How to End a Startup

Lessons Learned with Cart at TechArb’s Founder Friday

Jeffrey Henebury
TechArb
6 min readOct 1, 2017

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By Jeff Henebury

Every Founder Friday, University of Michigan entrepreneurs gather at TechArb to tell tales of startup battles lost and won and impart the wisdom of hard-earned lessons. Speakers come from a diverse range of fields and backgrounds; some are developing the earliest stages of their venture’s history, while others are eager to brainstorm expansion and next steps.

In a recent Founder Friday, TechArb alum Stacey Matlen offered a different perspective: she spoke about her recent decision, after two years of entrepreneurial highs and lows, to end her startup Cart. Far from a cautionary tale, Stacey spoke glowingly of her entrepreneurial experience — she learned more about business in that time than she’d have thought possible, and was generous enough to share those learnings with her fellow U-M entrepreneurs. Some of the takeaways:

Customer discovery is crucial

When Stacey started her entrepreneurial career with the School of Public Health’s Innovation In Action program, she knew she wanted to focus on issues of food access and security. When facing such issues, the instinct can be to jump in and start tackling them right away. But the first several months must be spent conducting as many customer discovery interviews as one can — an entrepreneur has to ensure that she understands every aspect of the problem before jumping ahead to solutions. For Stacey that meant talking to low-income food-shoppers in a variety of different communities, grocery store executives, and myriad other stakeholders to try and answer the question: what are the obstacles that currently prevent people’s access to groceries? Only then could she and her team move on to developing potential solutions.

Test your venture’s hypothesis quickly (and cheaply)

After months of customer discovery, Stacey and her team developed an initial business model: Cart would use existing rideshare infrastructure (think Uber) to get low-income, low-vehicle access individuals to and from fully stocked supermarkets. The rides would be subsidized by grocery chains, who’d benefit from the extra business of people who typically couldn’t access their store.

A trial run of Cart’s grocery ride-share service

But Cart didn’t jump right into developing an app. Rather, they ran low-tech pilots to determine whether this was a service people and grocery chains would be interested in and pay for. Sometimes this outreach was as simple as paper flyers, connecting rideshares over email, or setting up a table outside the grocery store, talking to shoppers on their way in. The early days of a business are defined by constant change — if your business model is still developing, you’ll want to avoid sinking money into infrastructure you might not need a month down the road.

Structure and the right team are critical to success

Cart was named MVP by their peers in the TechArb Summer 2016 cohort

After a successful one-month pilot partnering with the Meijer grocery chain, Stacey and Cart found themselves at a difficult crossroads: she and her three co-founders were graduating, and her cofounders decided to pursue opportunities elsewhere. With the support of TechArb and the Center for Social Impact, Stacey decided to give Cart a full-time chance — but she quickly realized she’d need a new team to carry forward. She hired interns and explored the wealth of project management tools available online. Her advice on building a team from scratch? Identify the skill sets your venture needs, find the right talent, and choose a method for team communication and accountability.

Don’t underestimate the importance of sales; beware the intention-action gap!

Cart at Grand Rapids’ Seamless Accelerator
Cart was awarded 1st Place in the Social Entrepreneur category of Ford’s Go Detroit Challenge

After a successful one-month and one-store pilot, Cart and the Meijer grocery chain agreed to expand into a three-month pilot at two Detroit Meijer locations. Cart participated in Seamless IoT, the nationally recognized Grand Rapids-based accelerator. And in April of 2017, Cart won the Ford Motor Company’s Go Detroit Challenge — a contest for creating innovative solutions to mobility challenges faced by Detroiters.

But Stacey and her team were also encountering a problem — while potential Cart users had initially expressed great interest in the service, many balked when it came time to actually change their routine. “The status quo is often your biggest competitor,” Stacey said. Even when offered an attractive alternative, people tend to stick with what they know. It can often take years for new services to really gain a foothold in a community. Focus on developing your business model, but remember that posting sales is how a venture grows and scales.

Trust your gut

At the conclusion of the second pilot, Stacey was faced with a challenging decision: the need for a service like Cart clearly existed, but consumers were proving slow in adapting to the new model. In an inspired move, Cart pivoted to Medicaid HMOs — they hoped that, when shown the long-term savings of providing their customers with access to healthy food, HMOS would be willing to subsidize the cost of low-income customer’s grocery store rides. Again, Cart found great excitement over the service but a reluctance to change the status quo — Cart fell outside of traditional approaches to ensuring patient health.

Stacey mentioned the importance of Daniel Goleman’s Primal Leadership: Unleashing the Power of Emotional Intelligence when making the difficult decision to end the startup she’d worked so hard developing. According to Goleman, there’s data behind our “gut feelings;” they’re based on all the patterns and data we can’t consciously process but have intuitively learned. As much as she might have been tempted to continue, Stacey’s gut was telling her that she and her team had seen Cart as far as the company could presently go, and she made the call to end operations.

Entrepreneurship is an emotional rollercoaster; surround yourself with a good support system to help you make it through the ride.”

For an entrepreneur, social support “isn’t just a nice thing to have,” Stacey said; “it’s essential.” Having a community is essential for soliciting feedback and providing mentorship; it also sustains you when the going gets tough. A good community is always willing to listen and offer help; they recognize they’re all riding the roller coaster together, and that one venture’s victory is a victory for all.

We’re so grateful to Stacey for sharing her experience, and so happy to count her as part of our community. If you’re a U-M entrepreneur looking to join that community, please join us at our Founder Friday gatherings this fall. Follow TechArb on Twitter to keep posted on upcoming dates!

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