When I tell people the story of ReQey I often get the type of response you’d expect if you told them you’d gone snowboarding and broke a leg. It’s kind of “I feel bad” mixed with “what were you thinking, I told you so”. The only way you can keep going as an entrepreneur is to tell yourself it was a learning experience and learn from your mistakes.
ReQey was poised to become the next big disruption, possibly upending an entire billion dollar industry. Capturing pictures of your keys using your mobile phone and being able to make a copy at any time could prevent 10’s of thousands of lockouts annually and after many other failed attempts, should have been my pathway to a startup success story. Instead, a competitor beat me to market, out innovated, and out marketed me. I wanted to write down some of my thoughts so I don’t make the same mistake next time and so other’s might learn from my experiences.
In 2001 I came up with the idea for ReQey when I got locked out of my car. Before camera phones with only $5 to my name, my only option was to call my mom to scan me a copy via email. I then printed it out, taped it to a blank key and cut a key with a file.
Fast forward until April 2012, after 8 years building software, when I finally figured out how to implement the solution. I started building the technology and business plan. By July I had enough in place to start pitching my idea at local business competitions. Although I didn’t get accepted into an incubator program I was approached by an Angel Investor who graciously offerred to invest enough to get a prototype built.
Mistake #1 – I thought the prototype would be easy enough to build on my own and I had saved about 10k to finish the build and I thought giving up 5-20% was way too much so I didn’t take the investment. I kept building it myself and added some outsourced expert labor and got a prototype built finally by December, almost 6 months after I had been approached by the Angel.
Mistake #2 – from July – December I focused all my time on build. I let my connection to the Angel dwindle and started thinking of other ways to get to the next step.
Mistake #3 - My business plan projected $500,000 in annual revenues maximum so I was hesitant to raise venture money, becuase at such a low valuation I didn’t think they’d be able to get their 10x returns without taking all my equity.
Mistake #4 - In December I knew I’d have to raise money and was intrigued by Kickstarter and keeping all my equity. So I began crafting a pitch. A few friends were video experts so free is always better. We began the video, spent about 6 weeks full time as none of us were really experts and sent it off to KickStarter. 2 weeks later we heard back – the verdict was they didn’t believe it could work based on the video so we needed to resubmit with more details. At this point my video connection had donated many hours and I felt bad asking them to do more work, plus scheduling didn’t work out so well, additionally I didn’t really know how to show off the product in a better light. Another 4 weeks went by, and another. Months now in total since the start of the fundraising process and I had run out of money, run out of momentum.
I finally got the movie updated on my own using imovie and was ready to go live on Kickstarter. I had been reading about some other people trying to do a similar approach and started reaching out to see why they never got it off the ground. As I planned my prelaunch, I also inadventantly started getting more and more discouraged. My market research started to show people were very hesitant about the idea. I kept on track though for my kickstarter Launch in late June. The weekend before the campaign was scheduled to go live I got an email from a friend, it was a competitor. They had launched a Kiosk that performed the exact same functionality ReQey was scheduled to offer. I was crushed.
Mistake #5 – I removed the kickstarter campaign and spent a week analyzing the situation. I still had a differentiator in that I was a mobile app, they were a kiosk. However seeing they had raised $2.3mil in venture capital made me nervous, angry, and hesitant. This dollar amount took whatever ambition I had left.
My business model could never justify that kind of raise, how could I even compete if I couldn’t even convince myself I could be worth that much? A years worth of time felt like it had gone down the drain. I sat on it for a month or so and picked myself up, promised I would at least try to get what I could from my sweat equity and at least bring it to market. Afterall I had a mobile app, they did not.
Nail in the coffin – I spent a little time rebuilding my network, getting people interested again with the intention to relaunch the kickstarter campaign. However,always a step ahead the competitor launched a mobile app. Not only that, but my business model called for a $2/month subscription, the competitor gave it away for free. With no competitive advantage, no money, no way kickstarter could take off, I gave up.
in summary, the following are the mistakes that lead to ReQey failing
- Execute quicker
- Don’t try to do it all on your own and lose momentum trying to fill a knowledge gap, instead partner with people with different skillsets
- Don’t be afraid to raise seed money when creating a revolutionary product 80% of something is more than 100% of nothing
- Don’t be afraid to raise venture money – your competitor probably already is
- If a competitor raises money, don’t let it discourage you immediately – if nothing else it validates your business model