I’ve been trying to set down a formal wrap-up email over the last few days but frankly I have really struggled. First it was hard to face the reality that I had to write such an email. Second to work out what on earth to say.
It would be far easier if we had genuinely failed. Done something obviously wrong. It would be easier to comprehend if we were seeing that week-on-week, despite our best efforts, things just weren’t working.
Now, let’s not kid ourselves, we were a long way from delivering against the original vision, and, from making money. The product was only half built and our back office process fell a long way short of all of our expectations and standards. Yet, that is perfectly normal in an emerging business, our customers barely noticed and we were way ahead of schedule to deliver the full end-to-end solution.
For me the thing that really rubs is that customers loved what we were doing, we nailed our execution across the board and our numbers were growing. Fast. Despite all of that, we are out. DAD is dead. We are all now in a position of looking for the next adventure.
The natural first question to ask is why? The short and simple answer to that is that our investors changed their minds. They felt it wiser to deploy the DAD platform within their existing infrastructure and curb further investment in developing the DAD proposition. They also happened to control the business (more on that later) so whilst we put in a valiant effort of trying to close series A funding from institutional investors in just a few short weeks, we failed and we have reached the end of the road.
I think it’s worth reviewing some of the core lessons that I see coming out from this experience. It helps me. I hope it does you too.
Brace yourselves this is a long one!
Right after I founded DAD I told everyone I could about how successful we would be because we had the three F’s of a successful start-up absolutely right. At the time, deep down, I knew I was kidding myself and that there was a fundamental flaw in how I’d set the business up. But, faced with few options at the time, my hope was we could get past this and correct the situation down the line. Turns out I was wrong. Let me explain.
The three F’s are Focus, Funding and Foundation. The key ingredients for any business and especially a start-up technology marketplace business like DAD.
Let’s dive in:
We absolutely nailed this. Focus is about becoming laser guided on a specific objective. Setting a far reaching goal that is clearly articulated, easily understood and ever so slightly scary enough to ensure it’s sufficiently challenging.
It’s about getting your timing right. Despite the popular belief that start-up success is down to technology, product or founder genius, in reality, it’s nearly always down to timing. I continue to believe DAD had the perfect timing to disrupt this market. The transformation of the home repairs market is a ‘when’ not an ‘if’. I continue to believe the when is very soon and that our solution, or a slight variant, is going to happen. Now we will have to watch from the sidelines.
It’s natural to think that we failed because of funding. In reality we didn’t.
We started, from scratch with very strong funding. With our investment coming from a corporate and being drip-fed in periodic drawdowns it was unconventional but there was still plenty of it.
Raising money is hard. Plain and simple. To raise £3m seed and have the opportunity to use that capital right out of the gates to build a brand, business and product from scratch is a rare opportunity.
It meant we could go fast. We executed to a standard and at a pace that far outstrips most new businesses. Naturally of course, as we had the best people and lots of them. We were perceived as mature, polished and as having a clear and compelling proposition. That takes talent, time and constant iteration. We should all be proud about how well we spent this money and what we did with it.
But here in lies the catch. Perhaps we spent too much? Perhaps if we’d spent less of our investors money we wouldn’t be in this place and we could still continue. Unfortunately, that’s not an option. The plan was always to go fast. To hire a strong multi-functioning team and to deliver across the board in order to hit an aggressive set of objectives and metrics. We met every single one and smashed most. If we’d hired less people, which was the majority of our cash burn, we would have gone slower, missed targets and likely still been out.
No. Funding was not our problem it was our Foundation.
I trained as a civil engineer and one of the first things you learn in the construction trade is about foundations, geotechnics and soil stability — I could literally bore you all to tears with that stuff. Of course, you don’t need a degree in engineering to realise that before you attempt to build a skyscraper you need to ensure you are on firm ground and have built a solid foundation. Simple.
Turns out this is pretty straight forward in the business world as well. It’s the biggest lesson I have learnt on this journey. It’s the ‘F’ I believe we got wrong. The one I “F’d” up. It’s the place I point to when I think about what I could have done differently.
To create long term success for a start up the founding team need the majority of ownership at the outset. You need a team incentivised by making the business a success, not by their monthly salaries. Professional investors mandate this because they are the ones that have both seen the successes and been burnt by the failures.
Really it’s just simple maths. DAD is a technology centric platform marketplace business. Businesses like ours are hard to start, capitally intensive and highly dilutive for the founders. Without significant ownership at the outset, the upside for the founders becomes the salary not business success and that all but kills the business.
When we founded the business this was not something our investors were prepared to do.
