Lessons from a 'Failed Startup' by this Chartered Accountant and Self Taught Software Developer
- Hi! I am Meheryar Tata, a Chartered Accountant by qualification and a software developer & consultant by profession!
- I am passionate about leveraging technology to help people be more productive and also the founder of 'Excel to Tally' a website that helps accountants complete their daily work faster!
- In 2015, I quit my awesome job as a Manager at a Big four firm to start an online rental startup!
- In 2 years of running our bootstrapped startup, we had a peak revenue run rate of USD 100k. However, we could not sustain it without any funding and had to close down!
- Was it painful? Surely it was but we learnt a lot of lessons.
- Here is my story of changing career lanes and the lessons I have learnt from my failed startup!
Quitting my job in the Big 4 to start my own venture
After qualifying as a Chartered Accountant, I started my career at a Big 4 firm in the valuations team.
Over the course of the 3.5 years with the valuations team, I was promoted twice and was doing pretty well!
I definitely had a bright future in the corporate world but somewhere within me, I wanted to start a business/venture of my own.
Around the same time, a good friend of mine (also a Chartered Accountant) wanted to explore outside the corporate world.
We both were in our mid-twenties and could see what the rest of our lives would look like...had we stayed on our respective corporate paths!
We did not want to regret later in life that when we were young and had the chance to plunge into entrepreneurship we did not!
So, one day, we both decided to quit our jobs and start something of our own.
Did we have a business idea? Not yet.
So what next?
The idea behind our startup - EazyLeazy
We then went through a few months of brainstorming different ideas for businesses.
Each time we got a new idea we would prepare a market sizing estimate and financial model and try to challenge ourselves on why it was a good idea to try.
Finally, we landed on EazyLeazy - an online rental startup!
Why? Our mission was to give easy access to high-end products that you would like to use once in a while or try before buying. Think DSLR cameras, GoPro’s, Karaoke machines, party speakers, the latest technology gadgets and others.
Our rationale for starting this was that the world was moving from offline to online and there were already existing online businesses in India that enabled buying new products (Flipkart, Amazon, Snapdeal), buying second-hand products (Olx, Quikr) but there seemed to be no big businesses in the asset rental space.
Funding our venture
We were aware from day one that in order to scale the business (EazyLeazy) in the future, we would need funding. However, initially, we put in the initial capital ourselves to test the hypothesis for the first 6 months. In short, we 100% bootstrapped our startup!
Having both worked for almost 5 years post qualification, we had some savings – enough to get the idea off the ground and run it for ~2 years.
Was self-funding our venture cheap? Not at all! We probably each spent as much as we would have on a top tier MBA.
Growing our Startup: The Complete Timeline (2015 – 2017)
Jan - Jul 2015
- We (me and my co-founder) quit our jobs and were brainstorming different ideas.
Aug – Dec 2015
- We landed on EazyLeazy as the business that we wanted to try.
- Did the setup for the business launch like incorporation, hiring staff, figuring out operational processes and buying assets to rent out.
Dec 2015 – Jun 2016
- Launched our business and spent the first few months perfecting our business model / operational model based on initial customer feedback.
Jul 2016 – Jul 2017
- Scaling our venture and talking to investors for funding.
- Over this time we spoke to ~40 investors and had in person meetings with ~10 of those.
- While we got some interest, our growth traction was not enough to convince outside them that we were a bet worth making.
- We were then faced with a difficult decision, continue to try to push ourselves or accept our failure and move on!
Jul 2017 – Dec 2017
- We spent a few months trying to figure out if we could manage to operate EazyLeazy as a side business on autopilot without outside funding.
- However, the operational complexity was too high for it to run without full-time involvement from us.
- Finally, we bit the bullet and shut down in December 2017, ~2 years since our launch!
Over the course of ~2 years of running our bootstrapped startup, we completed over 2,800 rental transactions and had a peak revenue run rate of USD 100k while being unit economics positive.
Dealing with a Failed Startup
It’s always HARD to shut down something and tell the world that you were wrong.
We had to face reality and accept that we had not achieved the business goals we had set ourselves when we started. Thus shutting down was the only "honest" option.
Every failure provides an opportunity to learn something useful - feeling sorry for yourself means you miss this chance.
We tried very hard to raise funds from investors but were not able to convince them that our growth traction deserved an investment.
We had the option of getting money from friends and family to continue but we both were clear that we didn’t want that kind of personal obligation on our heads. So 100% of what we lost was our own money.
Lessons from a Failed Startup
1. Changing default behavior is hard
- Considering renting as an option does not come naturally at least in India...though this is changing as of now!
- The problem is that because for 99% of our lives we use only what we own (and maybe 1% of the time we borrow something from a friend), our mind associates usage with ownership by default.
- Renting something that you don't need frequently for a fraction of the cost of buying it is a no-brainer idea but only once you are made aware that the option is available!
- Lesson learnt: Changing behavior is certainly not impossible. However, if you're starting a business, having potential customers actively looking for a solution to their problems is a huge advantage instead of trying to educate people on why they should remember you the next time they have a need for your product!
2. Selling and Distribution is as important as your product
- My co-founder and I both came from finance and strategy backgrounds...which means we were "linear" thinkers. We were somehow more suited to figuring out systems, processes and strategies to create the best possible customer experience.
- We initially treated sales and marketing as a secondary problem. We thought that if we gave people a great experience, by word of mouth people would get to know about us (so no need of marketing!)
- In short, this was one of our biggest mistakes!
- Lessons learnt: Unless you are counting on getting super lucky (luckier than the odds of winning the lottery), for the vast majority of businesses, answering the question "How will you sell?" is vastly more important than making your product or service 10% or 20% better than it currently is.
What Next? Go back to the corporate world?
After shutting down the startup, I wanted to take a break for some time before figuring out what to do next.
Having worked at a large professional services firm and then a startup, one thing I was sure about was that 'my personality was more suited to working independently with smaller teams!'
I had always wanted to learn how to code, so I thought I should spend some time learning how to do that.
In June 2018 I decided to (as my first software side project) build 'Excel to Tally'- (helping people pass their accounting entries in Tally quicker, it would be useful to anyone running their own business or even managing accounts for someone else's business).
Over the past ~20 months we have more than 20,000 users come to the site each month and traffic is growing steadily. Apart from the basic template, we now support 7 types of advanced templates to cover almost any import scenario.
Should you quit your job and start your own?
Yes and No!
Quitting your job and starting from scratch is NEVER easy.
Each person needs to make an honest self-assessment of where they are in life before taking that kind of call.
If you are young, have no debts/obligations and your whole life ahead of you, I’d say go for it – worst case you lose a couple of years of your life but will learn so much in return.
If you have family responsibilities / a loan to take care of / other commitments it’s important to plan ahead on how you would handle the worst-case scenario.
80-90% of new businesses fail within the first 2 years so there is no shame in failure.
A lot of successful entrepreneurs made it only on their 3rd or 4th try, so it’s important to give yourself the chance to keep getting back up and trying again until you make it.
If we knew what we know now about the importance of distribution, we probably wouldn’t have started EazyLeazy. But I don’t think we would have learned that lesson any other way. So no regrets!
Meheryar is passionate about leveraging technology to help people be more productive. He has done a bunch of different projects in this space, a few of which you can take a look at here.
Currently, he is working on building an ERP system for Indian NGOs. – ERP4Impact and also helps small and mid-size businesses with sales growth and operational improvement projects. Meheryar has also founded Excel to Tally - helping people pass their accounting entries in Tally quicker. He can be contacted at firstname.lastname@example.org.
(Image edited by Ankit Lodhi)
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