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After 7 months and thousands of $ spent, my cofounder and I realized we weren't tackling a problem worth solving. ( @pactero_)
In fact, we never had any customers, nor generated any revenue.
Here's the story of what went wrong to help others avoid the same mistakes
In fact, we never had any customers, nor generated any revenue.
Here's the story of what went wrong to help others avoid the same mistakes
Some context...
In February of this year, I left my job at @microverseinc, a "Lambda School for the developing world".
It was time to build my own startup, but I wasn't quite sure what to build. https://twitter.com/caffeinatedwes/status/1228388488552251397
In February of this year, I left my job at @microverseinc, a "Lambda School for the developing world".
It was time to build my own startup, but I wasn't quite sure what to build. https://twitter.com/caffeinatedwes/status/1228388488552251397
From February to April, I navigated the "idea maze".
I explored my general curiosities in the search of a startup idea.
More here: https://caffeinatedwes.substack.com/p/coffee-with-wes-2
I explored my general curiosities in the search of a startup idea.
More here: https://caffeinatedwes.substack.com/p/coffee-with-wes-2
I decided that I wanted to focus on solving the problem that it was "too hard for education startups to launch and scale (global) ISAs and outcome-based payments."
Another way to describe this idea: "Stripe for ISAs".
Another way to describe this idea: "Stripe for ISAs".
I thought my experience was a perfect match for creating "Stripe for ISAs"
- I knew how tedious it was to build ISA infrastructure from Microverse
- I had previously worked at a startup that created a similar product, a billing API, for a different industry.
- I knew how tedious it was to build ISA infrastructure from Microverse
- I had previously worked at a startup that created a similar product, a billing API, for a different industry.
Over the next ~2 months, I spent time talking to a dozen or so founders and operators using ISAs to better understand the problem from other company's perspectives.
At that point, I glossed over a critical business assumption: that the problem was worth solving.
The reality: I had "imagined" a model of the world where hundreds of entrepreneurs wanted to launch ISAs and the only thing in their way was software that handled the complexities.
The reality: I had "imagined" a model of the world where hundreds of entrepreneurs wanted to launch ISAs and the only thing in their way was software that handled the complexities.
@paulg warms founders about this approach of "searching for ideas instead of problems".
This mindset is "...doubly dangerous: it doesn't merely yield few good ideas; it yields bad ideas that sound plausible enough to fool you into working on them."
http://paulgraham.com/startupideas.html
This mindset is "...doubly dangerous: it doesn't merely yield few good ideas; it yields bad ideas that sound plausible enough to fool you into working on them."
http://paulgraham.com/startupideas.html
I now understand why: I thought I was onto something since the beginning.
When I announced the startup on Twitter, one tweet generated 100+ likes, 30+ RTs, and dozens of beta requests.
(I deleted the original tweet bc of legal issues w/ our name. That's a diff Twitter thread.) https://twitter.com/caffeinatedwes/status/1273661189847949313
When I announced the startup on Twitter, one tweet generated 100+ likes, 30+ RTs, and dozens of beta requests.
(I deleted the original tweet bc of legal issues w/ our name. That's a diff Twitter thread.) https://twitter.com/caffeinatedwes/status/1273661189847949313
I kept fooling myself for months with bad, vanity data.
- Consistent WoM traffic + leads.
- Customer conversations that seemed to go well
- Podcast mentions and guest invitations
- Countless investor cold emails + DMs
- Acceptance into an accelerator + $
- Consistent WoM traffic + leads.
- Customer conversations that seemed to go well
- Podcast mentions and guest invitations
- Countless investor cold emails + DMs
- Acceptance into an accelerator + $
Looking back, none of these things validated that the problem was worth solving.
The company still didn't have revenue. No one was using the product.
Yet, I continued the imagined reality and thought we'd take off at any moment.
The company still didn't have revenue. No one was using the product.
Yet, I continued the imagined reality and thought we'd take off at any moment.
Month after month, I felt *some* progress.
I brought on a cofounder, @aleixordeig.
Our software (that no one used) improved.
We found and hired specialized lawyers. (that we didn't need)
We talked to leads and industry leaders (that didn't want to launch ISAs).
I brought on a cofounder, @aleixordeig.
Our software (that no one used) improved.
We found and hired specialized lawyers. (that we didn't need)
We talked to leads and industry leaders (that didn't want to launch ISAs).
We continued spending months of time and $1,000s on things we thought we needed.
We became experts in our huge imagined market.
We knew how ISA startups navigated legalities, trusted students to pay back, verified outcomes, and managed the operational complexities of ISAs.
We became experts in our huge imagined market.
