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A Postmortem of a Startup

168 points by jamierumbelow 1y ago

andrewstuart 1y ago
>> After raising a £744,000 pre-seed round in April 2024, we explored several business models Capital after traction
- dzonga 1y ago
  to those who cry about 'BS' like diversity etc ask yourself if people without the same backgrounds, looks would have been able to raise the same amount without a business model.
  - drdrek 1y ago
    The financial world is not equitable, its about results. People from privileged backgrounds are more likely to raise funds because their privilege makes them more likely to succeed. If Being raised in a trailer park raised the odds of a successful exit, you can be sure VC interns would be having business meetings over deep fried Oreos way more often.
    - devmor 1y ago
      This presupposes that VC firms generally know what is more likely to succeed, which is demonstrably wrong and the entire reason that the “eggs” are put into so many different baskets every season.
    - Urahandystar 1y ago
      Is that so or is it more likely to succeed because they can raise funds? The way modern VC works is just a packaging industry anyway. A VC will give money to a founder if he thinks that he can raise more money in the future. They'll get back what they put in from someone else before it fails.
- immibis 1y ago
  Good advice for investors, maybe - not for founders. Why would a founder turn down money?
- hnthrow90348765 1y ago
  I don't know, getting paid to try things out sounds like a good deal
pyb 1y ago
A good question to ask before starting a startup is : "Do I see myself working 10 years on this problem?". Looks like they ran out of steam, rather than out of runway.
- bad_username 1y ago
  Why 10 years? Is it not typical with startup founders to plan a lucrative exit in a much shorter time frame?
  - pyb 1y ago
    No, where did you get this idea? Good startups do not think this way.
  - flessner 1y ago
    > "Good startups usually take 10 years." - Sam Altman It also aligns with other Y Combinator teachings, such as targeting growing markets.
  - drdrek 1y ago
    7-10 years is the realistic time frame for a moderately successful exit, usually those that are "Bought" after 1-3 years are actually failed ventures with all or most of the money going back to the investors to recoup their loses.
  - _fat_santa 1y ago
    It seems high at first but take a look at practically any successful startup (Slack, Dropbox, Notion, etc) and they all were around for 8-12 years before the founders cashed out.
AJRF 1y ago
Thanks for writing this! > Housing in Britain is expensive because getting planning permission is difficult. Isn't the real problem that supply is artificially constrained because house prices and the economy are interlinked in a way in a special way in the UK economy, such that the majority of home owners don't want it changed (because more supply == downward pricing pressure) I think the only entity that could meaningfully change this situation is government, and well it's easier to not upset your donors. Edit: To be fair to the author, they do mention artificial supply constraints but I think my point stands - it is there by design, too much inertia forcing it to be that way that won't be changed by streamlining the bureaucratic elements
- lalaithion 1y ago
  One of the ways in which supply is artificially restricted is that getting planning permission is difficult, so you’re not actually disagreeing with OP
- nemomarx 1y ago
  is that a very special thing? it seems like that in the US too imo
- Destiner 1y ago
  I think you're describing NIMBY, which is more of a US/SF thing (but also is a case in Europe to some extent).
  - zihotki 1y ago
    NIMBY is an universal human concept, it's present everywhere - Europe, Asia, South America. It may come in different flavours but it's everywhere. People don't welcome changes to the surrounding environment if it doesn't benefit them more or less directly.
    - dickersnoodle 1y ago
      It isn't as simple as "doesn't benefit them more or less directly". There are often projects that benefit some people that will actively degrade life for everyone else.
monkeydust 1y ago
Nice writeup, wish more startups who didn't succeed did this though understand not easy thing to write so kudos. One factor to success is timing, as someone who lives in UK around London and is seeing (slowly) greenbelt getting developed on perhaps the market might be moving towards you in the next 5 years.
- ktallett 1y ago
  I would agree but I doubt it will become more of a thing, too many seem to not be willing to accept failure or show vunerability. This will always be rare in the start up market as long as bravado and fake it till you make it is still a thing, which it is.
morsecodist 1y ago
This is interesting and they make some good observations but I can't help but think the deck was stacked against them because they are trying to come up with a technical/business solution to what is fundamentally a political problem.
- OccamsMirror 1y ago
  Yeah "founded to build software to fix Britain’s housing crisis." There was literally zero hope for success.
  - hinkley 1y ago
    I know of an ISP that wrote a custom CRM/ERP solution in order to harass the less well behaved telecom company in town into doing their jobs when they said they would do them. So it would do things like send you a reminder to see if the approval or the hookup they promised you Wednesday was done so you could meet you customer’s expectation of having their Internet turned on by Friday. That’s probably the best you can do. Make it obvious to everyone including the bureaucracy what their externalities are doing, and either nudge them to go faster or divest some responsibilities to someone else.
- mytailorisrich 1y ago
