Successes and failures the norm in the world of start-ups
This is the story about building a start-up and how things can go wrong, depending on how one goes about things, and with some valuable lessons learned, admirably shared by the Dane. All successful entrepreneurs say that before and in-between successes they have always failed – many times. Most ideas, and projects, never survive – for a variety of reasons and hiccups.
Back in 2005 Digital/IT lead Tommy Lissau Gotfredsen successfully founded and built an online fan base for a community portal called Nightlife.sg, while he was a Bachelor Degree-student in Singapore. This coincided with the dawn for social media. This adventure had given him lust for more, when he many years later embarked on realising a neighbourhood platform for commercial announcements based on one’s physical location, called Meeof.
As for Tommy’s first adventure, nightlife.sg, it came into trouble due to how “early” the concept was in terms of social media. Bandwith was a big issue back in 2005. As recently as ten years ago Internet speed was still an issue even in five-star hotels in Singapore, and the mobile networks were not yet the main suppliers of high speed internet.
Tommy’s social media concept for nightlife.sg was to take pictures of people within the nightlife scene, publish them online, and allow the public to become users, with personal profiles.
“Within three months after launch, from being no one on the market we had reached 33% market share. After six months we had 40 000 people on our platform, every relevant discotheque knew about us and we had partnerships with everyone. We also won two awards in the first two years of operations. We grew so fast that our hosting solution shut us down over night because we were using too much, forty per cent, of their entire band with,” he recalls.
You read right, the hosting shut them down, without prior notification! This was of course very damaging to Nightlife.sg’s reputation.
“We had just signed contracts with Jägermeister, Heineken etc. to do branding on our website. We were in the early stages of generating revenue.”
Eventually the hosting company came back with an offer to go from 70 SGD per month to 2,000 SGD in cost.
“Back in 2005 you didn’t have this vibrant start-up scene that you have today, so I couldn’t find anyone to invest in it. But at the same time there was another Danish company in the online industry that approached for collaboration partnership. They were trying to set up dating sites etc. and had also to set up in Singapore. I could not see how I could collaborate with them when I could not even keep my website up and running properly. So I sold the whole company to them and joined them as an employee. But I learned at lot in that year for myself while working for them. At the end of that journey, around mid 2006, I decided to focus on my bachelor degree and migrate back to Denmark and start a job.”
App to attract shoppers
Fast forward to 2016 and Tommy is back in Singapore – and with a new idea. And this time the circumstances are different. He has relocated back from Denmark, with his Singaporean wife, who has been assigned to set up her Danish employer’s Asia-Pacific operations. Tommy’s employer, Sanofi, also finds him an overseas job there, in charge of the commercial and digital solution center.
“We had a good combined income by now and I was thinking back at my nightlife.sg experience, where I had made so many mistakes. If I did that again could I be successful? So we decided that I would embark on building this new business based on an idea that had been brewing for a number of years.”
It was based on a problem scenario that Meeof would solve; focusing on attracting and engaging with people to visit physical stores and malls: “In retail, in fast-moving goods, everyone is going e-commerce, trying to lure everyone to their website and close the sale. There are so many tactics that e-commerce sites can use to lure customers back as well. More and more offline retail stores see people come in to try clothes, shoes etc. to see if they fit well – who then leave the store and go online to buy items at lower prices.”
“If I’m a new tourist in Singapore I don’t know the local shopping scene, I am not aware of all the promotions happening around town. So, Meeof was founded on the principle that we should give the digital marketing power back to the retail stores. Meaning: if I’m within say 200 metres of a certain store and if there is a match with my profile and I’m a frequent buyer of the brand, then the technology will ping my phone and inform of a brand store next door. ‘You are a returning or premium customer so we can give you very personalised discount. Not everyone going into the store gets this!’ By using this, stores can pull customers in by using digital technologies such as notifications to your phone.”
There was also a specific incentive for businesses to come on board and utilise the proximity-based tool: events. “If anyone saw an event happening around you, you could take a photo of it and tell where you are. You put it on to Meeof and anyone within the proximity could see that there is a promotion happening right now. So it was not just for the retail companies to tell you what they have but Meeof was to help as well, via crowd sourcing.”
“Living within five minutes from a mall in Singapore I myself missed many cool events for my kids just because I didn’t know. And the places where you find such information are if you subscribe to a particular mall for instance. If you don’t subscribe to everything you won’t know what’s happening around you. In the trial we did get some traction between members on that.”
One of the key decisions that Tommy made early was to go for outsourcing, since Meeof was very much his own “baby”. He has found one angel investor that supported the project. Aside that Tommy handled all the operational side and development.
“I started out and hired a company in Singapore, to have the provider close to me, tasked to build the native app. They had done many apps before and proclaimed to be the best in town. They were quite pricy and I paid them almost 50 000 Singapore dollars for the job. Everything was outsourced to them. Because I didn’t want to worry about technology, I wanted to concentrate on business development.”
