I lost $209,640 of my own money trying to start a business. Writing about failure sucks. But here's the real story:
Context: Me and my wife started a marketplace for last-minute tours and activities. Think of it as Hotel Tonight x OpenTable x ClassPass. The idea was to bring live connectivity to an industry where 80% of bookings were still done using pen and paper, months ahead of time.
We worked on it for 3 years while holding down full-time jobs. The initial money came from wedding gifts, the rest from our house fund and paychecks. We moved out of a fancy high-rise and into my parents basement to plow our "rent" money into the third-party development.
During the tail end of COVID, we packed up the truck and moved our lives from the East Coast to Florida, where we could market to year round tourism.
Lesson #1: Differentiate technical risk from execution risk. There's a reason everyone has a clever idea for a marketplace - they don't require you to actually build a standalone, unique product. And the technical barriers to entry are lower than high tech (eg, cybersecurity).
It appears simpler to play middle man, connecting supply / demand more efficiently. However, it's a long road to aggregate both sides & drive network effects. There are massive execution risks. And you have to solve for 2 sides, not 1.
Lesson #2: Don't be 100% dependent on someone else's data. Partnering with store management systems made it easier to hack the supply side, but dictated our development efforts and unit economics. We had massive platform risk. If any of our partners cut us off, we were screwed.
Lesson #3: You don't need to build everything at once. Building a website, android app, and ios app before proving product market fit was like burning money. It took us over a year to get to market, sell something, and get real feedback.
You should start small and get one platform right. Especially if you are paying someone else to do the coding. Some international developers are great value and true biz partners, while others are chop shops who will pump and dump Speaking of that...
Lesson #4: Don't make everything reliant on code if you can't code There were 1,000 times I felt absolutely helpless, knowing what needed to be done, but not being able to jump in and fix it myself.
I'll never depend on a 3rd party dev as the main means of production again. We would have been better off finding a technical co founder rather than outsourcing flexibility and control
Lesson #5: No one is going to invest in your business if you aren't willing to quit your day job. If you aren't crazy enough to take the plunge, why should they be?
Lesson #6: Adding more features is an expensive distraction. If it isn't improving your "core job to be done" don't spend time on it. Especially if you've yet to prove product market fit.
Lesson #7: As a marketplace, you can be either low frequency or low price, but you can't be both. Our avg purchase was $60 per ticket x 3 tickets = $180. However, people go on vacation infrequently. And they'd have to remember us again each time.
We were in a deadzone. And had what they call low LTV to CAC.
Lesson #8: Constraints drive focus. We tried to launch tours in +20 states, but quickly found we didn't have the time or budget to market everywhere at once. In addition, each market was different on the ground.
We honed in multiple times. USA --> Southern USA --> FL --> Sout West FL --> Tampa Nail it at the hyperlocal level and build a playbook.
Lesson #9: A founder's #1 job is sales. I hated cold calling. I hated walking into a scuba shop and nervously asking for the owner. I hated getting rejected. But I couldn't hide behind a screen and work on strategy. I had to sell.
Lesson #10: Killing your baby is really hard. It took us longer than it should have to call it quits. Even now, it physically pains me to use the word "quit". I haven't written or said it until this point.
Does losing $200K hurt?
Yes. Absolutely. But I also look at it as my "real world MBA". So what did I get out of it?
This led me to start a newsletter, since I was learning so many business concepts. And I never would have had the guts to put myself out there if I hadn't been shot down by hundreds of tour operators, tourists, hotels (and even family members).
I also learned the level of commitment it takes to bring something from 0 to 1. It's really, really hard to build something from scratch. And it takes an insane amount of irrational confidence.
And finally, I ended up landing my first CFO role at a venture backed tech marketplace. Talk about unexpected outcomes... I finally found somewhere to apply my marketplace knowledge. And if I didn't have this previous experience, this wouldn't have been possible.
