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*
