It was a reversal of fortunes for extracurricular activity startup, FrontRow, when it shut shop earlier this year. From raising $17 Mn at the height of capital boom between 2020 and 2021, the startup shut operations in 2023 after four years of operations and laying off its entire workforce.
While funding winter and adverse market conditions proved to be a major spoilsport, FrontRow, in the words of cofounder Ishaan Preet Singh, never ‘got to retention metrics that showed real PMF’ (product market fit).
Reminiscing about his startup journey, Singh in a LinkedIn post said, “.. the launch went better than anything we had expected!… we saw everything that you’d expect from a (moderately) hot startup – some amazing user love, site crashes.., viral reviews, an FIR (long story), inbound VC pings, an absurdly high acquisition offer, and angel funding from a bunch of startup legends (& Deepika Padukone!)… That lasted for 6 months. Then it didn’t.”
Elaborating on this, he said FrontRow’s annualised revenue plateaued after the initial ‘burst’ while marketing cost ballooned to more than 100% of revenue and course completion stayed below average. Despite incorporating a host of features, the startup noted a few very engaged cohorts even though it turned to blitzscaling after raising the $14 Mn funding round last year.
“We definitely had blinders on, and went into all-out growth mode. We did honestly believe a) we could rapidly improve operations and margins while growing, and b) that a large topline would enable us to raise the next round, and do even more. I’d let myself get carried away and focus on external metrics, despite knowing the pitfalls fully well,” added Singh.
However, it was not just FrontRow that misjudged the extracurricular opportunity. The startup followed the lead of peers such as Crejo.Fun and SuperLearn who also have had to shut shops since the funding winter gripped the Indian startup ecosystem last year.
While offering extracurricular activities online appeared to be an attractive opportunity for startups at the peak of the pandemic, user interest faded as daily life normalcy slowly returned. As schools and offices reopened, learning hobbies suddenly took a backseat for Indian households. Anyways, people prefer the aspect of tangibility when learning extracurricular activities which further made matters worse for these startups. But, FrontRow’s issues ran deeper.
Elaborating on the learnings during the course of his journey as a founder, Singh said the Lightspeed-backed startup took a long time to pilot its platform in 2020. He said they should have launched the startup in a third of that time. He also conceded that FrontRow, instead of building a strong product, ‘threw’ features (gamification, competitions, WhatsApp groups, open mics, chat, events, others) at the problem.
Another takeaway of Singh’s post was that blitzscaling is a ‘valid strategy’ if a platform has either an undeniably massive demand (social media) or profitable unit economics. He added that the startup made the mistake of believing that the extracurricular activity market had huge demand but was unable to figure out the next lever of growth despite predicting the plateauing early.
Singh underlined seven key learnings from his experience of running and eventually shutting FrontRow.
The Flailing PMF
As 2022 hit the Indian startup ecosystem, the course of valuation correction began and profitability emerged as the metric of choice for investors and markets. As the saga panned out, Singh said the company laid off nearly half of its team by mid-2022 and turned focus towards fixing unit economics and stopping all ‘moonshot experiments’.
Over the course of the next four months, he said, FrontRow ruthlessly optimised every tiny piece of the business and hit its breakeven mark of $1.5 Mn ARR.
“But it didn’t feel like PMF anymore. We didn’t feel the pull or demand, even at that scale, let alone at 10X that. This was honestly a very tough truth to accept… We easily took 6 more months to do it than we should have. But we eventually felt that despite still believing in the market, we had not arrived at the right solution,” added Singh.
Finding The Sweet Spot
Singh advised budding entrepreneurs that they should only build businesses if they ‘really believe in the market’. By this, he meant that founders should vie for segments where they can spend at least five years in the market.
He further added that having the right market will help founders hold on for longer when everything goes wrong.
The Lost Love
The FrontRow cofounder also noted that the company also had the option of a hard pivot, following the likes of Slack. He, however, said such pivots ‘were not’ for him and that he was ‘not the kind of person who would get excited about throwing darts and hoping one sticks’.
“Moreover, I felt I couldn’t force the love for a new market, and I didn’t want to put a deadline (even a long one) on locking it. When you start something from scratch, you need an unusual force of will and belief. Strong enough that it’s infectious. Honestly, I’m not sure whether this was just how I rationalised that at the time I just didn’t have it in me, but I knew I didn’t, whatever the cause,” added Singh.
Skip Shiny Vanity Metrics
Striking a wary tone, Singh told budding founders to not be lured by shiny vanity metrics and fundraising goals. He urged founders to skip external metrics and validation and focus only on metrics that matter and how well the business is working in their opinion.
He also urged entrepreneurs to keep the counsel of ‘small set of truth tellers’ whose opinions are ‘not just swept under the rug’.
“Find a small set of truth-tellers who keep you honest, and whose opinion you can’t just sweep under the rug. Make sure that’s how your board operates as well (as long as you can), which means keep it small and ensure high ownership. I’m grateful for the pushes I got throughout, and I should’ve looked out for more of them,” advised Singh.
There’s No Silver Bullet
Offering a piece of startup advice, Singh added that there is no magical solution to a complicated problem with universal application. While urging founders to take all advisories with a grain of salt, he added that founders should individually process data and take their own call.
Elaborating on this, he added that, for any piece of startup advice, he could find three data-packed examples where it worked and where it flunked. As such, he said founders should operate at their own discretion.
Starting Up Is Hard
Singh said operating a startup takes a psychological toll on the cofounders. Terming the journey lonely, he added that building a platform from scratch is an emotional roller coaster ride.
“Startups are way harder than I’d thought, despite being surrounded by founders. They’re not technically hard (usually), but they are psychologically hard. I’m not someone who shies away from challenges, but the emotional roller coaster in building a company is at another level and can be very lonely. I hated hearing this when I was in VC, but you really need to have gone through it to empathise,” said Singh
Giving Up Is Even More Confusing
Wrapping up his LinkedIn post, Singh drew the attention of the readers to the ‘weird’ dichotomy of giving up. While noting that founders are wired to be optimistic and think of every problem as a challenge to be solved, he said a flurry of developments over the past six months brought about a loss of conviction.
This process of his default optimism turning into default pessimism, he said, led to the eventual decision to shut down the startup and return the remaining capital to investors.
“… This year was the first time I’ve woken up and felt sad about going to work… That persistent feeling was the trigger which led to a deeper process – obsessing over all the numbers, talking to every type of user we’d had and long dinners with board members. Eventually the inputs almost blurred, and I realised my default optimism turned into default pessimism (or in other words, a loss of conviction) which ultimately led to the decision to shut down,” Singh concluded.
The post Edtech Startup Frontrow’s Postmortem: Founder Shares Learnings From Raising $17 Mn To Shutting Down appeared first on Inc42 Media.
