From zero to 5 million dollars - a start up journey

So many of you have been asking me to talk about start-ups. So I thought I'd make a video talking about some of my experience and the lessons I've learned along the way. A word of caution though, if you are expecting this video to be a list of amazing start-ups I have created, you will be disappointed. It is mostly going to be a collection of failures and roadblocks. That being said, it also wouldn't be a good video if it didn't have at least one success story, so I'll talk about that as well. But all-in-all, I hope that this video basically sums of what entrepreneurship is all about -- your ability to identify a problem in the market that you could potentially solve by creating a novel solution or by improving upon an existing solution.  Not every attempt yields success, in fact, you will likely fail 99% of the times. But you keep at it until you take that one successful product to market, and then you continue at it.

With that said, let's rewind the time all the back to 2002, which was my first attempt at creating a product that would provide value to a large group of people. 

Back in 2002, I wanted to create a guitar chord database of sorts because not much existed in that space at that time. But one thing I realized quickly was that me adding all the chords and validating their quality would not only be a bad idea for scalability but also beyond the scope of my own musical talent. So I used an open-source discussion board platform to allow users to submit chords and allow the community itself to vote on the highest quality ones. This way, the content itself would self-maintain for the most part.

So here's lesson number 1. In most cases, start-ups aren't created with the intention of changing the world, or to create a great business or even to make a certain amount of money. Good start ups start by identifying a space that could use innovation or improvement and then by building a product that not only solves that need, but also does it in a scalable fashion. By a textbook definition, this chord database wouldn't even count as a start up -- it was never a business and never made any money -- but that is the whole point I am trying to make. Step 1 on your start up journey is a well-intentioned, customer-obsessed side-project. And your biggest drive is the desire to solve a problem in a better way, not the number of downloads, earning potentials or anything like that. Those signals come later, only after you have validated your hypothesis that you can actually build something useful for your customers.

Moving on, the next time I had a meaningful crack at something like this was in 2011. At this time, I was in graduate school. A group of friends and I got into a conversation about how social-shopping wasn't really a thing. A few popular social networks had died out - the likes of MySpace and Hi5, and a few new social networks like Facebook and Twitter had been very successful by then. However, at that time, their revenue source was largely ads. We believed that providing an avenue for groups of people to shop socially would create a very unique experience that we could incentivize with group discounts. Imagine shopping for a gift for your mom for Mother's day when all your siblings live in geographically distributed locations. Or shipping for groomsmen suits as a wedding party. We contemplated creating a virtual trial room as an extension to existing social networks, where we would superimpose clothes and accessories over camera feeds, like how we have filters today on TikTok, Snapchat and Instagram. We even thought about creating an entirely new social network around the social shopping space.

The problem was that neither of us were experts on video streaming nor did we have deep understanding of how social networks worked. So, we split up the research. Half of the team focused on everything related to video streaming, while I took advantage of me being in grad school and took on an independent research project through my school on information propagation through large social networks. Since this was an academic research project, it also gave me access to very large, anonymized datasets from various social networks like Twitter and Facebook that I could use to study patterns and behaviors around social networks -- how connectedness impacted information flow, how clusters formed, so on and so forth.

This brings me to lesson number 2. Sometimes, all you have is the recognition that a space could use some innovation. But, you don't have the necessary skills or the expertise to solve it. And that's okay. Leverage your circumstances, connections and good-old academia to learn what you need to get the job done. Because this is one thing that will remain constant throughout your start up journey -- whether you are on day 1, or day 1000, you won't know what the next step is, but you will need to have the confidence and the desire to learn it. And this doesn't just apply to start ups, but to any high-impact or challenging project at your work. Ambiguity and uncertainty is part of the game, and you have to learn to not only accept it, but thrive at the face of it.

In regards to the social project we were working on, I had to unfortunately move on. The rest of my team had graduated a few years before me and already had full-time jobs. Considering the fact that I had just graduated while we were in the middle of working on that project, my highest priority was finding a full-time job. So, I departed the team to focus on that. But keep this project in the back of your mind, because it will come back some years later.