  Planning permission is partly a political issue, partly down to expertise. You need experience, you need to know the rules, you need to know the tricks, you need to know how to draft the application. You need to know the game. Indeed this is not something that is waiting for a technical solution. It's great that they tried, though. But it strikes me that they seem to be 20 something students (not meant disparagingly) with no experience in this so perhaps lacked the insights and understanding of the pain points. It does seem that VCs were happy to fund based on an AI play, though ;)
  - hinkley 1y ago
    My ex worked at a government contractor and they started paying the guy who wrote grant proposals more than the CEO because without grants they were fucked, and the grant writer was getting wistful for other horizons. Talking to government is a highly compensated skill set. That’s all lobbyists are.
dzonga 1y ago
well written. I think your fatal mistake even though you folks are smart was not understanding the complete value chain of your business. What I mean by understanding the economics of the value chain is you've to understand how your customers make money, how their customers make money & how their suppliers make money. From there - you can workout your value proposition - are you saving your customers money (means there's a cap on how much value you can extract) or are you allowing your customers to make more money (how much value you can extract is kinda uncapped - depending on mechanics) The other mistake - which you correctly kinda alluded to is not understanding the incentives / dynamics of the industry. UK land is tricky since most wealth / power is packed into UK land. hence your part about emotion etc. final mistake was equating success to raising money. Profit, if not revenue growth is the only measure of success. Raising money is not.
- Etheryte 1y ago
  I don't think the last paragraph is correct, many unicorns don't generate profit, yet are hugely successful by any other metric. In many cases, generating profit is actually undesirable for tax reasons.
  - frankdejonge 1y ago
    I believe that why they said "if not revenue growth". Those successful, yet unprofitable companies do have revenue growth, or market share growth.
  - mytailorisrich 1y ago
    Generating profit is highly desirable for any business. For tax purpose you need to differentiate between "profit" and "taxable profit". You can try to lower your taxable profit to minimise tax, e.g. by re-investing your profits, but ultimately it is better to turn a profit and to have to pay some tax on it that to have an unprofitable business.
    - Etheryte 1y ago
      Not necessarily, this is a classic misunderstanding. As a famous example, Uber did not make a profit for 14 years, all the way up to 2023. For taxable profit it's even more severe, they've built up a considerable backlog of losses, so they'll pay very little in taxes for the foreseeable future, even though they're now profitable.
flessner 1y ago
Very thoughtful writing and great to see someone cut it early instead of continuing without a clear path. > If I were to start a startup again, I’d take more time and be more intentional in talking to potential customers before needing to raise money. From the outside, this pretty much hit the nail on the head.
philipallstar 1y ago
> Housing in Britain is expensive because getting planning permission is difficult. It's true that planning departments are very expensive, don't do much positively, and still seem to allow awful-looking things to be built, and I'd probably happily do away with them, but the fundamental driver is the incredible onboarding of people from overseas for years that crushes the combination of the existing population and the new people into a number of dwellings that isn't that dissimilar to the previous year. You can't take on a net number of people each year that would require a new city the size of Nottingham to be built to accommodate, and say "well, it's all the planning process' fault."
- froddd 1y ago
  Reducing the problem to ‘people coming from overseas’ is an equally reductionist argument. There are properties going unused, for very many reasons. Second homes, holiday homes, etc. This also drives the price of properties up. This is one of the inputs to the problem. Planning permission laws is another input. The size and change of size of the people needing housing is another input.
  - spacebanana7 1y ago
    Is it not the dominant factor, at least in the short term? It's much faster for 150k people to enter/leave the UK than for a corresponding number of homes to built/demolished.
    - macrocosmos 1y ago
      It’s obviously the dominant factor to anyone with the eyes to see it.
  - chippiewill 1y ago
    It does, but occupancy rates in the UK are already incredibly high compared to countries like France. There are simply too many people and not enough houses.
  - matt-p 1y ago
margorczynski 1y ago
I think the problem with startups (from a business perspective) is that they're ego-driven and instead of looking at the business reality in an objective fashion they mostly try to "revolutionize" and "make a difference". It isn't as sexy as doing the next Facebook or disrupting global healthcare but just copying an existing archaic & expensive product and doing it better can yield a great and stable business. There's a plethora of software products (offline & online) which cost way too much and work like crap - all you need to do is do it better for a more reasonable price (where those old companies have a big headcount and lots of mouths to feed producing a hard price floor for them).
- belinder 1y ago
  Now where to get a list of such companies and products to decide what to build...
  - madmask 1y ago
    A decent 3d CAD and multiphysics FEM (cheap comsol) would be a good start
    - ph4evers 1y ago
      Yes but the industry is so rooted and vendor locked that it is extremely hard. People pay for Autodesk, Ansys, comsol etc. because it is proven and engineers are trained to use it. I would not be eager to use something new if I’m a constructor or car manufacturer.
      - nradov 1y ago
        Sure, a new startup will never get any market share in large, stable businesses like those. They would have to sell to other startups. New auto parts manufacturers pop up all the time.
    - qazxcvbnmlp 1y ago
