How to fail with big investment, great team and concept…and how to rise back

Show me where you fucked up, so I can learn from it

Most of the times media is only showcasing success stories. Oh, look at this startup: they got X investment/ they won a startup competition/ they reached Z users. But little do they tell about the road to get there and about what happens after. Little do they tell about failures so other aspiring entrepreneurs can learn from it.

Do not get me wrong, I do not blame media, they are businesses and in order to survive they give their readers the stories they want to know. Hence, is in the power of the readers to get over admiring iceberg tips and to ask for more. Good entrepreneurs are those with feet on the ground, not in fantasy land.

[eRepublik Labs case – part1] – How a startup can fail after raising 2.75M investment, winning important startup competitions and working with great people

Founded in 2007 and with offices in Dublin, Madrid and Bucharest, eRepublik Labs is revolutionizing the way strategy games are created, distributed and played by leveraging the power of communities and the Web. eRepublik, its first massive online social strategy game, is set in a mirror version of the real world. eRepublik Labs has received by June 2009 a total of 2,75M in funding from various Angels including Brent Hoberman, Stefan Glaenzer, Mihai Crasneanu, Alexandre Almajeanu, Diego Meller, Philippe Seignol and the VC firm AGF Private Equity.

When they got the VC funding in June 2009, TechCrunch was describing eRepublik Labs in the following way: “eRepublik website is said to have received over 3.7 million visits in May, with citizens from some 200 countries having spent over 55 million minutes and generating 95 million page views navigating the virtual world during that month. Pretty impressive for a small European company (eRepublik Labs only has 30 employees). The fresh funding will be used to extend eRepublik in terms of new features: eRepublik co-founder and CEO Alexis Bonte says they’re only at about 25% of what the game should become in the near future.”

To this, add as well several important prizes eRepublik won:

  • December 2007. Special Jury prize: best European Startup @ LeWeb3 2007 awards
  • October 2008, wins the TechCrunchPitch! Competition for startups at FOWA 08
  • April 2009, eRepublik Official Honoree of the 13th Annual Webby Awards
  • July 2009, eRepublik “highly commended” (2nd place) for the TechCrunch Europa award for Best Entertainment Application or Service (EMEA)
  • August 2009, eRepublik enters the TechCrunch Europe Top 100 startups list (22nd)

Everything sounds damn good, right?

Well, things started to fall apart afterwards. George Lemnaru, Co-Founder and CTO: “At eRepublik we had all that they say makes a great startup: great team, 2M VC funding, great concept. And we failed. One year after we got the funding, the sales were collapsing, all the 2M were spent, the team was frustrated.” One of the reasons he mentioned was the decision making process: the regular rare board meetings, no empowerment for those who really work on product and interact with the users etc.

[eRepublik Labs case – part2] – How a startup can prevent its death

The company was going towards a dead end, but the two co-founders took action to try to save it. George Lemnaru and Alexis Bonte made big changes and applied lean principles. The result? “In one month we doubled the sales and in 6 months we increased the sales by 6 times.” said George. They changed the decision making process, they were releasing faster and learning faster, they run user tests, they split people in smaller teams etc.

In the video below, released recently in September 2012 by George for my blog after a conversation we had at a conference (many thanks!), he is looking back at the experience and gives entrepreneurs 6 advice on how to apply lean development:

1) Choose your goals and a few KPIs that define the success of your company

2) Iterate fast. The faster you put things live, the faster you get feedback

3) Stop building tons of features and start building an experience

4) Give yourself the freedom to change the roadmap. Because it is not the goal, but the tool

5) Do not follow deadlines, follow results

6) Do not be afraid to take big risks, without risk you cannot surprise people

And they lived happily ever after….aaah, actually why not start over?! After this experience of launching a great startup, failing, learning and being able to make it rise again, George took recently a non-executive position at eRepublik Labs and is now starting another game business: Green Horse Games. He says that now it looks easier because of the learning experience and he has much less uncertainty.

Let’s wish him a great second start and evolution!