We Failed Such A Great idea

7 years ago, we started a startup to challenge Carta, we raised $1M, got our first 100 users, and tons of optimism. 6 years later we went bankrupt.

In 2017 I was playing cageball in Oslo when I met my old friend, who said he just started a new startup, it was a competitor of Carta, but for the EU. He asked me to join as CTO and co-founder.

We got accepted into a cool incubator, raised over $1M, and were set to win the EU and later go after Carta itself in the USA.

Our plan was the following:

• we win Norway first
• we get Scandinavia then
• then EU
• then the World

[Mistake #1]

We started with Norway. And this was our main mistake. The second big mistake was that we placed strong bets on corporate partnerships, which I will describe later.

[Hyper-localized service was a mistake]

We thought we would quickly make a version of our product for Norway, and go for the other countries then. We spent a few months, a year, a few years, and only then we were done.

And here I learned a good lesson: it takes almost the same effort to win in a small market or a big one. Takes same amount of coding and marketing in most cases. We spent several years just to make it functional within Norway. But right after this, we made our second mistake.

[Deadly Partners]

After launching our MVP, we gained our first 100 b2b users and got good interest from big corporates. Somehow all law/accounting firms wanted to innovate and were looking for startups to work with. We were extremely happy.

We thought this was so cool and we said yes to the 3 biggest players. I won't name them, but some were publically traded companies with over 50k employees. They said: we will sell your tool to all of our clients, you just need to fix these few things. The way we heard it: we have 100k clients, and you may get at least 10% of them, and we share the revenue. The "few" wasn't "a few".

[Corporate hell]

Being a startup, very quickly we realized that the number of requirements to be compliant with such a corporate partner was so huge, that we would spend years implementing them, and we actually did. But when the year passed and we were done, the corporation changed their plans, and all they did was include a link to our website in their email at the bottom, which drove just...30 clicks. But we spent the whole year, naively expected to be pushed to all of their 100k clients, get 10k clients overnight, and celebrate. It never happened.

Nobody to blame really, it was just us, being inexperienced in expectation management when working with corporates.

[More Corporates]

At the same time, we had a few other corporate partnerships going on, and the same thing happened there. We finally learned: that the people who promise things from the corporate side are the employees, who often aren't even there by the time we complete the work on our side. They just play the "cool" side and give promises, which were in fact never approved by the real decision-makers. But we have never had any idea who was the real decision maker, since every person in the corporate has such a buzzy title that it feels like this person is the second employee after the CEO. I mean the VP of...titles.

[Last partner]

4 years later, we had no users, no money left, and our product turned into a corporate type of product, that was too complicated for SMBs. We ended up joining forces with a new corporate partner, who bought half of the company. Things just fell apart after this and a year later the company was out of money again, the partner didn't do anything, because, in the deal, they had the right to the source code for internal use if the company fell apart. And this is what has happened. Our startup went bankrupt at the end.

Lessons learned:

1) Don't do anything with corporates.

Maybe it works for some, but when this story was unfolding, I met dozens of other founders, whose startups were dying following exactly the same corporate deals as ours. For corporate, our startups were just toys, they played "innovation" and didn't really care much about the outcomes.

I wanna emphasize, that I don't blame the corporates, I blame ourselves, the founders, who thought: Oh, this is the easy way, they got 50000 clients that we can easily get too. Let's take the shortcut. We should have gone the proper way, product-led growth, organic growth, user feedback, iterate, improve, and grow.

However, this lesson has taught me so much. The cost was high, but a few years later, when working on my other startup, I had a similar opportunity, one of the largest companies on earth offered me an exclusive deal and over $1M a year contract, but we just had to do some custom stuff for them...I'd say yes immediately if it was 2017.

But in 2022 I declined it, and fast-forward to today, I haven't had the slightest regret.

2) Don't build for a small market, if you can build for a large market.

What I mean is: that if winning the market is difficult and the software you have to build is very complicated, then don't go for small markets, go for the largest markets you can find. You should go for small niche markets in case the software is easy to build.

I hope this story may be useful for other founders.

[THE END.]