      Yep, decent 3d CAD is expensive. Competition in this space would be fantastic
4ndrewl 1y ago
"address Britain’s housing crisis" It's a feature, not a bug.
- matt-p 1y ago
  up to a certain point, yes, asset holders do benefit from workers spending 50% of post tax income on housing. It is now restricting GDP growth, however - so long term it's not in many peoples interest.
djoldman 1y ago
I looked for a source for this statement in the article: > Granting permission takes the median hectare of land from £20,000 to £2.4 million - a 139x uplift. I couldn't find one. However, I did run into some interesting viewpoints by a certain Paul Cheshire, Professor Emeritus of Economic Geography at the London School of Economics... "one of the world’s pre-eminent housing economists" He has this to say about "Green Belts": > Britain imposed its first Green Belt in 1955 and now, if re-zoned for building, farmland at the built edge of London has an 800-fold mark-up. There was no secular trend in housing land prices in Britain until the mid-1950s, but after Green Belts were imposed real prices increased some 15-fold. More than houses because you can substitute land out of house production. There is a similar pattern in Canada, New Zealand or the West and East coasts of the United States where policies restrict land supply. https://www.newgeography.com/content/006358-lse-economist-paul-cheshire-urban-containment-and-housing-affordability https://www.newgeography.com/content/006358-lse-economist-pa...
- matt-p 1y ago
  I have not researched this but someone I know at one of the big house-builders pegged the cost of building a 3 bed at around £35-40,000, so in the south east land with PP is 10X more valuable than what's sat on it. "Farm" land, even in the SE is about 12K an acre, and you get 6-8 houses to the acre so you should be able build a three bed and sell it for £50K on the outskirts of London, Cambridge, Oxford or Brighton (just by example) still making a profit if we liberalised planning in those areas. That shows you how extreme this situation of fake constraint is. It could therefore never be allowed to happen. The big house-builders wouldn't build and sell at that price, the locals wouldn't allow it as they've bought their houses for 500K, 10X as much and would literally all go personally bankrupt...
- gnfargbl 1y ago
  > I couldn't find one. A parliamentary publication from 2018 estimated the uplift factor to be 93x outside London and 287x inside [1]. Found via ChatGPT. I would think that the north-south variation has flattened a little bit by now, but I can't immediately find any similar document from the last couple of years. [1] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/407155/February_2015_Land_value_publication_FINAL.pdf https://assets.publishing.service.gov.uk/government/uploads/..., page 12. [2] https://www.progressive-policy.net/publications/gathering-the-windfall-how-changing-land-law-can-unlock-englands-housing-supply-potential https://www.progressive-policy.net/publications/gathering-th...
tiffanyh 1y ago
A lot of time & effort went into that write-up. I realize what I'm about to say will get backlash ... but I can't help but think is the time to write this postmortem indicative of how the business was run. Meaning, who benefits from the output of this postmortem? Seems like mostly strangers (who might not even live in UK). What other time/effort/resources was spent on things that weren't directly engaging with their customer ... because it seems extremely clear without knowing much about that market that this isn't a technical challenge per se - but a regulatory / social problem and the modest amount of capital they raised won't even scratch the service on solving this problem. Note: not intending to be negative. It just seems like the elephant in the room is that the team was so ill-prepared and not understanding what actual problem they are solving - that my heart goes out to them.
- spacebanana7 1y ago
  > this isn't a technical challenge per se - but a regulatory / social problem and the modest amount of capital they raised won't even scratch the service on solving this problem. Stripe hasn't fully fixed online payments but still made a good business of making things better. At a high level, SaaS to help people filling out planning permission forms sounds like a viable business. Many thousands of people do this as their full time job, so their employers might be willing to pay £100 per user per month on something that makes them more productive.
- shalmanese 1y ago
  > Meaning, who benefits from the output of this postmortem? Seems like mostly strangers (who might not even live in UK). Seems to be a piece of content marketing intended to help the two founders land a new role in the US so, in that sense, it does seem pretty strategic and well targeted.
maxehmookau 1y ago
> In May 2023, Tract was founded to build software to fix Britain’s housing crisis. I mean, they took on a heck of a problem. At least they tried, but I suspect it was an upward battle from day 0.
ejsdev 1y ago
I wrote something similar to this last year - it was an incredibly cathartic writing experience. It's extremely weird to realise that you're hung up on a business venture from years before, but made a lot of sense. FWIW I am never doing a 3-way marketplace again, hellish. If anyone is interested - https://edjs.dev/blog/my-first-startup/ https://edjs.dev/blog/my-first-startup/
curtisszmania 1y ago
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shalmanese 1y ago
When I coach startup founders, I walk them through a very simple 4 step process when we meet: 1. What have you learnt since we last met and how has that altered your priors? 2. What do you now believe is the most important problem you should be solving? 3. What's currently blocking you from solving that problem? 4. How do we overcome those blocks? Crucial to this process is that Q1 is not what have you done, it's what have you learnt. I do not give a shit about anything you've done if it's not in the service of learning. I also run a retro every 3 months with founders where we ask the following questions: 1. What would you want to tell yourself 3/6/12 months ago (essentially, all the lessons learnt in italics) to save the maximum amount of pain? 2. When did you learn each specific thing? 3. When was the earliest you could have learnt that thing? 4. What changes can we make going forward to minimize that delta? Extremely simple things but extraordinarily powerful when applied consistently over a long enough span of time.
