{"id":13010,"date":"2015-11-16T11:32:19","date_gmt":"2015-11-16T06:02:19","guid":{"rendered":"http:\/\/www.officechai.com\/?p=13010"},"modified":"2021-12-13T22:23:21","modified_gmt":"2021-12-13T16:53:21","slug":"how-we-lost-rs-1500000-in-our-startup","status":"publish","type":"post","link":"https:\/\/officechai.com\/startups\/how-we-lost-rs-1500000-in-our-startup\/","title":{"rendered":"How We Lost Rs 15,00,000 In Our Startup"},"content":{"rendered":"

[This article is a part of our First Person<\/a><\/span> series, in which \u00a0entrepreneurs and professionals share their stories\u00a0about their startups, lives and careers.]<\/em><\/span><\/p>\n

I thought I would make millions through my startup, but I failed miserably. I’d read shiny stories of Flipkart and Zomato, but nobody told me that 90% startups fail within two years of starting up, I failed in the first year. Sometimes I feel being cheated but the fault was mine, I believed one side of the story.<\/span><\/p>\n

Today, I am going to tell you the other side of the story, the secret of failure of first-time entrepreneurs.<\/span><\/p>\n

\"Optimized-closed<\/p>\n

It was April month of the year 2013 when I was getting uncomfortable in my office. It was a dull cubicle of an IT company in Gurgaon. I was pretending like fixing defects but actually\u00a0wasting time on the internet. All I could think about was being free from my boring job. I was losing interest in my work. My co-workers and my manager were sensing that something is going wrong with me.<\/span><\/p>\n

I was just\u00a0returned from the US last month, and I told my manager, \u201cSir, I need a little break to set up my home and adjust again in India\u201d. My baby was just 6 months old at that time, and he was also having trouble in adjusting to the Indian climate. I worked from home for some days\u00a0to take care of my baby. But my real problem was the unhappiness from my job.<\/span><\/p>\n

Like everyone else, I was also thinking about leaving the job and building a big company but I have to admit that I did not have the courage.<\/span><\/p>\n

I was in discussions with my good friend Amit (who happened to be my brother-in-law too) regarding the startup but we were unsure about the product. He also had the similar story with his job. He was heading a team in a recruitment firm, working in night shifts to work with the\u00a0US clients, and making less money than his expectations.<\/span><\/p>\n

We were very comfortable working with each other so we decided to start a company and build a product. I saved a good money by living frugally on my US trip. I decided to put all my savings in my startup rather than buying a home (unlike many other US returned friends).<\/span><\/p>\n

The first step we took was incorporating a private limited company, invested 5L each and divided equity equally. It was going to take about two months to get incorporation certificate, so we planned ahead with ideating\u00a0the product, hiring and setting up the office.<\/span><\/p>\n

We found a basement office in Gurgaon with monthly rent of 13,000 rupees. We spent another 100,000 rupees on the renovation. We bought furniture, air conditioner, inverter, and refrigerator. We were having a good feeling of owning an office.<\/span><\/p>\n

We wanted to solve the problem related to schools because education is a billion dollar industry. The second big expense on parents wallet is child\u2019s education. We thought that we can build any product for schools and make big profits. After long discussions, we came up with the idea of ERP for schools. Online software for schools to manage everything from fees, inventory, communication with parents, \u2026 bla. bla.. tons of features..<\/span><\/p>\n

Another important step was to hire a team. I was confident that we will hire people easily. We had everything for building a good team; an office, money in bank account, hiring policy and most importantly a co-founder with recruitment experience of more than ten years.<\/span><\/p>\n

We hired one person who was almost a fresher, and he was open to learn new\u00a0technologies for our cloud-based product. We needed one senior person to own the product and handle all development work because we were still into full-time jobs.<\/span><\/p>\n

We started interviewing people. My co-founder analyzed a pile of resumes since he had access to all the major recruitment portals. We filtered out best out of best people and interviewed them in cafe\u2019s or restaurants because our office was under renovation.<\/span><\/p>\n

