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BONUS EPISODE: The Comeback Kids (9 Startups That Battled Back from the Brink)
14 minutes Posted Apr 13, 2021 at 5:00 am.
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] Is there anything better than a comeback story? An underdog? David slingshoting Goliath? For me: no. How could there be?  I’m a serial founder failures are all but promised to me. Yet I keep coming  back from more. And I’m not the only one. This podcast is full of comeback kids, founders who’ve run up to and occasionally over the brink of failure only to bounce back build something better. Today we celebrate them the only way we know how. I’m Louis Beryl and this is The Startup Stack: Rocky-Style. 
] We started out of what we call a failure. So we’ve actually been in tech most of our careers, but all the founders and yeah. Uh, we had the startup that we went through sort of YC fellowship with and that didn’t work out. But what we had realized as part of that is that we love working together and that we’re pretty good at growth in general. Most of our backgrounds been either in marketing or product and growth is the combination of those two things together. So when that company was failing, we sort of like decided that, hey, we could do this for other companies and start focusing on helping. The different sort of sectors in software that we’re interested in
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] Come back kid number two is Anthony Armandariz of the design agency Funsize. Anthony learned that success can be disorienting. Here’s his story back from the brink. 
] Some of the more challenging things were like defining our own roles. As you might imagine things change when you go from two people to four people, to eight, to 16, to 32, which is like where we’re at now. And you have to find a way to scaffold and you have to find a way to stay connected to what you love doing, but also what the needs of the business are. Uh, the hardest parts for me were honestly coming to terms with my identity. Am I a designer still? Or am I a salesperson? Am I an owner? Am I CEO? Like, what am I in? How do I define like who I am and, and making sure that I’m fulfilled.
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] Coming in at number three is Jess Mah, CEO of accounting fintech firm inDinero. Jess’s comeback lesson? Big scary problems have to be acknowledged, even and especially when it hurts. 
] I try to be super authentic about it because running a business is not easy, right. For us. I think our first big challenge when we first started the business, and this is widely shared about if you just do a search for an a now our first. Business model just didn’t work out. We were building a software that was a finance dashboard, really targeted for sole proprietors. And a lot of them just weren’t willing to pay for our solution.
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] Comeback kid number four is Mike Morell of the executive  recruiting firm, Riviera Partners. Mike’s lesson: Failure can teach you who you are and test how far you’re willing to go.
] The biggest challenges was we were trying to do business in the Silicon Valley. Uh, we were based in Santa Monica and we had no reputation. We had no brand. We had no tombstone, so no, you know, successful searches. So the way I put it, as, you know, we were doing less than ideal searches for second, third, fourth tier kind of firms, because that’s what we could get. And so we always said to ourself, we have to kind of work our way up. We have to do, you know, if we’re doing average deals for average investors, we want to do good deals for average investors and then average deals for good investors, and then ultimately good deals for good investors. And that was really kind of our early North star, but we were still geographically isolated down in LA and we weren’t just, weren’t getting shots on goal with the VCs up in Silicon Valley.
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] Comeback kid number four is Swapnil Shinde, CEO of AI-powered finance firm Zeni. Swapnil’s lesson: Failure can be a great teacher. 
] One of the advantages we have is that a lot of those challenges were the same but the vertical was different. So at Mezi we probably managed travel for a million travelers in the first two and a half years. And we had travel agents supporting that on the backend. So the human operation was ah pretty human intensive but at the same time we had to build a technology that could balance the incoming requests and automate them. In a way that we could scale as a company. So I think that part remains the same. So that challenge remains the same. The good news is that we have been there before and we have done that and solve that. 
]
] Comeback kid number six — he’s British so maybe we’ll call him our comeback chap — is Matt Jonns, CEO of the accelerator uCreate. Matt’s lesson: Admit when things get tough. It might just save your company.
] It was, it was really tough. It was really tough. The first couple of years were really, really tough. The hardest thing was getting people to, to go ahead and for projects when you don’t have any, you don’t have any case studies, you don’t have any real expertise. And frankly, it’s all making it up as you go along. And then it was just about networking. It was about just meeting as many different people as possible. Try and do the best possible job we could do on the ones that we had already. Um, and we had some really hairy moments, so much run out of cash numerous times, you know, days away from running out of money at the start to literally things like asking certain of our early founders to pay a couple of months upfront. You know look can you help us out? We’re helping you out. Can you help us out, you know, winning projects and ask, asking them to pay 50% upfront, literally as tight as that, you know, we weren’t taking very much money at two out of the business. We were just surviving what we can.
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] Comeback kid number seven is another Matt. Matt Pru of the data science agency Stackmattix.  Matt’s lesson:  When things don’t go the way you expect them to adjust. Be warned, egos kill startups.
] I think being too ambitious out of the gate, we figured we would just sign fortune 500 clients off the bat, just because we had experienced working with large customers of that size. But I think despite our experience, we need to develop a brand and reputation for Stackmattix itself. And so that’s been the biggest focus for the business is to show that. We can drive great results and do that at increasing scales. And so at first that’s what we did. We went after very large clients and a lot of those sales processes didn’t materialize and very quickly, what did materialize is when we reached out to founders in our network that we already knew who were able to activate us more quickly and to give us a lot of autonomy to drive results.
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] Comeback kid number eight is Pawel Solyga of the software development firm Tooploox. Pawel’s lesson: When investors give you lemons, make lemonade.
