Failing is not cool (the Lean Startup hype)

Failing is becoming too cool these days. I agree that it’s ok to fail, but it shouldn’t be a reason to give up easily. Listen to Marc Andreessen talk about this (watch starting from minute 18 to 21):

 https://www.youtube.com/watch?v=JYYsXzt1VDc

He doesn’t want to invest in someone that gives up easily, someone that tried then tried then tried until things started to work. The journey will probably take longer than what you think. I know lean startup teach us to fail quickly and move on. I don’t agree on that, I think you should keep trying until the end. Some startups pivot, some need to Grind, read this post by Fred Wilson titled The Pivot vs The Grind:
http://avc.com/2014/12/the-grind-vs-the-pivot/

Entrepreneurs are inpatient, but you really need to wait sometimes, don’t give up easily, you’ll not see results as quickly as you thought. Waiting 2yrs till you see some good traction is normal. Waiting 3yrs to reach breakeven point is also normal. Sometimes you just need to wait!

The biggest reason for startups to fail it’s because the founders give up. There is a difference between failing and giving up. I see many founders give up in their startup quit easily, they couldn’t withstand the pressure from family, friends and life. I can totally understand how intense it could be, but unfortunately thats the game, it’s so f***** difficult to build a startup.

90% of us will fail, and it’s ok. I appreciate the courage to try something new and appreciate what you learned during this journey. Failing is OK, but not cool.

Am I going to smile again in my life? Founders and Depression

That’s the feeling I got the first time I felt depressed while building my startup. I remember this moment very well. It was two years ago and business was tough, no bookings coming and starting to get doubts about everything. I was driving my car in Kuwait, heading to Starbucks just to do something other than work. I was thinking, am I going to smile again in my life! I was so depressed. Then things flipped very quickly after reading something in Tech Crunch, a fishing startup called FishBrain won the best startup in Sweden. The news is not even about us, but I don’t know why, I started to feel much better. I got depressed so many times after that, but I started to get used to it. I know something good will happen later that will make me feel better. The longest depression I had lasted a couple of weeks, it was in summer 2013 after I moved to Dubai.

We always write how awesome it is to be an entrepreneur. Now being a tech entrepreneur is considered the coolest thing a person can do, even cooler than being a doctor in some countries. Well I have a news for you, being a startup founder sucks sometimes and in so many ways. It sucks during the time you are raising money, it sucks when you need to fire someone, it sucks when you need to go to work with a happy smiley face while in reality you were depressed and didn’t even wanted to leave your bed, it sucks when your family asks you “how is it going with business?” and you reply “great” and try to change the subject quickly so that they don’t dig deeper, it sucks when a customer give you a bad feedback about your product and it sucks when you start asking your parents for money to pay the salaries of your employees.
It sucks big time, you’ll feel depressed, lonely and desperate.

It is shocking how things can turn from bad to good in a moment. And this is the good news, as bad as things can go, things can get better, quickly. Whatever was the situation, things will happen and the bad feeling will disappear and in some situation you’ll even feel happier, it is really a roller coaster ride. Moreover, with time you’ll be more immune to bad situations, you’ll start recovering faster. If it used to take you a week to recover, it will take you days, then just hours to recover.

I do some things that makes me feel better when I feel down:
1- Talk to Jose my co-founder: this guy is always calm even in the worst situation, I don’t know how he do it, but talking to Jose always makes things much clearer to me, and together we find a new plan to solve the problem
2- Talking to one of our advisors: I usually talk to one of our advisors either Abrar, Omar Koudsi, mohammed Alzubi, sim whatley, Abdulaziz Alloughani. It will shock you how talking to an experienced entrepreneur will make you feel better, these guys have seen it all. No money in the bank, no growth in the company, the angry customer, the bad hire, you name it they’ve seen it. Just chatting with them about their stories and how they overcome them, makes you feel better and gives you ideas how to solve your own problems.

3- Talking to a friend entrepreneur. I have a friend doing food business, non-tech, talking to him just gives an inspiration on how he solved a similar problem in the offline world. We are always trying to do things online or in the cloud, when things can actually be solved in a good, but maybe old fashion way.

4- Talking to your team about: when things gets really bad and some changes need to be done, then you better communicate it to your team. You’ll be surprised how supportive they will be, and they will even start to work harder. They will appreciate your honesty and they will really feel part of the team.

