Post mortem – Thanks & lessons learned
January 27, 2014 § 28 Comments
Pingjam is no more.
As tough as it is to write after 2 years of giving our all to make it – the reality is that we’ve failed.
First and foremost I want to thank Daniel and Ran, my cofounders, they are the best team I could have ever hoped to work with. You are each an unbelievably talented person and it was a great pleasure and privilege to work with you. As a team we were invincible (almost…). My irreplaceable wife and my co-founders’ partners were as much part of Pingjam as we were. I can’t begin to express how grateful I am for their support and tolerance for what we were going through. Daphne, Linda and Attar – your support meant the world to us. Thanks!
A huge thanks also goes to Eric Ries and Rob Khedouri, our incredible advisory board, that supported us throughout this journey and helped us think through the issues, connect with the right people and were our biggest cheerleaders and most thoughtful critics.
There’s countless other people that have helped us along the way. Friends, industry experts, attorneys, CPAs, suppliers, investors, and most importantly – customers.
Thanks to you all. We couldn’t have (almost) done it without you!
- Pingjam was a monetization solution for Android app developers. Within 6 months of our public launch we had:
- Over 6,500 apps integrated our SDK into their apps
- 140k new installs per day
- 1,500 developers made money with us every month
- A run rate of over $500k earnings for year 1
- 60% monthly growth rate in users and revenue
We had bootstrapped our company to that point and hadn’t raised any external funds. We were one month away from “Ramen profitability”.
It all came crashing down in November. On November 1st Google Play kicked out over 1,000 apps that worked with us from their app store. That was the beginning of the tailspin that’s ending with our closing today.
In the spirit of helping other entrepreneurs learn from what we went through – here’s what happened and what I’ve learned:
Brothers in arms
Working with the right team made all the difference. Our ability to work together, back each other and argue fiercely and productively allowed us to deal with the challenges we faced. Our team had a developer, a dev-ops guy and a business guy. We complemented each other not only in skill set but also in temperament and attitude. The only things that we all had in common were a deep respect for each other, an unrelenting drive/hunger, a bias to brutal honesty (not to be confused with being assholes) and the desire and ability to support each other when needed. It took over 2 years of knowing my first co-founder before we started out. With the 3rd co-founder, we took 6 months of getting to know each other before he joined.
Lessons learned -
If you’re lucky, your partners are the only constant in your startup. Choose them wisely and make sure that you all have the ability to call each other’s bull**it without the team imploding.
Working with a team of extraordinary people means that you will be pushed out of your comfort zone. Just because you’re the subject matter expert doesn’t mean that your partners, that come from a different discipline, won’t have some brilliant ideas that you want to listen to.
Throughout this entire roller coaster of an experience we had a very strong support network of our personal partners, friends and colleagues. I can’t overstate how valuable that has been. It kept us balanced and focused and helped with advice and connections. All of the people that surrounded us added some value to us and to Pingjam.
Lessons learned -
Make sure that your partner, family and friends understand what you (and they) are getting into. They are the ones that will celebrate the large and small wins, help you deal with the stress and help you pick up the pieces when needed.
Surround yourself with people that have a vested interest in your success. It doesn’t necessarily mean financial interest. A shared vision, a sense of camaraderie or just bragging rights go a very long way.
Listen when the people you respect have something to say. You don’t have to like it, but you have to think about it. If you don’t respect that person’s thoughts – don’t consult with them.
When crisis hits
Saturday at noon and I was in the park with my family. I was very excited about the investment that was about to be signed when the weekend was over. Then I got the first phone call.
Within 3 hours from the first indication that there was a problem we realized that this was a major event. By 8pm we were already sitting together trying to figure out what was happening and trying to deal with the onslaught of emails and phone calls we were receiving from the developers that worked with us. The developers weren’t happy, they were angry, scared, confused and they blamed us for getting them into this mess.
Although we weren’t sure at the moment what was happening, we immediately decided to entirely disable our service in order to try and prevent any additional damage to our developers. As it became clearer that there was no effective way for us to communicate with Google, we did what we thought would be the best for our developers, we sent a blast email to all of our developers asking them to remove our SDK from their apps (effectively to stop working with us). We shared what little we knew about the situation and committed to them that we will work tirelessly to help the developers who lost their apps to get them back. We continued to communicate with our developers whenever we had anything new to share. Although a few of developers still think that we are bastards, most of the communications we received from our developers thanked us for our response to the crisis, for caring about them and expressed hope that we would continue to operate.
