ClayValet in hindsight
I just shut down my startup, 22 months after I started it in January ‘07. I want to tell you how I decided to close the company, what problems we encountered, and what I’ll change next time.
WHAT HAPPENED
ClayValet was an attempt to build a shopping recommendations business on top of Amazon’s Mechanical Turk, funded with seed capital from one angel investor. We created a website for shoppers to ask for and browse recommendations. Unlike search engines, our service was powered by real people, so we could answer ambiguous and detailed questions (within a day), and we could filter out useless answers.
Our website did not get much traffic. After several revisions aimed at improving usability and adding content, the metrics improved, but growth was still too slow. We tried to convert our recommendation service to a white-label product and sell it to online retailers, as a way to engage their customers and convert more sales. I didn’t close any sales. I explored the possibility of raising another round of funding to hire a sales team and develop this product, but our lack of traction was a problem for investors.
With a few months left in our runway, I focused on finding a potential acquirer for ClayValet. I contacted a couple dozen companies, and ended up having substantial conversations with three of them. In the space of a week, two of them went from lukewarm to actively interested. At the end of that week, all three told us that they would be happy to hire us, but “can’t structure the deal as an acquisition at this time.”
We could have continued to find acquirers, sell our service, or fundraise. At this point I’d tried all of the above, and didn’t think we had a good chance of success. Rather than burning through the rest of our funding, I decided to close the company and return the remaining cash to our investor.
MAJOR OBSTACLES
Overlapping learning curves
We were doing too many things for the first time. Before ClayValet, none of us had built a consumer website, promoted a consumer website, attempted enterprise sales, or run a company. It’s possible to learn everything, but learning is not instantaneous, and it detracts from focus and momentum. I found it hard to plan for a process I didn’t understand and to hire for positions I didn’t understand. One of the best bits of advice I’ve heard lately is “do mostly what you know, and change as few things as possible”.
The cold start problem
I drastically underestimated the difficulty of creating an audience for a new shopping site. Our recommendation service was new and often impressive, but it was in the end a feature and not a full shopping experience. Websites are easier to build today, but expectations are higher. Early user feedback slammed us for not having features that people had come to expect: conversations, profiles, a wider catalog, instant search. Shoppers wanted us to email them more. Shoppers wanted us to provide a more interactive service. Even worse, shoppers forgot about us because they didn’t often have the problem we offered to solve.
The process of enterprise sales
You want to have an “in” with your customers and a clear benefit, and even then the sales cycle takes months and a lot of engagement with the customer. We were pitching an interesting but unproven feature that didn’t obviously solve a problem they cared about. We figured that out and adjusted the pitch, but we still didn’t have a credible track record to back it up.
TO DO NEXT TIME
Cofounder
Running a new company is a lot of work for one person, and having a great cofounder can drastically reduce risk. I would look for someone intelligent, trustworthy, pragmatic, and responsible, with experience that complements mine. I believe that the choice of cofounder will be the most important decision in my next business, followed by the choice of market.
Advisors
In doing ClayValet, I met many experienced businesspeople: entrepreneurs, investors, domain experts, and more. I sought out their help, and when I ran into difficulties I’d ask a couple of people for their advice. This was much better than no guidance, but it was too sporadic: the people I spoke with only knew about my immediate questions, and they couldn’t help with “big picture” decisions because they weren’t observing the company regularly. Next time I’ll form a board of advisors who review our progress every month.
Planning
After doing so much for the first time at ClayValet, I can plan with more confidence. For example, I’m still no expert on enterprise sales, but I know roughly how long it takes, how buying decisions are usually made, and the kind of people I would need to help me. As always, there’s a balance: excessive planning impairs flexibility, lack of planning magnifies risk. I’ll be closer to the right balance next time.
Specific revenue model
In my initial business plan, I will have a specific target customer for our first sale. Waving my hands about markets and demand won’t cut it.
Distribution channel
In my initial business plan, I will have a specific distribution channel for reaching the next group of customers after the first sale. The distribution channel will not be “cold calling”, “word of mouth”, “organic traffic”, or TechCrunch.
ONWARD
I’m wrapping up some ClayValet business and deciding what to do next. I’m considering starting a new project, joining a local startup, or taking on some consulting projects.
October 27th, 2008 at 7:05 pm
[...] coverage and postmortem I posted a brief “ClayValet in Hindsight” post on my [...]
October 28th, 2008 at 4:17 pm
Thanks for posting this.
January 27th, 2009 at 11:02 pm
20/20! Thanks for sharing!
February 4th, 2010 at 5:23 pm
Joe…
Check out my domain sometime….
July 9th, 2010 at 4:37 pm
medyo chickboy talaga itong si James Yap, ayun tuloy mukhang wala na sila ni Kris::;
September 4th, 2010 at 11:17 pm
good points here I’m certain I’m not the only one who think this way.
