Thursday, January 3, 2019

Startup Guy, Restarting

Welcome back!

Over the past few years I haven't felt much like blogging, partly because I was constantly tired and stressed out from managing The Lancaster Food Company through one challenge/cliffhanger to the next, and partly because I felt I had nothing new to say.

This blog had been my outlet for sharing insights about building startups; I hope it was helpful to those of you building companies or helping startups in some way. Writing is a way for me to process, and to share what I've learned so maybe others can learn what to do--and not to do. More to come on that ;)

Starting today, I plan to post almost daily, mostly about lessons learned over the years with startups, and if I come up short I'll post links to helpful articles or other blogs. And while I'll talk about certain problems in the companies I've started, I largely won't talk about the people involved, and in most cases won't identify the company; this is to make it easier to talk about some of the harder stuff.

The last five years have been, to say the least, tumultuous, filled with excitement, growth, problems, and disasters that only come with underfunded food companies, and of course conflict, disappointment, and deep pain--along with triumphs, inspiration, true accomplishment, proud moments, fulfilling new relationships, learning, and growth. It was a mix.

I'm still processing the loss of the dream of building an employee-owned food company designed to hire people out of poverty. But I don't miss the stress for the most part;  worrying about perishable products, layoffs, funding falling through or coming through, chains saying yes and then dragging their feet for quarter over quarter over quarter (wtf, food industry?).

But when it came down to it, they weren't buying what we were selling. Not enough of it, anyway, not fast enough. At our peak we had a run rate of over $1 million annually, and needed to be at $2.5 million to get to break even. We weren't a mom & pop shop; we tried to do this at a relatively small scale but the break-even point was quite the lift: 3,000 retail units per day, or 15,000 per production week.

Toward the end we only needed one additional chain to get us over the top. Private label with Trader Joe's (we were close but they were too slow), Costco Northeast (had the approval for 60 stores, which was delayed/changed by the head buyer), Whole Foods NE, etc. And there wasn't fat to trim, just a baseline overhead that needed more time and capital, with the capital coming in a pool instead of dribs and drabs. Long, long story. Hundreds of things had to go right from production to ops to capital, and any combination of a few could derail.

Variable product quality while learning a new production facility which led to a loss of a private label customer, delays in sales, illnesses, false starts with partners, competition with very deep pockets, Amazon throwing the entire industry into a frenzy, a poor choice in the freezing method for large-scale shipments. But it came down to execution over time, and perhaps a vision that exceeded our capabilities, a flawed strategy, or the wrong team for the growth needed. Or all of that. I recognized that I wasn't the person to lead the growth of a food company in summer of 2018, but we didn't act on it until I had to stop working in April from my illness--it took too long. And even then, it took too long in recruiting my replacement,

Lot of lessons here; the sale piece is a good lesson for any of us: if you're not getting that job, not getting enough clients, not selling enough product, there's a pretty good chance the problem isn't the company or customer, it's you, how you're selling it, or what you're selling. Positioning can make or break you, as can product, as can story, as can branding, etc, etc, and etc. You have to get most of it right, consistently.

And we did get most of it right, but as the main salesperson as well as the CEO trying to keep us running, I suspect my stress was evident to the buyers at the chains; they are typically conservative in their choices and tend not to take chances. They want career-building products, and startup food companies introduce risk. So telegraphing stress certainly doesn't help. We needed the deals, and they could sense it.

I'll write more about that and other things over the coming months. But I'm also looking ahead, building a new story, thinking through new ideas, and am excited about some of them.

I'm looking forward to 2019. The rest of this is an update.

Health
A few of you asked on social media and in email, so here's the update: my health is good--better and improving. 2017 and 2018 were very challenging with respect to health, and I've been fortunate to be able to bounce back through access to the health system, a miracle drug, and the support of friends and family. I'm grateful for those who were in a position to help and did--I noticed.

Work
I'm a startup guy, and I'm restarting. After investing five years and all of my loose (lost) change, I'm personally working on going from 0 to 1 again. But that's always been my strength. I've started four companies and have had two positive exits, one voluntary shutdown of an unfunded effort, and this recent involuntary shutdown (i.e., running out of money).

Recently I've tried to remind myself of my own accomplishments to try to get past the deep sense of loss: I've raised over $14 million in my career, battled successfully with giants like Microsoft, IBM, Salesforce, and unsuccessfully with Flowers foods and Bimbo. And helped people along the way, including dozens of startup founders. Designed award-winning software and built the third-largest fundraising software company. Moved some mountains along the way. There :) that feels a bit better. It's tough when things have been hard for a long time, but a friend reminded me "you're the only still thinking about the loss...everyone else has moved on." Most of us have, anyway.

Sometimes I need to remind myself that it wasn't all hard, and wasn't all a loss. It wasn't, and it's time to stop mourning it.

I'm officially looking for work--not sure what just yet. I'd like to run a funded startup, or help an existing company turn around, or to grow through innovation. Or consult, which isn't my favorite thing but I'm open to i.

I might start another thing. I've been kicking around some of my own ideas and have been asked to look at a few...we'll see where that goes. The toughest part of a startup for most people is getting it from concept to first revenue, but that's always been the easy part for me. And the most fun. And because of that I've thought about launching an incubator where I could have teams working on several projects at once, and also nurture other startups.

But we'll see.

Personal
After not much consideration I'm wintering in Grand Rapids, Michigan (because why not!) to be able to spend more time with a fantastic person. I'm glad I'm here, but it's a bit strange to step out of the networks I've developed over several decades, and exciting too--I get to learn about new things and meet new people doing interesting stuff. There's a strong startup scene and a thriving localist economy. Fortunately we're just a short flight from NYC, BWI, SFO, parts of Florida, etc. Warm places are on my list :)

So let's reconnect. I'd love to hear how you're doing, and what you're working on. 2019 is going to be a great year for me, and hopefully for you too.

See you tomorrow?


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