Shutting Down Day One

Shutting Down Day One

Hey everyone, hoping you’re all settling in as temperatures rise a bit and we welcome spring - but trying not to jinx it!  We’re a few months into 2024 and overdue to share some bittersweet news. 

As the clock struck midnight on 2023, Rahul and I were signing the final papers to officially shut down Day One. It was both a tough decision…and an easy one.  Keep reading and you’ll understand.

It’s hard to put into writing all the thoughts and feelings that come with shutting down a startup (but we’re going to try). We have so many people to thank. We’ve done quite a bit in three years and there’s a ton of good work to reflect on. We have so many lessons and learnings, from all the ups and downs, pivots and decisions (including the one to shut down). And we wanted to share a bit of the “why” behind the shut down. 

We also have new things starting, and with this chapter closing, Rahul and I have exciting new projects kicking off as we both move off to new things after 1000+ days of building Day One together.

In a bit of a cathartic exercise, we wanted to share a little bit across all of those topics. If you’ve been a part of the journey, or just following along, we hope this last post provides some value.

So what exactly happened?

With the benefit of hindsight, and a few months for us to get our thoughts together, it became clear that we were pushing a boulder uphill, that there wasn’t a path to a positive outcome, and with that, we made the call to shut down.

There was no single thing that caused us to make the call to shut down. Day One was one of those businesses that had lots of positive signs and wins along the way - revenue milestones, investors like Gary Vee, awesome feedback from hundreds of founders - but not enough, and not the ones that mattered in the end (which feels like something you can only see in hindsight). 

A harsh reality we had to come to grips with was that there probably was a successful, sustainable business to be built with Day One, but that wasn’t the game we signed up to play once we took in venture capital. Could Day One have been a good business? Yes. But a venture scale business? Unfortunately no, but that’s the path we took.

So after 3+ years of building and shooting for scale, and then making hard decisions like cutting our team to reduce burn and pivoting into new products, it became clear that there wasn’t a path to a positive outcome. Let me dive into a few of the biggest challenges we faced that made building a successful business tough. Maybe there’s a lesson in here for another founder.

1. The entrepreneurs we were targeting (idea stage) aren’t great customers. Awesome people, but not great customers. They don’t have money, are very price sensitive, and many times desperate. One of the last things they can afford is a 4-figure expense that doesn’t go towards a critical need of their new business, and they don’t want to be on the hook for recurring expenses. The lesson here - finding a pain and need is necessary, but not sufficient to build a good business. There’s a reason why many businesses focus on the top end of markets.

2. Not only is a 4-figure price point a tough sell, it’s also the danger zone when it comes to building a GTM - way too high for paid ads (folks don’t impulse buy at this price point), but too low to sustain a full-on sales team. And so a big part of why we couldn’t make Day One ultimately work was our inability to create a sustainable, repeatable, and ultimately scalable GTM. The lesson? Just because you can sell your product, even dozens or hundreds of times, is also not sufficient to building a good business. You need repeatability to then drive scalability.

3. We set out to create a good-vibes founder community and support founders at the earliest stages, oftentimes founders who weren’t getting support from anywhere else. And while that created an inclusive, supportive community, we never created an environment with the competition, motivation, and selectivity that are often necessary to push people to build successful startups. So while almost everyone in Day One benefited from their experience, we weren’t graduating successful startups at a high velocity, and we could never get that flywheel going. The lesson here, be thoughtful about which customers you serve first and how that will set you up to be positioned to the rest of the market.

4. We could never crack the B2B puzzle. Corporations weren’t keen on paying for their employees to learn about entrepreneurship (or intrapreneurship) for the main reason that it wasn’t a skill that has proven benefits to their bottom line. Universities already had in house entrepreneurship programs and weren’t interested in investing in their alumni in a meaningful way, or if they were they had in house teams to do so. The lesson here, if you’re going to go B2B, just do it, don’t do it “after” you scale a consumer business.

Net net, the community business space is one that probably isn’t designed to be venture scale.  After all, the beauty of communities is that they are small and niche, and the best ones grow organically at a very steady pace. But they don’t blitzscale. After we reached a certain point, the magic and intimacy of Day One was at odds with the requirement to scale and scale quickly. Layer into this the headwinds we faced as markets turned in 2022 and 2023, and we got to the end of 2023 realizing that we had tried almost everything, and had run to the end of our resources.

All the emotions

This is a section we really wanted to write, because shutting down a startup is a black box to so many, and the part that I think is most difficult to navigate are the emotions. So let us share what we’ve been feeling to demystify this experience a bit.

