A guest post by Ben Wirtz, founder of Unifyo on why he feels Unifyo ultimately failed
Foreword by Julian Carter
Unifyo was an investment made by EC1 Capital at the end of 2012. Other investors in the round were Seedcamp and a number of angels from AngelLab and Firestartr.
I think it is just as important if not more so, that founders and VC's publish why an investment failed. There is too much hype in the usual tech media around success when the fact of life is many startups do not make it, yet VC's tend to shy away from talking about failures probably for fear of negative LP perceptions.
At EC1 Capital we are not shy about failure and not afraid of talking about it, it is something that is baked into our expectations and we come to expect a high percentage of failure in what are high risk but high potential tech startups.
EC1 Capital, Seedcamp and angel investors including members of AngelLab and Firestartr all went out of their way and spent considerable time to help Ben and his team.
As Ben goes on to explain, ultimately Unifyo failed to find a product market fit and should have not tried to overstretch the technical possibilities of being able to support different email clients and browers.
As investors, we often have to make a hard call of whether or not to continue to invest in a portfolio company, as a smaller fund these rules are even more important. Had Unifyo been able to prove customer delight and retention as well as a model that could scale we would have been happy to keep funding the company.
The best outcome is that we all learn from what happened, investors and founders included and move on with these new learnings to make better decisions in the future. Fail Fast.
Sometimes when things are happening in slow motion they don't make sense until they speed up.
Ben was exemplary with communication to shareholders around the problems he faced and the decisions that were ultimately made to liquidate the business.
All investors wish Ben and his team every success in his next venture, he is a young, talented founder and has many more startups in him.
This is a copy of a blog post made by Ben Wirtz founder of Unifyo
Unifyo (founded as Handy Elephant Ltd in 2010) was a startup in the relationship management space. Our vision was to enable people to build and maintain more relationships. We have built 6 different products (and gone through 6 pivots), all of which focused on automating daunting contact & relationship management tasks for users to create a outstanding user experiences.
It started with me building an Android app for business professionals which quickly became popular — back then, the ‘personal CRM’ space was hot. After a year of bootstrapping, Robin Message and Lewis Spearman joined full-time when we received investment from the Citrix Startup Accelerator. We subsequently built a 7 people team and increased our total investment amount to $700,000 in total, adding investors like Seedcamp, EC1 Capital,Firestartr, Angellab and Tom Blackie.
The final value proposition was a sales tool for new business teams at enterprise size B2B companies, which enables them to find introductions to leads and prospects from within their own company. We had deployed solutions in big professional services companies to even a Fortune 500 bank, but ultimately did not have the bandwidth to succeed with an enterprise sales approach. Apart from committing typical startup sins like not being focused enough and occasionally trying to scale prematurely, we learned a ton of lessons that we hope will benefit the next generation of startups — especially in the ‘relationship management’ space, as there is still a lot to be done.
Whenever you talk to people who have to use CRMs on a regular basis to maintain the contact and relationship data, you can feel frustration. The ultimate outcome in terms of analytics and insights should be good, the manual data entrey and clunky interfaces are not and cause low data quality. We aimed to build a great, highly automated user experience first, focusing on the end-users and SMEs with plans to grow into companies from the bottom up (like Skype, Yammer, Dropbox). We couldn’t empathize with big corporations and heard only scary things about the long sales cycles. However, every company we have kept track of in the ‘relationship management’ space has either shut down or moved at least into the B2B space (as opposed to targeting consumers), e.g. Nimble and Contactually. Except Rapportive which has successfully been acquired by LinkedIn.
The problem is, as soon as a key feature requires data from multiple users and has to access key data (e.g. email or CRM systems), you will need the buy-in from the head of sales (who can get a whole team on board) who will need to get approval from the IT department, who have locked most applications down. Once targeted head of sales type people in big enterprises, there was plenty of interest and we got further in the process than we thought we would, but ultimately we validated this assumption too late in the process.
Brad Feld wrote a great article on about “founder market fit”, which made us realise (2 years down the line) that we might need to up our game here. As we focused on consumers originally, all of us were passionate about building great user experiences. None of us were passionate about sales, nor did we have sufficient experience.
