I always told myself that I would stop pushing forward when there was an overwhelming force from the outside saying that this is not working. But even when I reached that point, I continued to try to brute force it into existence. I wound up losing a lot.
We followed every test and experimental process from the get-go but we didn't tell our investors we were doing that. They still thought we were building what we had presented in a PowerPoint slide. When they found out, they questioned my decision-making and me as an entrepreneur.
The same passion that got your startup idea off the ground can blind you to signs that your company is failing.
And not keep investors informed about changes to your business model can have serious consequences.
How to recognize when it's time to pull the plug on your startup idea, and why founders can't operate afford to operate in a vacuum were the focus on today's Entrepreneurs are Everywhere radio show.
The show follows the journeys of founders who share what it takes to build a startup - from restaurants to rocket scientists, to online gifts to online groceries and more. The program examines the DNA of entrepreneurs: what makes them tick, how they came up with their ideas; and explores the habits that make them successful, and the highs and lows that pushed them forward.
(And download any of the past shows here.)
Clips from their interviews are below.
Dan Miller is the co-founder and CEO of Level Therapy, which provides access to psychotherapists through video, voice, and text. Before Level, Dan was the founder and CEO of Freshsessions, the world's first marketplace for musicians to find and book studio time anywhere.
Before setting out on his own, Dan held various product, research, and operations roles at Salesforce, SurveyMonkey, Forrester Research, and The Ladders. He was also on the team that wrote the business plan for BlackGirlsCode. In 2014, Business Insider listed Dan as one of the top 46 African Americans in Tech.
With Freshsessions, Dan thought he was on to a great idea. Other people thought so, too, but weren't willing to pay for the service:
It was going pretty well at the very beginning. We built a landing page, and ran some ads, and started to drive targeted traffic to the ads to see if people would be interested in it.
There was a lot of interest. But it was very difficult to find engaged studio owners that wanted to change how they were operating their businesses to adopt a technology-based model, and find musicians that had enough money to book consistent sessions through the platform
We found the need, but no payers.
He wanted Freshsessions to work so badly that he was tone-deaf to signs that it was time to shut the business down:
I always told myself that I would stop pushing forward when there was an overwhelming force from the outside saying that this is not working. Even when, I believe, in hindsight, that I reached that point, I continued to try to brute force it into existence.
We were trying out different cities, and I was flying around the country, and we were trying different campaigns and various things, and ultimately they were not working.
Through that process, I lost a lot including some relationships with individuals, and I started to develop symptoms of acute anxiety.
To hear the clip, click here
Brian Zuercher is the CEO and co-founder of Seen, a marketing software platform that is helping marketers tell the story of their brand and build relationships with their customers through consumer generated photos and videos. Seen was recognized as the "Innovation Game Changer" at the 2012 Ohio Interactive Awards.
Actively involved in the local startup community, Brian is a Startup Weekend Columbus host and MC at the monthly morning pitch event for entrepreneurs, WakeUp StartUp.
Today, Seen has achieved some success, but it took Brian and his team several pivots to get where they are. They didn't always keep their angel investors informed about the changes they were making and it nearly cost them:
We followed every test and experimental process from the get-go but we didn't tell our investors we were doing that. They still thought we were building what we had presented in a PowerPoint slide as the product, but that didn't work out in our case.
We did three iterations of the product in less than 12 months, each one progressively going off of different consumer metrics that we found and then partner feedback.
Ultimately, it didn't work and we decided we had enough time to maybe do one last iteration. We did the tough thing of letting everyone go, reducing the burn down to two of us from almost 10 at one point, and gave ourselves six weeks to turn into a new product.
Meanwhile, the investors thought we were dead. We'd told them, "Hey, we let everyone go. We've got some money left, but we don't know if we've got much left."
They questioned my decision-making and me as an entrepreneur. Fortunately we had the confidence of a couple board members as well who were able to stand up for us.
To hear the clip, click here
Seeking help to cope with the anxiety he developed as Freshsessions was falling apart, Dan tried some web-based mental health practitioners. The experience wasn't positive, and led him to come up with the idea for Level Therapy:
I tried one that was solely web-based, with an interesting subscription model, but they didn't accept insurance. I walked away from that experience feeling cold, and more like a number than a person.
Immediately, the entrepreneur in me started to kick in, and I started to think about why, objectively, was I having those thoughts? Where did this company miss? How could I build a solution that would address those points?
Dan suggests other founders seek out not just a single mentor but a network of fellow entrepreneurs that can act as a kind of advisory board:
I would aim to find other entrepreneurs that are perhaps six months ahead of where you currently are as a company, or six months to a year or two years ahead of where you are, so they are contemporaries that have experience, potentially the same types of challenges that you're experiencing. They can give you timely advice.
Also, individuals that are further out, so perhaps they have either sold companies or they've been operating companies for three plus years, five plus years, etc. They can give you more long-term strategic advice.
Based on his experience with Freshsessions, he also counsels founders to never work with friends:
It was difficult to overnight go from being someone whose relationship was based around just having fun to actually motivating them and inspiring them and pushing them.
Maybe that was a function of me being young in my professional career as well, but that was my experience. I wouldn't do it again.
To hear the clip, click here
In his first startup, Clearwish, Brian learned it isn't enough to focus on trying to realize your vision. The founding team must be on the same page about possible future directions for the company, too.
We were approached to get funded and had enough success and promise at the time, but we couldn't find alignment around the notion of building a lifestyle business first, a venture-based business, and how big it could really be.
We had never discussed everyone's expectations when we founded the company. Oh we had a happy, fun conversation over a couple of beers, but we did not sit down and say, 'Hey wait, where's everyone want to go with their life?"
Instead, we launched the product, got momentum very quickly, and were swept up in this process. We misfired on that and broke down that team. It was a learning experience for sure.
To hear the clip, click here
Having worked with startups in Columbus, Ohio, Brian says it's not necessary to be in a startup ecosystem to make your startup work:
When I was complaining about raising money in Columbus many years ago, Bill Diffenderffer, who ran SkyBus and is now one of the founders of Silvercar, told me, "You keep saying here, but there is no here here, so just go get the money."
That really stuck with me. The place isn't necessarily going to make the business go.
His advice for other founders? Think big:
I think I try to ask all the questions that I've been asking myself, like why are you doing this? Why are you making the decision? Why are you looking at that? Is this what you believe is right for the business versus right for what some financier asked you to do? I push them to think really big.
Tune in Thursday, Oct. 13, at 1 pm PT, 4 pm ET on Sirius XM Channel 111 to hear these upcoming guests on Entrepreneurs are Everywhere: George Zimmer, founder of Men's Wearhouse and now founder, chairman and CEO of Generation Tux; and Scott Adams, creator of Dilbert
Steve Blank blog: www.steveblank.com