• Bittersweet - we start with this emotion, because ultimately it was the emotion that told us we made the right call. Of course shutting down our startup stung, and felt like a failure. But by the end, we had put in so much work pushing a boulder uphill that there was something of a release. And you know how when you make a hard decision, the feeling you feel after tells you whether you made the right call? Just feeling that release, and some renewed energy for what’s next, told us we made the right call to shut down when we did.

• Nervous - this is a pretty natural emotion, and we expected to feel anxious about telling people we were shutting down, and worried that they would react negatively. Thankfully, everyone, to a person - investors, customers, members of our community - have been supportive, which is what every single founder needs to hear when shutting down a company. But this was a big emotion that we had to work through. We were pretty certain that this would work out like it did, so we weren't paralyzed, but we’d probably be psychopaths if we weren't a bit nervous going into those conversations.

• Thankful - this emotion has grown as more and more people find out and reach out to us, and as we get time to step back and reflect on the journey. Just thinking back on everyone who took a bet on us, especially our investors but also our team, our customers, and everyone from across the startup ecosystem who contributed to what we were building. Building a startup is a privilege, and getting as far as we did doesn’t happen alone.

• Proud - thinking back on what we built and the work we did, the founders we supported, the impact we had, we can’t help but feel good. While we didn’t build a sustainable business with Day One, the value we created was real, for over 500 founders. It’s fun to think back to the first sale we made, the first investor we closed, the big launches, and tons of other cool moments and big wins along the way.

• Reflective - this has been an ongoing process. Making the decision to shut down required thinking back on how things have gone and how we got here. And now with some space, we have room to think about lessons learned, big and small. A lot of the reflection has been thinking about all the mistakes we made, things we wish we had done differently - not in an overly negative way, but there’s a feeling that we’ve made the many mistakes first time founders make, and we can already feel more capable in whatever happens next.

• Some energy for what’s next. This is a weird one, but I think lots of founders will relate, whether you’ve gone through this, or are considering shutting down a business. But we worked on Day One for almost all of 2023 as just the two of us. We started the year by laying off our whole team (not fun), and pivoted at least twice. By the end, we knew we had given it our all, and no one would accuse us of quitting or holding back. All that made the last few months difficult, knowing deep down we were doing work that wouldn’t actually amount to anything. So once we got over the frustration, reflection and burnout, we are here now, ready to take on what’s next.

Hard fought wisdom

This section could go on for many many pages. I just feel like I’m somewhere between 2-10x better of a founder now than when we started. I now have experience doing SO many things that I just hand-waved at before - building, launching, marketing, making sales, building community, running events, hiring and firing, raising money from VCs and angels, and so many little legal things. I have a serious appreciation now for multi-time founders and why it makes real sense to invest or bet on them.

And in a meta way, once you learn so many new things, you learn how to learn - you learn that anything can be tackled, and you just gotta do it. And then you also learn that you don’t know what you don’t know, so if you actually want to get good at something, just go freakin’ do it, and in a month you’ll be good at it. No excuses.

But probably the most important lesson I’ve learned is that even though dozens of things can go right, you’re nowhere unless you get the 1 most important thing right. And yes, I’m talking about product-market fit.

I’ve known intellectually about PMF for a long time, and I bet you do too. But it doesn’t matter how many awesome hires you make, how awesome your brand is, how much press you get, if your launch drives 100 customers (or even $100k in sales, which we did).

My definition of PMF is actually less ambitious than the original one proposed by Marc Andreessen. He says PMF happens when the product flies off the shelf and you can’t keep up with demand. My definition is less atmospheric. To me, PMF is when you can consistently and repeatably acquire and serve customers, at a pace and at a cost that meets your business goals - which is either profitability, or a growth rate that’s attractive to VCs.

If you don’t find this repeatable, profitable way to acquire customers, you don’t have a business, you have a project or a hobby. But I agree with Marc, that PMF is the only thing that matters. And as you can imagine, we never had it - despite an awesome team, an awesome brand, hundreds of customers, great launches, partners, investors, everything.

So if I had to do it over again (and if I could influence any of you), please don’t do much of anything until you’ve found PMF, and put all your effort into finding PMF.

I’ve also learned a lot about the market we were building in (community and education for entrepreneurs) as well as the business model we were building (cohort based education and community). I don’t think either are a fit for venture scale startups, although I think there are plenty of non-venture scale businesses to be built. One piece of advice - if you’re building a community powered business, play the long, slow game.

So what’s next?

