{"id":47577,"date":"2023-10-20T15:54:13","date_gmt":"2023-10-20T15:54:13","guid":{"rendered":"http:\/\/startupsmart.test\/2023\/10\/20\/why-milaana-ended-and-how-it-will-live-on-startupsmart\/"},"modified":"2023-10-20T15:54:13","modified_gmt":"2023-10-20T15:54:13","slug":"why-milaana-ended-and-how-it-will-live-on-startupsmart","status":"publish","type":"post","link":"https:\/\/www.startupsmart.com.au\/uncategorized\/why-milaana-ended-and-how-it-will-live-on-startupsmart\/","title":{"rendered":"Why Milaana ended and how it will live on – StartupSmart"},"content":{"rendered":"
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Honest reflection is a lot like the startup journey \u2013 it is hard and gritty but if you throw yourself into the process it will transform and strengthen you.<\/p>\n

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This piece is for anyone involved (or interested!) in the journey of startups, especially regarding social enterprises and the duality of success and failure. It is an analysis of four factors that led to the closure of Milaana\u2019s operations, the startup I founded, as well as what will live on.<\/p>\n

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I have taken great care to ensure this blog is a true reflection of the organisation by also integrating the insights of our team. You\u2019ll notice the term \u2018I\u2019 used heavily when discussing Milaana\u2019s failings and \u2018we\u2019 regarding the successes. This is because as Milaana\u2019s founder and leader <\/b>I<\/i> <\/b>failed to steer Milaana to economic viability, but as a team and community we<\/i> <\/b>were successful in achieving a lasting impact. <\/b><\/p>\n

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Failures or fault lines?<\/b><\/h2>\n

Milaana.org was created as an online marketplace for cause-driven projects. We found our niche between internship and volunteer platforms by focusing on supplying community projects for student internships and skilled, young volunteers for organisations.<\/p>\n

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We also worked hard not just to facilitate connections but to create materials to increase the likely success and impact of these projects. We had a viable mode. Founding Milaana in July 2013, we took the prototype to market in September 2013 and validated the need. Upon launching our crowd funded MVP in June 2014, we started receiving subscription fees from registered organizations. This proved the next stage of growth was feasible so long as we stayed lean.<\/p>\n

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It can feel liberating to use the terms \u2018fuck-ups\u2019 or \u2018failures\u2019 but in reality, the things that hurt us most weren\u2019t monumental doozies. They were the hundreds of little decisions that I made, which prioritized impact and process over income and profit. These accumulated over time and when I finally acknowledged the position we were in, I was looking over the edge of a fault line towards Milaana\u2019s economic failure.<\/p>\n

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Every social entrepreneur must balance two forces \u2013 maximizing community benefit on one side and maximizing profit on the other. The reality is these forces have been pulling in opposing directions for too long, creating a fault line through which far too many fall. I failed to manage this balance and Milaana fell into the gap.<\/p>\n

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What I did wrong<\/b><\/h2>\n

Any founder will tell you that the hardest thing to do each day is to prioritize how to spend your finite time. My focus centred on impact (what we created), connections (who created it) and an authentic process (how we created it). In retrospect, I should have put more focus to developing a strong team of co-founders, driving high-margin sales, saturating the local market before scaling and finally, raising capital to fund the growth needed to reach sustainability. These areas could have prevented the lack of funds and founder burnout that marked the end of Milaana\u2019s operations.<\/p>\n

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The four factors that led to Milaana\u2019s closure<\/b><\/h2>\n

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1. Not having a founding team<\/b><\/p>\n

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If I had assembled a strong team of co-founders, I possibly could have dealt with some of those aforementioned problems. With their added experience, time and energy a team of co-founders would also ensure I wasn\u2019t the organisation\u2019s main constraint and in the end, liability.<\/p>\n

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That\u2019s not to say I was alone. Throughout our journey we had incredible students in a variety of three-to-six month roles and their energy, ideas and decisions were core to our development. But none had ownership stakes. I raised the possibility with some, but the timing and\/or our inability to pay, thwarted these attempts.<\/p>\n