- mrweiner 1y ago
  Thank you — the way you frame this is helpful.
- monkeydust 1y ago
  This is good especially 1. bit of Bayesian thinking thrown in. I find a lot of founders ask for feedback, advice and just carry on doing what they were going to do anyway, perhaps convince themselves that the advice backs up their thinking when it doesn't. Not everyone of course but a lot, hence why I like your question.
  - shalmanese 1y ago
    I think the linked tweet from the article explains it better than I could: > The more time I spend advising founders, the clearer it gets that 80% of my value is repeating "don't die, don't lie to yourself" https://x.com/_ArnaudS_/status/1805638715739619679 https://x.com/_ArnaudS_/status/1805638715739619679
- hermitShell 1y ago
  Do you steer them away from ‘bad ideas’? Trying to recall pg’s essay, which was admitted sw focused, but the core idea is both worthless on the open market and essential to the ultimate success. Is this coaching ‘don’t become a statistic’ or ‘better luck next time’
FpUser 1y ago
They've started in a wrong place. To solve problems like this they need to create political party, not a company.
freeone3000 1y ago
One of the key takeaways belies the entire premise: if you want to build a housing fix for the UK, build it in America? After identifying a very real, pressing problem, they made a business to solve it. They were then more focused on building that business rather than fixing the actual problem. It seems like the takeaway is: don’t worry too much about the problems where you are, instead move to the US and write software.
clpm4j 1y ago
If a government truly wanted to fix a housing "crisis", wouldn't a ban on any type of corporate entity from buying single-family homes be an efficient solution? E.g., LLC's can no longer purchase single-family homes. Only real, live human individuals can purchase single-family homes. They could also try to implement some type of ban on any single individual person from purchasing more than 1 (or choose a number) single-family home.
- socalgal2 1y ago
  Why would that be a solution? What's the difference between the LLC that buys a bunch of homes and the LLC the builds bunch of homes. When the homes are done being built the LLC has morphed from an LLC that builds homes to an LLC that bought a bunch of homes. The solution to me is to stop preventing people and companies from building homes. https://www.youtube.com/watch?v=cjWs7dqaWfY https://www.youtube.com/watch?v=cjWs7dqaWfY Effectively, goverments and nimbyism prevent houses from being built. Even when some laws change to supposedly allow it other laws continue to prevent it. It's got nothing to do with LLCs buying existing houses, it's got to do with not enough houses period.
  - clpm4j 1y ago
    The solution lies in eliminating the entire concept of investment properties, and to classify single-homes as purely places to live. You do realize that part of "not enough" houses is due to corporate entities / investment vehicles / investors owning many properties. And the types of cities (dense, highly-desirable urban cities like SF, London, Paris) where the NIMBY people complain most often also happen to be the most common markets for these investors to purchase/own multiple homes.
    - socalgal2 1y ago
      > You do realize that part of "not enough" houses is due to corporate entities / investment vehicles / investors owning many properties. No, I do not realize this. This is only possible because of limited supply. If the supply was not limited by government and nimbys then it would not be profitable for "corporate entities / investment vehicles / investors owning many properties." It's also irrelevant, no amount of preventing "corporate entities / investment vehicles / investors owning many properties." will do anything to keep prices low as long as demand is high and supply is low.
kengoa 1y ago
Very interesting read, I wish more startups did postmortems like this. It seems like the authors managed to build a set of tools that provided real value that ultimately did not make commercial sense, but would've been interesting to see if this learning: > Scout was our most-used product. Its users weren’t our target market, but some were. We had vague ambitions to use it as an inbound marketing tool, but we never capitalised on it. This was a missed opportunity. was applicable in a conservative industry like real estate and government as lots of open-core companies operate on this model (e.g. free open-source software and marked-up hosted solutions).
mleonhard 1y ago
> We want to stress from the start that the ultimate failure of the company lies with us. This statement discounts how much random chance contributes to success & failure. Could the world's best founding team find and build a successful business in that field? Maybe. And even if they could, is it failure to be less good than the best? Not at all. > Stay lean until you have proven revenue. They raised a pre-seed round and used it to search for business opportunities. This seems like the normal way of doing a startup. > TIME AND MONEY SPENT ON NON-ESSENTIALS - These included an office, website and branding, a trip to America, contractors, and unnecessary employees. Having an office can boost energy and productivity. Taking a trip to US to connect with new advisors, investors, and other founders seems like a pretty normal thing to do. I think these founders are being too hard on themselves. They got an amazing education in entrepreneurship. They don't need to feel bad about it.
know-how 1y ago
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168 points by jamierumbelow 1y ago

