1 year building Kosmo

6 things that everyone tells you before starting a business. The same 6 things that no founder ever listens to.

Around one year ago I started to build Kosmo. Before that I had an amazing career growth at foodpanda. From that comfy role at foodpanda I always read that starting a business is super hard, that only a few make it… and all of those topics that I am sure you’ve always heard before.

But I thought I was smarter. That I could skip all those challenges and that I would be the one making it - for sure. Now, one year later, I still think that I am the one who makes it. But now I finally understand what those people say when they say that building a business is very hard.

It is quite ironic that it is me coming to share the challenges around building a business. During that year I learned many things about what it takes to build something successful. Let me share the key learnings of 2022.

You need to believe in the idea like crazy, else you will surrender

You will face many challenges that will make you doubt if you can actually build something successful. If you don’t believe in the idea like crazy, you will surrender. Let’s face it, there is a big opportunity cost in starting something. Your friends are still having a good job and making good money with no risk. If you don’t believe in it a lot you’ll go back to the comfort of a corporate job. So before starting, make sure you really believe in this and that you like it enough to work 10 years on it.

Build something where you have an advantage, else you will lose

Building a business is hard per se. There are many problems you need to solve, besides the customer problem. You need to do legal, build a team, manage finance, sell, onboard, ensure ops work, etc. And when it comes to solving the customer problem, you need to be very knowledgeable in the industry to understand how to iterate. You will not solve the problem at first. You’ll need to work with that customer to understand their pains and slowly iterate to solve their problem. The customer will not tell you what they need. You need to read it in their answers.

Now, at Kosmo, when we face issues I kind of now the answer. I dealt with riders and logistics before. I know the ins and outs. And I still face new things every day. But I know what makes and what does not make sense. If I would be building a fintech company I would struggle way more.

Rule: build something you’ve been working on for years. Knowledge compounds.

Patience is key for the success of the company

You start a business and you want to succeed tomorrow. Well, not really. If it would be so easy everyone would make it. Building something great takes years. Not 3. Not 5. It takes at least 10 years. So don’t expect to sell $5M in your first year. Work hard to make it happen, yes. But be realistic. Most likely you are hurting yourself more than anything if that’s your goal. You’ll be selling a raw product. You will not make customers happy. You’ll build a broken organization. Lack of patience triggers anxiety. Anxiety makes you make dumb decisions.

In August we did not have even 20 customers. And we went to automate sales with the goal to get to 1k merchants. Why? Really, why? Why the rush? We did not even validate that the product worked. Just the greed to go fast. And guess what? We spend 1-2 months trying to automate reach outs and sales via Dripify and we signed 0 customers doing that.

All of that for lack of patience. Since then we’ve taken a slower, and better approach. The sales of mid September onwards have been much more artisanal and one by one. Success has been way higher.

Sales is really hard

When I was at foodpanda I always undermined the role of sales. I thought that building is what’s hard. It’s easy to sell a great product, right?

I remember Pedram - my boss by then, always told me that sales is really hard. That’s why the best paid business people are not ops, but sales. I never believed him.

But yes, now I agree with him. Sales is the hardest function in a business. You can have the best product in the world, but if you don’t know how to sell it… bye bye. It is not a science and the feedback loops are long. It is a combination of art, emotions and persistence. Businesses have their own problems and enough people selling to them. They don’t have time for you. You got little time to figure out how to sell them your product.

You got one chance. Detect the problem. Communicate the benefits of your solutions to the right person and at the right time. Price it at the right spot. Make it easy to use. And above all, make sure they like you.

Managing your runway

I think that’s the hardest when it comes to managing a business. You raise some money and you need to decide how to allocate that capital. The more you spend, the less time you have to figure it out. The less you spend, the more time you have. The problem? You don’t know what a good runway is. In the past years where money was free you could have a 10 months runway and you’d be fine. Nowadays if you are below 12 months you might die.

We raised close to $1.5M. When you have all that money in the bank account and you are 3 people you feel like it never ends. And that’s risky. We went a bit too fast and by August we lost sight of it. In September we burned 85k euro and we had a really raw product that was not ready to sell yet. At that pace our runway was quite tight. We immediately made some changes (on both the revenue and the cost side) and we are finishing December burning 55k euro.

I think it’s key to have a long runway to try out things, let the market know about you and evolve the product to be ready to be adopted. Now we have clear checks in place to ensure we can last long enough.

Building a strong team is hard

One thing is managing a team in a corporate environment, the other thing is managing a team in your own early-stage business. In a corporate, if someone in your team is not top you’ll survive. In your business, if someone in your team is not good that might make you die.

We are building remote, so that makes it even harder. You have limited money so you cannot waste it on people who don’t perform. And you need to build a team that likes to work on this problem. By default, people get paid less in an early-stage business than in a corporate. In exchange they have a bigger sense of belonging and they are building something they believe in.

We’ve had quite some bad experiences so far, but we let them go fast. It is critical to let go and move fast. If something does not work, best is to say bye and move on.

Having said that, I think we’ve build a super solid core team that has already been together for more than half a year. Atmosphere is great and everyone is autonomous and independent to move things on their own. Really proud of this!

We end the year very strongly. Those challenges become learnings. Those learnings get us closer to success. 2023 will be a great year.

— This is just the beginning.