2 failed startups taught me lessons on starting, scaling, and surviving

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I have been around the startup scene for a while, not only trying to build one but also traveling continents from New York to Rwanda, Chile to Bangalore to meet founders who were trying to create companies from scratch. The notions and cultural nuances of starting up in these geographies may be different, but some lessons apply to most situations.

Failure 1: Too optimistic, immature, and irrational

The entrepreneurial bug bit me in 2011 when I moved back from the US to India for the first time and helped my brother in setting up Croissance, a services firm. Startups weren’t that prevalent back then, and venture capital was barely accessible in India. So, we had no choice but to do the traditional route of building a company. We offered IT development and human resource consulting services, so there was no niche product to sell but the people.

We haggled our way to find our first few clients for a customized human resource management solution. There was a lot of friction getting those customers on board, leading to the long sales cycle. In the meantime, we had to pay salaries to our eight employees, including sales persons and programmers. With no investors, we resorted to debt via unsecured bank loans with high-interest rates. To cut the long story short, the deals were not closing fast enough for us to catch up on the salaries and operational expenses, so significant debts on our accounts piled up in about a year.

In hindsight, we were too immature and considered every flicker as a flame.

The question about when we should quit came up often. My brother and I, however, ended up making a fatal mistake: being overly optimistic of the small openings every month. We didn’t take a step back and focus on the fundamentals or carve out a niche for ourselves. We almost snatched a big fish contract one time, but the decision maker wanted a kickback in exchange for awarding us the work. There was a lengthy discussion, but we couldn’t just overlook the morals we’d be compromising. We declined, and that was the death knell.

In hindsight, we were too immature and considered every flicker as a flame. The days of winding down that followed were painfully brutal. Emotions were riding high and we weren’t rational (and it’s best that I don’t get into the personal details of the closure). Today, I look back at two 20-something guys who ran the business exactly in the wrong manner. We hired people we didn’t need, chased prospective customers that wouldn’t convert, and took dumb money from wherever it came. If only I could go back in time and talk sense to those two guys.

But somehow, I’m also glad that it happened to us, a hard-hitting mistake that we probably will never repeat. With all that said and done, debt was still running high, so we went back to our corporate jobs. It took us three long years to fully recover from that bad dream.

Failure 2: Getting caught up with the day job

Over time, I was doing reasonably well in my career in New York, but I wasn’t content. I wanted to have another shot at building something of my own.

The idea of simplifying textbook rentals for college students had been in my head for a while since I had experienced the hassles firsthand during my student life. I knew I would be a customer, so would many other students. Chegg and Amazon were doing it successfully in the US then, so I wanted to be able to do it for the Indian market.

In 2014, I spoke to some of my close friends about it and two of them expressed interest in getting on board as co-founders. However, all three of us were living in the US with good jobs and fat salaries. None of us were keen on giving those up. I was reluctant in quitting my job too early on as I believed I could bootstrap the first few months with my paycheck. This situation, however, was a major bottleneck since we needed someone to run the operations in India in the early stages.

The hunt began for that person, and we got lucky with a young college grad who had already tried his hand at this model in New Delhi. We launched Readhopper, an online textbook rental platform, but it took us six months to get there. Moreover, I sat on the idea for almost two years because I was reluctant to repeat the previous startup disaster.

There were tons of ideas on the drawing table, but the pace was sluggish since we were all caught up with our day jobs.

Anyway, we ramped up our offline marketing through college networks and magazines that resulted in traction. We saw some early sales, but the model also exposed the logistical vulnerabilities, as every transaction involved two-way shipping. Moreover, the Indian last mile delivery wasn’t mature yet. We also felt the need to use motorcycles for delivery or go entirely digital by collaborating with publishers for content distribution based on the pay-per-view model. There were tons of ideas on the drawing table, but the pace was sluggish since we were all caught up with our day jobs.

A ton of lessons