andrewstuart 1y ago

>> After raising a £744,000 pre-seed round in April 2024, we explored several business models Capital after traction

dzonga 1y ago
to those who cry about 'BS' like diversity etc ask yourself if people without the same backgrounds, looks would have been able to raise the same amount without a business model.
- drdrek 1y ago
  The financial world is not equitable, its about results. People from privileged backgrounds are more likely to raise funds because their privilege makes them more likely to succeed. If Being raised in a trailer park raised the odds of a successful exit, you can be sure VC interns would be having business meetings over deep fried Oreos way more often.
  - devmor 1y ago
    This presupposes that VC firms generally know what is more likely to succeed, which is demonstrably wrong and the entire reason that the “eggs” are put into so many different baskets every season.
  - Urahandystar 1y ago
    Is that so or is it more likely to succeed because they can raise funds? The way modern VC works is just a packaging industry anyway. A VC will give money to a founder if he thinks that he can raise more money in the future. They'll get back what they put in from someone else before it fails.
immibis 1y ago
Good advice for investors, maybe - not for founders. Why would a founder turn down money?
hnthrow90348765 1y ago
I don't know, getting paid to try things out sounds like a good deal

pyb 1y ago

A good question to ask before starting a startup is : "Do I see myself working 10 years on this problem?". Looks like they ran out of steam, rather than out of runway.

bad_username 1y ago
Why 10 years? Is it not typical with startup founders to plan a lucrative exit in a much shorter time frame?
- pyb 1y ago
  No, where did you get this idea? Good startups do not think this way.
- flessner 1y ago
  > "Good startups usually take 10 years." - Sam Altman It also aligns with other Y Combinator teachings, such as targeting growing markets.
- drdrek 1y ago
  7-10 years is the realistic time frame for a moderately successful exit, usually those that are "Bought" after 1-3 years are actually failed ventures with all or most of the money going back to the investors to recoup their loses.
- _fat_santa 1y ago
  It seems high at first but take a look at practically any successful startup (Slack, Dropbox, Notion, etc) and they all were around for 8-12 years before the founders cashed out.

AJRF 1y ago

Thanks for writing this! > Housing in Britain is expensive because getting planning permission is difficult. Isn't the real problem that supply is artificially constrained because house prices and the economy are interlinked in a way in a special way in the UK economy, such that the majority of home owners don't want it changed (because more supply == downward pricing pressure) I think the only entity that could meaningfully change this situation is government, and well it's easier to not upset your donors. Edit: To be fair to the author, they do mention artificial supply constraints but I think my point stands - it is there by design, too much inertia forcing it to be that way that won't be changed by streamlining the bureaucratic elements

lalaithion 1y ago
One of the ways in which supply is artificially restricted is that getting planning permission is difficult, so you’re not actually disagreeing with OP
nemomarx 1y ago
is that a very special thing? it seems like that in the US too imo
Destiner 1y ago
I think you're describing NIMBY, which is more of a US/SF thing (but also is a case in Europe to some extent).
- zihotki 1y ago
  NIMBY is an universal human concept, it's present everywhere - Europe, Asia, South America. It may come in different flavours but it's everywhere. People don't welcome changes to the surrounding environment if it doesn't benefit them more or less directly.
  - dickersnoodle 1y ago
    It isn't as simple as "doesn't benefit them more or less directly". There are often projects that benefit some people that will actively degrade life for everyone else.

monkeydust 1y ago

Nice writeup, wish more startups who didn't succeed did this though understand not easy thing to write so kudos. One factor to success is timing, as someone who lives in UK around London and is seeing (slowly) greenbelt getting developed on perhaps the market might be moving towards you in the next 5 years.

ktallett 1y ago
I would agree but I doubt it will become more of a thing, too many seem to not be willing to accept failure or show vunerability. This will always be rare in the start up market as long as bravado and fake it till you make it is still a thing, which it is.

morsecodist 1y ago

This is interesting and they make some good observations but I can't help but think the deck was stacked against them because they are trying to come up with a technical/business solution to what is fundamentally a political problem.

OccamsMirror 1y ago
Yeah "founded to build software to fix Britain’s housing crisis." There was literally zero hope for success.
- hinkley 1y ago
  I know of an ISP that wrote a custom CRM/ERP solution in order to harass the less well behaved telecom company in town into doing their jobs when they said they would do them. So it would do things like send you a reminder to see if the approval or the hookup they promised you Wednesday was done so you could meet you customer’s expectation of having their Internet turned on by Friday. That’s probably the best you can do. Make it obvious to everyone including the bureaucracy what their externalities are doing, and either nudge them to go faster or divest some responsibilities to someone else.
mytailorisrich 1y ago
Planning permission is partly a political issue, partly down to expertise. You need experience, you need to know the rules, you need to know the tricks, you need to know how to draft the application. You need to know the game. Indeed this is not something that is waiting for a technical solution. It's great that they tried, though. But it strikes me that they seem to be 20 something students (not meant disparagingly) with no experience in this so perhaps lacked the insights and understanding of the pain points. It does seem that VCs were happy to fund based on an AI play, though ;)
- hinkley 1y ago
  My ex worked at a government contractor and they started paying the guy who wrote grant proposals more than the CEO because without grants they were fucked, and the grant writer was getting wistful for other horizons. Talking to government is a highly compensated skill set. That’s all lobbyists are.