As such DAD has always been under corporate control and we have never been on the right foundation. An investor with majority ownership, having sunk significant cash into a business which, in time, would directly compete with the investor’s own core business is a recipe for disaster. A cocktail for a cockup. I knew this at the time but somehow convinced myself that if we built the product, gained the traction and attracted institutional investment down the line we would be able to change our structure. I told myself it could work. I convinced myself that our investor was brave enough to try. Engaged enough to believe. That they got it. I was wrong.
Let me be clear. That mainly talks to founder incentivisation and that’s not what killed DAD. I had long before come to terms with my personal ownership and relationship with our investor. The other thing a majority gives you is control. Control provides options. Options give you freedom. Sure, you need to keep the rest of the board and shareholders on side but at least you have a fighting chance of controlling your own destiny. We didn’t have that at DAD and our destiny was decided for us.
By controlling the flow of cash and the strategic investment decisions related to DAD, without anyone from DAD even in the room, our investors always ensured we were always operating on a very short cash runway. Fine as a corporate development project. Not for a successful start up. When push came to shove we had 6 weeks to attempt to raise series A capital for a business that was just 3 months post launch, pre-traction and with 6 weeks of cash runway. Quite a challenge!
How did we get to that position? Operating within the constraints I was given I naively took our investors at their word. With a renewed commitment to a minimum of 12 months cash runway in which to validate the model I felt we were on a safe (enough) footing. We all built our 12 month roadmaps to reflect that.
It turns out the old adage of ‘cash is king’ is true and without cash at the bank we were entirely caught. It seems so obvious and is a painful lesson for me personally. I have learnt lots from it. I hope you do too.
The only way to look at the situation we are in now is with both positivity and with a sense of objectivity. As hard as it is, it’s important we do not get emotional about things which are out of our control. As someone far wiser than me once said.
Control your controllables and don’t sweat the the things that are out of your control.
The Foundation I set the business on right at the start killed it. Our future was effectively out of our control.
Looking back over the last 2 years I have nothing but great memories from the adventure we have been on. Creating something from scratch is hard.
I firmly believe that the hardest thing to do at the outset is to convince others to come on that journey with you and share in the adventure. I have been incredibly lucky in that regard and it has been a pleasure to work with you all. Across the board, your contribution to DAD has been incredible and invaluable.
Indulge me while I dig into this a bit more.
I asked you for a period in which to secure funding or at least strong investor interest which could extend the runway from our current backer. Unanimously you gave me that support. Super helpful — thank you! To hold up my side of the bargain I have tried very hard to honour the fact that you would have sufficient time, bags of experience and a very strong and positive story from your time at DAD which you can use to secure a new role. I hope that goes some way to relieving your stress as you embark on a new adventure.
For a moment let’s look at what we’ve done over the last 2 years. There are many things I’m proud of. Here are but a few.
We brought together a fantastically talented and committed team of experts. Anyone who took a live customer video call will agree that our Experts had one of the most pressured jobs of anyone at DAD. They all excelled. When asked by people looking at the business I was frequently challenged with statements such as “you will never find people willing and able to act as DAD Experts”. I will be for ever proud to say that not only did we find the people with the right technical talent and customer service skills. We built a remote located, highly engaged, supportive group of people who believed in what we were trying to do. As a team they never let us down, never complained and even took the prank calls with a straight face. Impressive.
As we all know, the core focus of DAD was to solve the end-to-end communication challenges that plague the home repair world. Good communication permits an enhanced experience and ultimately a happier customer. At the end of the day though quality of execution by our Technicians was, and would always be, paramount to our success. Boy did we crack that with DAD Technician’s — our multi-disciplined team of hard-working, highly skilled engineers, the guys who were actually hands on fixing things. The quality of their execution and commitment was second to none.
The DAD Technology
From a standing start we created the worlds first truly end-to-end mobile solution in the home repairs space. A product that operated on multiple platforms to cater for multiple users with multiple touch points. We only got to ship v1 but there is no question it is a rock-solid, world-class piece of software.
This market will be shaken up by technology. I doubt it will be as good, as rapidly put together or as well polished. Just imagine what might have been if only we had the chance to release our v2.
So what’s next?
As you knew right from the moment you interviewed to be a part of team DAD the biggest thing you would take away from the experience would be the learning. It is why you were here. For everyone involved in and associated with DAD there has been significant learning and lots to take away.
Now is time to close the DAD chapter and embark on a new adventure. I have thoroughly enjoyed our time together and will be forever proud of what we achieved. It’s been an honour to work with you all and I hope to get the opportunity again in the future.
For now. I leave you with the words of Jim Morrison.
This is the end, beautiful friend
This is the end, my only friend
The end of our elaborate plans
The end of ev’rything that stands
Founder & CEO