The provider allocated a project manager, and Tommy submitted a very detailed PowerPoint, with all the pre-works and including the requests. This project manager then rewrote that into a formal requirements document, and with Tommy’s documents attached, essentially as the basis for what was to be delivered 4 months later.
“The work document was very loosely defined but I was O.K with that because I knew I was going to get what was in my document, as that had been agreed.”
But only after less than a month the project manager resigned from the provider and a new one took over. Problems started to emerge.
“After two months I realised they were not delivering what I had requested. I had a meeting with their CEO and stressed that this was really going in the wrong direction.”
This is when Tommy found out that the production had been outsourced to a third party vendor in Vietnam! And they had given this vendor the requirements document but not the PowerPoint so from now on everything that Tommy was asking for became a fight, because the vendor objected to the scope of the work. Now he found himself stuck in that whole scenario between those two vendors.
“My agreement was with the Singapore vendor and they could not honour it based on the price because they hadn’t submitted my PowerPoint to the Vietnamese company. The price they had given me was not the correct price, they said. And they basically just stopped working until we resolved this. I agreed to extend the timeline by one month and to pay 6,000 dollars more. Now it was clear and I was going to get everything,” Tommy thought.
“Then that project manager also left and I got the third project manager who again did not know the heads and turns of everything that was going on. After three and a half months I got my first view and was very excited to see it. Probably 40 per cent of it worked, and some of the basic stuff was not working. I sent it back with 500 issues and they started working on fixing those. A couple of weeks later they sent it back to me again, claiming they had solved all 500 issues.”
They hadn’t. Tommy had the patience for this for about another 4 months. Then he decided to part with the vendor.
“I was doing it part-time while having my full time job. It had been going on for about eight months. I decided to quit my job and to stop building native apps. I could instead quickly build a website to prove that this technology was going to work and raise interest for it.”
So, within the next four months he built the website, fully available with location-based marketing and profiles and where companies would join. It was launched in June 2017.
But there was a catch with this. “I knew that. Only when your mobile phone is turned on, with the website on you would get a notification – which is obviously a very big limitation for success. But the objective was to build the website and get a lot of PR out there and then get some investors in and help me hire people to build the native apps. So there was a reverse strategy to success because I couldn’t get the people to build it for me, missing a large enough budget. The angel investor that I had found gave high risk investment to try and get to the Proof of Concept stage,” Tommy explains.
“We did a massive push, with paid advertising to get people to join this. We reached that we had about 50 people who were sharing stuff and we had a lot of traffic coming to the website but not many signed up.”
When visitors were asked they responded they could not find the app in the app store and therefore had not joined. Also, some eight VC companies responded that they liked the idea but needed to see at least 20 000 people in the database and at least five big malls as customers. Then they would consider investing with growth money. With an app even a local radio station was be willing to dedicate a whole programme to promote the concept.
This gave Tommy new energy to turn back to realising the native app. “We started out with a Chinese vendor that was given the source code but wanted to start from scratch. Things looked promising for one month but then it seemed they started dragging their feet, because they were paid weekly, so they saw that the longer it would take the more money they would earn. So I fired them and instead found a start-up company in Sri Lanka.
This time the provider was even promised equity, no less than 20 %, in the company, upon delivering the native apps for both Android and IOS, and would remain the main tech company for all development.
“This Sri Lankan company got very excited and started delivering some amazing works for about 8 weeks, and I was finally thinking: ‘Now, we’re going to get it this done – at last!’”
Unfortunately, yet again, and despite have partnered up, also with this company issues started to occur, and with really bad responsiveness.
“The passion that they had had just seemed to die. So I flew to Sri Lanka and sat with all the developers for two weeks. Being a developer I could scrutinize the code myself and see what was going on. And after that trip I decided that I had had enough; they were simply not able to do the job for me. When it came to the logical implementation of it they were simply not capable. The competence, the technical aspects were not there. Now another 15 000 dollars had been wasted.”
Here, the start-up adventure came to an end for Tommy.
By February 2018 Tommy went back into the corporate world, having been offered a very attractive job with Astra Zeneca.
“I got excited about the thought of making money again and the angel investor agreed to shut down the project, because we did not know when we would be able to get the product launched. I paid him back the 60 000 SGD that was still left from his investment.”
“Astra-Zeneca is a great place to work at and I‘ve got good responsibilities and good career path opportunities so I wouldn’t put that at jeopardy to start something again. We’ve got kids too so I need to manage my risk responsibly.”
“Among the lessons learned… one is definitely that if you want to launch a tech company start-up you need to get co-founders in with you that have a skin in the game. I am a website developer but I needed an app developer as co-founder and either of us with sales and marketing experience. Probably three or four people would have been needed in the team that all had skin the game, equity and the motivation to make it work. Otherwise you’ll struggle with vendors,” concludes Tommy.