Founded date: Oct 2015
Closed date: Jul 1, 2018
Company description: Oratio helps businesses to connect with their customers on messengers like WhatsApp, Facebook Messenger, Telegram and others through personal conversations and chatbots.
Crunchbase profile: crunchbase.com/organization/orat-io
Location: Vienna, Wien, Austria
Founders: David Pichsenmeister, Bernhard Hauser
Number of Employees: 1-10
Founder Twitter: @pichsenmeister
Reason for failure: Too much dependency on other platforms
Submitted failure story: From hero to zero — closing my 3rd startup
(original post on medium.com/@pichsenmeister/from-hero-to-zero-closing-my-3rd-startup)
Exactly one year ago I wrote an internal memo to our team proposing to change our strategy from a short term opportunity to a long term mission. One year later, we are out of business.
The company I’m talking about is called oratio, which I founded together with my co-founder Bernhard in 2015. Oratio is a customer communication platform which helps businesses to communicate with their customers on messengers, through personal live chat and automated chatbots. During the first 2 years, we grew an international, remote team of 9 people and grew our MRR to USD 20k. Unfortunately we weren’t able to keep that pace.
When we started in 2015, basically none of the messaging platforms had APIs to manage messages through 3rd party providers. So we just started building it on our own. Soon most of the messaging platforms launched an API and we integrated it. Except WhatsApp.
As one of the few companies making WhatsApp accessible for teams in a stable way, we got quite some interest from the market. Our solution was always meant to be a bridge solution and not build to scale. We basically uploaded Android Emulators to the cloud, installed WhatsApp and remote controlled these instances (= crazy shit). At some point most of our resources went into creating new WhatsApp instances, keeping them running and maintaining new WhatsApp versions rather than improving our product. For me that was a clear sign that this approach won’t work in the long term. So I drafted an internal note to our team suggesting to deprecate WhatsApp, fully aware that our cash flow will drop heavily, but with an optimistic mindset that focusing on our platform will help us on our long term mission and optimistic that we will be able to close our seed round. I was wrong.
Internal note suggesting to deprecate WhatsApp on April 24, 2017
What followed was a huge (expected) decline in MRR and usage. We started focusing more on our product and quickly realized that what we have built was not enough to retain nor grow our user base. Even though we focused our resources on our product again, it was too late. Without the ability to close the very needed funding round, the huge drop in MRR and only a small amount of money in the bank we weren’t able to sustain our team anymore. By end of September we were that close to running out of money, we had the take the final decision to dismiss all our employees (which was just 3 days before our annual ChatbotConf). It was one of the hardest decision we as founders ever had to make.
Even though the last 3 years were quite a rollercoaster, I really enjoyed working on oratio. Not only we had the luck to hire an amazing bunch of people (Thanks Bernie, Rene, Ash, Piotr, Vilyana, Viktoriya, Ioana & Karyna for being part of it) and basically building up the messaging and chatbots market from the ground, I’m furthermore very happy for all the things I learned during this time:
Transitioning my role from a technical co-founder to a Product Manager & Team Leader
Learning the importance of Company Culture & Community
Building a remote team
Learning how to manage people, teams, products and users
Becoming a better writer and speaker
My biggest takeaways
Don’t build your startup solely on other platforms
Our business was completely dependent on other platforms (like WhatsApp, Facebook Messenger, …). When Viber changed their strategy from allowing all businesses on their platform to just global brands, our growth for new Viber accounts basically stagnated. Recently Facebook announced that they stop reviewing or allowing new Messenger Experiences or Bots to be published (March 26, https://messenger.fb.com/newsroom/messenger-platform-changes-in-development). This block affects many bot startups since more than 4 weeks who can not onboard new users and nobody knows when this ban will be lifted.
Even though many other people advised not to build on top of existing platforms, I ignored it. Now I regret it.
Other companies move at a different speed and have a different focus
When we started out in 2015, basically none of the messaging networks had an API. So we started building it by ourselves. Soon most of the platforms released an API which we integrated then. Except WhatsApp. In 2016 they announced an API, today there’s still nothing in sight.
Ride the hype, but don’t build for it
Hypes come and go and they are often a huge opportunity for growing your business. But if you build your business only around a hype, then you depend on it and if the hype goes away, your business does as well.
Building startups is hard
That wasn’t exactly new to me, the fact I learned is that it doesn’t get easier along the way. For every challenge and milestone you achieve, new ones come up. It’s a never ending story of learning, adapting and evaluating.
Company Culture matters from day one
Company Culture is hard to build but easy to fuck up. It’s an ongoing process which starts with you, the founders, and will mutate with every person you hire. It’s never too early nor too late to think of the values you want to establish in your company.
What works for others won’t necessarily work for you
You can’t copy products, features or marketing strategies and expect them to work the same way it worked for others. Sometimes they do, sometimes they don’t. Market dynamics change and your target users are rarely exactly the same as the target users of others. The only way to find out what’s working is through trial and error, ideally without losing too much time or resources on that.
You are never immune to failure
Many of the mistakes we made, I heard or read about them before. We often have the habit to disregard failures of others as they couldn’t happen to us. But they will. So you better listen to others and learn from them.
What’s up next
Every new beginning comes from other beginnings end, meaning I’m open for new challenges, preferably as a Product Manager or Product Engineer. If your company currently has open career opportunities where I would fit in, I’m happy to talk.
Since finding new career paths is not always an easy task and often takes a decent amount of time, I started a small product studio called PI Venture Labin the meantime with a friend of mine, Emanuele. Our goal is to build new products, help existing companies and support startups. More information can be found on our website, check it out!