It’s sad but true that we often learn more from the things we fail at achieving than from those which turn out well. There’s more incentive to analyse the facts and be brutally honest with yourself when things don’t go according to plan, than when the world is singing your praise.
Friend of htxt.africa Andy Hadfield recently announced that he was closing his social start-up Real Time Wine. It was a bit of a surprise: after all, South Africans love wine and they social media – surely an app which is designed to let the community of wine drinkers recommend (or advise against) bottles is a dead cert winner?
Enough people thought so that the Real Time Wine won the Tech4Africa Ignite Startup competition back in 2011, earning Hadfield R50 000 to get going. Over the next three years he picked up backers, sponsers, fans, SuperFANS and – above all – a vibrant and connected community that delivered honest wine reviews in a non-snobbish manner. There was a spin-off app – MyBEER – for lovers of craft hops, and plenty of positive press coverage.
But it wasn’t enough. Hadfield pulled the plug on Real Time Wine at the end of last month having run out of cash to keep it going. He published the software as open source and blessed the existing community with a new home and name – Incogvino – where it can grow without the need to turn a profit.
In a 8 000 word post over at his blog, Hadfield post mortems the company in a brutally open and honest fashion, partly for catharsis but also, he says, to “give a little back to a community that provided an enormous amount of support during this start-up journey”.
“Failure isn’t a bad thing,” says Hadfield, “South Africa has a horrible stigma around failure. Where US/European startup communities celebrate it and wear it like a badge of honour – we hide under a rock and pretend it doesn’t happen. I’m not going to lie – I’ve been pretty worried to write and release this, because of that stigma. Hopefully this content does something to move us towards a more accepting, better culture around startup failures. Failure is a couple of extra course credits in the Street MBA. In the US, most investors won’t even look at you until you have a couple of failures under your belt.”
Here’s the major points from his post, reproduced with permission – you really should read the full thing here. He describes the process of running Real Time Wine as earning his ‘street MBA’. The course notes for which run something like this:
Make sure you have a co-founder
I was blessed to have an amazing support team around this startup… But I didn’t have a co-founder. And I will never, ever, do another start-up without one.
The life of single founder is tough and lonely. Amazing businesses are built with people not with products. The chemistry between founders and early staff is probably the single most critical factor in its success. When things are going well, you need people around you to high five. When things are going badly, you need people to prop you up and help you get up off the floor and keep punching.
Pay yourself up front
I didn’t pay myself a cent throughout the whole Real Time Wine story. It was probably the wrong move.
On one hand, I think this showed my investors how committed I was, how I’d go to the mat and do anything to give the start-up as much runway as possible. On the other hand, it gave a completely unrealistic view of what the start-up would actually cost to run. And even worse, almost distracted me from hiring a team earlier (or at all).
Pay yourself up front. Even if it’s R5 000 per month. If you’ve raised even a little bit of funding (or have some savings), this number is actually meaningless in the grander scheme of things – but meaningful in keeping yourself motivated. You can always escalate your salary quite quickly – investors understand you have to live as well as work.
For a mobile play, you don’t often get multi-skilled developers. So you’re going to need 1 iPhone Developer and 1 Android Developer that can hopefully double up as backend developers. Hard core coders like this don’t usually design. So you’re going to need a designer. Let’s say you get extremely lucky and you can grab these guys for R30k/m each (almost impossible in JHB, possible in Cape Town if you get younger guys/gals). Then you pay yourself R30k/m. Assign R30k/m for marketing and ops expenses (which is as lean as it comes). TOTAL: R150k/m burn rate.
If most Angel funding in SA is between the R500k and R1m, your runway is, shall we say, limited. Three t0 four months to develop a product, launch, test traction, get revenue and cover costs. You can play the numbers any way you like, they usually work out in the same range.
So get a technical co-founder. That’s the simple answer. There’s a reason hustler/hacker team are so popular in the US – they keep costs down and promote speed. In fact, what we’re seeing more and more of in the US is hustler+designer/hacker teams.
If the stars don’t align, you’re going to be forced to outsource. This was really the only viable option available to me two years ago.
Focus on one channel
In early 2012 when we were planning the build, BlackBerry still utterly dominated the South African Smartphone Landscape. If you remember back then (it wasn’t so long ago, but it feels like it sometimes) South Africa had quite a fragmented smartphone penetration. It still is in many ways. There was definitely no cut and dried approach towards which platforms should be supported and which shouldn’t.
Turns out, Blackberry users before BB10 came out weren’t app users. Turns out Android was horribly fragmented and the app wrapper approached just garnered frustration from users used to US/Europe quality native apps. Turns out the amount of time and cost involved in getting people to discover you inside each app store actually slows growth, not promotes it. Turns out there’s a whole branch of SEO related to app store discovery that requires an immense amount of effort. And turns out that app users are fickle, a couple of 1 star reviews can really sink an app in rankings – and users wield the power these days. If you’re not a 5 star app, you inherent a nasty line item to your advertising budget: help people find this app in the first place.
Don’t believe your PR (too much)
Real Time Wine won plenty of awards and due to the kind community of journalists who supported us, it had a enviable amount of coverage. If I’m honest about it, I think I got a little distracted by the product’s media success. When the world is telling you (mostly) what a great product you have, it becomes a little easier to focus on making that product and its associated community sexier – instead of grinding your way to those user and revenue milestones.
In a small market like South Africa, especially with Silicon Valley style products (those that rely on sex, sizzle and scale) – you can’t get distracted, we just don’t get the same kind of runway that Valley startups do. That is both frustrating and liberating.
PR helps you craft your story. It doesn’t help you execute and operate. Lots of PR doesn’t mean you’re winning. Lots of revenue does.