Even though we’re shutting down Day One both of us (Rahul and Andrew) are still passionate about supporting early stage entrepreneurs. We both still find it energizing and just a lot of fun to be working with people who are taking big swings (even if building small businesses) and working to change the world (even just one storefront or freelancer at a time). And in something of a paradox, as we’re shutting one business down, we both are sitting on a huge stockpile of insight and advice that we want to share with the world.

So neither of us are taking a sabbatical or stepping away. We’ve both taken the last couple months to reflect on the kind of work we want to be doing, and the needs that early stage startups and founders have that aren’t being met.

And so we each have a new project to announce. We’re going after these projects separately, but we’ll always have each other’s back.

Founder Checkup with Rahul

Rahul here. I wouldn’t trade the last few years for anything. I’ve learned so much and gotten to know so many interesting and inspiring people. But I’ve also been able to drill down on the skills and areas where I know I need to continue growing and evolving. After months of conversations and research, I’ve decided to focus my energy and effort into three primary areas:

1. Founder Check Up - I’ve been doing some form of mentoring and advising years before Day One, and the last few years have only amplified that desire. I got the most satisfaction from the 1:1 sessions at Day One, and from the outpouring of messages of thanks, it appears others did as well. I’m happy to announce Founder Check Up, my 30-day, outcome-based, personalized founder coaching service. I’ve been working with a select group of Founders since January and have a few slots opening up in April.

2. Bumble Bee Blinds - As an investor, there are a number of sectors that excite me from a growth perspective - childcare, eldercare, education, future of work, home services, and boring businesses. As a founder, the last few years have given me the hunger to dive headfirst into being a full-time operator. And after years of “zero to one,” I’m ready to work on something with proven demand. Put that all together, and I’m excited to jump into the latest adventure, life as a franchisee in the home service industry in Houston, TX. I’m in the thick of a 20 week training program and am on track for a summer launch.

3. Content Creation - One of the areas where I’m most disappointed in myself is my (and our) inability to stay disciplined on consistent, quality content creation while at Day One. There’s already some intrigue in my network to see how my transition from VC-backed founder to franchise owner/operator goes - and I’m challenging myself to share updates on a regular basis with our Future Founder community. So I’m putting out the Bat Signal now for accountability partners!

Lots of you have asked how you can help or stay involved - so here are three ways:

1. If you’re interested in Founder Check Up, please give it a look and sign up on the super short form on the website. 

2. If you’ve worked with me in the past and would like to leave a testimonial on our time together, I would really appreciate it.

3. If you’d like to just catch up, I’d love nothing more.  Use this link to get on my calendar for a catch up call.

Customer Discovery and GTM support from Andrew

Andrew again. In all of my time supporting founders - whether it was the 3 years I spent at Human Ventures, or the last 3 years building Day One, I’ve come to the conclusion that for 9 out of 10 founders, what will make or break their startup is whether or not they they understand their customer enough to build a repeatable, consistent acquisition channel. It goes back to PMF, and for most founders, the critical path is figuring out the market side. 

So to help founders nail that down, and give their startups the best shot at success, I’m building a solo consulting practice around helping founders do customer discovery and nail down their “market fit”. What this looks like is a fractional service where I plug in with founders to build out a repeatable GTM engine by driving customer conversations that lead to learning and sales.

Who’s a fit for this service? For starters, I’m focused on B2B startups, who have an initial customer hypothesis to work from. You’re either funded, or serious about nailing down your target market and validating your business by selling - meaning, you’re not living in a world where you think that you can just build a product and then start selling. 

If that’s you, I’d love to get in touch and share more. Fill out this form and I’ll get back right away to set up a time to chat.

What’s the future of everything we’ve built together at Day One?

Just because we’re shutting the business down, that doesn’t mean we have to blow up all the great work and assets that were created over the last 3 years.  

Here’s what we’re thinking right now.  We’ll spend the next month or two organizing all of the curricula, playbooks, presentations, decks, recordings, worksheets we have and we plan on open sourcing them all on a Day One website/Notion page for anyone and everyone to use going forward.

If anyone would be interested in helping us in this massive content management project, please reach out to either of us at [email protected] and/or [email protected].

For all of you in our Day One Slack Workspace, we’ll keep that open on the free plan for as long as they let us. This will be our last posts on the Day One X and LinkedIn profiles as we will sunset those and other Day One social media accounts shortly.

Not goodbye - see you around

As a last thing, we’ll come back all the way around and just say that we’re so so grateful to everyone who was part of the Day One journey. We’ll be saying thank you for a long time to come.

Please don’t be a stranger. We’d both love to reconnect, hear and share long-overdue updates, and see how we can be helpful to each other.

Seriously, thank you.

Andrew and Rahul