How not to found a startup

On June 2021 I’ve co-founded my first tech startup: PlayLife. In 2021 the goal of PlayLife was to provide a web applications where people can easily manage their events, sell/buy tickets and find new events. There was two main sources of income: a fee that PlayLife keeps for every transaction and the plan to sell user related data.

As you can imagine you don’t build an application in few days: I have worked on the project since October 2019. I have worked alone on the project from October 2019 to the date PlayLife was released, July 2021. That’s the first big mistake. If you co-found a startup all the people have to be engaged in the project. If you find yourself working alone on a project where multiple people are involved just leave the project as soon as you can.

The second big mistake derive directly from the one above: a business it’s not just the product. You can have the best product in the world but without a good analysis, good strategy and planning you have nothing. Before writing any line of code you MUST validate your product: you have to fulfill a need that people have in order to be successfull. During this year of study I have found a good steps to follow: validate the market, analyze the market (customer, business, competitors), smoke test, business plan, financial plan and pitch. At this point if you have money start developing your project, otherwise search for a seed funding to start your business. There are a lot of different ways to perform this steps that depends on your specific business.

We have no money to start our business but I have developed entirly the core product and we found people to help us and gave them in exchange stock options. So we just need money to start marketing and to pay servers. So we started searching for investors and people to help us grow. After some time my co-founder found someone who can help us grow and who can bring three investors for a total of 150k pre-seed investment. This person wanted a high percentage of shares. Third big mistake: NEVER GIVES SHARE WITHOUT A WRITTEN CONCTRACT. This person did nothing for the company and bring us 20k and well, it keeps his high shares. Also don’t accept investors just because they bring money in early stage: you need people that help you, that know the business that can guide you. Money are useless if you don’t know what to do with it. The investors also want to have inside the company a trusted accountant and we bring him in. Well don’t trust your investors. Our accountants didn’t know anything about our business or startup. He was useless. Fourth mistake (b): if you’re in Italy you need a good accountat because bureaucracy can lead to a big loss of your time while you need to focus 100% on your product and your business.

The fifth mistake was to gives access to your product for free the first months: people don’t use it because it’s good but because it’s free and they will not pay you in future. You need to validate the market, your product and your price. This way you’re not validating any of these.

Just a reminder: if you found yourself to be the only person who actively works on the projects co-founded by multiple people: LEAVE.

On January 2022 I tried to find another co-founder who can help me restart the company and validate the market once and for all. After few months I found him. We started again from scratch, validate the market, the customers, change our business model (introducing some real changes in the current market), write a brand new business plan and so on. We started our first smoke tests (well, we alredy have a product so it’s more than just a smoke test but the idea is the same) on September 2022. Since that time we have 0 income and we were paying for aws server (300$ months) without any other expenses. During September, October and November we made an average of 500$ months with a good market validation. It was time to clean up the company and search for another fund that can help us with marketing and sales.

Sixth mistake: trust people. TLDR: don’t trust anyone if there are money involved. All other people didn’t want to exit the company and they ask for huge amount of money that we don’t have. At this point there’s nothing you can do. That was the time I realized that the company was dead and it was all because of people, not because of the product, the market and so on. I spent much time thinking about the product: how to develop it, how to scale it, how to deploy it, how to extend it. None of that makes sense. We had a microservices architecture, running on docker, with integration testing deployed on AWS with autoscaling backend a multi az RDS database, a queue system to decouple our architecture, an elasticsearch instance to perform near real time searches and so on. None of that is importat. Write a shit monolith in Python and use your time to choose people in your team. You can rewrite a code, but you can’t change a person.

I learned lot of things during this years but the most important one is that the team is everything. A good team will bring success to even a mediocre idea. A bad team will bring failure to even the best of ideas.

This is the brief journey where I definitly learn HOW NOT TO FOUND A STARTUP.