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Lessons Learned After Shutting My Startup, Following A Six-Year Struggle

On 12 January 2015, Getwear, an integrated custom jeans company, processed its last order. After that, the company shut down. Despite coming up with a unique custom production process and outstanding jeans, we didn’t achieve much success. Several months — and a lot of discussion and dissection — later, I figured out why. In this article, I’m happy to share a few insights, mistakes and lessons learned, so you know what to watch out for in your projects.

It all started back in 2009, when I was finishing my marketing studies in Italy. I read a well-known article by Tim O’Reilly, “What Is Web 2.01,” and was stunned by an idea of bringing the concept to the world of “real” objects, through mass customization. Enabling users to make their own products should have transferred the power to make design decisions from the hands of the few to the hands of the people — or so I thought.

With that revolutionary idea, I approached my classmate and cofounder-to-be, who had an extensive experience in clothing production. He confirmed that producing customized clothing on a mass scale was possible.

Our professor, a former top manager of Levi’s, gave us the green light, our friends told us how cool our idea was, and we embarked on a six-year journey of uphill battle and lessons learned the hard way.

Getwear was founded on five assumptions:

  1. There is a demand for unique or unusual jeans.
  2. People want to design their own clothes.
  3. People would get hooked on customizing their own clothes and buy what they have designed.
  4. People would gladly share their designs on social media to show what they’ve designed and to earn commission.
  5. Social sharing would attract new customers, and the cycle would repeat.
Getwear's website2
Getwear’s website. (View large version3)

All businesses are built on assumptions, but basing a business model on five untested ideas, each one being critical to the success of the company, was just too much.

The circumstances that made us finally close were far beyond our control, but we paved the way by not doing things right. See for yourself.

We Moved To Building Too Fast, And It Took Us Too Long Link

Believing in “Build it and they will come,” we skipped proper research and validation. After all, the idea seemed so wonderful that it was hard to comprehend how it could fail.

We had zero experience with web development, but we managed to raise money within a month. Naturally, we decided to get an agency to build everything for us. They were supposed to follow a set of mockups that we designed ourselves (see below); now I think those folks had a fun time working on it.

Early mockup of Getwear's website4
Early mock-up of Getwear’s website. (View large version5)

To make a long story short, in a year we launched with a custom-coded website costing more than $100,000 — that was in payments to the agency and not accounting for employee salaries or the living expenses of the founders.

Along the way, we decided to narrow our focus, cut up-front costs and launch with just one product category, the one that would yield the highest profit: jeans. Surprisingly, the production costs of one pair are not drastically different from those of a quality hoodie, yet people are accustomed to paying twice as much for jeans! Besides, denim can be customized to a great extent both in decoration and cut.

By the time the website was ready, we had a fully equipped production office in India.

We Anticipated A Viral Loop Link

You can see that the growth and development we anticipated relied primarily on a viral loop. Going viral is something that many entrepreneurs hope to do and never achieve, while others who do achieve it never dreamed they would.

We believed that users would enjoy designing jeans online and would gladly share their designs on social media, attracting new visitors to our website. That didn’t work out. While we had great average time on site of 3.5 minutes, users were simply not sharing.

In short, Getwear didn’t succeed because the project didn’t go viral. This was, in part, because the demand for custom clothes was more limited than we had thought.

We Had No Market Strategy Link

Since the company’s launch, we pivoted several times, trying to find a niche where we could grow. The first pivot was to give up on the US market, and here’s why: US jeans tend to fall into a couple of categories:

  • mass-produced jeans that cost between $15 and $40 (for example, Wrangler, Levi’s, etc.);
  • artisanal or designer jeans with a strong maker’s story, costing upwards of $150.

With a price point of $99 for our standard jeans, which were made in India, Getwear was out of place compared to the artisanal jeans that are handcrafted in the US (or Japan) by rugged, tattooed lumbersexuals. And we couldn’t compete with the mass-market prices of brands like Levi’s or Lee either. Severely cutting our prices wasn’t an option, because the business would cease being profitable. So, we pivoted. Again.

We Jumped Into Things Without Thinking Link

In this desperate situation, we decided to explore the overseas Russian market, where we had always had casual sales, despite the lack of a single Russian word on the whole website.

Because we hadn’t taken time to experiment, we decided to spend our money on the channel with the highest net coverage, without really thinking about our return on investment. Advertising on the biggest blog, run by the most famous Russian web designer, Artemy Lebedev, paid for itself within a couple of days and led us to believe we might succeed on that side of the ocean.

