Learnings from Mistakes
Sharing my experience as a first time failed entrepreneur
Original article published on Linkedin on 25th May 2020. Access here
I wanted to start a content company in 2016. It was around a fun idea of having a bot (called "Bakbot chacha") envisioned as a one-point destination for discovering memes and funny content. Then I thought of adding another bot-"Botboli Chachi"- a chatbot for homemakers to help them discover content around cooking and other relevant topics. Both did not click and I got busy with a job (like every other time in the past) and starting up was put on hold.
However, in September 2017, some insightful conversations with ladies in my family finally made me start a platform for homemakers and I bought bakbuck.com to start my entrepreneurial journey. Yesterday, exactly 2 years after the legal incorporation of Khichadi Technologies as an identity, I thought it would be good to pen down my parting thoughts and share my learnings from mistakes I made as a first-time founder, as I decide to move out.
First - Why am I moving out?
As a founder, it is very difficult to make the decision to move out of a startup you founded. You want to keep trying new things, pivot to a new model, or do something to survive another day. That is exactly what I tried first, till very late in February/March of this year, to see, if there is a way this can work. Cash was less, monetization was difficult and funding was difficult post-WeWork debacle. But these were things I could have still managed. My problem was more fundamental which made me take this difficult decision.
Early Days- MVP & Investment
Around the time we started in 2017, many vernacular/regional content or social startups existed and others were coming up. It was crowded and to differentiate ourselves we had to be unique in use-case or users or both. Early on, after failing as a content discovery platform, we sensed an inherent need to play online contests and competition existed (need) in our users(Homemakers) and they liked our platform exactly for that reason. Our MVP to build a social contest-playing app for homemakers gained early traction. My friends chipped in some money and we got the backing of early investors in Nazara to help us build our platform the right way, focusing on retention, and organic growth & not MAU.
Problem 1: Missing Virality (or PMF)
We knew PMF here meant strong retention and organic growth numbers. For the first few months, our retention was improving MoM as we expanded on the core user base. However, after this initial success, we built and shipped great features at a good pace, hoping to get virality, referrals, and organic traffic. But, organic growth never reached a respectable level for a social product (at least 50% plus). There was a big miss in our product.
I think, if one is building a social product, it is extremely important to get the pulse of the audience. And it has got to do a lot with understanding psychology (No wonder, Mark Zuckerberg- a major in Psychology built Facebook). It is the core reason why only a handful of social products work and others keep throwing money at acquisition but never really get there.
For me, I could understand consumer insights but my knowledge on psychology as a subject was limited and that reflected in the product. This is probably the biggest reason, why we could not get virality. And no matter how much money one throws at acquisition, if PMF is not established with virality, social products can never work.
Next Step- Can't we raise another round for PMF validation?
It is not that all startups find their PMF in the first year of operation. In fact, there are many who pivot to different models or start scaling up even before PMF is established (and regret later) by raising subsequent rounds. I tried that as well to see if we can raise funds (late 2019) to extend our runway while we still figure out PMF.
Being part of Lightspeed Extreme Entrepreneurs 2019 and Yourstory's Tech30 helped us get good inbound interest from investors and we could have managed to raise another $500K or so in our next round. We discussed this internally and realized even if investors are interested in backing our team, there is a bigger concern around the monetization model of content startups. We were equally clueless about it and before we promise any numbers to incoming investors, it is better to get some clarity on it ourselves.
Problem 2: No Business Model
A playbook used by most engagement startups is, to first build a user base and then monetize it, typically, through an ad or a subscription model. Both need a very big scale, at least a 100M+ user base to work and that's why virality is needed.
We thought, if we didn't have a scale then another way to monetize (which I truly believed then) could be through commerce, as we had a good traffic of homemakers coming on our platform. It never worked and that was my second fundamental problem.
To be honest, it was an experiment if social commerce could work on an engagement app. It failed and it just confused everyone, team members, and investors. But, it helped me test my hypothesis about social commerce as a business model. By now I knew, that even if we had some growth in user base, a bigger challenge was awaiting us with the discovery of a business model- something even bigger players were yet to prove (and making investors nervous).
Final Decision
With monetization & virality still unsolved, me and my cofounders-Rohit and Shashank, had many discussions and we realized funding does not help us solve the problem. We ourselves have to fully believe in a business model and its long-term sustainability before accepting any external funds. This was early 2020 and a black swan event was about to unfold.
I kept thinking about the business model - going B2B, making it real money, and multiple other ways. From here, I knew it would need a complete revamp in product and at least a couple of years before it may result in something. And with Covid-19 coming into the picture, it will become even more challenging for any business to generate revenue. This with my personal life commitments, made the decision tricky for me.
After a lot of introspection, I realized, with my belief in a consumer-led business model shaken and limited runway for our company, it is better, if I help Bakbuck grow from outside as a friend/advisor and decided to move out.
Path Ahead
From the start, Rohit & Shashank have been instrumental in building Bakbuck as cofounders and they will continue to run the company. They have many plans and new offerings lined up HTML5 games, Engagement as a Service, a New Avatar for the Bakbuck app and more. Nazara Technologies-which has been a great supporter and investor continues to help us move ahead and has been supportive of our decision.
For me, I got a fair chance - an extremely talented team, supportive investors, super helpful friends, and a lot of love from my family members to help me succeed in my first entrepreneurial stint. I could not have asked for a better support system. Though things did not shape up as I had envisioned, these are extremely valuable learnings that will help me become a better entrepreneur.
Journey continues.