Nihal Mehta launched real-time city guide buzzd in 2007, raising about $4 million in venture funding and drawing about two million users. But in an era before the smartphone craze, he struggled to find a great mobile revenue model. By mid-2010, he was forced to slash his staff by more than half and personally float payroll. While buzzd was on its deathbed, Mehta took the time to fortify the relationships he had built over the years. He persuaded investors to convert their preferred stock to common stock and reconstituted the board – all while selling them on a new product that would help connect brands almost instantly with targeted consumers.
There is no winding down for entrepreneurs. There’s only winding up. Rather than just accept defeat and pack it up, Mehta raced to figure out how to preserve capital, modify his vision and refocus his efforts. While the media may describe your struggling company as “failing,” the only way you can truly fail is by bringing your venture to a complete stop. You should try to never hit zero mph – just slow down the pace enough to catch your breath and gather all the hard work, talent, relationships and personal equity that you have worked so hard to build. Then take all that you can gather from the startup experience of disrupting a targeted industry and figure out how those assets can best be used to build something new. Mehta did just that.
LocalResponse rose from buzzd’s ashes, raising an estimated $7 million in 2011. And now major companies — ranging from Coca-Cola to McDonald’s to GMC — use LocalResponse in harmony with social media to find and reach potential customers. For example, if someone tweets about being hungry, an ad for Pizza Hut appears. Or if someone posts a status update about hating tax season, a TurboTax ad shows up on their screen. Can’t figure out how to pivot from a less-than-successful trajectory into a more promising business model? The real asset you could be sitting on is a talented and harmonious technology team — a team that could work miracles as part of another organization. Consider being acquired, because it’s rare to find the trifecta of great talent, people and teamwork in one place. Just look at Yahoo. Last week it bought MileWise and GoPollGo, just to have them shut down and roll their staff into the Yahoo mobile team. Yahoo did the same thing last year when it acquired Stamped, and it spent millions of dollars to retain all but one of the staff at San Francisco’s Web clipping startup, Snip.it. Others, such as Facebook, are also in the market for buying the talent and tech percolating from the startup world, so don’t write off acquisitions when trying to salvage your efforts.
The personal investment you make in your company should pay entrepreneurial dividends, regardless of whether you make millions or don’t make much money at all. Do not allow your startup relationships to voluntarily dissolve with your corporation. There is a reason people believed in you as an entrepreneur, and your job is to harness that entrepreneurial spark even if your current venture is not a champion. Every successful entrepreneur and investor knows that it’s never win or lose — it’s always win or learn