I Just Shut Down My First Startup. Here’s My Retro.
This article was first published by Lillian Cartwright on Medium.
Three years ago, when I founded ShelfLife, odds were I’d be writing this post about shutting down. The greater majority of startups fail. Although the definition of failure is up for debate, more than two-thirds of startups don’t deliver a positive return to investors.
Couple this with the fact that in 2022, just 1% of venture capital went to Black founders and less than 2% went to all-female founding teams. And Black female founders raised…er, let’s not even go there.
Against those odds, we went on to raise $3M from VCs and angels. More importantly, we met and partnered with some of the most incredible people along the way. ShelfLife launched an unparalleled tech platform — helping hundreds of passionate food and beverage entrepreneurs access quality ingredients.
We experienced our fair share of lows too. We quickly learned that it takes more than venture capital, a strong product, and a smart idea to grow at VC rates. We spent hundreds of thousands of dollars building bullet-proof product that really never saw the light of day. We tried everything to boost our painfully low retention rate and completely failed to hit any of our revenue targets. And last, but not least, we ran out of money and time.
Turns out, startups are hard — like really hard. And the decision to walk away, to say goodbye to the team, to throw away everything we’d built together? The hardest part.
Everyone talks about the lack of “fun” in fundraising or the battle to reach true product-market fit or how to hire (and fire) a rockstar team. For better or worse, failure certainly wasn’t the topic that I was running to my mentors to chat about. And when I googled “How to wind down your startup?” — I came up empty.
My co-founder introduced me to the practice of retros or retrospectives. They’re used at the end of any engineering project/sprint to reflect on what worked, what didn’t, and why. For us, they took the form of things we should start doing, things we should stop doing, and things we should continue doing.
When I first sat down to reflect on ShelfLife, I often blamed myself for my oversight, or even worse, started to blame others. A retro allows one to take a step back, not take things so personally, and focus on improvement — focus on the future. This is exactly what I needed. Because, at the end of the day, ShelfLife may have failed, but I certainly did not.
So here’s my retro:
🌱 Start by getting obsessed with the problem space, not the end vision 🔍
I read The Lean Startup by Eric Reis and Zero to One by Peter Thiel. I took all of the entrepreneurship courses I could at Harvard Business School. I watched every single YC youtube video out there. Yet still, in 2020 when I sat down to do customer interviews with dozens of breweries across Boston, I let the solution in the back of my mind get in the way of pure curiosity for the problem.
Sure, I founded ShelfLife based on a realization I had when developing the business plan for a spiked seltzer brand, called Astrid. I found sourcing ingredients to be an insider-only black box, lacking the type of transparency and access I was used to in my consumer life.
But truth be told, I came up with the bright and shiny solution while working as an MBA Associate at Bessemer. I mapped out the TAM, competitive landscape, business model, and even drafted a pitch deck months before doing sufficient user research. I wanted this to be a venture-backable company, and had little patience getting there. At first, I was more focused on being an entrepreneur than addressing a real problem.
I carried this baggage with me into customer interviews, hearing what I wanted, and needed to hear, instead of what they were telling me. Sure, sourcing ingredients was a headache, but it really wasn’t their biggest problem. They may waste hours pulling up pdf documents, emailing, cutting checks, and calling suppliers, but it got the job done. We were ultimately building a vitamin, not a painkiller.
Looking back, I don’t blame myself. There’s really no better teacher than experience when it comes to being a founder. I recently re-read those same books as if for the first time, adding The Mom Test to the list. It’s tough to really know if you’ve truly learned a lesson unless you’ve actually put those learnings into practice.
After the team was laid off and my co-founder departed to take a job, I went through a validation sprint for a pivot for ShelfLife with one foot firmly planted in the existing product. One last hail Mary if you will. This time around, I carefully laid out a plan. What questions to ask, what questions not to ask, and what statements to avoid. After each conversation, I ranked them across several “leap-of-faith assumptions” that needed to be true in order for me to pursue the idea.
Do customers recognize they have the problem you are trying to solve?
Can we build the right solution for this problem?
If there was a solution, would they buy it?
Would they buy it from us?¹
These last two questions bring me to the second thing I vow to start doing as a founder…
🌱 Start asking customers to pay something, anything, upfront 💰
Growing up, my parents would aggressively hang up on telemarketers or close the door on salesmen. Noting the significant mark-ups and immoral profiteers, they never encouraged me to sell GirlScout cookies or holiday gift wrap. All this is to say, asking people for money terrifies me. Asking people to pay for something that doesn’t exist yet, or is a skeleton of a product, almost feels criminal.