dzonga 1y ago

well written. I think your fatal mistake even though you folks are smart was not understanding the complete value chain of your business. What I mean by understanding the economics of the value chain is you've to understand how your customers make money, how their customers make money & how their suppliers make money. From there - you can workout your value proposition - are you saving your customers money (means there's a cap on how much value you can extract) or are you allowing your customers to make more money (how much value you can extract is kinda uncapped - depending on mechanics) The other mistake - which you correctly kinda alluded to is not understanding the incentives / dynamics of the industry. UK land is tricky since most wealth / power is packed into UK land. hence your part about emotion etc. final mistake was equating success to raising money. Profit, if not revenue growth is the only measure of success. Raising money is not.

Etheryte 1y ago
I don't think the last paragraph is correct, many unicorns don't generate profit, yet are hugely successful by any other metric. In many cases, generating profit is actually undesirable for tax reasons.
- frankdejonge 1y ago
  I believe that why they said "if not revenue growth". Those successful, yet unprofitable companies do have revenue growth, or market share growth.
- mytailorisrich 1y ago
  Generating profit is highly desirable for any business. For tax purpose you need to differentiate between "profit" and "taxable profit". You can try to lower your taxable profit to minimise tax, e.g. by re-investing your profits, but ultimately it is better to turn a profit and to have to pay some tax on it that to have an unprofitable business.
  - Etheryte 1y ago
    Not necessarily, this is a classic misunderstanding. As a famous example, Uber did not make a profit for 14 years, all the way up to 2023. For taxable profit it's even more severe, they've built up a considerable backlog of losses, so they'll pay very little in taxes for the foreseeable future, even though they're now profitable.

flessner 1y ago

Very thoughtful writing and great to see someone cut it early instead of continuing without a clear path. > If I were to start a startup again, I’d take more time and be more intentional in talking to potential customers before needing to raise money. From the outside, this pretty much hit the nail on the head.

philipallstar 1y ago

> Housing in Britain is expensive because getting planning permission is difficult. It's true that planning departments are very expensive, don't do much positively, and still seem to allow awful-looking things to be built, and I'd probably happily do away with them, but the fundamental driver is the incredible onboarding of people from overseas for years that crushes the combination of the existing population and the new people into a number of dwellings that isn't that dissimilar to the previous year. You can't take on a net number of people each year that would require a new city the size of Nottingham to be built to accommodate, and say "well, it's all the planning process' fault."

froddd 1y ago
Reducing the problem to ‘people coming from overseas’ is an equally reductionist argument. There are properties going unused, for very many reasons. Second homes, holiday homes, etc. This also drives the price of properties up. This is one of the inputs to the problem. Planning permission laws is another input. The size and change of size of the people needing housing is another input.
- spacebanana7 1y ago
  Is it not the dominant factor, at least in the short term? It's much faster for 150k people to enter/leave the UK than for a corresponding number of homes to built/demolished.
  - macrocosmos 1y ago
    It’s obviously the dominant factor to anyone with the eyes to see it.
- chippiewill 1y ago
  It does, but occupancy rates in the UK are already incredibly high compared to countries like France. There are simply too many people and not enough houses.
- matt-p 1y ago

margorczynski 1y ago

I think the problem with startups (from a business perspective) is that they're ego-driven and instead of looking at the business reality in an objective fashion they mostly try to "revolutionize" and "make a difference". It isn't as sexy as doing the next Facebook or disrupting global healthcare but just copying an existing archaic & expensive product and doing it better can yield a great and stable business. There's a plethora of software products (offline & online) which cost way too much and work like crap - all you need to do is do it better for a more reasonable price (where those old companies have a big headcount and lots of mouths to feed producing a hard price floor for them).

belinder 1y ago
Now where to get a list of such companies and products to decide what to build...
- madmask 1y ago
  A decent 3d CAD and multiphysics FEM (cheap comsol) would be a good start
  - ph4evers 1y ago
    Yes but the industry is so rooted and vendor locked that it is extremely hard. People pay for Autodesk, Ansys, comsol etc. because it is proven and engineers are trained to use it. I would not be eager to use something new if I’m a constructor or car manufacturer.
    - nradov 1y ago
      Sure, a new startup will never get any market share in large, stable businesses like those. They would have to sell to other startups. New auto parts manufacturers pop up all the time.
  - qazxcvbnmlp 1y ago
    Yep, decent 3d CAD is expensive. Competition in this space would be fantastic