By that time, it was becoming clear that custom-designed jeans weren’t really interesting to anybody. Perhaps the fact that none of us had ever tried to order custom jeans ourselves should have set off alarm bells. So, we decided to refocus on quality, craft and perfect fit, which we had considered to be secondary values up until that point.

Getwear’s factory6
Getwear’s factory. (View large version7)

We Had No Engine Of Growth Link

Actually, we did, but it didn’t fit our business model. According to Eric Ries, author of The Lean Startup8, an engine of growth is sticky if the company lives and grows by a high percentage of repeat orders and a very high customer lifetime value (LTV).

It’s a great mechanism, and it works for companies that sell, for example, luxury goods, for which the difference between cost and retail price is high. For brands and artisans that produce goods that appeal to or are accessible to a limited audience, this allows them to live off a relatively small customer base.

Unlike them, Getwear was positioned in the mass market, and the amount of money we made on each pair was relatively low. We had to constantly acquire new customers to keep the wheels turning.

Because we didn’t go viral and there was no established demand for custom jeans, all we could rely on in the short term was paid user acquisition — that is, advertising. We tried almost everything, from smart content marketing to posters in subway cars.

Guest blogging (paid, incidentally, because that’s much more common on Russian websites) and Facebook newsfeed ads worked really well, but both channels quickly hit the ceiling (we knew we would eventually run out of popular blogs, and Facebook’s market share in Russia is pretty small).

While we managed to get great numbers (almost 6000 clicks, with a clickthrough rate of 4.36%, a cost per click of $0.13 and a conversion rate of around 1.2%), the strategy didn’t take us far and ceased to work quite quickly.

Our Facebook statistics9
Our Facebook statistics. (View large version10)

Another strategy we tried on Facebook was promoting our original content (for example, a blog post on our production unit). Unlike traditional ads, this brought great organic reach (people were sharing the content), but the conversion rate was twice as low. Needless to say, soon enough we reached a significant proportion of all active Facebook users in Russia.

Russia’s mighty Facebook rival, VK — which has more than twice as many total users11 and probably many times more active users — didn’t work for us. It seems that folks there are too preoccupied with cats and funny images to bother about custom jeans.

Our Last-Ditch Effort Fell Short Link

When nothing worked, we didn’t suspect that anything was wrong with our fundamental assumptions. Instead, we decided to boost the appeal of the product. So, we took one more leap by fully redesigning the website (this time in-house) and creating some beautiful hipster lookbooks12 (we do sell garments, after all).

To make sure that the website design didn’t cause problems, we hired a specialist in conversion-rate optimization to work on our sales funnel.

By the fall of 2014, it became clear that replacing the computer-generated images of jeans with properly photographed ones, adding a catalog of pre-designed jeans and running multivariate testing weren’t leading us to anything. With a conversion rate of only 0.6% and a thinning acquisition channel, our growth was stagnant.

Getwear’s back end was built for a level of sales and growth that we never reached.

Everything was clearly structured. We’d built a smart production- and order-management system, and we’d integrated with intelligent pattern-making software, allowing custom patterns to be created in seconds.

This all required a lot of maintenance and R&D (Research and Development), which forced us to have qualified engineers on staff, thus increasing our burn rate. The level of sales we reached (and were struggling to increase) meant that the company was profitable only in “good” months.

The Nail In The Coffin Link

We had six in-house engineers and four customer-support representatives to maintain an outstanding level of quality and service. A year ago, we decided to cut costs, halt all R&D and lay off some of our employees in order to break even.

Unfortunately, political and economical realities hit hard: Following the political unrest in neighboring Ukraine, Russia’s annexation of Crimea and the collapse of the currency, Getwear jeans became twice as expensive overnight for customers in both countries.

By the end of December 2014, our financial results were seven times worse than the previous year’s. In 2013, we were selling $3000 worth of Christmas gift certificates a day — last year, just a couple in a whole month.

Getwear was dead.

Reflections Link

In many ways, Getwear’s story was an attempt to revive a golem. Most people, whatever their social group or сlass, don’t see the need to design their own clothes. Getwear was doomed from day one.

We started listening to user feedback only when we were already up and running, and acting on it didn’t change much. What sense would adding color and fabric options make if people simply are not interested in purchasing custom jeans online?