I was a privileged kid — didn’t really want for anything. Well maybe I wanted a lot, but I didn’t need it. I was also taught the value of money — how to spend it carefully and cautiously. There’s something about running out of money that completely changed my perspective on the whole asking people for money thing.
In 2022, we ran out of money, and with that, time. I vow to never let this happen again.
Yes, it often takes money to make money. That is certainly true for venture-scale businesses, and rang especially true for those who raised in 2021. However, in 2022, I learned the sheer importance of not only asking for willingness to pay, but requiring, even your earliest adopters, to put their money where their mouth is before you move forward.
ShelfLife was designed to be a b2b marketplace for ingredients on day 0. As mentioned above, I spent months orchestrating the perfect marketplace business model:
We would capture as many transactions as possible, or gross merchandise volume (GMV), and take a small take rate in the form of commission, payment processing, financing, and ad spend. The market for ingredients was huge — $150B in the US alone — if we captured just a fraction of that, we would be huge too.
But how do you get there? Alas, we have, the cold-start problem, the chicken-egg problem, the marketplaces-are-fucking-hard problem…
So we tried a few things:
- Come for the tool, stay for the network: In the beginning, we focused on the buy-side (food and beverage brands) because we knew them the best. We built tools to help them with day-to-day procurement operations. This way, we’d collect a ton of supplier, product, and pricing information and then launch a killer marketplace. Turns out, Google Sheets and email work just fine, and Google Sheets and email are free…
- Subsidize the hard side: Abandoning the tool, we decided to just launch the marketplace. Brands kept asking us to help them source things, so it felt right. To launch the marketplace, you need supply. Suppliers seemed like a difficult bunch to sell to. They were used to conducting business offline and it worked well for them. They were skeptical, and rightfully so. At the time we had very little product. We were gracious for their time and just offered everything for free. We would set up their storefront on ShelfLife — list their products, and send them new business. Later, we would charge a commission.
- Flintstoning¹: Building the marketplace product took much longer than expected. So we did things manually. We artificially propped up the product by attempting to make deals the old-fashioned way, serving as a brokerage.
When our marketplace was ready for prime time, we had one small problem. No one wanted to actually transact on the thing, which meant, we couldn’t make any money. We spent hundreds of thousands of dollars building out beautiful payments and invoicing features that hardly got any action. Getting dozens of suppliers to accept ACH instead of paper checks and move from email to chat was no small feat.
Users were actively meeting suppliers and price shopping, but not actually purchasing. In an effort to become a one-stop shop, we had failed to create a strong atomic network, monopolizing one market before moving on to the next. What we had was a dispersed assortment of ingredients across geographies and categories. Couple this, with the fact that switching to or onboarding with a new supplier took months, not weeks.
We had falsely assumed that scale and product would fix the problems we were experiencing. Instead, we could’ve required suppliers (the true hard side of the market) to pay upfront to have their products listed, to be their digital commerce platform. This would’ve given them more skin in the game, and potentially deepen their trust in us. I think I was subconsciously scared the answer would be “no”, and I’d run out of options. In hindsight, asking for money, upfront, could have saved us a lot of time, heartache, and…money.
During the last hail-mary pivot, I jumped to the hard questions a whole lot quicker. Starting with the few that actually recognized a problem, I asked about their willingness to pay for a solution or even better, if they had a budget allocated. If the answer was yes, I went a step further to get a pilot contract signed (YC has a template that made this way less daunting).
When the answer was no, I shut down the company. We tried everything.
🛑 Stop seeking a technical co-founder 👨💻
Do you remember the stats I started this post with? The odds of raising capital as a Black woman? Not ideal. And to run a venture-backed startup, you need one thing, venture capital.
The summer of 2020, during peak COVID, I set an ultimatum. I would only continue pursuing ShelfLife if I found a technical co-founder. Why? Because most successful companies have complementary co-founders. Because YC said so. When in reality:
- >50% of successful startups are founded by solo founders
- I may have been suffering from severe imposter syndrome, and I was looking for a savior.
Flashback to 2019 while in business school, I confessed to my Entrepreneurial Management professor that if I were to start I company, it would definitely have to be with a white male co-founder — ideally technical. Despite HBS’s hopeless attempts to promote diversity in its case studies, white male technical founders had the clearest pathway toward capital. He asked if I’d read Whistling Vivaldi by Claude Steele. He was being nice.
