Fail faster: Business lessons from my lawn startup that failed to grow

So I started a startup. The culmination of 14 years working in startups. I was going to work on my startup. Yarda helped people get great results with their lawns. It was based on a successful model in the US. Australia was our oyster.

But it didn’t work out. Why? As is startup tradition I’ve written a failure blog to explain.

You did what?

Yeah, lawns. We helped people with lawns (est. half of all Australians) get great results. The key insight is that no one knows what they should do with their lawn. And so with our tailored lawn subscriptions based on climate, soil, and satellite imagery we could send exactly what customers’ grass needs, when they need it.

Source: supplied

And did it work?

Yeah, well — sort of. I mean the fertiliser worked. And it should have done, we got it developed by literally the world’s leading expert on site-specific fertiliser recommendation. This stuff was science in a bottle.

Source: supplied.

Sort of?

Yeah. A great fertiliser does not a brilliant startup make.

So what didn’t work out?

The ultimate cause of mortality was the #1 startup killer. We ran out of cash.

CB Insights — Top 12 reasons for startup failure

But we tried to raise funds. Oh how we tried:

• 91 investors contacted; and
• 31 first meetings with investors.

Why couldn’t we raise more money?

I’m glad you asked. Here’s a summary of the main feedback themes from investors:

Small market

VCs don’t get out of bed for revenues of under $100 million in five years. Lower outcomes don’t “meet their fund dynamics” as each investment needs the potential to return the fund. This was compounded by Yarda having a retail business model, which is harder to expand internationally (and thus expand your market) than something less physical like SaaS.

My initial market estimate was around $1 billion. Despite my market sizing skills this figure was never entirely believed and was a sticking point.

The trump card in this (every?) situation is traction. Ours was middling: 200 subscribers with a customer acquisition cost of $200. Not enough to make the opportunity compelling.

Learning: If you are going to start a venture-scale business choose a venture-scale market.

Not defensible

Direct-to-consumer went through a boom in the 2010s with companies like Casper, AllBirds and Dollar Shave Club scaling rapidly. Unfortunately, the 2020s have been less kind to the model with one solitary $1 billion+ exit. The D2C darlings were unable to maintain their early advantage as new competitors entered the market and established companies went online.

It’s just too darn easy to start a retail business. Which makes running one hard. It’s easier than ever to source a product from Alibaba and launch a Shopify. So it’s harder than ever to maintain your advantage if you don’t have some kind of defensibility to your product (tech, exclusive contracts, supply chain etc.).

This all results in investor confidence in DTC being at an all-time low.

For an excellent analysis of the problems with DTC I recommend this article by Packy McCormick, “The Hard Thing About Easy Things”.

Learning: Invest in tech, not marketing.

Founder product fit/customer understanding

Would I die for this startup? Do I live and breathe lawn? Honestly I chose this business as I loved the model, rather than lawns being my passion. I don’t even have a lawn.

It’s easy to dismiss the importance of this. If businesses were only focused on founders’ interests we would have an overabundance of startups making productivity tools, Web3 projects and improving food delivery (oh, wait).

But there’s a chasm between a product and an incredible product. And the insights which get you there are based on a deep understanding of your problem. And achieving that level of understanding is easier when you have a deep connection to the problem.

Learning: The problem must be your obsession

Ohhh nasty. But what did you get right?

The most positive feedback was for about the team. Phil (CMO) and Blake (founder’s associate) were highlighted as the right people to have along for the ride. I’m incredibly grateful to have worked with these two and for them to dedicate themselves to Yarda.

Why were you raising money in the first place?

Great point Alasdair, I’m glad you asked.

There’s another route to success with DTC — bootstrapping. This allows you to,

grow slowly, get profitable before all of your credit cards are maxed out. If you’re targeting small niches that you know how to reach without giving all of your margin to Google or Facebook, you can build a really nice business.

And that’s a really great position to be in. Your options are open on how to grow from there. You don’t have revenue targets which can only be achieved by gambling your capital on Facebook adverts.

But Yarda was a venture-backed business. Flash Ventures backed us from the very start and were supportive throughout. I wouldn’t change anything about my investor. But they wouldn’t back a company promising slow growth and modest outcomes. So that course was set at the start.

💸 As an aside there has been a welcome trend of DTC start-up crowdfunding to fuel their growth (see Ouvira, Zero, Heaps Normal). Consumer investors don’t have a fund to return and so are happier with modest returns. And those passionate about the product are more likely to forgive it for being hard to defend. As a result some excellent Aussie DTC brands have grown with help from their customers. With more time and traction this would have been a great route for Yarda.

So why didn’t you pivot?

We weren’t fast enough. If I could open a portal to day one Founder Alasdair and shout something before it closed it would be “FAIL FASTER”.

Knowing what I know now I could work out that the market wasn’t attractive enough in a few months rather than a year. That would have left most of the money in the bank ready to give a crack at a related start-up using the insight from the first.

Part of that is better learning the skill of how to test a market. I like to think of this as a reframing of launch. Instead of working towards a launch (product in hands of customers). You are working towards proving the product (website hits, sign-ups etc). As that means you can be making valuable contributions earlier in the process, rather than giving yourself the excuse of waiting until launch.

But the larger part is embracing ambiguity. Building a company from 0 to 1 is so hard for so many reasons. It’s the most exposed to failure I have been in my life. And that’s scary.

Deferring launch defers failure. And that feels good.

But the path to success is embracing the things which can kill you. Because only by resolving those can you progress.

Ultimately not enough people bought our product. And we didn’t know that until too late. By leaning into this challenge. Getting in-front of customers early. Learning, iterating, pivoting. We would have been more likely to win. Waiting on “launch” only sheltered me from the storm. And gave me less time to escape it.

This article was first published on Medium.