It has been a long road but my startup has been closed for some time now and I just wanted to write a quick blog post to look back on my time working on it.
The Concept:
For those unfamiliar my cofounders and I started a company called Echo Markets to enable stock copy trading (a leader makes a trade and a follower automatically makes the same trade). When that quickly became a regulatory nightmare, we pivoted and focused on the content-sharing side of our business. Our new platform, Finstack, was a web application that allowed users to link their stock portfolios to a public profile and monetize access to it.
Now why did we do this?
There was a huge trend towards retail investing during the Covid lockdown. The Gamestop stock phenomenon was a major moment but in general individual, nonprofessional investor trading activity went way up. And these investors turned to anonymous message boards for their hugely problematic investment advice. We thought that our platform could bring transparency to these conversations and attract high-quality accomplished investors and financial influencers who wanted to add a new revenue stream. We saw our platform as the creator economy coming to finance.
Unfortunately, our concept was in many ways doomed from the start.
Active investors very rarely beat the market and over the long run often lose money altogether and consistent success is largely random.
The financial influencers we wanted on our platform who had built up followings didn’t want this level of transparency with their followers because, at the end of the day, they probably weren’t successful traders and preferred to monetize their influence in other more indirect ways.
I wish I had spent the time from a foundational level thinking through these problems more at a greater depth. The whole concept of active investing is seriously flawed and you are better off just buying and holding a diversified portfolio in most cases.
Takeaways From My Time as a Founder
In addition to our troubled concept, our execution as founders was indeed lacking. Here I just want to share some of the lessons I took away from the experience.
Leadership
Your founding team needs to commit
Part-time founders will not give your company the flexibility and development speed you need to be successful. At Finstack, we had 3 founders and really only I was completely full-time during the whole lifespan of the company. It made launching our product very difficult, made the experience extremely lonely at times, and led to tension.
Business
Pivoting is an art
We went through a pretty significant pivot when Echo became Finstack and dragged our feet while establishing our new product direction. The change was very much required but we needed to make a decision and stick to it. Think hard about the ramifications of every significant change you make but commit to it 100% or else it can lead to uncertainty.
Getting good feedback is hard
While working towards our MVP, I would spend hours talking to friends, posting in investing forums and interviewing Discord and Wallstreetbets community members. The friends seemed interested while feedback was moderately positive from investing community members (though notably any actual influencer was never overly positive). People close to you probably don’t want to hurt your feelings and people not close to you often don’t care enough to give you much to go off anyway unless your product is dramatically making their lives better.
Consumer businesses are difficult
Consumer businesses are difficult and depend on a completely different strategy that depends on some level of virality. We thought by doing most of our selling to financial influencers we would be able to circumvent most of these problems as they were very business-like. But with the lack of interest from the influencers we were pretty much stuck.
Two-sided marketplaces are just as bad
Our business was a two-sided marketplace: the first side was the influencers and the second side was their followers. That means two different difficult sales pitches. That is a huge amount of work to pull off especially when one of those sides is a consumer segment.
Engineering/Product
Enable an environment that optimizes for rapid iteration
A lot of tools we chose to build Echo/Finstack with were out of our realm of expertise. We used a lot of Python because of its abundance of financial libraries and this also led us to Django which none of us had experience with which made progress slow. Work with frameworks and tools that your team is comfortable with during the MVP stage of development. You need rapid iteration and if you don’t optimize for that your life is exponentially harder because you aren’t going to get it right on your first try.
In its infancy, your start-up’s concept should be your bet NOT the technologies you build it with
We took a bet on Vue as our front-end framework! Our team had little front-end experience and probably could have saved a lot of time working with something more established like React. This isn’t to say that all bets at an early stage are bad, but, if you make it, most of your code is probably going to be rewritten anyway so it’s not a bad idea to stick with what works well and has a track record of doing so.
A lot of little things can hurt
As our product owner, I was hugely passionate about what we were building and always looking for ways to improve. This led to new feature suggestions which made me look unfocused and killed morale by adding more hurdles to our already slow MVP development. Don’t overcomplicate things! Your startup, in all likelihood, needs to do a small thing very well. This doesn’t mean it will be easy to identify what that thing is and there will be constant iterations at this stage but secondary features aren’t going to completely change your product experience.
Conclusion
In conclusion, the startup journey, while challenging, provided invaluable lessons. Navigating the intricate landscape of entrepreneurship requires a deep understanding of the market, a committed team, and a willingness to adapt. As we close this chapter, the experiences and insights gained will undoubtedly shape future endeavors and contribute to the ongoing growth and learning in the ever-evolving startup ecosystem.