December 12th, 2010 at 12:59 am
Learning to be a wonderful parent or guardian involves a preliminary understanding from your daughter or son’s necessities. Keep an eye on your own child and discover the signs and symptoms regarding what exactly they may be after.
January 28th, 2011 at 2:40 pm
‘-. I am really thankful to this topic because it really gives useful information “`.
March 3rd, 2011 at 8:37 am
Heya i’m for the first time here. I found this board and I find It really useful & it helped me out a lot. I hope to give something back and help others like you helped me.
May 31st, 2011 at 10:58 am
Test adaeb Blasts are Great
September 7th, 2011 at 11:50 am
forums that go within the very same themes? Many thanks!
September 12th, 2011 at 8:55 am
Good article! I’m also going to write a blog post concerning this… many thanks
September 13th, 2011 at 4:18 pm
Hi there, You have done an admirable job. I will absolutely digg it and I’ll recommend to my local freinds. I am certain they will certainly be took advantage of this web site.
September 17th, 2011 at 10:32 am
fabulosa a redespe si agadro adavr con radotern. pirce aderia se adúrguenc son querro mi demos amencu y anteland patin madamur.
September 18th, 2011 at 12:49 pm
schöner geret mit herenung und vosipet cksstart, sehr viebezieg und benha. stisch schon fifong hat michtu, huxigt und sennenet mit ngligehmu.
September 27th, 2011 at 6:09 am
There are certainly quite a lot of particulars like that to take into consideration. That is a great point to convey up. I offer the thoughts above as common inspiration however clearly there are questions like the one you convey up where a very powerful factor will probably be working in honest good faith. I don?t know if greatest practices have emerged around issues like that, however I am sure that your job is clearly recognized as a good game. Both girls and boys feel the affect of only a second’s pleasure, for the rest of their lives. montre solde
September 28th, 2011 at 5:23 pm
Hi there. Very nice blog!! Man .. Beautiful .. Wonderful .. I will bookmark your blog and take the feeds additionally…I’m glad to locate so much helpful information here in the article. Thank you for sharing .
October 22nd, 2011 at 9:07 pm
Howdy I wanted to share a new comment here regarding you to be able to tell you how much i actually Enjoyed this read. I have to run off to work but wanted to leave ya a quick thought. I book-marked you So definitely will be back after work in order to read more of yer quality posts. Keep up the quality work.
October 28th, 2011 at 3:02 pm
This is like my second time stopping over your site. I really like the content of your website. It must have taken you a lot of days and effort. Keep writing.
November 10th, 2011 at 4:18 pm
Thank goodness some bloggers can still write. My thanks for this post!!!
November 23rd, 2011 at 1:36 am
That’s cruel, you shouldn’t have posted like this, this is scary and it should be put right in place
November 24th, 2011 at 2:25 pm
Megamaxi Money Maker
November 28th, 2011 at 9:45 am
How are you? I love your site. Do you like watching Movies Online?
December 3rd, 2011 at 6:42 am
Pretty nice post. I just stumbled upon your blog and wished to say that I’ve truly enjoyed surfing around your blog posts. After all I’ll be subscribing to your rss feed and I hope you write again very soon!
December 17th, 2011 at 1:13 pm
Do you mind if I post your article on my Wiki Site? I would think this article suits my topic perfectly. Well, thanks for writing this.
January 2nd, 2012 at 7:18 pm
Pretty excellent post. I merely stumbled upon your weblog and wanted to say that I have genuinely enjoyed reading your blog posts. Any way I’ll be subscribing to your feed and I hope you post again soon.
January 4th, 2012 at 2:01 pm
Hello there. I necessary to inquire some thing…is this a wordpress site as we are thinking about transferring across to WP. Moreover did you make this theme all by yourself? Cheers.
January 7th, 2012 at 11:49 am
Thank you for another magnificent article. Where else could anybody get that kind of info in such a perfect way of writing? I’ve a presentation next week, and I am on the look for such information.
January 9th, 2012 at 1:30 am
Hello there, just became alert to your blog thru Google, and located that it’s really informative. I’m gonna watch out for brussels. I will appreciate if you happen to continue this in future. Numerous people shall be benefited from your writing. Cheers!
January 23rd, 2012 at 6:22 am
comment!.
January 30th, 2012 at 8:54 am
Just doing some surfing and came across your blog. Frankly, I believe “writing” to be the very best of your, seemingly limitless, talents.
I know nothing of software design, a little more about entreprenuership, and have a passing interest in the written word. I found your posts to informative, clear, concise, and yes, very interesting. I say forget the startup and write a novel.
February 2nd, 2012 at 3:19 am
Great write-up. I’m a regular visitor of your website and appreciate you taking the time to maintain the excellent site. I will be a regular visitor for a long time.