What about @lyft for food?
We looked @Postmates + thought:
- the food arrived sloppy / restaurants don't care about delivery
- it took forever (1hr)
- too expensive
Nobody talks about failure in Silicon Valley, yet 90% of startups fail.
Why?
3 yrs ago, @neerajberry and I shut down @Sprig, which raised $60M from @GreylockVC + @socialcapital & grew to $20m revenue.
Then, it all fell apart.
For an honest story about failure,
**Read on**
What about @lyft for food?
We looked @Postmates + thought:
- the food arrived sloppy / restaurants don't care about delivery
- it took forever (1hr)
- too expensive
3 taps and $15 for a healthy meal delivered in 15 min
To make it possible, we had to run the restaurant ourselves; it would be expensive but worth it
We recruited @n8keller, Morgan Springer + @mattkent as founders
Our Series A was a hot round. I did 4 partner meetings on the same day. Raised $10M.
Great investors, great team, off to the races - @omal and @simonrothman
1) Govt. SF health + planning made our lives hell. They didn't like our innovations. We had to bribe officials ("lobbying").
2) Gross Margins (GM). As we grew, our burn rate grew too. We were losing money on every meal. If only we could get to critical mass.
We were always “1-2 months away” from managing the burn.
We finally got some progress on margins, but it meant degrading the product: food is fickle.
Less money in, worse food out.
Sprig's peak was Feb 2016:
4,500 meals per day (largest restaurant in SF)
$22M run-rate (SF + Chi)
1,300 employees (incl delivery)
$60M raised
The public treated me like a star, which was both uncomfortable & awesome.
Even my dating life felt like it had improved 2-3x.
But secretly, I was nervous - it didn't feel like a done deal.
On Feb 22, 2016: our growth curve inverted. +2%/wk became -2%/wk.
We scrambled to figure out why.
Was it seasonality? Was it our rising prices? Was it the quality of the food?
Everyone was running tests to figure out why and what to do.
🤦
It was UberEATS, which launched that week.
Fucking Uber. After hearing all the war stories from @lyft, I knew they were unsavory competitors.
Super smart, ruthless with big coffers.
What about pursuing a sale? If we do layoffs, then we can’t sell. If we don’t, we may die trying.
We decided to pivot to a new offering that focused on food quality.
Everyone (fam, friends, investors) thinks you're doing well and you can't tell them you're not.
We were in pure panic mode.
We launched Sprig 2.0, shut down Chicago and laid off 1/3 of HQ staff to conserve burn.
I shut down external activities, such as talks and press, so we didn’t become a Theranos.
Internally, I leaned on my executive team. They were honest and kind with our employees. Through it all, we had only 1 departure.
We got to $0 margins, but the traction didn’t improve.
The board asked us: what would it take to be fully profitable?
We were running a restaurant doing $6M in revenue but paying real estate for a place that needed $20M in revenue to be profitable.
After 3 pivots & multiple layoffs, we faced a final decision. We had $8M left and knew we had to restart or quit and return the money.
@neerajberry & I made an exec decision: we shut @sprig down on May 27, 2017.
1) In 2013, we mistook present for future. Delivery apps got better w scale. We got worse.
2) The profit equation was off. The market size in SF was too small for our big kitchen. We blitzfailed.
3) Cap Table + Burnout. Hard to restart after losing $50M.
Learned way more in 4 yrs @sprig than 4 years @udemy or @UCBerkeley.
Few grudges were held & we took care of the team. They mostly landed on their feet (Silicon Valley embraces failure).
A classy ending helped sow the seeds for forgiveness.
If you're gonna fail, do it fast.
If you're gonna succeed, do it slowly.
In startups, remember to watch your flanks. Your competitors are not your direct competitors, but the whole market.
Thanks to everyone who believed in us.
Follow me to read more honest takes from a recovering founder 🙏🙏🙏
Here's an equally honest thread about @udemy going from 0 to $2B valuation:
https://t.co/mc9Dd8A6xI
I\u2019m biased but @udemy is a true underdog story + thought I\u2019d share details we\u2019ve never shared before.
— Gagan Biyani (@gaganbiyani) February 20, 2020
ICYMI, we announced a $50M raise at $2B valuation.
Udemy almost died at least 5x. We got rejected by everyone in the Valley. Startups are never a straight line.
*Read on*
More from Startups
1/ Tuesday was my last day as CEO of @CircleUp. I’ve been CEO since starting the co. in 2011 with my co-founder @roryeakin.
This is a thread about what happened, why and my emotions about it. For more detail:
https://t.co/vYImcm1bTM
Much of this I have never talked about.
2/ My goals: I hope it helps founders feel less lonely than I did. Little public content about the challenges of transitioning exists, but I longed for it. I’m not here to provide a playbook- just to share my experience. Hope it might build greater empathy.
Here goes….
3/ Why: When I tell people that I’m transitioning to an Exec Chairman role their first question is always: “why?” Short answer: co. pivot + fertility issues + health issues + a false sense that grit was always the answer = burnout. Long answer: is longer so hang in there with me
4/ Over a 12-18 month period that ended in late 2017 I ran my tank far beyond empty for far too long. You know that sound your car makes when it’s sputtering for more gas? It was like that. Worst year of my life. Since then it has felt like bone on bone.
5/ Here is what happened:
Professionally: pivoting a Series C company was a living hell in and of itself, as I’ve talked about before.
This is a thread about what happened, why and my emotions about it. For more detail:
https://t.co/vYImcm1bTM
Much of this I have never talked about.
2/ My goals: I hope it helps founders feel less lonely than I did. Little public content about the challenges of transitioning exists, but I longed for it. I’m not here to provide a playbook- just to share my experience. Hope it might build greater empathy.
Here goes….
3/ Why: When I tell people that I’m transitioning to an Exec Chairman role their first question is always: “why?” Short answer: co. pivot + fertility issues + health issues + a false sense that grit was always the answer = burnout. Long answer: is longer so hang in there with me
4/ Over a 12-18 month period that ended in late 2017 I ran my tank far beyond empty for far too long. You know that sound your car makes when it’s sputtering for more gas? It was like that. Worst year of my life. Since then it has felt like bone on bone.
5/ Here is what happened:
Professionally: pivoting a Series C company was a living hell in and of itself, as I’ve talked about before.
1/ We Pivoted a few yrs ago. This is the story- mostly my feelings. It has never been told publicly.
— Ryan Caldbeck (@ryan_caldbeck) April 16, 2019
This will be rambly and represents the chaos in my head at the time. There is [hopefully] no advice here. I don\u2019t know if we did it right.
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“We don’t negotiate salaries” is a negotiation tactic.
Always. No, your company is not an exception.
A tactic I don’t appreciate at all because of how unfairly it penalizes low-leverage, junior employees, and those loyal enough not to question it, but that’s negotiation for you after all. Weaponized information asymmetry.
Listen to Aditya
And by the way, you should never be worried that an offer would be withdrawn if you politely negotiate.
I have seen this happen *extremely* rarely, mostly to women, and anyway is a giant red flag. It suggests you probably didn’t want to work there.
You wish there was no negotiating so it would all be more fair? I feel you, but it’s not happening.
Instead, negotiate hard, use your privilege, and then go and share numbers with your underrepresented and underpaid colleagues. […]
Always. No, your company is not an exception.
A tactic I don’t appreciate at all because of how unfairly it penalizes low-leverage, junior employees, and those loyal enough not to question it, but that’s negotiation for you after all. Weaponized information asymmetry.
Listen to Aditya
"we don't negotiate salaries" really means "we'd prefer to negotiate massive signing bonuses and equity grants, but we'll negotiate salary if you REALLY insist" https://t.co/80k7nWAMoK
— Aditya Mukerjee, the Otterrific \U0001f3f3\ufe0f\u200d\U0001f308 (@chimeracoder) December 4, 2018
And by the way, you should never be worried that an offer would be withdrawn if you politely negotiate.
I have seen this happen *extremely* rarely, mostly to women, and anyway is a giant red flag. It suggests you probably didn’t want to work there.
You wish there was no negotiating so it would all be more fair? I feel you, but it’s not happening.
Instead, negotiate hard, use your privilege, and then go and share numbers with your underrepresented and underpaid colleagues. […]
