I was ready to put my entrepreneurial hat to rest. I had spent years building what I thought was shaping up to be a fashion e-commerce giant for the Indian marketplace. We’d raised pre-Series A funding of $4 million, led additional rounds and saw four years of solid growth.
Yet, at the end of these four years, we swallowed the pill and shut down the startup for reasons I will soon explain.
Something unexpected and positive, however, was born from this experience. I launched another startup and bootstrapped it, because I had a strong crutch this time — the lessons from my first failed venture. Today, Squadhelp — my second business — is the world’s largest naming platform.
Here are the lessons I’ve learned that I believe can help any entrepreneur succeed:
Delay fundraising until you have a strong initial offering that has shown some level of success in creating happy customers with profitable marketing.
Early-stage funding can lend a false sense of security
With solid early-stage funding at Fashionara, my first venture, our leadership and marketing team became overconfident. Our mindset was that the funding was our golden ticket. With a strong team and money in the bank, we had what we needed. But the reality was just the opposite.
We stopped paying attention to cost per acquisition, and instead concentrated on increasing our month-over-month acquisition numbers. Once these numbers were strong, we focused less on essential startup success factors, especially creating differentiated experiences for new customers, which could have set us apart from our competition and increased customer loyalty.
On the other hand, bootstrapping my second startup has forced me to be laser-focused. For example, our development team handles critical tasks such as creating differentiation and ensuring customer satisfaction. And, we regularly review our marketing efforts to ensure that our spending goes into channels and strategies that bring customers in sustainably.
We also scale spending when we achieve strong return on ad spend (ROAS) and reduce or eliminate spending that is not driving customers at the right cost. We even have marketing strategies that we only use when the market is strong. Conversely, when our business slows seasonally or due to economic factors, we can cut back on marketing spending to keep our finances healthy.
I would advise any startup to delay fundraising until you have a strong initial offering that has shown some level of success in creating happy customers with profitable marketing, and you can strongly believe that more capital would allow you to scale in specific, pre-defined areas.
Let customer satisfaction define your product roadmap
I’ve learned that customer feedback should significantly influence your business plan. At my second startup, we have daily meetings to go over feedback from our customers. We then prioritize and implement changes to our product, customer service and even our marketing weekly based on this feedback.