Writing up this post has been in my mind since about a year ago in the beginning of 2013. That was the time when I decided Sponfed would not work out and it was time for us to move on. The delay came from my busy schedule to picking up coding and finding a software engineer job. I wrote half of it in late-2013, but never managed to finalize the details.
Flashing back to the summer of 2012, I graduated from college and had to face the crude real world. Only in my senior year had I discovered more about tech, web development, and startups, so I had been brainstorming for ideas throughout my final year in college. After two months of preparation, Sponfed was launched in September 2012 as a sponsorship platform startup to connect brand owners and event organizers. The idea was exciting, and everyone I met loved it. Most of them even expressed strong need in this service.
The next six months was a big learning curve for me and my two co-founders. There were tons of meetings, tons of networking events, some pitches, and some rough work developing the website. In March 2013, I decided to accept that we failed to turn the (we thought) brilliant idea into a business, and called a peaceful breakup. We went separate ways and continued on the journey each person had.
Doing startup is tough, and that’s why everyone should try it. Only if you have tried to take on the challenge would you understand the magic and challenge inside. Here I want to share 10 lessons I learned from this particular failure:
1. Age matters and be in the right industry
When you have a startup to sell a product, taking even $10 from a customer is hard enough. Sponfed intended to connect sponsorships that were range from $3,000HKD to $1,000,000HKD, this kind of deals wasn’t something three twenty-something years old could easily do. People tend to associate your age with your ability to do business in that price range. In your 20s, it is much more convincing to work on creative ideas that do not have a huge price tag. Be at the right place at the right time.
2. Don’t be afraid to share equity, idea, and success
During the preparation period, I was out seeking for technical co-founder or a team of developers to work together to build this sponsorship platform. I had a few great choices, from freelancer, to web dev firm, to unknown tech guy who seemed to have more than 10 years of experience in building successful online businesses, but I was too worried about the potential consequences to get these people on board. What if they screw me over? What if the tech guy has absolute control over the company because he handles all the code (the valuables). You can’t be scared of every tiny detail. If you pick the right person, the business will go a step further; if you do not pick at all, you’re still at step zero. However, keep in mind that at the end of the day, if you don’t know your co-founder well or you have never worked with him/her before, it will be a huge challenge going forward in months, or years. To start the first venture, never plan to do everything by yourself, pick the right talent and build it together.
3. Iterate and learn
Building startup is like standing in a forest, you never know what is in front of you and which direction leads to the way out. The key is make a ton of assumptions, test and validate them, and constantly look for feedback from real customers. To sum it up, just follow Lean Startup. Our team did not learn and iterate fast enough; it was also because of the lag time between each communication point. I recommend setting up morning meeting to reflect and go over lessons learned from the previous day and try to adjust the startup’s direction quickly.
4. Don’t meet everyone
When you have a business, people love to meet up with you to have coffee to explore opportunities. However, in early stage, only meet with the ones that are potential customers or could offer significant advice. This is because meeting people is extremely time consuming and most of the time, you gain nothing. In Sponfed, we had to meet up with a lot of brand owners and event organizers to learn about their needs, only about 30% of the meetings actually carry on and turn into further discussion. Make your selection wise.
5. Build a team with different talents
The three co-founders of Sponfed were all non-technical (and now I’m a Software Engineer). I was the one who took care of the website, one of them was doing marketing and PR, and another was on sales and operation. It seems like a good combination of people, yet don’t forget we were planning to be in the tech scene. Therefore, instead of three business people, a more ideal combo would be a developer, a designer, and a business person. Make sure your team has different skill-sets when you start.
6. It takes time, so have faith
It took Sponfed a couple months to build partnerships with other companies and got actively approached by event organizers. Almost 99% of startups don’t get the attention they want, and what you should do is have faith in your business if it works, and one day it will come back to you. Keep fighting until you reach a point where things cannot be changed. If you’re dead sure about that, then call a breakup and try again in the future.
7. A prototype needs to work
Since we didn’t get a developer in our team, I was the one who built the website for Sponfed and it did not have a lot of functions. Bounce rate was almost 70% and retention rate was 0%, basically after the first visit, no one would come back to our website. Our prototype was more or less a website showcasing the business, thus there was no purpose for them to come back after the first time. To create a platform, make sure the prototype has enough functionalities to get going. Don’t just tell what you do, show what you can do.
8. People are generally nice
When you go out and tell people about your idea, I would say about 80% of the time, you would receive feedback that praises the idea. They would say they would use your service if they’re an event organizer. Don’t get tricked into this illusion and think that your idea or business can make big money now, the reality is feedback is easy to give, money is not. Instead of telling people about your idea, I would recommend going straight to the customer and see if they would pay.
9. Freemium is dangerous
A pricing strategy called Freemium has become significantly popular in the last few years. The idea is to give customers a taste of your service so that they’ll be willing to pay to use more features. Be careful of this strategy because in order to move from free to a payment, it takes extra effort to show the value you’re bringing to the table. At Sponfed, we were offering our service for free to begin with, and we even offered extra manual help to ensure everything went our way. It was a dangerous move as we moved from an online service to an offline service, and we were not validating the right assumption. So, it makes sense to offer a free account type if you’re building a software, if not, you are better off charging people on the first day and really validate your assumption.
10. Say thank you to families and friends
Without their support, doing startup will be a rougher and tougher path. It takes a ton of courage to be in this space, it takes a ton of braincells to be thinking about how to work it out all day, and it takes up a ton of opportunity cost. Nevertheless, the experience is unforgettable and the realization will only bring you more greatness in the future, regardless of what you do.
Thanks for reading this, I hope you will make the same mistake that I made, but realised them faster, as only mistakes will make you stronger. Stay cool and carry on!