Lessons learned -
There’s no one else that can make the decision. You built the company, you got the customers and you’ll have to make the tough decision.
You can’t hide. You owe it to everyone that’s trusted you to communicate with them openly and to share whatever you can about the situation. It’ll also be worth it, done right, it helps everyone understand what you are facing and will take a lot of the pressure off.
Ignore the outlier noise. We had 2 developers who continuously hammered us on everything we did. They called us names, accused us of various things and generally made us want to punch someone. We chose to ignore them. It was much better for our mental health and for our ability to focus on actually working.
Big corporations are not your friend
Throughout our product development process, we constantly consulted Google developer relations, sales teams, marketing, technical, etc’. We were consistently assured that we are fully compliant with Google’s Play store terms which governs our ecosystem. Our EULA was written by a senior Google employee and at the time that Google kicked us out – we were being hosted at one of their incubating facilities.
Nonetheless, on November 1st Google kicked out over 1,000 apps that worked with us from the Play store. Neither us nor the developers got a warning (thanks Sebastian). Our attempts to try and help the developers that worked with us or to get any response ended with our contacts telling us that they’d been instructed to disengage and not speak with us.
Google proceeded to send threatening emails to our remaining developers that unless they stop working with us their apps would be banned. They even kicked out apps that hadn’t worked with us in 3 months. That’s right, apps that had tried working with us and then stopped working with us as far back as 3 months before November were also removed or threatened.
To this date, I don’t know what made Google suddenly not like us. I don’t know whether we got kicked out because 24 hours before banning our apps Google launched an almost identical feature in Android 4.4 or if it’s something else. The messages we did receive stated conflicting reasons. Beyond the obvious damage, the lack of communication caused us to assume the worst and that whatever we do in the space will be killed by Google.
Lessons learned -
Don’t operate in a market where a single player can arbitrarily decide to kill you. Especially don’t work in a market that’s controlled by an entity that explicitly refuses to communicate with you (or anyone else) or to explain their guidelines.
To stress the point, if your startup has one point of failure that is controlled by one entity – do what you can to not be totally dependent on that single entity. Develop for other platforms, decouple from the ecosystem. Do whatever it takes to get out from under their thumb.
When dealing with big corporations – don’t assume that the left hand knows what the right hand is doing. It’s a big organization and speaking with people who’s job it is to know the answers to your questions doesn’t necessarily mean much. Don’t forget that even if you speak with the right people – the organization can still change its direction in a heartbeat.
Until the money is in the bank – you’ve got nothing
On November 1st we had finalized an oversubscribed investment round for $1 million led by a prominent VC fund and other investors. The final documents were ready for signing that was supposed to occur after the weekend. As soon as the s**t hit the fan we immediately shared what was happening and our investors took a “let’s wait and see what happens” stance. Some of them were great and tried to help us figure out the next steps. Regardless, as the picture unfolded the deal fell apart. I have no bad feelings towards them. If I was an investor I’d probably do the same and I really appreciate their support and willingness to invest in us in the first place.
Nonetheless, in anticipation of the impending funding round and the “Ramen profitability” we substantially increased our burn rate. This left us with no oxygen and no room to maneuver.
Lessons learned -
Until the money is in the bank you don’t have an investment. Don’t increase burn rate until it’s done.
Work as hard as you can to get the deal done as fast as possible. Ride the attorneys, the investors and everyone else that’s involved in the process. Don’t be a pest or cross the line to seeming desperate, but call them 3 times a day if needed. Get it done!
Valuation and terms aren’t as important as actually getting the money. The difference between having money in the bank and not is huge, it’s the difference between surviving or not. The deal terms may be onerous, but in most cases they won’t kill you. Not having money in the bank will. If the deal is dragging on because you’re insisting on terms – cut it out and get it done.
Being a hot commodity today means nothing when trouble begins. Unless they are already in – investors will not support you as you try to figure out the path forward.
Always be truthful and forthcoming with your investors. It might hurt in the short term but it’s the right thing to do.
I don’t yet know precisely what either of us are going to do next. I do know that we will all do something meaningful. We will carry the lessons we learned with us to whatever we do and we will do better next time. In spite of what we’ve been through, we’d love to continue working together and I hope that we will be able to do that soon.
So long and see you in our next venture!
one more thing, if you need a kickass team that can move mountains or need help or advice with your endeavor – feel free to reach out.