4ndrewl 1y ago

"address Britain’s housing crisis" It's a feature, not a bug.

matt-p 1y ago
up to a certain point, yes, asset holders do benefit from workers spending 50% of post tax income on housing. It is now restricting GDP growth, however - so long term it's not in many peoples interest.

djoldman 1y ago

I looked for a source for this statement in the article: > Granting permission takes the median hectare of land from £20,000 to £2.4 million - a 139x uplift. I couldn't find one. However, I did run into some interesting viewpoints by a certain Paul Cheshire, Professor Emeritus of Economic Geography at the London School of Economics... "one of the world’s pre-eminent housing economists" He has this to say about "Green Belts": > Britain imposed its first Green Belt in 1955 and now, if re-zoned for building, farmland at the built edge of London has an 800-fold mark-up. There was no secular trend in housing land prices in Britain until the mid-1950s, but after Green Belts were imposed real prices increased some 15-fold. More than houses because you can substitute land out of house production. There is a similar pattern in Canada, New Zealand or the West and East coasts of the United States where policies restrict land supply. https://www.newgeography.com/content/006358-lse-economist-paul-cheshire-urban-containment-and-housing-affordability https://www.newgeography.com/content/006358-lse-economist-pa...

matt-p 1y ago
I have not researched this but someone I know at one of the big house-builders pegged the cost of building a 3 bed at around £35-40,000, so in the south east land with PP is 10X more valuable than what's sat on it. "Farm" land, even in the SE is about 12K an acre, and you get 6-8 houses to the acre so you should be able build a three bed and sell it for £50K on the outskirts of London, Cambridge, Oxford or Brighton (just by example) still making a profit if we liberalised planning in those areas. That shows you how extreme this situation of fake constraint is. It could therefore never be allowed to happen. The big house-builders wouldn't build and sell at that price, the locals wouldn't allow it as they've bought their houses for 500K, 10X as much and would literally all go personally bankrupt...
gnfargbl 1y ago
> I couldn't find one. A parliamentary publication from 2018 estimated the uplift factor to be 93x outside London and 287x inside [1]. Found via ChatGPT. I would think that the north-south variation has flattened a little bit by now, but I can't immediately find any similar document from the last couple of years. [1] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/407155/February_2015_Land_value_publication_FINAL.pdf https://assets.publishing.service.gov.uk/government/uploads/..., page 12. [2] https://www.progressive-policy.net/publications/gathering-the-windfall-how-changing-land-law-can-unlock-englands-housing-supply-potential https://www.progressive-policy.net/publications/gathering-th...

tiffanyh 1y ago

A lot of time & effort went into that write-up. I realize what I'm about to say will get backlash ... but I can't help but think is the time to write this postmortem indicative of how the business was run. Meaning, who benefits from the output of this postmortem? Seems like mostly strangers (who might not even live in UK). What other time/effort/resources was spent on things that weren't directly engaging with their customer ... because it seems extremely clear without knowing much about that market that this isn't a technical challenge per se - but a regulatory / social problem and the modest amount of capital they raised won't even scratch the service on solving this problem. Note: not intending to be negative. It just seems like the elephant in the room is that the team was so ill-prepared and not understanding what actual problem they are solving - that my heart goes out to them.

spacebanana7 1y ago
> this isn't a technical challenge per se - but a regulatory / social problem and the modest amount of capital they raised won't even scratch the service on solving this problem. Stripe hasn't fully fixed online payments but still made a good business of making things better. At a high level, SaaS to help people filling out planning permission forms sounds like a viable business. Many thousands of people do this as their full time job, so their employers might be willing to pay £100 per user per month on something that makes them more productive.
shalmanese 1y ago
> Meaning, who benefits from the output of this postmortem? Seems like mostly strangers (who might not even live in UK). Seems to be a piece of content marketing intended to help the two founders land a new role in the US so, in that sense, it does seem pretty strategic and well targeted.

maxehmookau 1y ago

> In May 2023, Tract was founded to build software to fix Britain’s housing crisis. I mean, they took on a heck of a problem. At least they tried, but I suspect it was an upward battle from day 0.

ejsdev 1y ago

I wrote something similar to this last year - it was an incredibly cathartic writing experience. It's extremely weird to realise that you're hung up on a business venture from years before, but made a lot of sense. FWIW I am never doing a 3-way marketplace again, hellish. If anyone is interested - https://edjs.dev/blog/my-first-startup/ https://edjs.dev/blog/my-first-startup/

curtisszmania 1y ago

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shalmanese 1y ago

When I coach startup founders, I walk them through a very simple 4 step process when we meet: 1. What have you learnt since we last met and how has that altered your priors? 2. What do you now believe is the most important problem you should be solving? 3. What's currently blocking you from solving that problem? 4. How do we overcome those blocks? Crucial to this process is that Q1 is not what have you done, it's what have you learnt. I do not give a shit about anything you've done if it's not in the service of learning. I also run a retro every 3 months with founders where we ask the following questions: 1. What would you want to tell yourself 3/6/12 months ago (essentially, all the lessons learnt in italics) to save the maximum amount of pain? 2. When did you learn each specific thing? 3. When was the earliest you could have learnt that thing? 4. What changes can we make going forward to minimize that delta? Extremely simple things but extraordinarily powerful when applied consistently over a long enough span of time.