I knew what assimilation meant. I went to a college-prep school in Maryland. I knew that I resented the practice, but at the same time, I knew I was a part of the problem. I was expressing prejudice against myself. I didn’t believe in others who looked like me just as much as they didn’t believe in me. I wasn’t going to fix investors’ implicit bias, or my own, overnight. Plus, I wasn’t really hurting anyone. I wanted to quickly jump over this hurdle, move onto something greater, and come back to it later. If all goes well, I was potentially setting myself, and all the future people who look like me, up for a better future.
I wanted a white, male, technical co-founder.
I wasn’t the only person seeking a technical co-founder. Even today, AngelList (Wellfound?), LinkedIn, and Slack channels are filled with “unskilled” hopefuls seeking a technical partner.
I met my co-founder through one of ShelfLife’s first investors. He checked all the boxes. At the time, he was interviewing for a few different startup roles — ready to join something early and leave behind his cushy engineering manager gig at Google. We co-founder dated and answered the 50 questions. We ran through hypothetical scenarios and gave hypothetical answers.
I couldn’t believe it when I got the call that all his other opportunities had fallen through and he was ready to commit to ShelfLife full-time. After we signed on the dotted line as co-founders, I had founders reach out and full-on panels simply to discuss my co-founder search. How I got so lucky.
I placed so many tangible qualifiers on my co-founder search, that I overlooked the key questions I should have been asking. Was he hands-down excited to work with me? Could we communicate well through tough times? Do we fundamentally get along? Do we build each other up? Do we respect each other? Are we equally as excited about building this company? At the end of the day, are you on or off the bus?
More importantly, I failed to ask myself the tough questions:
Was I worried about doing sales calls alone?
Was I worried about what venture capitalists would think of me?
Was I seeking validation?
Did I believe I could do this?
Was I looking for someone better than me?
I started ShelfLife in 2020 — a time when I was hyperaware of my shortcomings and the unjust world we live in. Under the guise of prioritizing technical acumen, I was seeking a band-aid to cover my own insecurities and beat others at my own game. Instead, I should’ve spent that time building a business, working on myself, and hiring talent when I was ready.
The funny thing is, each and every one of the investors on ShelfLife’s cap table, yes had strong conviction in the business, but also had conviction in me — a Black female founder. And, at the end of it all, I’m standing here and winding this company down on my own. I had what I needed all along. I didn’t fool anyone, but myself. And I certainly didn’t trick anyone into overcoming racism. It just took me a while to see that.
🛑 Stop trying to convince investors to have conviction 🥺
Fundraising is a necessary evil — a means to an end (not to be confused with the actual, less sexy, end goal of building a profitable business 🔑 ). I knew it would still be the majority of my job as CEO. If I took one thing away from business school, it was, “don’t run out of cash.”
It was Q1 2021, and, at the time, raising our $3M seed was one of the hardest things I’d ever done (this was before I tried to sell software to an ingredients distributor in Kansas — more on this later). It took us 8 weeks to close, and it felt like a lifetime. I received 88 passes — and 9 times out of 10 — they just couldn’t gain conviction.
They couldn’t gain conviction in the industry, the business model, or just me. There’s no doubt that we could’ve had more traction, more proof points. However, at the time, money was seemingly being thrown around to any founder with a pulse. I had founder friends who had closed much larger rounds with much higher valuations saying it was easier to raise pre-product — that way there was less for VCs to diligence.
I had never seen or heard the word conviction so much in my life. It felt so vague, yet so personal. I tried to set up customer calls, share analogous companies, and exaggerate my founder-market fit. It was an exhausting dance. I was comparing myself and ShelfLife to any and everything around me.
I couldn’t drive for months even after we closed the round. I had never experienced that amount of subsequent rejection, and the resulting obligation that comes with having millions in the bank. I had to deliver results not just for myself, the team, and our investors — but for everyone who couldn’t “gain conviction.” I remember urgently pulling over on the highway on numerous occasions just trying to breathe, to see clearly again.
Therapy helped. But also, once I accepted that fundraising wasn’t fair and to focus on what was in my control, it became a lot easier.
At the early stage, there is very little convincing that can actually influence an outcome. Investors have their minds made up on what industries, metrics, business models, and even humans excite them enough to cut a check. Whether I like it or not, pattern recognition is the name of the game. The investors that ended up on my cap table either believed in me from day 1 or came up with a similar idea on their own.
Oddly enough, our unsuccessful round in the Q3 2022 was 10x easier on me than our successful round. I stopped trying to convince investors of the incredible opportunity in front of them. Instead, I:
- Focused solely on the investors most likely to “get it”
- Painted us in the best possible light
- Tried everything we could to push business metrics up and to the right
- Quickly got to the tough questions
- Understood incentives and the art of a “soft pass”
Fundraising is about giving investors the chance to get behind something great. If they can’t see that, onto the next. And if those people can’t see that, is it really so great?
