I Exited My First Start-up at the Age of 8: What I Did and What I Should've Done
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In a regular person’s world, they say an epiphany occurs once. In an entrepreneur’s world, an epiphany occurs five times – during your first hire, your first failure, your first sale, your first fundraise, and your first exit.
At the age of eight, I experienced all these with my first venture.
It was a hot summer day in the middle of June. Too hot for schools to remain open and heat sweltering enough to ground an eight-year-old from being out kicking a ball. Between the walls of an air-conditioned room, a tetra-pack of mango juice guzzled down, I was a pre-adolescent filled with energy and limited options to spend it on. This pent-up energy was the inception of my entrepreneurial escapades (much before I knew how to spell either of these words).
My parents recognized fairly early into the vacations that leaving me idle in a room waiting for the heat to subside would be a mindless and wasteful activity. It was right then they gifted me a ‘DIY Tattoo’ set, filled with two crazes of the early 2000s packed in one; sketches of Pokémon characters and stencils equipped with colors filled in blow pens.
Living among other apartments, I wasn’t the only eight year sitting indoors during the holidays. There were 250 other homes, and out of them, in one-fifth were friends around my age, with whom I’d go onto spending a majority of my growing years.
Every weekend I’d attend an arts class at my friend’s house, who lived three stories above me. It was his mother who taught us, and her son was by far the most advanced artist in a class that concentrated on learning how to color in boxes. We sat together because he could teach me how to paint, and I had a knack for talking in class, which meant I was punished by sitting next to the most reliable student.
It was during one of these weekends when he saw a smudged mark on my arm. There were hints of yellow mixed with black, with the feintest clue of an abstract version of a ‘Pikachu’ just about recognizable, that caught his attention. It wasn’t much of a surprise that like me, he was another Pokémon fanatic, so we got talking. Before we knew it, we both agreed to meet the next day, to make tattoos together.
We sat for two straight hours, which in the time zone of boys our age was equivalent to being still for an entire day. In that time, we made over ten different tattoos. That was seven more than I could manage in one week, and each of them resembled the sketches given to us in the kit’s manual. All that was left to do (or so we thought), was to plaster all these tattoos on ourselves and show them off to our friends when we’d go to the park for a daily ritual, playing football.
The tattoos didn’t only stick, they looked professional to the eyes of all our friends as we showed them off the very same day. Soon, we had an order book of more than 20 requests to fulfill, and that was the start of a start-up that would scale too soon.
It was day two in the office, which was my bedroom floor, scattered with newspapers to avoid any spillage. It was our makeshift co-working pad, and we realized we had a lot of work on our hands. It was both sets of teams we would usually play football with that requested to get inked. Little did we know they became the target group for our first proof of concept leading to everlasting principles from our first venture.
The Art of Hiring
The most important decision was hiring a co-founder who was more skilled than I was at coloring in the tattoos. It was his ability to shade immaculately that increased the quality of the product. While I was good at stenciling, he would color them in and without realizing, we created a supply chain method that worked without either of us interrupting our flow. Following a horizontal structure to our two-member organization enabled us to maintain quality as we respected each other’s tasks.
When it came down to selling, we both sold the tattoos door to door. This turned out to be one of the most important learnings because to this day I believe that an entrepreneur is a salesperson and should always be selling. On certain days, he’d pitch and on some I would, and soon we got the hang of one another’s approach and began complementing our sales pitch. There was team effort that inevitably came into action.
Our initial set of clients was the one we related to the most. The group of boys we played football with, all of whom resonated with the designs we offered. They became a validation to our product, and ambassadors adorning the tattoos on their arms like a mini cult being formed. We even pasted the tattoos for them with no extra cost, to ensure the quality of service matched the product. After all, it is your client that helps you reduce your marketing costs, and that’s exactly what happened.
The value of word of mouth played its part. It wasn’t just our friends who wanted tattoos but their siblings too. Expansion was on the horizon and we weren’t prepared for it.
While our business was generating cash with healthy margins, the demand increased two-fold, as parents began ordering twice as much for their children, and this led to a change in demand basis the quantity and variety of tattoos. We realized it was the boys that liked smaller tattoos with darker colors, and the girls liked the bigger tattoos with the same color tone as what their closest friends chose as well. This became data before we knew its value, for us to make tattoos in batches.
In order to cope with this, we borrowed another tattoo kit worth of money from our parents. (Thinking back, we never had to pitch to raise capital because we went to investors that believed in our product and neither did we set a valuation, making me wonder, what terms would we have settled for back then?)
Our success saw failure fairly early in the form of increased quantity leading to a decrease in quality. We had scaled too quick and this was not the number of orders we took but more so the scattered variations. What we forgot to acknowledge was that our product was doing well not only due to its uniqueness but the quality over the other tattoos in the market. We spread too thin and forgot the basic principle of generating revenue; ‘create loyalty among your customers and soon you won’t spend a dime on marketing’. However, we began focusing on newer buyers each day, completely forgetting that our product could be consumed more often as it was after all temporary tattoos. But we were clearly high spirited eight-year-old entrepreneurs that saw an increase in sale, blindsiding us from an inevitable decrease. Our original customers started settling for tattoos that came complimentary in chewing gums sold at every store for merely one rupee, and before we knew it, our tattoos lost their novelty.
‘No product is expensive, there is always a market for it, but when you try and sell to everyone, your product no longer has a value, it has a price tag and that’s when selling gets hard.’
Ego and entrepreneurship are two words with the same letter that should never see eye to eye. Our numbers decreased, and we had an inventory of tattoos to spare. Luckily, we both remembered that our love for tattoos made us start this adventure, so we painted ourselves with the remaining, and called it quits.
We had money in the bank, and as youthful shareholders, split the dividends before we saw the plateau lead to a decline. This came at the right time, as schools began to re-open from the holidays, and adorning tattoos wouldn’t be permitted. Our products would no longer be accepted, and it was the easiest exit we saw (no paperwork, no shareholders to repay and no handover period).
In hindsight, the first hire was the best decision, and staying with our target group was smart too. I would’ve created an ESOP pool to get more partners on the road. We could’ve hired the same clients as our salespeople and spread the word but chose to stay boutique. We made more than an eight-year-old could. The exit gave us a better multiple than we could calculate but the learnings are what I value the most, coming in handy today.
To this day, I only wish I didn’t spend all the earnings buying junk food and invested in getting better at sketching.
The most important bit in what we did was we had fun, which taught me a key tool, to be an entrepreneur; we need to stay excited as an eight year old, needless of the outcome, the excitement will concoct means to grow as you enjoy what you started.