Lessons From a Former Founder

I have put off writing this post for four years, which is how long it has been since I exited my own startup, FreshNeck. Two main reasons for this:

  1. I needed time, and additional experiences under my belt, to properly reflect and process lessons learned.
  2. It hurts, and this isn’t easy for me to write. I have many regrets, and some wounds still haven’t healed.

But I’ve learned in the years since to embrace my own vulnerability (thanks Reboot), and am finally in a place where I am comfortable wearing it all on my sleeve. And most importantly, I feel like my experiences have truly helped me as an investor, and perhaps they can be helpful to my team, and the founders I am lucky enough to partner with on their journeys.

The Context

After spending six years in traditional careers (three as an Assistant District Attorney in Brooklyn, three in finance at Merrill Lynch/Jefferies & Co), I embraced my entrepreneurial spirit and launched FreshNeck, a consumer-facing fashion-tech startup that rented men’s accessories via subscription. My brother, Bryan, was my co-founder and initial investor (though never worked on the day-to-day), and we raised a little bit of outside capital. Over the next 3.5 years, we built a pretty awesome product, experienced good-but-not-great growth, and eventually sold the business to one of our early backers. Let’s not beat around the bush here — it was not a great exit. Rather, I basically made the money that I had given up by leaving a high-paying job for a few years. I still own a small piece of the still-operating business, but I’m valuing my stake at this point somewhere around that of an HQ Trivia entry. But for all the stresses and heartbreak, I am eternally thankful for the experience, as it gave me incredible insight and perspective, and led me to where I am today.

What We Did Well

· Listened to our customers. Their feedback drove most of our product decisions. We automated some (cancellation surveys, feedback giveaways), and tried to have as many one-on-one conversations as possible. We’d invite customers into our office/showroom to do in-person exchanges, not only because it gave them a great experience, but because it gave me the opportunity to have an authentic, human interaction with customers. This helped us move quickly, and limit mistakes.

· Let data tell the story. The answers are often right in front of you…they just take a few pivot tables to uncover! Where were the choke points in our conversion funnel? What was the best channel for acquisition? What were the drivers of retention/churn?

· Continually learned. I was very self-aware that there was a lot I didn’t know, so I fully jumped into the broader startup ecosystem, soaking up as much knowledge as I could: platforms to leverage, how to hire/manage employees, building a culture, metrics to track, investors to know. It’s a never-ending journey, but a necessary one.

· Did things that didn’t scale. In the early days, we hustled. I’d stake myself out at the tie bin at Bloomingdale’s, ‘accidentally’ dropping promo cards for customers to find. I’d stop every tie-wearing man I could in my building, on the street, and in the subway. Every wedding basically turned into a trade show for me, where I’d make sure to wear one of my ‘conversation starters’.

Mistakes We Made

· Relied on capital. As an inventory-heavy business, we continually needed more capital. Sure, it was an asset, but you can’t pay employees or acquire customers with inventory, no matter how shiny that number looks on the balance sheet. As first-time entrepreneurs in an unsexy industry, we should have found a model that allowed for bootstrapping.

· Outsourced tech. Our MVP, built by an outside agency, actually was delivered just as we had planned (I’ve since learned this was a borderline miracle). Because of this, we never brought tech in-house, choosing to divert resources to product and marketing. While we had great partners who could build anything, we were forced to batch major feature updates, losing the ability to property A/B test, and were slow to incorporate feedback.

· Operated too lean. Sure, limiting wasteful spend and extending runway is great. But not at the expense of growth or bringing on additional experienced team members. As a result, I was often forced to spend time in the weeds, sacrificing the bigger picture.

· Solo (first-time) founder. Let alone the actual high-return man-hours that a second founder can provide, it would have been nice to have someone in the trenches with me, bouncing ideas back and forth, and absorbing some of the stresses and pressure (see below on founder wellness).

Additional Takeaways

· Logistics can make or break a company. It is easy to get distracted by the sexier parts of the business — customer acquisition and revenue — but shipping can not only affect costs and margins, but can have a drastic effect on customer experience. This was especially so for us at FreshNeck, as it was a two-way shipping model.

· Rapid feedback loops are key. Getting insight as soon as possible from customers and team members, as to what is working and what is failing, leads to the best, collaborative, outcomes. I’ve learned that this not only relates to product features, but employee management as well. An ideal culture embraces radical candor, in which all actively provide and solicit feedback.

· Founder wellness is an overlooked, but key aspect of long-term success. Being a founder is STRESSFUL AF. Overworked and under-resourced. Investors and employees counting on you. Sleepless nights. Families to provide for. Friends (and strangers) judging you. All while putting a façade out to the world of ‘always crushing it’. A founder needs every edge he or she can get, so it’s key to stay physically and mentally strong. Eat healthy, get proper sleep, be prepared, and have some balance. (Do yourself a favor and read my colleague’s post on Founder Wellness)

· We all need a support system. See above — it’s hard, and it’s lonely. I wouldn’t have made it through the ups and down without an incredibly supportive wife, parents, brother, friends, and team of loyal employees. Thank you for being there.

· I love this shit. The people, the ideas, the technology, and the community. It became so clear that I was meant to be a contributor to this amazing ecosystem.

It feels good to write this all out. I’ve been inspired by others’ similar stories, and I welcome anyone to reach out to me directly (dgoldberg@corigin.com) to share theirs, or just to chat.

Nov, 29, 2017

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