We interviewed many people for product development\/design but no one was ready to join a startup like us.<\/span><\/p>\n

We were shocked!!<\/span><\/p>\n

My co-founder said, \u201cI could have hired ten people for any other company by this time, I am not sure why people are not joining us.<\/em>\u201d I said in tension, \u201cMaybe they will join after seeing our new office.<\/em>\u201d<\/span><\/p>\n

Since we were from the corporate background, we spent few days on drafting new hiring policy. We introduced company incentives based on revenue and individual performance bonus along with basic salary.<\/span><\/p>\n

Our office was ready in June. We moved to our new office and resumed our hiring process. Someone advised me to hire initial teams from the personal network, but none of my friends was having the matching profile. I asked all my friends to give me references of his friends who are working in PHP development or website frontend design.<\/span><\/p>\n

\"a<\/p>\n

I got contact of a person who was working in Chandigarh, and he was willing to work with a startup in Gurgaon. We were impressed with his technical capabilities but doubtful about his managerial & leadership skills. We thought of giving a try (anyways, no one else was ready to join us). He was a costly hire. We offered him 60,000 rupees per month plus company incentives if we made any revenue by the end of the year.<\/span><\/p>\n

We were feeling lucky with two developers. We desperately needed one designer so that our work can be started. I architect the product and developers started coding without waiting for the frontend design.<\/span><\/p>\n

It was an\u00a0exciting time. Our product was taking a shape. The co-founders were spending hours on whiteboard discussing the features and developers were busy in coding. We managed to hire a designer on 25,000 rupees per month, but we compromised a lot with his skillset & attitude. We were feeling the heat of startup hiring.<\/span><\/p>\n

We wanted to complete the product as soon as possible so that we can start selling.<\/span><\/p>\n

Then we started facing unexpected problems. You know, startups are full of uncertainty and surprises.<\/span><\/p>\n

Our junior developer was not performing up to our expectations so we had to ask him to leave. With a team of just four people, we completed the first version of our product.<\/span><\/p>\n

We were confident that our product will sell like hot cakes once it will hit the market. We included all the features of top ERP products in the market to beat the competitors. However, we were not happy with the front end design and were continuously looking for a better designer.<\/span><\/p>\n

ur first potential client (a known school principle) appreciated our idea & demo but put us on hold till she hear from higher management. We gladly sent her the sales material and thought we will deploy software in few months.<\/span><\/p>\n

By this time (6 months) the cost of product development was:<\/span>
\n Company Incorporation: 30,000<\/span>
\n Office Renovation: 120,000<\/span>
\n AC\/Fridge\/Inverter: 40,000<\/span>
\n 7 month Rent: 91,000<\/span>
\n Salaries: 3,60,000 + 1,00,000 + 65,000<\/span>
\n Travel, Food, Marketing Material and Others: 100,000<\/span>
\n \u2014\u2014\u2014\u2014\u2014-<\/span>
\n Total: 9,56,000<\/span>
\n \u2014\u2014\u2014\u2014\u2014-<\/span><\/p>\n

We had full confidence in our software but to get more sales we had to leave our jobs. We were ready to take the risk. We put our resignations. We decided to move our development office to Chandigarh where I will manage operations and my co-founder will handle sales by staying at Gurgaon.<\/span><\/p>\n

We benefited with our step.<\/span><\/p>\n

    \n
  1. Now our senior developer was spending more time into development than traveling from Gurgaon-Chandigarh-Gurgaon.<\/span><\/li>\n
  2. We saved money on office rental.<\/span><\/li>\n
  3. I\u00a0saved money on my living expenses<\/span><\/li>\n<\/ol>\n

    Another surprise<\/strong>, our designer ran away with the laptop.<\/span><\/p>\n

    We tracked him and recovered the laptop, but\u00a0we lost our only designer.\u00a0I took the challenge and learned basics of web designing. We revamped the entire design in one month. The product came out nicely.<\/span><\/p>\n

    We started reaching out to schools and got the bitter taste of selling to schools<\/a><\/span>. None of the co-founders were from the sales background.<\/span><\/p>\n