mrweiner 1y ago
Thank you — the way you frame this is helpful.
monkeydust 1y ago
This is good especially 1. bit of Bayesian thinking thrown in. I find a lot of founders ask for feedback, advice and just carry on doing what they were going to do anyway, perhaps convince themselves that the advice backs up their thinking when it doesn't. Not everyone of course but a lot, hence why I like your question.
- shalmanese 1y ago
  I think the linked tweet from the article explains it better than I could: > The more time I spend advising founders, the clearer it gets that 80% of my value is repeating "don't die, don't lie to yourself" https://x.com/_ArnaudS_/status/1805638715739619679 https://x.com/_ArnaudS_/status/1805638715739619679
hermitShell 1y ago
Do you steer them away from ‘bad ideas’? Trying to recall pg’s essay, which was admitted sw focused, but the core idea is both worthless on the open market and essential to the ultimate success. Is this coaching ‘don’t become a statistic’ or ‘better luck next time’

FpUser 1y ago

They've started in a wrong place. To solve problems like this they need to create political party, not a company.

freeone3000 1y ago

One of the key takeaways belies the entire premise: if you want to build a housing fix for the UK, build it in America? After identifying a very real, pressing problem, they made a business to solve it. They were then more focused on building that business rather than fixing the actual problem. It seems like the takeaway is: don’t worry too much about the problems where you are, instead move to the US and write software.

clpm4j 1y ago

If a government truly wanted to fix a housing "crisis", wouldn't a ban on any type of corporate entity from buying single-family homes be an efficient solution? E.g., LLC's can no longer purchase single-family homes. Only real, live human individuals can purchase single-family homes. They could also try to implement some type of ban on any single individual person from purchasing more than 1 (or choose a number) single-family home.

socalgal2 1y ago
Why would that be a solution? What's the difference between the LLC that buys a bunch of homes and the LLC the builds bunch of homes. When the homes are done being built the LLC has morphed from an LLC that builds homes to an LLC that bought a bunch of homes. The solution to me is to stop preventing people and companies from building homes. https://www.youtube.com/watch?v=cjWs7dqaWfY https://www.youtube.com/watch?v=cjWs7dqaWfY Effectively, goverments and nimbyism prevent houses from being built. Even when some laws change to supposedly allow it other laws continue to prevent it. It's got nothing to do with LLCs buying existing houses, it's got to do with not enough houses period.
- clpm4j 1y ago
  The solution lies in eliminating the entire concept of investment properties, and to classify single-homes as purely places to live. You do realize that part of "not enough" houses is due to corporate entities / investment vehicles / investors owning many properties. And the types of cities (dense, highly-desirable urban cities like SF, London, Paris) where the NIMBY people complain most often also happen to be the most common markets for these investors to purchase/own multiple homes.
  - socalgal2 1y ago
    > You do realize that part of "not enough" houses is due to corporate entities / investment vehicles / investors owning many properties. No, I do not realize this. This is only possible because of limited supply. If the supply was not limited by government and nimbys then it would not be profitable for "corporate entities / investment vehicles / investors owning many properties." It's also irrelevant, no amount of preventing "corporate entities / investment vehicles / investors owning many properties." will do anything to keep prices low as long as demand is high and supply is low.

kengoa 1y ago

Very interesting read, I wish more startups did postmortems like this. It seems like the authors managed to build a set of tools that provided real value that ultimately did not make commercial sense, but would've been interesting to see if this learning: > Scout was our most-used product. Its users weren’t our target market, but some were. We had vague ambitions to use it as an inbound marketing tool, but we never capitalised on it. This was a missed opportunity. was applicable in a conservative industry like real estate and government as lots of open-core companies operate on this model (e.g. free open-source software and marked-up hosted solutions).

mleonhard 1y ago

> We want to stress from the start that the ultimate failure of the company lies with us. This statement discounts how much random chance contributes to success & failure. Could the world's best founding team find and build a successful business in that field? Maybe. And even if they could, is it failure to be less good than the best? Not at all. > Stay lean until you have proven revenue. They raised a pre-seed round and used it to search for business opportunities. This seems like the normal way of doing a startup. > TIME AND MONEY SPENT ON NON-ESSENTIALS - These included an office, website and branding, a trip to America, contractors, and unnecessary employees. Having an office can boost energy and productivity. Taking a trip to US to connect with new advisors, investors, and other founders seems like a pretty normal thing to do. I think these founders are being too hard on themselves. They got an amazing education in entrepreneurship. They don't need to feel bad about it.

know-how 1y ago

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