Here you go, that’s the bad side of being an entrepreneur and how you can deal with some of the down times. I’ll end with this hybrid quote (part I read in twitter and other part from Mandala (or Gandhi not sure) and the other I came up with):

Being an entrepreneur is like being punched in the face 10 times every day, and the punches will get harder with time. The more you resist these punches the stronger you get. You will be punched to the floor, the ones who stand up every time are the ones that win at the end.”

The Sweet Spot of Talabat’s Business

Hamad Mufleh has an interesting (as always) take on the Talabat acquisition and where it can lead us. The original post can be found here, but if you’re too lazy just read on.

PS: Context matters. The F bombs he is referencing were out of sheer surprise, not anger 🙂

 

The Sweet Spot Of Talabat’s Business

Talabat is the first tech unicorn of Kuwait, and it could be the last.

Mijbel broke the news in the Startupq8 whatsapp group..

“Guys, we got our 1st +100m startup.”

The reactions have all contained versions of the F-word. And rightly so. Talabat has managed to unseat Maktoob with a ~$170 million price tag and take over the title of Middle East’s Biggest Acquisition in tech. The hard work that put Talabat and, consequently, Kuwait on the map shouldn’t be understated or dismissed as money laundering.

Just a few days ago, a friend of mine asked me to look him in the eye as he told me to give up on tech startups in Kuwait. “Ma yamshi 3endena,” he said. I have to admit that I believed him for a second. My faith is renewed.. but I have to say this: I don’t think there’ll be another Talabat-size acquisition in the next 5–10 years coming from Kuwait. Well, maybe the game developer Lumba Inc. can pull it off. Maybe the guys at Nabdh will. But it’s incredibly hard to match that 9 figure. The reason has nothing to do with the lack of talent or hard work — although Kuwait generally has to make up a bit on that front.

Talabat was and continues to be in a sweet spot. Between Moh’d Jaafar’s purchase of Talabat in 2010 for USD ~$3 million and the sale at ~$170 million, the market had matured significantly. But why has it been so good for Talabat especially?


Well, here’s my best explanation..

Talabat offers value at the very base of Maslow’s pyramid — food!

Maslow’s hierarchy of needs

Startups at every level on Maslow’s pyramid have been valued/acquired with greater valuations (e.g. whatsapp, instagram). But the catch is this: the closer you are to the base, the higher your average customer lifetime value, and consequently, you’ll need fewer of them to achieve the high valuation. In the case of Talabat, they offered a service to an essential and frequent need. That commanded a decent CLTV.

Why does that matter? For a Kuwait-based startup, you have to operate knowing that your target market (Kuwait, or GCC) is a fraction of, say, the US where we usually see those high valuations. In a realistic best case scenario, you can take on all of the Middle East — but most of the Middle East is unbanked. In fact, the population size of those who have bank accounts and live on more than $5/day are estimated to be only 45 millionfor all of the MENA region, including the Gulf. With smaller markets, transaction frequency matters.

Talabat is piggybacking on the growth of four overlapping macro factors..

  1. growth in household income levels & purchasing power,
  2. growth & innovation in the restaurant industry,
  3. changing consumer habits towards lazy on-demand meals, instead of home cooked. My mom knows this one too well.
  4. growth in mobile penetration and usage. The shift from desktop to mobile upended the entire tech industry, but not Talabat, which positioned itself well to serve the always-on mobile customers.

All without the operational headache of running a restaurant chain

Several entrepeneurs have started amazing food concepts and are doing remarkably well. PICK is one of my favorite examples. But the sheer challenges that surround the operations — expanding physical locations and kitchen to mention two — can wear down any energetic, focused and hard working entrepreneur. This is not to understate the challenges that Talabat faced, but to emphasize that scaling a technology-based business that exists largely online can be done relatively faster, especially in a country that ranks low in the business friendliness index (and dropping every year).

It managed to convince businesses and customers to pay a small fee on every transaction

I asked friends to help come up with alternative startup ideas that fit all these criteria combined: a scalable tech, a sizable market, a transaction-based revenue model, and a frequent need. We failed.

Talabat is the first tech unicorn of Kuwait. And it could very well be our last. That being said, there’s still hope for the rest of us at the 6–8 figure level. Cheer up amigos!

%d bloggers like this: