Angara.com sells fine jewelry around the world, specializing in sapphires, rubies, emeralds, tanzanites, diamonds and other precious gemstones.
There's a very fine line between confidence and overconfidence. When I started Angara I was really on the wrong side of that line.
Going back to when we started, I was pretty confident that we would take off immediately. We hired some pretty strong, top-level talent—senior people from the jewelry industry as well as executives from Fortune 500 companies. It was a stellar team but it wasn't really used to a scrappy start-up environment. So that was kind of a skill set mismatch.
Subsequently, the site took a lot longer to launch than we anticipated. We also launched with a very broad product assortment, so we were selling everything in the jewelry industry. We kind of wanted to dominate the industry from the first day. But once the site did finally launch, sales came in like a trickle. So we were burning cash like there was no tomorrow but the sales weren't coming in. One mistake we made was trying to get a perfect site experience before launching it.
When you have very little cash left, you're forced to make very quick and very important decisions. So very quickly we reduced the team to the very core needed to survive. We cut 80 percent of the team. We off-shored a lot of the elements within the team, and then we had a new team that was very happy not taking a salary to make sure the company survived.
We started focusing on just one product category where we felt we had a very strong competitive advantage—color gemstones jewelry—where we had generations of experience and the lowest-cost sourcing in the US. So all of a sudden by doing a couple of very simple but painful things the business started to make sense. I think the overconfidence led us to have a very senior team with a very high expense structure without anticipating the possibility that the sales wouldn't come through immediately. We had a very high burn rate.
The only thing I knew for sure is that the company would survive and thrive. I just had to do everything I could to make that happen. I never had doubt that we would come out of it, but it was certainly very stressful.
Launch a minimum viable product, iterate like mad and get customer feedback as soon as possible.
The first lesson learned I think, was to always make sure that the revenue comes before the expenses. So we should launch a minimum viable product, iterate like mad and get customer feedback as soon as possible.
Also, test small and run large. Run a bunch of mini-tests at the $20,000 range before you spend $1 million or $5 million on that particular strategy.
The third lesson that we learned is that we have to focus on getting one idea or product category right before going on to the next. So we don't take on too much. We take on a very specific thing, get that right, and then go on to the next thing.
We had to build competitive advantages into the company and maximize our core strengths.
Follow Angara on Twitter at @Angara.
Photo courtesy of Ankur Daga.