FROM LOGISTICS TO STARTUP WORLD | MLOG
Entrepreneurial lessons learnt from my first SaaS startup
If you are a SaaS business owner, then you know exactly how it feels to build a business from scratch. It’s not a walk in the park, and if so it is a lightless and notrious one. Thus, in this case study, I will be revealing my lessons taken from that journey.
Thanks to SGH (Warsaw School of Economics) initiative MBA for Starups I had a chance to present the story of Mlog for a broader public. You can watch my part of that event on the video above. The whole video with presentations of all speakers is available here: https://youtu.be/4GZSiH4JQnU
Introduction to Mlog
Mlog was my first serious business endeavor that helped me understand how much I do not know.
The main idea was to develop a platform that could save from 5% to 15% of the overall transport and logistics costs for ocean freight companies. It did this by gathering and analyzing varied market prices before giving the best recommendation.
The photo source: a screen from a Mlog sales presentation
How I started Mlog
I started Mlog in 2014. I can say it was always my dream to own a company, earn the name ‘industrialist,’ make my family proud, and my hometown famous.
After analysing or starting various businesses, such as a gift shop, a streetwear brand or a Christmas tree online store, I settled on the logistics niche.
My education and professional experience was tightly connected with logistics and supply chain management. When studying for my MA, my thesis was on supply chain management. In addition, I worked for small logistics businesses as well as big corporations. The Mlog idea was a solution to professional problems I was solving on a daily basis - how to find and get the best price for containerized ocean transport.
The photo source: a screen from a Mlog sales presentation
How I tested Mlog viability
At first, Mlog was a daydream, since there was no direct competition on the market. Nobody had had a company providing that kind of solution before. However, very soon I learned about a Scandinavian startup offering almost the same service. It was a benchmarking tool for containerized freight.
That confirmed to me that Mlog was a viable idea. Apart from helping freight companies to save on the total cost, another company had already proven its viability but to a different audience. Hence, it was time to look for an angel investor for my startup idea.
But before that, to ensure I had enough experience in what I was about to get into, I took a job in a major corporation and learnt as much as I could about ocean freight index as well as software development on the sideline.
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Your idea is worth 0
Armed with an explainer video and powerpoint presentation I tried pitching my idea to over 20 VCs to secure cash for software development, marketing, salary, everything.
I had believed that a beautiful idea dressed in firm numbers in excel spreadsheet was investable.
Strangely, I couldn’t get any of them onboard.
Noone crowned me for that PowerPoint presentation...
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Source: thanks Canva for letting me crown the power point the 1st :)
However, VC managers helped me to craft my road map to financing…
Financing
To build an investable startup from the powerpoint presentation you need to have (these rules do not apply to Adam Neumann):
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Clear business model
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Good value proposition
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Tech, business and business-domain competences in your team
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Rough but working MVP
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Basic business indicators. If you do not show traction, present at least free users or intent letters.
That was not something I expected, as in reality my pitch deck was the only thing I had at the moment. Did they require me to build the company without funds? What are seed VCs, then? Those were my thoughts at that time.
But I’ve started to work towards marking all points on the list.
I’ve reached out to software developers willing to pick up a challenge as co-founders roles in a startup; and took part in the Warsaw Startup Weekend in an attempt to network, find support, and learn about other startups.
The latter one was a deal breaker because to my surprise my team won the competition that gave me massive support, adrenaline and motivation boost and what’s the most important sort of credibility.
As a consequence I was able to build a founding team and got a low-fidelity version of MVP that helped me to get first letters of intent.
Voilà, finally we got one investor who decided to give it a shot. Boom! We had an operational company.
The product that companies like but do not want to pay for
Even though we had a company, it was barely moving the needle. We had piles of code lines written, and afterwards over 20 company users who we helped maintain a pricing index for most transportation corridors. Some were big names on the market.
However, we had no money coming in. In fact, almost all attempts to gain traction were futile.
To make things going we tried hard by:
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Animating benchmarking indexes
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Adding new features and functionalities
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Experimenting with free and paid trial
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Trade fairs visits
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Partnerships
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Outbound marketing
But even with those, the main challenges were lack of product market fit and running out of capital. We couldn’t serve complex needs of top corporations and on the other hand the SMEs weren’t willing to spend money on the analytical and benchmarking tool.
A lean startup model that came too late
At our last run, we decided to pivot our business model and become a logistics marketplace instead of an analytical tool. That was a good move. As a consequence, we found a source of cash - freight forwarders, who used the platform to get sales leads and take part in tenders. All was alright, despite the firm’s and our private bank balances being empty.We also neither had enough morale in the team nor a significant number to show VCs to get a new investment round. So, we decided to close the business.
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The biggest lesson
The whole story could be covered by numerous articles and books about startup failures. What has happened to Mlog has happened before and will happen to thousands of other ventures.
But the most important are takeaways:
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Good product will not sell by itself, as information about it will not spread around the globe without your work.
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Clients, people, companies, they do not care about you and your product, until you show them real value and help solve their problems.
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Look at the business model canvas. Before you plan your business model, make sure you understand all the fields there and address all of them.
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Marketing should not be treated as less important as product development and sales, never. It is your chance to build the business, your gateway to success.
We underestimated marketing in an unbelievable way. That stemmed from a lack of knowledge and understanding of its power. Today I am a marketing consultant, and with full responsibility, I can say that lack of competencies in marketing is the reason for failure for a big hunk of companies and startups.
Marketing ignorance is a characteristic trait of many (not all, but most ) area specialists. People who know technology, software development, logistics and other verticals inside out from the operational or technical side, and who decide to try their hand in business. For most of them, marketing and sales are almost swear words. But it should be noted that be said loud and clear - without marketing and sales competencies in the business your technology will not succeed.
To show more powerful social proof, I’d recommend listening to Steve’s famous speech about what is important in all technology companies: https://www.youtube.com/watch?v=48j493tfO-o
At the time when the Mlog thing ended, I felt lots of bad feelings. How bad I am, how big a time waste was that project. I was blaming myself and everyone around me for the failure. That was a hard time.
Today I perceive that project as the most important in my life because it gave me a lesson I'd never learn from any university or course. The project changed how I perceive life in general and taught me the 'do and test' attitude.
Lastly, it made me feel comfortable and understand a software business, plus that was a trigger that pushed me to the place where I am right now. Specializing in digital marketing for software development companies.
To me, all of this story is still surprising :)
PS: Everyone reads post scriptum, at least in emails (small tip :)).
PS 2: I just wanted to take this opportunity to say: Thank you to Diana, the one who had extreme patience in keeping a Wannabe Steve Jobs at home for so long :).
PS 3: Great thank you to Jacek and Emilian, Mlog co-founders, guys who believed in Mlog's idea, committed to the company, and gave their hearts, their best to make Mlog a great software. It was a great time.
PS 4: Thank you to Dawid, Dawid the Wolf :) Thanks for a great time and fun! (everyone who wants to understand why 'the Wolf' needs to watch the video at the beginning of the case study).
PS 5: Jacek suggested, at least a year before we started working on it, to pivot from analytical platform to marketplace, which was a great idea and the best move we could do. Unfortunately, we did it too late. Lessons learned, at least by me: don't be fixed to the initial idea and listen to others and test more.
PS 6: Hopefully someone will find a whole Mlog + Seed Capital team photo from the moment of signing the investment agreement.
Best regards,
Marcin
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