Made in India13
We started listening to user feedback only when we were already up and running, and acting on it didn’t change much. (View large version14)

Customization and “consumer co-creation”, as it is formally called, is no replacement for a strong, established brand. Even a strong brand can fail trying it. As of now, there is no successful online custom jeans business. INDi Custom Denim, which was run by former top managers at Levi’s, ceased operations a year before us; two smaller startups, OriJeans and Tribe Jeans, sank in 2014; and a Kickstarter-funded project15 (from four years ago) hasn’t even gotten off the ground.

Levi’s shut down Original Spin, its own custom jeans operations, in 2004 — probably for good reason.

Faulty Assumptions Link

The assumptions on which we built our business were wrong, and we didn’t take notice. We were not honest with ourselves, and we ignored negative feedback.

We wasted a lot of time and money on creating a beautiful product that nobody needed.

Getwear had amazing customer loyalty, a ton of positive reviews and repeat sales, but we had no market to grow on and a tiny number of potential customers. While the customer lifetime value was potentially very good, people do not purchase jeans — especially good-quality ones — frequently enough to fuel sales. We struggled to find enough potential customers to keep the thing going.

Lean startups teach us that businesses work either on high volume and low margins (think mass production) or vice versa (think designer clothing). Getwear was meant to be a unicorn — a high-margin and high-volume company. In hindsight, we should have known that ignoring common sense usually leads to failure and not a $1 billion valuation.

What Else We Could Have Done Link

This story is not about failing to jump off a sinking ship fast enough. It’s about a failure to understand why the ship is sinking.

One of the best ways to validate a business idea is by preselling the product. The failure of crowd-funded custom jeans projects shows that it’s not that simple; to validate, one has to presell to the same target audience that the mature product will attract. If I were to start over, I would not head to Kickstarter, but rather would talk to people to learn why they purchase jeans of certain kinds and what weight a brand name carries in their decision. Knowing that, I’d most probably have come out with a better idea for my first business.

When Getwear was done, we founded a new startup, Chatra, in the crowded space of live chat software for websites. I don’t know if it will succeed, but at least we are making a tool for something we are very good at (customer support) and in a market with existing demand and strong competition, showing that the potential for growth is there. And we live and breathe customer development.

Takeaway Link

We believe that a company becomes successful usually not because of a revolutionary product, but because of micro-innovations. Doing something that in some way is better than others will give you a much higher chance of success than inventing a new way of doing something.

I hope some of you can learn from our mistakes.

Questions? Let me in know in the comments section below!

Summary of Lessons Learned Link

  • Do customer development before you start. Don’t start building before you have a clear understanding of your customers. “The Entrepreneur’s Guide to Customer Development16” is a great book on that.
  • Don’t aim to revolutionize something. Aim to make something better.
  • Validate your fundamental assumptions as early as possible, building a minimum viable product. Don’t spend time designing detailed mockups, as we did, especially if you are new to product development; you risk wasting a lot of time and money on features that are not yet required.
  • If the minimum viable product does not work as it should, don’t blame it. Check your initial assumptions instead.
  • Treat the cause, not the symptom. When assumptions are invalidated, don’t try to change the facts — try coming up with new assumptions instead.
  • Let it die. Working on a project that doesn’t move is painful and depressing. You can trick the media and investors into thinking that it’s going fine and that you are almost there, but don’t lie to yourself. Never ignore your gut.

(vf, ml, al, jb)

Footnotes Link

  1. 1 http://www.oreilly.com/pub/a/web2/archive/what-is-web-20.html
  2. 2 https://www.smashingmagazine.com/wp-content/uploads/2015/10/01-gw1-opt.jpg
  3. 3 https://www.smashingmagazine.com/wp-content/uploads/2015/10/01-gw1-opt.jpg
  4. 4 https://www.smashingmagazine.com/wp-content/uploads/2015/10/02-gw2-opt.jpg
  5. 5 https://www.smashingmagazine.com/wp-content/uploads/2015/10/02-gw2-opt-small.jpg
  6. 6 https://www.smashingmagazine.com/wp-content/uploads/2015/10/03-factory-opt.jpg
  7. 7 https://www.smashingmagazine.com/wp-content/uploads/2015/10/03-factory-opt.jpg
  8. 8 http://theleanstartup.com/
  9. 9 https://www.smashingmagazine.com/wp-content/uploads/2015/10/04-fbstats-opt.png
  10. 10 https://www.smashingmagazine.com/wp-content/uploads/2015/10/04-fbstats-opt.png
  11. 11 http://www.russiansearchtips.com/2015/01/top-social-networks-russia-latest-numbers-trends/
  12. 12 http://getwear.com/explore/men-2014-2015/
  13. 13 https://www.smashingmagazine.com/wp-content/uploads/2015/10/05-made-in-india-ink-opt.jpg
  14. 14 https://www.smashingmagazine.com/wp-content/uploads/2015/10/05-made-in-india-ink-opt.jpg
  15. 15 https://www.kickstarter.com/projects/sammiller/custom-fit-jeans/description
  16. 16 http://www.custdev.com/