In 2012, during my first job, I met a very talented engineer who also had a similar knack for entrepreneurship. My mind was still into social networks since I had spent a significant time researching them. And he loved machine learning. So, we got together to build a food recommendation engine that would learn about eating habits of its users, and combine that with various social cues to recommend various restaurants and foods to the user. For example, if I have a late night, I always lean towards having a nice warm Vietnamese Pho in the morning. Or when it is a weekend and cold and rainy, I always gravitate towards a Nepali dish called Mo:mo. Imagine an app that can recognize those patterns, find the most highly rated places for those dishes, possibly even find discount coupons and have it all ready when you inevitably try to order the same. That "it read my mind" effect was what we were going for.

We built a working proof of concept, but sadly, both of us eventually ended up leaving the company we were working at and moved to different locations across the country and this project never saw traction again. 

In 2013, I moved to Seattle and I met with another colleague who had a very similar mindset and we immediately jelled over a cool app idea where you could leave your memories across places you have travelled in the form of digital artifacts like pictures, texts, and other files. It would be all anonymous and the maps would be rendered with those memories that people have left behind for others to see. We thought that was a cool concept, almost a digital representation of how things are in the real world.

We did make an MVP for this product, but for various reasons it never progressed beyond that.

And this takes me to lesson number 3. The notion of a million dollar start up idea does not exist. Ideas are worth nothing without execution. In fact, the idea itself does not have to be life-altering, it can merely be an improvement over an existing concept. A crowd-sourced guitar chord database before Ultimate Tabs was a thing, social shopping long before the MetaVerse was a thing, or a food recommendation and purchasing platform long before Uber Eats was a thing -- these were all great ideas with good potential as other great start ups in similar spaces have shown. While I had great fun working on every one of those and learned a lot, none of them made it to what you'd think of as a start up. Because the truth is that the idea itself is only a small part of the picture. It is the commitment, execution, and in all honesty, a whole lot of luck in terms of landing the right thing at the right time with the right team, that makes a start up or a product successful. Sometimes you are too early and the market isn't ready for it, sometimes you are too late and other times, you don't have the grit or the drive to take on the risks to see the product through. You will experience a lot of dead ends, but if you keep trying, and you will eventually find that golden egg. And that is exactly what happened to me in 2015.

Remember that social-shopping project I had worked on with a few friends back in 2012? Well, they had continued working on the project. Only that they had pivoted numerous times and the project had morphed into a Marketplace concept, focused on making custom, hard-to-find meals and food items available to users on-demand. Think of it as your personal concierge service in the food world. I joined the group again in 2015 and obviously, we also integrated aspects from all our previous failed projects into this, like group dining incentives and recommendations based on supervised learning. 

And that's lesson number 4. No effort is wasted effort. A project may feel like a failure, but the experience you gain from it will transfer to something new. And with each failed attempt, you get better at recognizing market gaps, customer behavior, scalability needs and in general, you just get better at churning out MVPs, failing fast and pivoting quickly, which is critical for your start up success. 

And that's exactly what we did for our project. After many years of failed attempts, we had all gotten better at the execution part of the process. That meant we knew how to split focus between our team to target specific areas that had cost us in the past. Two of us were in charge of engineering, two of us were committed to customer and market research and the remaining two were fully focused on finding investors and seed money. Keep in mind, that this is still a side project for all sense and purposes. We all had demanding full-time jobs and various family commitments. But maybe it was all the previous failed attempts, or just the right team working together at the right time, we had the discipline and drive to commit fully to this after hours. I've mentioned this in some of my other videos, but my life from 2015 - 2017 was literally 8-10 hours for my full-time job, an hour or so with my family and my dog, then another 8 hours or so for this project, with weekends fully committed to it as well. 

