We shut down our startup

On average, my customers resell my products for about 2.5 times what they pay me. Depending on the customer, my products requires anywhere from no labor to 20 seconds of labor from restaurant staff.

The business was profitable its first month and has shown year-over-year growth every year in both product sales and revenue. Everything is done by myself and one other person (who joined after two years). We’ve spent $40 on marketing from that time I had business cards printed. We have higher per-month revenue than Dishero and there’s never been a monthly loss.

As food industry people, we use our understanding of the food environment to help our customers. We know the awfulness that is restaurant life and we accommodate our customers’ needs using what we know, what customers tell us, and what we see that isn’t stated.

Probably my favorite action is when I show up delivering what my customer has ordered, only to cancel the order because I know the customer does not need the items. These are not products I can simply sell some other day. When that happens—and it always does—my customers know our focus is taking care of them, not making every possible sale.

In short: We have relationships with customers, and relationships are always give-and-take arrangements. I’ve found that focusing on the giving ensures we make enough to keep giving.

All those self-congratulatory things said, I have no doubt that our success thus far can be attributed to customer service. No, that’s not saying anything novel, but—as always—it requires listening, watching, adaptability, frustration, flexibility, and a host of other behaviors/actions. It’s hard work and it’s not easy to get out of my own head to get inside someone else’s head.

The economic and non-economic results have been good. We haven’t lost any customers. The majority of our customers have found ways to get more products from us. All new business has come from word of mouth.

But I don’t think there’s anything novel in what we’ve done. I say that because I believe the success of every business come down to three factors: cash flow, logistics, and people skills. I don’t know of an instance in any industry where a great product overcame deficiency in those areas.

I was unfamiliar with Dishero prior to this piece. From what was shared, it’s hard to see if they did well with logistics or people skills (the author says they missed on cash flow). The author noted they had trouble overcoming the logistics of interacting with restaurant staff. If so, it’s difficult then to build relationships, so there goes people skills.

It certainly sounds, though, like the people behind Dishero had some good product-making skills. And I have nothing but respect for the decision to cut their losses. I can’t imagine the difficulty of that choice, and the accompanying pain, despite the apparent wisdom of that decision. My best to those people in their next pursuits.

Developers are some of the cheapest people I know. Many refuse to even pay for tools that save them a lot of hours per month (i.e. PyCharm). They don't know how to value their own time.

So unless they start targeting the C level management this product is probably doomed.

For an offering like that, get out of SF and find a "small" city like Des Moines or Tallahassee that has 1,000 restaurants but not a million Silicon Valley sales bros calling them every 5 minutes. Prove the business with a lean team before opening up the purse strings.

I can expand on that: Selling to small-to-medium-enterprises is a dead end. They are entirely focused on the near-term, and usually their finances are hand-to-mouth each month. Unless you can demonstrate that they will be making real, actual money with your product from day one, without any extra effort, save yourself the bother.

"Our business was seemingly working and from 30K feet — it looked great:"

"We had had happy customers and revenue almost from day one. Our revenue grew continuously for 11 months in a row."

"Despite of all of the above, Dishero was still in a mediocre category: we were burning $100K/m and making $9K/m in revenue. The revenue continued to grow, but the growth was painfully slow and unpredictable."

We're not in a bubble....

Take all of this into consideration when next interviewing and negotiate for the best possible deal, knowing that no amount of possible "future" prospects is a solid as hard cash in the bank now, be as predatory and hard nosed as you can possibly be. You are working for Me(Inc) and its dependants, you are morally obliged to extract every last drop of value you can from your current employment relationship, because, as you can see from this example, the converse is a given.

Startups are already hard just by themselves. If you want to increase your chances, pick a industry with healthy margins.

[1] http://smallbusiness.chron.com/average-profit-margin-restaur...

-> "replace the paper menus and give restaurants full control over their online presence"

This isn't a task of selling to a restaurant. Restaurants don't make their own menus, they go to designers. Designers are the customer for new paper menus. They are currently being threatened by Canva, which is making it easier for non-designers to get a better product.

->"[restaurant owner] doesn’t have a spreadsheet estimating how many people show up on a Tuesday night"

Uh, HUGE opportunity. Machine learning across what is going on in a city and how that would affect restuarant sales. Network effects (if you're getting data as well as selling answers) and you get to sell the same product again and again and again.

I'm maybe not so sure they were looking at the opportunities enough.

But fantastic if you can make it work a la Grubhub and Seamless who got $360 million in revenues primarily by selling to restaurants.

The restaurant business is indeed hard, but lucky (or good) sales people have had tremendous success and profitability tackling it.

That is how startups in America work: a) take any idea b) find enough believers c) throw money at the problem until it either works out or fails.

I mean are those people for real? It's like watching 5y olds playing monopoly

How about: If you need millions investment for your idea then your idea is just BAD (except you are building Teslas maybe)

There's all that needed to be said, right there.

None of the insights they talk about are particularly noteworthy or trade secrets. They could have been discovered as part of coming up with their business plan. It's more than fair to assume they'll make the mistake again.

"We shut down our startup"

Thanks for letting us know.