We knew how ISA startups navigated legalities, trusted students to pay back, verified outcomes, and managed the operational complexities of ISAs.
You'd think at this point—0 revenue and 0 customers—we'd go back to the underlying assumption of market need.
Nope!
We wrote it off as a failure to execute.
We read books, listened to podcasts, and consulted with friends + experts in areas we were unfamiliar with to improve.
Nope!
We wrote it off as a failure to execute.
We read books, listened to podcasts, and consulted with friends + experts in areas we were unfamiliar with to improve.
We also rationalized that we were "just moving too slowly" because we weren't in-person.
So, Aleix flew to Indianapolis.
Well, from Barcelona --> Mexico --> Indianapolis.
Covid travel restrictions, ya know?
So, Aleix flew to Indianapolis.
Well, from Barcelona --> Mexico --> Indianapolis.
Covid travel restrictions, ya know?
Cue a unique startup environment.
We were cofounders...
1) from different continents
2) who had ever met in person
3) who now were coliving in the same bedroom
4) in a small Midwestern city (Carmel, Indiana)
5) during a pandemic
We were cofounders...
1) from different continents
2) who had ever met in person
3) who now were coliving in the same bedroom
4) in a small Midwestern city (Carmel, Indiana)
5) during a pandemic
Being in-person sped up our journey.
As much as I love remote work, I believe that we're still at the point where "innovate in-person, iterate remotely" works well.
Anecdotally, a ~week~ after we were in-person, one potential customer put down a $100 deposit for our product.
As much as I love remote work, I believe that we're still at the point where "innovate in-person, iterate remotely" works well.
Anecdotally, a ~week~ after we were in-person, one potential customer put down a $100 deposit for our product.
At first, I was excited.
But then we struggled to even find 3-5 more companies to talk to with the same problem.
That made us finally reflect over the last few months of data, where we came to two somber conclusions.
But then we struggled to even find 3-5 more companies to talk to with the same problem.
That made us finally reflect over the last few months of data, where we came to two somber conclusions.
1) Launching ISAs isn't a problem that needs new software.
Few new education startups are launching ISAs or outcome-based payments, and the few that are don't really need our product.
Few new education startups are launching ISAs or outcome-based payments, and the few that are don't really need our product.
I'll likely write an entire thread on the previous point at a later date, but here's the TL;DR
There aren't more ISA startups because investing in people is hard, which means other business models have higher expected returns.
There aren't more ISA startups because investing in people is hard, which means other business models have higher expected returns.
2) Scaling ISAs isn't a problem worth solving through software.
The few growing ISA startups run into operational problems scaling, but the market isn't big enough to justify a software company.
The few growing ISA startups run into operational problems scaling, but the market isn't big enough to justify a software company.
In other words, we realized we were following the most common path towards startup failure: we were building something that (almost) no one needed.
That was last week.
It was rough, but relieving. We finally understood what had been going wrong.
That was last week.
It was rough, but relieving. We finally understood what had been going wrong.
It was also exciting given that...
- We have a low burn
- We're quick builders experienced in no-code, low-code, and code.
- We're experienced in the future of learning and work.
- We know so much more than before about how to not start a startup.
- We work well together!
- We have a low burn
- We're quick builders experienced in no-code, low-code, and code.
- We're experienced in the future of learning and work.
- We know so much more than before about how to not start a startup.
- We work well together!
*What's next*
- Build and launch MVPs for learning communities focused on scaling.
- Get to "default alive" w/ revenue from product(s) + consulting for education startups
- Build and launch MVPs for learning communities focused on scaling.
- Get to "default alive" w/ revenue from product(s) + consulting for education startups
If you're interested in...
- following along with our journey
- getting early access to the tools we're building to help learning communities scale
- hiring us to get hands-on help for scaling your learning community or startup
Leave your email here: https://pactero.typeform.com/to/ULJ7T8q0
- following along with our journey
- getting early access to the tools we're building to help learning communities scale
- hiring us to get hands-on help for scaling your learning community or startup
Leave your email here: https://pactero.typeform.com/to/ULJ7T8q0
I have more conviction than ever in this trend, and now the question I'm thinking about is "where are the biggest problems that need to be solved in this space?"
Really excited to test all the assumptions this time
https://twitter.com/caffeinatedwes/status/1218968492004859906
Really excited to test all the assumptions this time
https://twitter.com/caffeinatedwes/status/1218968492004859906
Avoid what I did- https://twitter.com/caffeinatedwes/status/1328544743735898112?s=20
Interested in more threads like this as the journey continues?
Give me a follow
Buy us a coffee
https://www.buymeacoffee.com/pactero
Give me a follow
Buy us a coffee
https://www.buymeacoffee.com/pactero