] I had this idea for a quiz game. Very much similar to HQ trivia if you, that was eight years ago. So age is actually the best timing for that, but we started working on it. I convinced two other friends to join me and talk to work on it. I left the full-time job and with some savings, we started working on our startup and we always thought about creating a company where, uh, that would be like more like an umbrella organization where we would have multiple products and that will be one of them, but that’s how we started Tooploox and Crispy. That was not the game I was supposed to be a first product. So we run out of money pretty quickly. And at this point we were like, okay, so what do we do? And there was a bunch of folks in my network that were reaching out to us to help them build mobile apps. And that’s actually how we started doing services.
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] And that brings us to our final comeback kid of the episode, Greg Buckner. Greg’s software development, data science and design shop AE Studio shows us that great startups sometimes rise from the ashes — and that failure isn’t always an end point. 
] Interestingly AE actually already existed at that time. And he had come out of the, uh, ashes of, uh, my business partner Judd and my other partner, Ed their previous startup. So they had a Startup in like the food delivery space and basically, um, that startup head had failed for some interesting reasons, but they wanted to keep everybody on staff. And so they, um, they were operating the company as an agency, but nothing like kind of what AE exists as today. So I met Judd and they brought me in as a partner in the business and like the business just started growing. So we kind of see it as like a refounding almost at that time, the company that exists today is like, you know, much different than what existed then. And that idea of human agency is kind of at the core of everything.
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] That’s it for this week’s special Rocky-style episode of The Startup Stack. Thanks for joining. And remember: 
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This week we give you nine stories from The Startup Stack archives about startups that looked failure in the face and lived to fight another day. 
These companies have the right stuff. Sweat, grit, smarts — & adaptable business models. 
Join us in learning from their lessons.
“Is there anything better than a comeback story? For me: no. I’m a serial founder! Failure is all but promised to me — and yet, I keep coming back for more.”
-Louis Beryl
The Startup Stack’s Host
Louis Beryl
CEO, Co-Founder of Rocketplace
Rocketplace is a curated marketplace of high quality professional service providers. A 3x founder, investor, and board member, Louis began his tech career as a partner at Andreessen Horowitz. When he’s not working or podcasting, Louis enjoys cooking for his family. His pizza, he’d like you to know, is incredible. 
Full Episode Transcript
MUSIC INTRO [
Louis Beryl: [
I could have been a contender! 
Let’s get into it. 
Come back kid number one is growth marketing heavyweight and Pearmill co-founder, Nima Gardideh. Nima’s Lesson? Failure can teach you who your friends really are.
Nima Gardideh: [
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Louis Beryl: [
Anthony Armendariz: [
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Louis Beryl: [
Jess Mah: [
So we ran out of all the funding we had. Raised about a million dollars and change and started completely from scratch and bootstrapped the in and out that we have today, which is full service accounting and tax solution for businesses a few years into doing that. So probably 2015, 2016. We just scaled out way too quickly. I mean, I hired. Dozens and dozens, uh, that’s your sales reps and accountants and people who just weren’t cost-effective we were just burning cash and we were getting good top line growth, but it was just so unprofitable, the type of growth we were getting. And my thought was all right. If we just grow like this, we could go out raise money to cover up those problems. I didn’t consciously think about it that way, but I thought we’ll just optimize the model and do a better job over time. You know, it kind of dawned on me that I didn’t want to run a business that way. So we had to do a decent sized layoff. We probably laid off 40 50 people at that point got to profitability almost immediately. And it kind of taught me this lesson of really understanding the underlying, not just longterm profitability of hiring salespeople, but also what’s the cashflow.
MUSIC INTERLUDE [
Louis Beryl: [
Mike Morell: [
In 2006, we made the decision to move up to the Bay Area. So Ali and I sold our houses, burned burned the boats and moved up to Silicon Valley. And we bought out our third partner at that point because, uh, he wasn’t interested in moving up this way, um, at that point. So it was two of us and I think we brought two, two staff from LA. Today, we’re at about a hundred people across the country. Uh, we’ve done searches, executive searches and about 122 zip codes.
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Louis Beryl: [
Swapnil Shinde: [
But now we are applying it to the finance vertical, which is pretty new for us. So, and it’s also pretty complex. The good news is that the data that we receive is pretty structured compared to travel vertical. So we have that running of data being available to us from all the different sources structured in a way that makes a lot of sense. 
MUSIC INTERLUDE [
Louis Beryl: [
Matt Jonns: [
So I think, uh, you know, people can say that there’s amazing plan, there’s amazing process, but at that start when you’re just sort of, you know, hustling for a better word and just trying to just get wherever you can and, and those early stages, it’s just sometimes a bit of luck but working really hard as well, and doing a really, really good job and being transparent with your clients and, you know, Being honest and saying, look, you know, this isn’t quite right now. This is what we need is can you help us? And you know, usually they work, but I’m really glad to say that, you know, after the first 18 months to two years, we really sort of worked out what we were doing.
MUSIC INTERLUDE [
Louis Beryl: [
Matt Pru: [
And so we built up a big base of clients, uh, that were smaller. And over time we’ve been taking on larger and larger projects and we’ve been working through those longer and longer sales cycles, but that was the biggest challenge is just getting the ball rolling.
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Louis Beryl: [
Paweł Sołyga: [
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Louis Beryl: [
Greg Buckner: [
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Louis Beryl: [
It’s not about how hard of a hit you can give. it’s about how hard you can get hit and keep moving forward. I’ll see you next week folks.
MUSIC OUTRO [
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