In 2015, Jonny Plein and his friend Ben Corrigan had a break-through business idea: a browser extension that automatically applies all the possible voucher codes for whatever website you visit. Existing voucher code sites offered, in Plein’s words, ‘a terrible user experience’, so their idea was to flip the existing model on its head by creating an easy-to-use product that puts the consumer first. It worked.
In 2016 Pouch came out on top in business accelerator programme Mass Challenge and, off the back of that, Plein, Corrigan and new co founder Vickram Simha were invited onto BBC’s Dragons’ Den, the show in which budding entrepreneurs pitch for investment. Pitch they did, and Pouch became only the third business in the programme’s history to receive a full-house of offers from the investors. They chose to partner with three of them, then went off to raise money – and improve their product – ahead of the show’s TV airing.
‘We spent a lot of time and money building products – including a brand-new website and analytics systems,’ says Plein. ‘The show went really well – we were aired in the first show of the series and it was great. We got 50,000-60,000 users overnight and our revenues increased tenfold. We were like, right we've got a business now. That September and October were crazy months: we had lots of press, lots of retailers getting in touch and we were kind of enjoying our mini celebrity for a week or two.’ Then the problems started…
First, personal issues forced the company’s Chief Technology Officer, Simha, to take an extended break in India – two months in total. ‘All our systems started crashing and we didn’t know what to do about it,’ says Plein. ‘We lost some massive retailers and about 20% of our revenues.’
Then, at the end of March 2018, News UK approached to see if Pouch would like to enter the News UK Startup Lab. This, as Plein explains, was ‘a programme set up to invest in startups that News UK knew they could grow, but would also give them back an instant revenue stream.’ Plein, Corrigan and Simha, seeing a chance to rebuild, agreed. It backfired. ‘At the end of three months they turned around and said: “We're changing our strategy, we're not investing in startups anymore – no one is getting any money.”’ The trio had to let one third of their newly recruited team go. ‘It was horrific,’ says Plein, who also reveals they told their investors, ‘there may not be a bright light here.’
They refused to give up, and after focusing all their attentions on the product itself – rather than outside influences – users, and revenue, began to steadily rise once more. ‘The forecast now is a lot sunnier compared to the start of the year,’ says Plein. ‘In terms of our size as a business, we have about 70,000 users of the product and we work with the likes of Amazon and Sainsbury’s: big companies and their affiliates.’
So, how can your own startup avoid making some classic mistakes, or even fail, but then come back stronger, like Pouch?
1. Failing To Focus On The Correct Analytics Analytics are vital for all new businesses, but you need to make sure you pick the right ones to base your decisions on. ‘We didn't have our analytics set up correctly, which meant that in the early days we were making a lot of mistakes – decisions without clear information. Those decisions weren't necessarily correct – we thought our user churn was a lot lower than it actually was, because we didn’t have the right analytics set up.’
Lesson Learned: You can never do well if you’re making decisions based on guesswork, or relying on the wrong data.
Our systems started crashing and we didn't know what to do – we lost 20% of our revenues
2. Failing To Hire For A Good Company Fit When you’re under the cosh you usually grab whatever tools are to hand, however they fit into your mitts. That’s a mistake. ‘We hired some people because we really needed some extra development help. We paid the recruiter fee, which I'm still annoyed about. We had this guy who could do the job, but he was definitely not right for the team and, more than that, his work ethic was all wrong.’
‘As soon as the clock hit 16:59 he was out the door and that’s not the attitude that we want – or any startup can afford to have. Since then we've had other people come in with a similar attitude: spending an hour-and-a-half lunch break watching Netflix, and that kind of thing.’
Lesson learned: Take your time to recruit and find out as much as you can about the personality behind the CV.
3. Asking Family And Friends For Too Much Money When you start up a new business, it’s natural to turn to those you trust for support, but this comes loaded with potential pitfalls. ‘This is only really coming to head now as an issue, but when it comes to family and friends’ money I would accept it at the beginning for the very first round, but not at later stages when the valuations steadily creep up.’
‘Managing a personal relationship if you might lose their money is very tricky. Family and friends’ money is great – we raised £18,000 initially, which paid for our servers to host the first version of the product – but just be really careful in the later stages.’
Lesson learned: Consider the personal fallout from losing others’ money.
We wasted money because we didn’t take the time to build up the skills ourselves
4. Failing To Bring Knowledge Into The Company Outsourcing key tasks can be invaluable for a startup but you should always look to build knowledge within the business, in parallel with outsourcing. ‘When we started doing marketing, we thought we should use a Facebook agency, because they know more about the platform and we thought they will be able to do a much better job than us. When we used one, however, we didn't know if the results were good or bad, because we didn’t know how the platform should work.’
‘We needed to build that knowledge base up ourselves, rather than having it always being outside the company. We wasted money there, just because we didn’t take the time to build up the skills ourselves.’
Lesson learned: Don’t wholy rely on the expertise of people outside the business.
5. Failing To Spread The Load From Key Personnel Every business has its key people, but no one should be indispensable. ‘When Vic Simha left for India, if we had someone else in the business who had all his knowledge it wouldn't have been such an issue. We have an insurance policy on him so that if something terrible happens we can hire someone else to fill his shoes, but going away for a few months isn’t covered. If there is one person in the team who, if they’re not there, things can’t operate properly, then you are too reliant on that person.’
Lesson learned: Take time to understand every facet of your business and recruit for back-up skills.
WHAT NEXT? Watch Jonny Plein and Ben Corrigan’s winning pitch on Dragons’ Den.
For free voucher codes for thousands of websites, automatically applied to your basket, visit joinpouch.com