Update 2012-09-03: We’re online with our startup now (yay!), so I can disclose the innovation in our business idea now. See the update at the end of the post!
This is the unfinished story of our little startup company. Just as real life, it’s pretty chaotic. And it’s a story about how the EU nearly helped us get that company going, but in the end … well, read for yourself.
Finding a business idea. We’re roughly at the brink of 2010. I had been self-employed for two years by then as an IT freelancer, and by then had seen all the precarious work and exploitation going on in that area. And I didn’t want to proceed writing fixed-price offers for developing software that the customer had no real idea of yet … . So I talked with a friend of mine who felt likewise, and we agreed that, in adsence of vitamin C contacts to big business for getting better contract work, developing an own product would be the only option to sustain the freedom of self-employment yet start earning some bucks … . We also agreed that, where money flows, you can grab some money (… urgh … not my style of thinking normally and it hurts my open source soul to write that but, you know, these “economic necessities” in the system that we have). So we wanted to do something about trade. The innovative portion came in when I had to repair a digital camera for another friend at that time, and found it quite easy and fun to do, and spare parts were also cheap by buying other defective items. So the initial part was that we set up a site that bought defective cameras from all over Germany, and could immediately hand out prices for all the different models. We later extended that “remanufacturing business” idea to other kinds of electronics, and not just defective items but also all unused / old ones, and currently work on another extension of the idea (which I cannot disclose until its launch …). But the basic idea stayed the same. And with respect to money, our initial experiments were promising enough to keep us on that path … . However, IT development work beyond that prototype turned out to be quite much, and we had to see how to support ourselves while completing that development:
EXIST? Working in the daily electronics remanufacturing to earn our bucks and at the same time doing programming for improving our prototypical software proved to be quite too much, and we made slow progress. And by the start of next year (2011) we were in contact with two young guys, one a MBA person just finishing studies, the other a young graphics designer, who were interested in joining our entrepeneuring startup. That was good luck, as our MBA person was already in contact with an entrepeneurship support cluster and also a professor from university who was eager to support startups done by students. The entrepeneurship cluster offered help to develop a business plan that would get accepted for an EXIST business startup grant, co-financed by Germany and the European Social Fund. So we had initial meetings to figure out our exact business strategy and such. and it looked all quite promising.
Real life cuts in. But things are not always smooth in life. The MBA guy in our 4-person team finished university successfully and decided to move from Munich to our area for being full-time member in this startup and to write the business plan for EXIST. But then shortly after, his girlfriend finished the relationship and he was … devastated. No longer capable or motivated for the risks and workload of a business startup. We did of course allow for the retreat, but together with that our chances to get a EXIST grant went to zero. As we no longer met their “at least two founders with a university degree no longer than 5 years back” requirement. In addition, my own computer science degree was maturing to be 5 years back in summer 2011, so we even had no time to find a replacement for our MBA person (finding business partners for yearlong co-working really takes time …).
Three F funding. We’re still proceeding with this startup, and since two or three months are always just two weeks before the release of our new and shiny, innovative recommerce platform However, without the 100k EUR EXIST grant, it has been a hard ride. Funded by the 3F: family, friends and fools. (And ourselves of course.) We’re grateful for the support and for being still in business, but it’s all quite the limit of what you can fund for by private means and we can’t go on like that much longer. But put another way round, there are times where your startup has proceeded beyong the point of no return. I certainly do not want to have wasted 2 years of life on a business idea that I abandoned just before going to the market …
Note to entrepeneur funds. Funding programs like EXIST are great, but as in our case, too rigid to be a help to any but the most lucky startups. Read a good book on web startups or the like, and they show how a startup is about developing the very business idea in some area, by doing experiments and pivoting as required. We have changed our idea how to make money in recommerce like 5 times (I shortened it up above …). And then you’re required to write some business plan with numbers what to earn in what year … it’s simply some old-school nonsense, not for the networked age where a startup mostly pioneers a market in some way. And on top, there are these rigid requirements (see above, finally blocking us) and at the other side these rigid grant model setups. (On a side note, we also were not eligible for another, smaller German entrepeneur support program informally called Ich-AG because we had been registered as self-employed before getting on the idea to do this startup together … sigh.) What I’d like to see is a group of experienced mentors who are eligible to distribute some funds to startups at will and as they see fit; with peer review against corruption and all, but distinct from the rigid support models that failed to support us.
Wish us good luck, we’re going online in … two weeks
Update 2012-09-03Thought I'd let you all know some good news about our little startup's progress: we're really really online now :-) Our product description page is this (in German):
Only for the German market initially, sry for the language barrier. So here’s our idea in a nutshell: while there are many buy-in sites for used stuff already, like for example, gazelle.com, these are always larger companies which develop their own product catalog and software for the buy-in process. Our new approach instead is to provide that buy-in software as a product to a multitude of independent, new remanufacturing companies. Which could be really small, like a student wanting a side income, or people working from their homes. Like the one we operated ourselves before focusing on the software.
As far as I can see, a network of small independent businesses is quite typical for how Edgeryders folks would organize the economy if they had a say on it. And it’s not by chance that we chose such a strategy for our startup, rather than trying to become a big(ger) remanufacturer with employees ourselves. Personally I much dislike the employee role, so I don’t want to give others that treatment either …
As always, feedback welcome: Do you think ours is a viable approach to tackle the problem of financial independence for us, and for those who use our product to become self-employed? And, how does it all fit into the context of difficult / insecure economic times like these?