John Rush’s Ups and Downs in Building Startups

John is the founder of MarsX Inc, the 'Operating System' for software development. He has built 20+ products and scaled to 10M+ users on b2b2c with $2M+ ARR.
Guest Author: John Rush

Series A went totally wrong for my startup 🙁

[Seed]
After graduating from 500 Startups & and raising seed, our mobile app startup pivoted into b2b saas.
We quickly found PMF, got a bunch of clients lined up, and our team was working 100 hours a week to deliver.

[2019] Series A
Our TAM was too small for a unicorn, so investors wanted us to expand it.
I had mixed feelings about it, but all I saw around were the startups in growth/unicorn mode.
So we expanded.
We added more verticals, more products, more people, lots of sales force, and hired super expensive sales experts and marketers.
We put loads of money into paid marketing, sponsored conferences, and media.
It was all done just like in the Silicon Valley playbook.

[2020] All IN
Covid lockdown. All our customers are closed and don’t know when to reopen.
We’re burning cache like WeWork in their worst days.
The whole strategy fails.
We added a bunch of new verticals, and suddenly our product is not great for any of the verticals, just average, like the competitors.

[2021] Failed
We keep losing all the money we raised. We know the whole model failed. We know we can’t make it to work. But we can’t turn the ship.

[2022] Out of cash
We run out of investor money.
But we still can’t turn the ship. At that time I was a CTO. The CEO ghosted the company. The whole thing is heading toward oblivion. We spend our last money. I put my own money to keep things afloat and pay salaries to the devs.

[2023] Pivot
I don’t know what to do. I can’t watch the company die.
I tell the board: we need to change the course. We need to give up on a unicorn dream. We need to turn into a regular mid-size profitable business.
It took me 1 year to convince the board and chairman.

[The Change]
We cut all sales and marketing people.
Cut costs on everything.
Stop all sponsorships and pretty much everything that’s not development or support.
We transform into a product-led company.
I jump on a call with each client and tell the whole story, as it’s. It turns them into a loyal friend and they turn into our ambassadors and start bringing new leads.

[NOW]
In 3 months we turn into a profitable business that’s growing.
We have great margins.
We do only one product for one niche, but we’ve got the best product in the world for that niche and the sales are back.

[TakeAway]
Not all ideas can be unicorns and need investor money.
My company was pretty much killed by Series A.
I pivoted it at the end and managed to bring it back to life.

[FUTURE]
I’m not building unicorns anymore.
I’m not aiming for series A or IPO.
My mission is to build profitable businesses that do one thing really well for one niche. So that we’re the best in the niche.
It means most of my products won’t make more than 1M ARR. And this is fine. This is the new world.

[We’re a profitable business now]