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We also had an informal group of \u2018wise ones\u2019 including mentors, advisors and non-executive directors who I\u2019d call upon for advice and send monthly board reports to. Strategically adding to this group and formalising it as a board would have provided further support, but it was in the trenches where help was really needed.<\/p>\n

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2. Scaling before validating<\/b><\/p>\n

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In the middle of 2014, we moved to Sydney to work from ATP Innovations and test our ability to scale and remotely manage teams. We grew our team from three people based in one location, to 24 across two states in a matter of months. It forced us to develop the core systems and processes that would allow further expansion and I learnt SO MUCH from being based in Australia\u2019s heartland of tech startups. But it was too fast, too soon, we\u2019d only just launched our minimum viable product (MVP) a few months prior.<\/p>\n

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By not saturating our local market first, we were scaling with a partially, but not fully validated, model and a platform that still required a lot of manual input. Inconsistencies in communication and team co-ordination were also creating problems. I made the mistake of not personally engaging in all of the hiring decisions which meant we were putting A LOT more effort into people management for reduced (or certainly unequal) output.<\/p>\n

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3. Reduced focus on sales<\/b><\/p>\n

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Spending so much time and effort managing our sudden interstate growth meant that I was also increasingly distant from customer experience and sales. Furthermore, to ensure positions were filled, we had to sustain a ratio of 20:1 in terms of students registered for each position. With a strong baseline of 100 plus organisations, we quickly fell behind in student numbers. Engaging students was more expensive in terms of marketing and had no immediate financial reward. So we built our volunteer teams (through student societies) around this purpose.<\/p>\n

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4. Money, money, money!<\/b><\/p>\n

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We ran an incredibly lean ship! With a $10,000 loan for the prototype, $20,000 in crowdfunding and grants for the MVP, our small (but existent!) income then went to operational costs and marketing. With just this, we not only survived two years but we developed quickly and provided a valued service. However, the structure of our model meant our growth (a core motivating factor for our team) would potentially stagnate without capital.<\/p>\n

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Milaana\u2019s low fee, subscription model for organisations required a high volume of users to be sustainable. Reaching this point would allow us to pursue revenue streams with much higher profit margins. First, by integrating the private sector, including corporate social responsibility projects, and connecting corporate staff as mentors on existing impact placements. Second, helping our proven students enter the job market by partnering with like-minded recruitment firms. To reach the required volume, it became clear we needed substantial investment (i.e. $250,000) to support a full-time team, further product development and to fund a marketing drive.<\/p>\n

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I waited until we had solid growth, which took until late 2014, before chasing any sort of impact investment. The pursuit took me to Washington D.C. in May 2015 to pitch at the global semi-finals of a venture capital competition, the 1776 Challenge Cup.<\/p>\n

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The ultimate winners were already making $100,000s or even millions. It was at this competition, that reality hit me. Impact investment is in its infancy, especially in Australia. Even with our demonstrated viability we weren\u2019t cute enough (frontline impact) for philanthropic investors or \u2018billion dollar enough\u2019 for the rest of the investment community. Another 12 months of further demonstrating our viability and pitching my heart out would increase our chances but the reality of my personal circumstances had also hit.<\/p>\n

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The result:  Founder burnout and operational closure<\/b><\/h2>\n

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I\u2019d reached a point where I was \u2018running on empty\u2019, both financially and emotionally. I\u2019d graduated from university over a year ago and the paid consulting work I did here and there was great but it couldn\u2019t cover my costs. My parents had generously plugged the holes but 12 months of this was the limit.<\/p>\n

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Even if I could secure long-term co-founders (including a front- and back-end expert to continue product development), it would still take at least one more year of everyone volunteering to reach an almost viable level. I even experimented with reducing my engagement and seeking part-time work but this wasn\u2019t a practical solution. Stepping back at this crucial stage without a clear replacement was unfair to our team and would result in stagnation. It was either \u2013 get investment NOW, or \u2018call it\u2019 whilst we were still ahead.<\/p>\n

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How do we define startup success?<\/b><\/h2>\n

We measure Milaana\u2019s success by the extent to which we achieved the following;<\/p>\n