Seven reasons why my first Startup failed

We started our journey in wrong direction and we failed to change direction with time.

Startups are hot talk these days and everyone want to start their own company. People read success stories but ignore the fact that more than 90% companies fail within 3 years of operation. Our startup SchoolGennie is one of R.I.P startup which we founded in 2013 but got shutdown in 2014.
Let me share top reasons of our failure.

No Market Validation
We wanted to build zomato like platform for school listing & reviews but realized that parents research for schools in admission days only. Then we thought of doing something else for education industry. With little knowledge about schools, we decided to build online collaboration platform for parents and teachers. We thought this was much desired product by education industry which can help building great relationships between parents and schools.

Do market research (product-market fit) before writing first line of code

We sowed the first seed of failure when we started building product without validating product-market fit. We could have done better things if we had few school signups before starting product development.

Waiting for perfect product launch

In my experience, there is no perfect product in startups, my suggestion is to keep building and keep releasing. We were not aware of Lean Startup concept which says, build fast — fail fast — fail cheap, and keep iterating until you success. Unfortunately, we kept investing time in building awesome product with great user experience and mind blowing features.

Launch MVP (Minimum Viable Product) as early as possible and keep improving product with feedback from early customers

We could have saved lot of resources with early launch of product. Customers should have given opportunity to test demo version, even with shitty user experience and half baked features. We spent almost half year to come up with first demo account, which could have been done in first month itself.

Following foot steps of competitors

When we launched our product we confronted with harsh reality, customers were not interested in our offerings. Then we started looking out what our competitors are selling. This was the opportunity to focus on USP (unique selling proposition) but we started building what our competitors were selling.

“Focus on something you are very good at — but your competitors are not”

We hired people from competitor’s sales team, we tried to sell with similar pitch, we prepared similar marketing material, we even tried to align our product features with competitor. Our efforts failed because we could not compete with competitors at points where they were good at — but we were not!!

Spending money on unwanted things

We spent too much on unwanted things like office, furniture and electrical appliances. We could have optimized expenses by running operations from our home.

“Spend money only if it helps in releasing software fast, test fast (customer acquisition) or pivot fast”

Startups have to spend money on hiring talent and there is no alternate unless you have time to do things yourself. Actually money was not primary reason of our failure but we could have done much more with same money, like hiring more smart developers to fast build & test our product.

Lack of Vision

Ultimately we lost the vision!! We forgot why we started company and where it should be in two years or five years. We were saying something and doing something else. We wanted to collect students data from 1000’s of schools but we were trying to sell to top schools only. We were not having any clue of our key growth metrics, unit economy, sales conversion ratios or product road-map.

Startups should keep eagle-eye focus on Vision and keep changing strategies and products to achieve end goal.

Influence of wrong people also disturbed our thought process. We discussed things with people who had no prior startup experience but they were successful in corporate job. My suggestion is, do not to follow advice of corporate guys, I am not saying they are wrong but things works differently in startups.

Startups have to explore their own growth path, don’t be afraid to experiment with new things.

Delayed decisions

I believe every startup come at a stage where hard decisions are taken. Delay in decisions impact badly on startup growth. Founders should sit together, discuss deeply about issue, take firm decision and move on!! There are good decisions and there are bad decisions.
If Founders are clear of what they want to achieve then they can take quick and efficient decisions otherwise they take decision tonight and tomorrow morning they want to change it.
Something similar happened with us when we were to decide for sales partnerships, establishing new sales channels, product roadmap, equity allocation to team members, pivoting product and finally during critical decision of running or shutting down company.
With time, we (founders) had differences in thought process, one of us wanted to try new unexplored things and other wanted to follow processes of big successful companies. One of us believed in open culture where anyone can contribute in any area but other believed in closed culture where two teams (dev & sales) should not share know-hows of each other.
This friction and lack of cohesiveness was also reason of delayed decisions, hence one more step towards death of startup!!

No Mentors

Startup should genuinely invest time in finding good mentors. We could not find mentors for our-self or honestly we have not tried hard enough. Mentors can be really helpful in critical times when startup needs expert advice, connection in network and resolving internal conflicts.
Now we are not working at SchoolGennie but it has been a great journey so far. I am really grateful to my co-founder Amit, who trusted my capabilities and gave me opportunity to work with him. He was instrumental to bring me out of corporate job and introducing me to amazing world of startups.

Failures are not always bad if we know how to handle post-failure situation and apply learnings in future, on positive side I know some ways things don’t work and I will avoid repeating my mistakes. SchoolGennie experience actually helped me getting into my current startup, PocketScience, where I joined as co-founder.


This reference is taken from :-
http://yourstory.com/2014/10/schoolgennie-failure-reasons/

7 Lessons Learned From Running a Consulting Company

Although I don’t do much consulting these days, I used to run a consulting company. It was an Internet marketing agency that helped small and large brands like GM, HP, Samsung, Viacom and AOL boost their traffic through search engine optimization and social media marketing.
I did it for around six years, and boy did I make a lot of mistakes. Running a consulting company is tough, and sadly it’s a lot less sexy than it seems.
Here are 7 lessons I learned from running a consulting company:

Lesson #1: The day you sign a client is the day you start losing them

Consulting companies have a high churn rate. Some consultants claim that they have never lost a client, but that’s a bunch of horse crap. If a customer doesn’t renew their contract, I consider that a lost client.
You never know how long a client is going to last, so make sure you do everything possible to keep them. Here’s what I used to do to ensure that clients stay as long as possible:

