With the startup failure rate holding steady at around 90%, stories of new companies going belly up are common. What’s less common is finding founders of these failed ventures who are willing to candidly share exactly what went wrong and why.
David Jackson is one entrepreneur who isn’t ashamed to admit that his startup — a company called Roost, which he describes as “basically Uber for lawn care” — bit the dust despite the best efforts of he and his business partner to keep it alive.
The pair launched Roost in 2013 with the starry eyes of every tech co-founder — with high hopes for its success. Jackson explains how everything started out smoothly and showed initial signs of growth: “Homeowners came to our website, measured out their property on Google Maps, selected a weekly or bi-weekly plan, and submitted their payment information,” he said. “We then partnered with lawn care professionals who would provide the recurring service to the homeowner. After each visit we’d charge the homeowner’s credit card, and allow the homeowner to leave feedback for the landscaper.”
At the company’s peak, Jackson and his partner were processing several hundred jobs per month, receiving positive feedback from homeowners and landscapers alike who were involved with the service. Despite these early indicators, the company wasn’t making any profit, and the model required significantly more customer service than Jackson had anticipated.
“Roost worked well for a while,” said Jackson. “But when something went wrong, the homeowners would call us directly and want us to fix it, as opposed to calling the landscape company.” As the startup grew, customer service began absorbing more and more of the co-founders’ time and resources, eliminating whatever small profit margin they might have made. “Lawn care is a commodity service and buyers are very price sensitive, so we had a hard time raising prices to try and offset the cost,” explained Jackson.
After a year of trying to make it work, they called it quits and shuttered the business. Though Roost wasn’t Jackson’s first startup, he felt discouraged about the outcome. “It was pretty disheartening to shut down Roost, especially since we had strong initial traction and positive feedback from customers and service providers, and decent revenue,” recalled Jackson. “But I was convinced that the business model just wouldn’t work in the long run, which made the decision easier.”
Pivoting to a new venture
The co-founders had bills to pay, so they needed to think fast. They pivoted their efforts toward software consulting, which Jackson considered “an easy place to turn.” The gearshift turned out to be a smart decision, as their consulting business ultimately evolved into FullStack Labs, which launched the same year as Roost and has become a huge success. The company does several million dollars in annual revenue and has added 60+ employees, with offices now in California, Washington DC, and Colombia.
“When we originally started FullStack, we had no idea it would grow as quickly as it has,” said Jackson. “We thought that best-case scenario, maybe we could build a small five- or ten-person consulting firm.” But they far exceeded that original vision. In the five years since they launched FullStack, the company has grown to 60+ employees, with continued expansion projected in the future. The firm has also been able to grow profitably without taking on outside investment.
Jackson attributes the successful bounce-back to a compatible dynamic with his co-founder. “My business management and sales experience combined with my business partner’s technical experience gave us a competitive advantage in the consulting marketplace,” said Jackson. “We were able to divide and conquer between delivering projects and focusing on sales, and the business just took off.”
Since Jackson has experienced both sides of the entrepreneurial coin and has emerged relatively unscathed from a failed venture, his advice to other entrepreneurs hoping to beat the one in ten odds and launch a successful startup has special meaning. First, he suggests that founders don’t waste too much time trying to make lemonade from an obvious lemon. “Fail fast,” said Jackson. “Your time is precious and you can’t afford to invest several years into a business that’s not going to make it.”
Jackson also recommends that if you’re going to change course, you do so early — even if it means transitioning to an entirely new business model. “If you try enough business models, eventually you’ll find one that works,” he said.
His final tip: think about whether the business that you’re proposing has a high chance of failure. “Established business models (like software consulting) are much easier to make successful than new products and services that don’t currently exist in the marketplace,” explained Jackson. “There’s more upside if you can create something brand new, but the chances of failure are much higher. So don’t be afraid to pivot to an established business model in the event your moonshot business model didn’t work.”