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Yaakov Karda is a co-founder of Chatra.io and a slow coffee enthusiast. When not brewing or working on the startup, he helps his wife with a jewelry business or explores Tel-Aviv on a bicycle.

  1. 1

    Amazing you went ahead and dropped all your incredible failures for us all to read. Thanks for sharing, this is very useful for companies who want to start out without research nor any audience.

    26
    • 2

      You are welcome, Jasper! Great that you liked it!

      8
      • 3

        Dear Yaakov, you know that I had some doubts about the distribution strategy (web and support of traditional retailers) and I do appreciate the way in which you are sharing the lesson learnt. I still believe that Getwear was an interesting business concept. It was not 100% new because other big manufacturers tried to customize their offer on the point of sale. The pricing strategy was perhaps crucial, particularly because you changed it as soon as you faced selling problems. I still belive that customization is a strong trend (look at the new VIP service in Ralph Lauren showroom and flagship store) and also that jeans could be positioned at a high level (getting out from mass market); a good example being Jacob Cohen (the brand being linked to the name of the taylor who developed the Levi Strauss business, therefore taking advantage from the heritage of the product category).
        You tried and your self-criticism is even too strong; anyway it represents a “gift” to everybody will read and learn from it.

        0
        • 4

          Thanks, Mario! I believe that it isn’t possible to base a brand on customziation. Customization possible can provide added value for an established brand, but can’t be a cornerstone of the brand building.

          5
          • 5

            Tagalog, thanks a lot for the sharing, and the insight that customization in itself would not support a new brand. So how about building a business on helping existing brands provide customization service to their customers? Just like what people do with CRM and ERP?

            0
        • 6

          It might be worth researching companies outside the jeans industry. For example Timbuk has been very successful with their messenger bags and you can also customize them: http://www.timbuk2.com/customizer

          0
  2. 7

    This is a fascinating case study, thanks for sharing and sorry to hear it ultimately didn’t work out.

    3
  3. 9

    “Don’t aim to revolutionize something. Aim to make something better.”

    It takes maturity to understand the above. You had to go through a lot of pain in order to do so. You were indeed honest to discuss about all the negatives. I’m sure there would have been plenty of positives too, for you to last even this long. Thanks for sharing!!!

    7
  4. 11

    I’m sorry your company didn’t succeed, but by discussing what happened in such a clear, concise manner, I’m sure this will help others who want to embark on similar ventures. And I hope the mere act of writing this down was cathartic for you.

    3
  5. 13

    “Never ignore your gut”

    Thank you for sharing your story, It’s incredibly insightful and serves as a cautionary tale to many who stand in their own way. When pivoting won’t cut it….

    3
  6. 15

    This is the type of articles I enjoy reading, not because of the failure, but because of the self-pointing honesty of it all. I can learn more from people who take full responsibility for the success or failure of their endeavors than from those in constant denial.

    Actually, I am still surprise there is not much of an audience for custom jeans. I guess I’m stuck in the’80s. When you mentioned that on VK people were more interested in cats and funny images, I wonder what may have happened if you displayed some of your product with cats and funny images on them.

    Still, your Summary of Lessons Learned is so helpful. Points 1 and 2 are so on-the-mark for me. Point 4 (check your assumptions) is the one that struck home for me. Point 4 requires a lot of maturity.

    The fact that your experience is so personal, Point 4 will surely help anybody, especially those new to startups, with paying close attention to their own actions and biases.

    I’m not one for fake emotional connection, so all I can say is Thanks for sharing your story because I definitely learned a few things from it and also reinforced some conclusions I have already made.