• Set expectations from day one – before you take on a client, you should let them know what they should expect and when to expect it by. If they have unrealistic expectations, let them know why.
• Have a kick-off call – having one is a great way to ensure that things start on the right foot. One unique thing you can do is send your client some cookies or snacks in the mail so that they feel like they are with you during the kick-off call.
• Weekly calls – every week, you should have at least a 5-minute call with your client. Tell them what you did for the week and see if they have any questions.
• Send industry updates – if you are a design agency, you should be sending unique design news to your clients. If you have a marketing agency, you should send them marketing information. Sending industry related news to your clients not only shows that you know the latest and the greatest, but it also makes them feel special.
• Monthly reports – at the end of each month, you should send your clients a detailed report of everything you did. Ideally, it should include pretty graphs and other forms of visual aids. You should go over the report with the client over the phone or in  person.
• Monthly surveys – at the end of each month, I recommend sending your clients a quick survey. The survey shouldn’t have generic questions like “are you happy?”, but instead it should have specific questions that help you improve the quality of your work. Include questions such as “how can we make the monthly report better?”

Lesson #2: Clients are always right, except when they are wrong

You are always going to have clients telling you what they want. And although they are paying you, they shouldn’t be telling you what you should be doing.
See, you were hired because you have a specific expertise that they don’t have. This is why it should be you telling the client what is best for them. It doesn’t matter if they like what you have to say or not. Your job as a consultant is to do what’s best for the client.
If you focus on doing what’s best for them, your work will provide better results for their company.
When trying to do what’s best for your client, you will run into roadblocks. The best way to be prepared for this is to show them data that backs up what you want to do and that shows that it is the best solution for them.

Lesson #3: You’re worth every penny, so show it

Every once in a while, you’ll have clients who will make snarky remarks about how much they are paying you or that they feel they can do your job better than you can. Don’t take crap from clients; make sure you show them that you’re worth every penny.
You can do this by showing their return on investment. For example, with my consulting company, we looked at three numbers: average revenue per transaction, conversion rate, and search engine traffic. We used those metrics to show how much additional revenue we brought in through our efforts.
This shows how valuable of an asset you are, assuming you are actually providing results. The next time they are thinking about canning you, they’ll think twice because they know you actually bring in more money than you cost.

Lesson #4: You have to dress to impress

I already mentioned it last week, and I say it again: you have to dress to impress. The better you dress, the higher of a consulting rate you can demand.
When I started off as a consultant, I dressed like a bum, and I wasn’t able to make more than $100 an hour. Once I started to dress a bit nicer, I was able to go up to $250 an hour. And when I dressed really nicely, I was able to command rates in the four-figure range.
Not only does a nice wardrobe show potential clients that you are successful, but it will help boost your confidence. Plus, clients want to pay people who are successful as they hope they can bring that same success to their company.

Lesson #5: The more you charge, the less they complain

One of the first things I learned is that there is an inverse correlation between how much a client pays you and how many times they complain. In other words, the more money a client pays you, the less they will complain.
Large paying clients usually have a lot more cash, so spending it isn’t that big of a deal. They know that if they want to continue to grow, they have to spend money. And when doing so, sometimes things work out, while other times they don’t, but at the end of the day, they have to keep on making bets.
Smaller clients, on the other hand, don’t have that much money. So, if they hire you and you mess up, they usually don’t have the luxury of hiring someone else like the larger clients do.
When you first start off, you may have to take on smaller paying clients, but your goal should be to transition to the larger paying ones as quickly as possible.

Lesson #6: Fake it till you make it

As I mentioned in Lesson #5, you should be going after larger paying clients. If you don’t have a bunch of case studies or years of experience under your belt, don’t worry. You can still lock in the big guys.
All you have to do is figure out what separates your consulting company from the larger ones. Big clients typically pay big consulting companies, but if you can show why you are better than the bigger ones, you will lock them in.
At my consulting firm, I realized that clients loved the fact that I myself would work on their projects compared to the practice of bigger firms assigning junior consultants to them. Once I found this out, I would tell potential clients that I personally would be working on their projects, which they would not get with the bigger firms.

Lesson #7: When it rains, it pours

Like I mentioned earlier, you are going to lose clients. It’s just a matter of time. Because of this, you should try to conserve as much cash as possible. When things go south, you don’t want to have to fire people; instead, you want to operate off your reserves.
A few ways you can conserve cash is:

1. Have a cheap office – my office was cheap and didn’t have windows. I also didn’t have fancy furniture, and I made sure my clients didn’t see it by only doing in-person meetings at their offices.
2. Create a variable compensation plan – when my business was doing well, my employees got compensated well. And when it wasn’t, they didn’t. Everyone had a low base salary and earned a percentage of the profit.
3. Keep a healthy reserve – I never depleted my corporate bank account by taking a high salary. I always left a 6-month to a 1-year reserve in the bank before I paid myself well.
4. Don’t grow too fast – even if you are constantly getting new clientèle, don’t hire too quickly. Consider outsourcing some of your work to a local firm before you hire new employees. This way, if you lose a few clients, you won’t have to fire any of your staff.
5. Always be closing – even when things look good, remember that someone still has it better than you. Never stop trying to bring in more clients as this will help your business stay afloat.

Conclusion

Running a consulting company isn’t easy. It’s a lot of work, and you have tons of bosses (each one of your clients is your boss). Although it can pay very well, at the same time it can be very stressful.
If you want to reduce your stress as a consultant, make sure you learn from your mistakes and only take on clients you can actually provide results to because being with a client is like being in a marriage. Sometimes you get into it for the wrong reasons, and eventually it hits you in the face.
So do yourself a favor, don’t get into a marriage unless you know it will work.

As this article is completely copied from reference to remember in future,
 http://www.quicksprout.com/2011/09/19/7-lessons-learned-from-running-a-consulting-company/

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