and confidence. It took nine months to pick up the pieces and get back on track, but we started again by hiring our CTO, Martin Halford.
At that point, Martin was the most expensive employee we’d ever brought on board. We weren’t even sure we could afford him, but we also knew that we desperately needed his experience and guidance.
Just seven days after signing Martin’s contract, we convinced him to jump on a plane to India and fix the mess. Mark went too. They worked hard to regain our employees’ trust and turn the project around.
We established a solid growth pattern over the next couple years — and the delivery centre played a vital role in that expansion. Today, we have nearly 350 developers and staff members working in India, which provide the backbone for $19M in annual revenues.
When I think back to the early days in Gurgaon, though, I can still feel the gnawing stress of trying to run a business while cleaning up an epic mess on another continent.
I barely slept. I think I ate something other than McDonald’s, but it’s a bit of a blur.
What I do know is that our shared enthusiasm for the company and the impact we wanted to have kept us going. We knew our core idea was sound and we never lost sight of what we were trying to create.
Money can’t be your carrot
I know it’s a cliché, but it’s one of the best pieces of advice I can offer: don’t let money drive you. Sure, a business needs to be monetized and if you want to build a sustainable, growing company, you need to choose an idea that can bring in significant cash.
But, when your back is against the wall, an investor drops out, your co-founder quits — or one of 700 other disaster scenarios unfolds — your passion for the business will help to pull you through.
If you’re not truly excited about your idea or the impact it could have on the world, keep moving. Keep thinking and searching for the project that keeps you awake at night (in a good way).
It takes persistence to get through those rocky times and your core purpose will provide much-needed fuel. I didn’t totally understand this a few years ago, but I sure do now.
Three questions to jumpstart your idea generation
If you’re still hunting for a great idea, take your time. It’s worth digging and stretching to find something that makes you come alive. The following questions seem simple, but they’re deceptively tough to answer with clarity and conviction:
- What frustrates me? Where do I see or feel friction — and what’s my solution to the problem?
- Can I create a viable business model? Are people or companies willing to pay for my solution? Is it scalable?
- Am I willing to grind for my idea? Am I ready to put in the time, energy, resources, late nights, and crack-of-dawn mornings to do what’s required?
The final question has been on my mind a lot lately. Mark and I started Appster because we’re entrepreneurial by nature and we were excited about building a great company. After just one year, we knew that focusing on startups and serving entrepreneurs would keep us engaged. Every project and every new client is different. That’s exciting.
Eventually, we knew we needed a mission. When we clarified exactly what we were trying to do, we had our answer: build a development hub for the greatest ideas and innovations in the world.
We knew why we were grinding so hard — and that’s what will see you through empty bank balances and thieving managers.
Find something you can commit to for five, seven, or even 10 years and beyond. If you’re ready to spend a decade with your business idea, you probably have the determination it takes to grind through the bad days.
Now go give your office a thorough cleaning and get down to work.