So that's the story of how I lost $200K, but came out on the other side smarter and happier. If something doesn't scare you, it's probably not worth doing
Context: Me and my wife started a marketplace for last-minute tours and activities. Think of it as Hotel Tonight x OpenTable x ClassPass. The idea was to bring live connectivity to an industry where 80% of bookings were still done using pen and paper, months ahead of time.
We worked on it for 3 years while holding down full-time jobs. The initial money came from wedding gifts, the rest from our house fund and paychecks. We moved out of a fancy high-rise and into my parents basement to plow our "rent" money into the third-party development.
During the tail end of COVID, we packed up the truck and moved our lives from the East Coast to Florida, where we could market to year round tourism.
Lesson #1: Differentiate technical risk from execution risk. There's a reason everyone has a clever idea for a marketplace - they don't require you to actually build a standalone, unique product. And the technical barriers to entry are lower than high tech (eg, cybersecurity).
It appears simpler to play middle man, connecting supply / demand more efficiently. However, it's a long road to aggregate both sides & drive network effects. There are massive execution risks. And you have to solve for 2 sides, not 1.
Lesson #2: Don't be 100% dependent on someone else's data. Partnering with store management systems made it easier to hack the supply side, but dictated our development efforts and unit economics. We had massive platform risk. If any of our partners cut us off, we were screwed.
Lesson #3: You don't need to build everything at once. Building a website, android app, and ios app before proving product market fit was like burning money. It took us over a year to get to market, sell something, and get real feedback.
You should start small and get one platform right. Especially if you are paying someone else to do the coding. Some international developers are great value and true biz partners, while others are chop shops who will pump and dump Speaking of that...
Lesson #4: Don't make everything reliant on code if you can't code There were 1,000 times I felt absolutely helpless, knowing what needed to be done, but not being able to jump in and fix it myself.
I'll never depend on a 3rd party dev as the main means of production again. We would have been better off finding a technical co founder rather than outsourcing flexibility and control
Lesson #5: No one is going to invest in your business if you aren't willing to quit your day job. If you aren't crazy enough to take the plunge, why should they be?
Lesson #6: Adding more features is an expensive distraction. If it isn't improving your "core job to be done" don't spend time on it. Especially if you've yet to prove product market fit.
Lesson #7: As a marketplace, you can be either low frequency or low price, but you can't be both. Our avg purchase was $60 per ticket x 3 tickets = $180. However, people go on vacation infrequently. And they'd have to remember us again each time.
We were in a deadzone. And had what they call low LTV to CAC.
Lesson #8: Constraints drive focus. We tried to launch tours in +20 states, but quickly found we didn't have the time or budget to market everywhere at once. In addition, each market was different on the ground.
We honed in multiple times. USA --> Southern USA --> FL --> Sout West FL --> Tampa Nail it at the hyperlocal level and build a playbook.
Lesson #9: A founder's #1 job is sales. I hated cold calling. I hated walking into a scuba shop and nervously asking for the owner. I hated getting rejected. But I couldn't hide behind a screen and work on strategy. I had to sell.
Lesson #10: Killing your baby is really hard. It took us longer than it should have to call it quits. Even now, it physically pains me to use the word "quit". I haven't written or said it until this point.
Does losing $200K hurt?
Yes. Absolutely. But I also look at it as my "real world MBA". So what did I get out of it?
This led me to start a newsletter, since I was learning so many business concepts. And I never would have had the guts to put myself out there if I hadn't been shot down by hundreds of tour operators, tourists, hotels (and even family members).
I also learned the level of commitment it takes to bring something from 0 to 1. It's really, really hard to build something from scratch. And it takes an insane amount of irrational confidence.
And finally, I ended up landing my first CFO role at a venture backed tech marketplace. Talk about unexpected outcomes... I finally found somewhere to apply my marketplace knowledge. And if I didn't have this previous experience, this wouldn't have been possible.
So that's the story of how I lost $200K, but came out on the other side smarter and happier. If something doesn't scare you, it's probably not worth doing