When I started reading books and threw myself at it (with the help of some amazing sales advisors, including Analisa Sarasini, Ben Rainbow, Julie Cheneau, James Ski and Steven Wakeling), things started taking off and it felt like we had product market fit, but still, none of our commercial hires for marketing and sales had a big impact on our growth and revenues as we did not truly understand what qualities we should be looking for in them.
Plenty of companies do well with targeting SMEs first and having their sales team pick up inbound leads. As the right market for us was with big enterprises, we would’ve fared better with a co-founder who has at least a lot more commercial experience than the 3 mid-twenties of us.
After bootstrapping, we raised $700,000 over 2 rounds which sustained a 3 people team (with 7 people at peak time) over 2.5 years, in each round we gave ourselves 12-18 months of runway at a stretch (with a small team and limited bandwidth). Enterprises are as slow as their reputation, it will take 12-18 months to get your money if you know what you’re doing. I’m not saying there won’t be exceptions (especially if you have existing connections and a great reputation with your first clients), but you need to raise enough money to keep going while enterprises shift focus, people wait for approval and people getting replaced. You will also go through multiple rounds of iterations on your security and compliance mechanisms, all this will take a lot of developer time.
This won’t just apply to your actual sales cycle. It took 8 ridiculous months to get our (finished) mobile app approved by Salesforce for their AppExchange. And even Salesforce, which is a CRM company and should lead by example, isn’t always up to speed. After paying for the security review of our application, they forgot us for 2 months. Once we chased them up on it, they said ‘it fell through the cracks’. Thats Salesforce for you.
Unifyo had a few genius, truly innovative parts to it that haven’t been tried before, including identifying contact names on any website and injecting items next to them without breaking the layout (so people don’t have to manually look up contacts but get made aware pro-actively if someone in their organisation has an existing connection to a prospect).
We did this for 2 reasons: Provide an outstanding user experience (inspired by Rapportive and other ‘install-and-forget’ tools) and to avoid being at the mercy of APIs due to our experience with Salesforce (and also because LinkedIn, Facebook and Twitter started restricting their APIs when we set out). Although our algorithms were solid, there was always yet another edge-case that extended our roadmap (which was tight already, as we never had more than 3 engineers). So even though we felt we had product market fit with an amazing user experience in demos, in practice our tool mostly underwhelmed users — and there was no easy way to test and plan for all the edge cases with organic data that was out there and always evolving.
An example? There are dozens of ways the name “Don Draper” would appear on websites (including “Draper, Don”, Donald “Don” Draper, Don D.). Either avoid having to mess with this (although, for outstanding user experiences in the contact and relationship management space, sensing that all these refer to the same person will be critical as you scale) or dedicate (more than) enough resources to testing this and constantly analyse the cases your users face. Greetings from the Machine Learning space.
Every founder has got a vision and values. Few are great at communicating and engraving them in their company culture. To me, that happened because the vision was bold and broadly applicable (‘everyone manages relationships’), but also because I did not take the time early on to write the mission statement and my values down into a document every applicant would read before even applying. It would’ve saved us lots of time and hassle by setting expectations right from the start.
Thinking back, I’m not sure what my excuse was. Make sure you get it right — Buffer has created an amazing slide deck on their values which I recommend every company to check out.
We have just shut the landing page down, although the web service will keep running for the time being (no guarantee if you’re a user).
We still have the startup bug, and while Robin (our full-stack CTO with a PhD from Cambridge University) and Duncan (our amazing front-end developer) feel like it’s time for a change, I’m still very much excited about the vision of enabling people to build and maintain more relationships. But mostly, I think there are a lot of areas in which new user experiences which automate daunting tasks for users will out-innovate existing players. I am still looking to join a company which has reached the next stage, has a great product culture and wants to make their users’ lives better. If you’ve got a Product Manager opening, I’m all ears: email@example.com
Duncan will broaden his horizon while travelling, Robin will join another young company (TBA). And Lewis, our amazing designer, is all ears about any remote and contracting opportunities. You can email everyone at the corresponding firstname.lastname@example.org email addresses.
A huge ‘Thank you’ to all the friends, mentors, investors, former team members, applicants, and other people along the way who believed in our vision, gave up their time, made connections or put money where their mouth is. And also ‘thank you’ to the people who said that we’re crazy and that our idea is useless, you kept us working hard.
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