We were also fortunate to find an amazing advisor, who had a great amount of start up experience -- he had created a fantasy sports and betting platform from scratch and taken it to being valued at over a billion dollars in a very short time. We were also fortunate to have developed a good network over our professional careers, which led to us finding multiple investment firms that were interested in our product. But, that also meant that things went to hyperdrive. Product pitches would get scheduled at the least convenient times and we had to churn demos after demos with very short turnaround times. It was extremely high pressure. Also, the project backend at that time was written in Python and Django because that is what we had picked all the way back in 2012, and we just continued to build on that original framework. However, the two of us that were in charge of engineering were quite new to Django and as a result, it was slowing us down. So we made the choice to completely re-write the backend in a stack that we were most familiar with -- in our case, that was C# and .NET. It was a one-time overhead that would yield big benefits in terms of our speed of delivery.

This takes me to lesson number 5. The choice for your tooling isn't always about the fastest one or based on some other performance metric. Often times, you pick the stack that you are most comfortable with. Rewriting a stack can add to technical debt, but it is a one time commitment once you have traction with your project. However, working on a stack that you aren't comfortable with can make or break your start up right from the beginning.  

Anyway, we eventually got buy-in from one of the investors with an initial seed of 750 thousand dollars and a total company valuation of $5 million dollars! That was probably one of the greatest days of my life. The emotions that run through you when something like this happens is just insane. It not only makes all those failed attempts and years of 16-hour work days so worth it, but in some ways also validates all the life and career choices you have made along the way. When the seed money eventually made it to our account, we were sharing screenshots of the account balance like little kids, needless to say none of us had ever seen an amount with that many zeros before. I remember reading the story of Dropbox's success and the founders mentioned how they were bedazzled seeing a million dollars of seed money in their accounts, and I had wondered what that would feel to experience something like that. Well, this was that DropBox moment for me. And I know, we often refer to things like these as what dreams are made of. But as I have mentioned before, it is actually a result of years of perseverance and grit from every member of your team, not to mention, an incredible amount of luck.

However, when it comes to a successful start up journey, getting seed money and a good valuation is only step one. That is when the work actually begins, along with a lot more headaches. That's when you need to focus on your market penetration goals -- hitting the user and revenue milestones, growing your team, and so much more. And we all know how expensive software engineers are, $750k barely buys you a year's runway to hire just 1 or 2 qualified engineers. So your immediate effort goes to the next round of investments, and the round after that. Also, if your team has some members that aren't US residents or citizens, that poses a completely different challenge as self-sponsorship requires you to provide at least a few years of operating revenue. There are also other strategic details about the future of your start up, whether you see long-term potential or whether you want to leverage the valuation and traction to pursue being acquired by some other business. But, to keep this video on topic, I will leave those details of post-seed logistics for a future video.

But before we move, here here is lesson number 6: Market penetration is challenging. It's one thing to gather early users, but another thing altogether to grow in that space. Because with volume, comes unanticipated customer behaviors. And the biggest challenge is to be able to quickly adapt and be able to continue to provide value to the bulk of your customers. There are many strategies one can adopt during this phase in terms of engineering, from lean experimentations to A/B flighting, but a good chunk of it is also customer relationship. 

Ok moving on, in 2018, I dabbled at the idea of home-cooked meals as an experience. Yet again, we were a bit early. Obviously, we couldn't have anticipated COVID-19, but a year or two later would have definitely been a great time for that idea. In 2019, we worked at making a fully online and remote version of a game that we like to play often as a group. And since 2020 and beyond, I've been working on a few side projects aimed at helping new-in-career software engineers. Maybe you guys will see of those in the near future.

And that brings me to the final lesson I have for you, which is a reiteration of lesson number 1. Entrepreneurship isn't limited to the action of trying to create that one start up that will help you retire happily. Entrepreneurship is a mindset, a behavioral trait where you are always looking to make an impact in a space that needs innovation. It does not matter whether a start up is eventually formed or it just ends up as a side project, your biggest drive is to solve problems and provide value to the customers of your product -- this applies to projects you work on your free time, or at work. Failures will happen and are disappointing, and some successes will come along the way that are exhilarating, but neither of those are above your desire to solve a problem that needs solving, and your obsession towards the customers of your product. If you retain this mindset, success will eventually and inevitably follow.