🥾 Continue to pull up a seat at the table🪑
Going from 0 to 1 is not for the faint of heart. It demands getting comfortable with the uncomfortable. It requires the acceptance of rejection as a part of the process.
In his book Zero to One, Peter Thiel starts out by emphasizing the importance of contrarian perspectives in building our future. “What important truth do very few people agree with you on?” He goes on to define a startup as “the largest group of people you can convince of a plan to build a different future.” People at successful startups are fanatically right about the overlooked.
Your role as a founder is to find those people. This starts with customer development and truly never ends. Let me tell you, getting in front of the right people to share your half-baked idea isn’t easy. Getting in front of those people when they look nothing like you, often feels impossible.
But it isn’t.
While building ShelfLife, I walked into over 50 breweries asking for time with the manager. I called on hundreds of food and beverage operators to share their experience sourcing ingredients. I got in front of over 150 venture capitalists. I set up a booth at the biggest industry trade show. I sold a new way of doing business to hundreds of ingredient suppliers and sales reps. I demoed broken prototypes to executives at publicly traded companies. I found myself in Kansas pitching to a family business. I went to Colorado to discuss a potential merger.
I was met with skepticism, humiliation, and outright rejection. “I don’t have time for another startup that won’t be around in 6 months.” “What do you want from me?” “My current solution works better than this.” “Why are you even working on this?” “I’ve been in this business for 20 years. What gives you the right to do this?” “Come back when you have a functioning product.”
In the name of Solange Knowles, I will continue to pull up a seat at the table. No matter how fearful I am or uncomfortable it gets. It’s the only way to get from 0 to 1. It’s the only way to change the future.
🥾 Continue asking people to bet on you 🤝
When I shared the news of team lay-offs, I was in the beginning stages of one of the biggest failures of my life. One of our angel investors Elena Donio wrote back,
“Don’t stop asking people to bet on you, and beyond that, don’t stop betting on yourself.”
To close out this retro, I vow to do just that.
I put my heart and soul into building this company. There are things I’m not proud of, and mistakes I hope to never make again. But the journey certainly doesn’t stop here.
I want to thank those who took a chance on me to get me here.
Our investors and advisors: I was sincerely proud to have each and every one of you on the cap table. Thank you for trusting me to fulfill the vision, guiding me when I asked for help, and pushing me to make tough decisions. You taught me so much about what it means to lead with respect, honesty, and integrity. I owe you so much.
The ShelfLife team: You were the best part of ShelfLife. You had ample opportunities in front of you, and you took a bet on us. I am grateful for that. It was an honor to work with each of you, we did the damn thing, and I certainly hope it’s not the last time I work with each of you.
ShelfLife Users: Without you, we wouldn’t exist. The food and beverage entrepreneurs behind the brands we all love are exactly why I got into this. Thank you for welcoming us with open arms. Together we worked to dream up and create a more transparent and accessible way to source and purchase ingredients. While our story ends here, we hope you’ll remain open to working with the companies that will reimagine the future of digital commerce.
My mom & dad: You not only taught me how to ruthlessly shut down a salesman but also how to build my own future. For my entire life, I watched you run a successful OBGYN private practice. I learned the importance of putting your “customers” first, investing in your employees, and never settling for the status quo.
My husband, Thomas: Because of you, I had the confidence to start ShelfLife in the first place. You were there to pick me up when I was down and to remind me to celebrate my wins. I wasn’t easy on you, or the rest of my immediate family. I coupled my personal happiness with the successes or failures of ShelfLife. Hands down, without you, I wouldn’t have gotten half as far in this journey.
If you made it this far, thanks for reading! This was as much for me as it was for anyone going through something remotely similar. Starting a company is hard, and in my opinion, winding down a company might be even harder. Just be kind to yourself, and forgive yourself. I’m sure you made the best decisions you could given what was in front of you.
If you’re a founder grappling with some of the same decisions or trying to avoid some of the mistakes I made, don’t hesitate to reach out, I’m an open book.
As for me, I’m not quite sure what’s next. I just hope it’s more of a hike and less of a rollercoaster.
- Ries, E. (2012). The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses (1st ed.). Currency.
- Chen, A. (2021). The Cold Start Problem: How to Start and Scale Network Effects. Harper Business.
This article was first published by Lillian Cartwright on Medium.