    2
    • 16

      Thanks! Showing jeans with cats and mems could have generated some likes, but not purchases I believe :—) My hypothesis is that when people browse through cats and funny images, their minds go into a vegetative state — no chance to sell something that requires consciousness.

      1
  7. 17

    Thank you for sharing your story. Yes, doing your market research would have been helpful because I think the most important thing you would have found out, in the very beginning, is that people (ok, probably mostly women) need to TRY ON jeans before buying. Even if Macy’s is having a big online sale on Levi’s, and I know what exact pair and size I wear, I still don’t buy them because I need to try them on. I can buy anything else online – even shoes – but jeans…. I need to see how that backend looks first. :)

    0
  8. 19

    Thanks for sharing your story. I am just starting out in my business and this has made me do some real thinking again.

    5
  9. 21

    Stephen graphic

    November 26, 2015 7:12 pm

    “Don’t aim to revolutionize something. Aim to make something better.” This resume the whole article. It is better to copy something and make it better than to invent something where there is not much need. This is an honest and great story. thanks for sharing!

    2
  10. 23

    Kamal Bharakhda

    November 26, 2015 8:53 pm

    feeling like in Institute

    thank you so much for the wise words and sharing heart of experiance.

    hard to swollow but…. truth is truth.

    thank you again. well please provide your email address if we wish to contact u for any suggestions or consultancy.

    kamal.9328093207@gmail.com

    -1
  11. 25

    Thanks Yakov! This article, your unfortunate experience with your first business, serves as validation for me and I will be sharing this with others I know that need to know of your experience. As a UX designer, I am all to aware that research is extremely important. Thanks again for bearing it all here for others to learn. Much appreciated!

    0
  12. 27

    Thanks a lot for sharing. Awesome article.

    0
  13. 29

    Scott Richardson

    November 27, 2015 4:11 am

    Fantastic read. Thank you for sharing your experiences. I think a lot of budding entrepreneurs will take a lot away from this.

    0
  14. 31

    Greate Article. Just as a side note, Eric Ries also states in The Lean Startup that paid user acquisition is a big red flag. Your story conforms with the book, it only disagrees on what is a “_high_ percentage of repeat orders” and a “_very_high_ customer lifetime value”.

    0
  15. 35

    Very interesting read! Thanks for sharing.

    0
  16. 37

    “There is a demand for unique or unusual jeans.”
    Based on what ?…

    As you stated ” Perhaps the fact that none of us had ever tried to order custom jeans ourselves should have set off alarm bells.”

    0
    • 38

      Based on our distorted perception, of course ;—)

      0
      • 39

        There was no mention of focus groups in the article. Did you have people test out the website before launching publicly or create user stories/personas? Usability issues may have kept customers from completing the ordering process – out of frustration or confusion of the UI.

        0
  17. 40

    Thanks for sharing!
    However, why haven’t you tried to switch the business model of customising jeans to a classical one: having your own blue jeans line or maybe a more extensive clothing line?

    I mean you had the whole infrastructure, why not give it a last try? Of course, you would have had to come up with something the differentiates you from all the other blue jeans companies. And yet, I believe that if marketed well to the right audience it might have worked.

    0
    • 41

      Business model was fit only for direct online sales, regular mass-production is a different business altogether. Even our production facility was not fit for that. Besides, we plan to earn on direct selling, i.e. eliminating the middleman. Your proposal would require to introduce one and it would have effectively killed most of the profits.

      0
  18. 42

    Thank you Yaakov! we are in the process of growing a startup and it is really hard as we have made the same mistakes. However, I believe we still have time to turn things around and re-analyze the market and how we can improve.

    0
  19. 44

    Thanks for sharing.

    I am curious to know why you had huge R&D cost and 6 engineers on staff once the platform was lunched?

    0
    • 45

      Hey Thomas, thanks for your question. We had a very sophisticated back end system (production & order management), website and customizer (configurator), pattern making software all running on different technologies, so we needed to keep separate people for each component. Besides, we were tweaking it constantly (not only fixing bugs, but preparing the system for the bigger volume of orders that we expected to receive in the “near future”) – Getwear never meant to be a small business, we planned to sell big and were preparing accordingly.

      0
  20. 46

    Hi Yaakov,

    Thanks for sharing your case study. I feel that you have not dine research but again no one was there to provide you proper guidance kf web technology. Any way better luck.

    Regards,
    Pankaj

    0

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