What I learned from Curb's failure

In my first ever substack post I am sharing a letter I sent to my investors. In the letter I share the important lessons I learned from succeeding and failing with my last startup Curb.

Dear investors, 

Hope this email finds you well. 

This email has been marinating in my mental drawer for some time now - in fact, since the day we closed Curb. I wanted to leave enough time to make sure I look back in a sober manner before pulling it out, avoiding any risk of making attribution errors. 

I’m now sober (enough). In the pursuit of understanding and not repeating my mistakes I have tried to break down some of the lessons I’ve learnt. The process has resulted in 15 bullet points or “reminders to self”  that have already proved valuable to me in evaluating and navigating future opportunities. I am now sharing it with you in the hope that it might serve you as well. 

On raising outside capital 

1. The easiest person to fool is yourself - It becomes increasingly difficult to question your own assumptions or the superiority of ideas when you are constantly expected to convince others of it. Once everyone is invested in your idea, no one benefits from questioning it. 

2. Be respectful of venture capital - Venture capital has a time and a place. However, for most businesses it should be plan Z, especially in an early stage. Once you raise, it’s like losing your virginity - difficult to take back. For many, venture capital means bigger bloat, obligations, promises and expectations. They all pile up like debt and can crush you if you are not careful. 

3. Planning is guessing - Planning is hard and your estimations probably suck. Have a big vision but set small goals often. Small mistakes hurt less and are easier to correct. 

On building a business 

4. Own the customer - Never start a business where you do not own the customer or data. Full stop. 

5. Build your business on returning customers - Your first sale is where you make a customer, the second is where you make your profit. Very few business models can grow and sustain themselves relying on new customers. 

6. Scale will aid your margin, but it won’t fix it - Never even start a business with <70% gross margin. If you do not have it, fix it before you do anything else. You are going to need it. 

7. Keep it simple - If you can’t explain your business in one sentence, you are either trying to do too much or it’s just an idea, not a business.

8. You only compete with one thing, your cost - Make your own business work regardless of the competition. Avoid bloat and fixed costs in good and in bad times. Staying lean is one of the strongest competitive advantages you can have. 

9. Start a business not a startup - You might be a startup, but you are first and foremost a business that will sooner or later have to leave startup land and operate in “the real world” where profit matters. 

On managing oneself as a founder and CEO 

10. Don’t get greedy - Building to flip (exit) is building a flop. Focus instead on building a strong business with a product or service that customers love. Only work with others with the same mindset. 

11. Manage the right business - Every business is really two businesses. The first is the business itself. The second business is the business of getting customers to your first business. In VC funded startups, you also have a third business to run namely raising capital and managing investors. Understand which you are uniquely skilled at and focus on that. Hire others for the rest. 

12. Leave an empty calendar - If you are constantly busy it means you have no priorities. Create room to think and build up energy to solve or capture the few problems or opportunities that matter. 

On hiring and building a team

13. It’s about who not how - Don’t hire great people only to manage them. If they need to be tightly managed they are probably not that great. Instead aim to be a coordinator and a curator of people, projects and ideas. Almost always remove, almost never add. 

14. Pain is your cue - Only hire when it’s hurting badly after you exhausted every other option to simplify, eliminate and/or automate. 

15. Resumes are overrated - Trust your gut and current results regardless of an employee’s professional history. Be especially critical of mid-level managers with inflated titles from large companies or startups. 

On moving forward

16. Own it - We failed because we made too many poor decisions where it mattered. It was not the market’s fault, nor the investors, nor the employees. 

17. It’s ok - The whole purpose of this letter is to avoid failing again. However, after having experienced a rather spectacular failure, it is not as bad as I expected. Life does go on. 

18. Luck - Never underestimate the role it plays in your life. Especially when things go well.

If I had to choose one or two reasons why Curb failed I would say number 4 and 12: Not owning the customer and not leaving an empty calendar. From the beginning, Curb had a flawed business model and I should have created space to build the mental energy and courage to see the signs earlier and act. 

I am incredibly grateful for the opportunity to succeed and fail with Curb and to have all of you onboard. I am especially grateful for Fredrik Hjelm’s encouragement to not only start Curb but his support along the way. I also want to mention Sri and Tara at P72V who really showed me what great investors look like. It was a privilege to work with you. 

With all of this behind me and after some much needed family time, I have never been more excited to get back into the game. See you in the arena :)

Best, 

Carl