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What Shutting Down Your Startup Feels Like - Avni Patel Thompson of Poppy with Kat Manalac
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Avni Patel Thompson founded Poppy, which helped parents book the best caregivers. They went through the YC Winter 2016 batch and recently shut down. Avni asked to come on the podcast to talk about what the process of shutting down was like. http://avnipatelthompson.com/ https://twitter.com/APatelThompson Kat Manalac is a partner at YC. https://twitter.com/katmanalac The YC podcast is hosted by Craig Cannon. https://twitter.com/craigcannon *** Topics 00:05 - Kat’s intro 00:45 - Avni’s intro 1:45 - When did it become clear that scaling Poppy wasn’t working? 5:20 - Experiments Avni tried with Poppy 9:25 - The last six months of runway 12:55 - Choosing to shut Poppy down 16:55 - Pivot or shut down? 19:40 - Who did Avni have these hard conversations with? 24:05 - Communicating with investors during the process of shutting down 30:50 - How does Avni feel since shutting down Poppy? 38:00 - Tying self-worth to your accomplishments and how it feels after shutting down 39:00 - “This is what trying looks like.” 43:30 - The effects of having raised money 45:30 - Starting to think about what’s next 48:30 - Struggling with unstructured nothing 49:15 - Kindness
Segments Timeline
Meet the Hosts
Kat Manalac introduces herself as a partner at Y Combinator and shares her experience with Avni Patel Thompson, the founder of Poppy. This segment sets the stage for the discussion about the challenges of running a startup and the emotional journey of shutting it down.
"cat you haven't been on the podcast in a while why don't you introduce yourself before we talk about omni for an hour well so I'm captain Alec I'm one of the partners at YC I I work a lot on outreach ..."
Avni's Journey with Poppy
Avni Patel Thompson shares her vision for Poppy, a platform aimed at connecting families with vetted childcare providers. She discusses the mission of building a modern village for childcare and the realization that the business model was not scalable, leading to the difficult decision to shut down.
"thanks for coming on the show Avni you've been on the podcast before but people who haven't heard of you what do you do what's your deal my name is Omni Patel Thompson I I suppose was the founder and ..."
Understanding the Scaling Challenges
Avni reflects on the inherent challenges of scaling a childcare business, including the economics of what parents are willing to pay versus what caregivers need to earn. She discusses the complexities of transitioning from a small, community-based model to a larger, scalable operation.
"month and just I think that's something interesting to think about yeah absolutely so there are a million things to talk about yeah yeah but maybe we can talk about the economics in the beginning I ca..."
The Experimentation Mindset
Avni describes her approach to building Poppy as a series of experiments, acknowledging the challenging economics of the childcare sector. She emphasizes the importance of testing different pricing models and understanding the dynamics of scaling in a service-oriented business.
"but I always thought about it knowing that we then took a look at pricing from like a membership model and and transaction revenue and I can certainly go into the details of that but it was always und..."
Innovative Community Engagement
Avni shares successful experiments aimed at engaging the community, such as the 'Bring Back Brunch' initiative, which connected parents and caregivers in a social setting. She highlights the importance of community in building a sustainable childcare model.
"into that a little bit further when we started doing something like 500 bookings a week now you're talking about working with hundreds of caregivers and like thousands of families well that is a very ..."
Skepticism and Trust in Caregiving
Avni discusses the skepticism parents have about using multiple caregivers for their children. She explains how Poppy successfully addressed these concerns by providing a range of vetted caregivers, emphasizing the benefits of diverse interactions for children.
"the economics can you talk a little bit bit about some of the experiments you tried that made you optimistic about the space and the work absolutely so lots of different things first of all there's tr..."
The Slow Realization of Shutdown
Avni reflects on the gradual realization that Poppy might need to shut down. She discusses the importance of monthly investor updates and how they helped her gauge the company's performance and the need for bold experimentation as runway dwindled.
"example we started running experiments towards the end where we did a thing that was started as a marketing kind of community thing called bring back brunch and so we partnered with a really great res..."
The Impact of Runway on Decision-Making
Avni explains how the dwindling runway forced her to make critical decisions about Poppy's future. She shares her thought process as a founder, weighing the evidence and considering the potential for improvement against the backdrop of financial constraints.
"little bit kind of tricky because once you then have them all moving on and then you have like the number of folks that parents want you know eventually again over time you start to see how that gets ..."
Facing the Inevitable Decision
In this segment, Avni discusses the emotional weight of deciding to shut down Poppy. She reflects on the journey of experimentation and the realization that despite her hopes, the business model was not sustainable, leading to the difficult conclusion.
"necessarily as fast that bought us the time for more experiments yeah and so that's the way I thought about that the writing was starting to be written on the wall and for me I wasn't done with the ex..."
Conversations with Potential Acquirers
Avni recounts her conversations with other CEOs regarding potential acquisition. She emphasizes the kindness shown by these leaders, who understood the nature of the discussions. This segment highlights the importance of transparency and the emotional dynamics involved in such conversations.
"and is probably sometime in November where it was more the realization of I don't think this is working the way it is and so some change has to happen and so for me I looked at it with sort of three o..."
The Challenge of Assessing Options
Avni reflects on the difficulty of assessing the viability of Poppy's future. She discusses the importance of evaluating the probability of success for each option and the emotional toll of making these assessments. This segment captures the complexity of decision-making in a startup facing shutdown.
"one was truly shut it down call it and do all that and so for me I pursued all of those I had conversations with folks that I thought were interested in acquisition or good partners I will say this is..."
The Decision to Call It Quits
Avni describes the moment she decided to shut down Poppy, emphasizing that it wasn't a sudden decision but a gradual realization. She discusses the importance of aligning the decision with the original mission and the emotional process of letting go of the startup.
"that actually helps you to go figure out what the path is now that it isn't to say that there couldn't have been someone out there that eventually you know could have done but also as I was evaluating..."
Navigating Team Communication
Avni shares her approach to communicating the shutdown decision with her team. She emphasizes transparency while considering the emotional impact on junior team members. This segment highlights the balance between honesty and kindness in leadership during difficult times.
"us I think the truth of the matter is is if we had wanted to pivot we probably would have done that you know six months prior if I was going to cut the team and leave a good chunk of money and the in ..."
Finding Power in Control
Avni discusses the empowerment that comes from controlling the narrative during the shutdown process. She reflects on the importance of choosing how to handle the situation and the lessons learned from navigating this challenging experience. This segment encapsulates the emotional journey of a founder facing the end of their startup.
"cleanly call it and not I'm not saying that any part of that was easy but that's when it wasn't like a morning that I said I think we need to call it it was more that it started to I started to live w..."
The Importance of Transparency
In this segment, Avni emphasizes the value of maintaining transparency with investors throughout the lifecycle of Poppy. She explains how consistent communication helped manage expectations and fostered understanding when it became clear that the company would not succeed.
"know when you can control the narrative when you can control how this happens there's tremendous power there but just to come back to your question about like who did you talk to and how did you do th..."
Facing the Hard Conversations
Avni reflects on the emotional difficulty of having hard conversations with her team and investors about shutting down Poppy. She discusses the importance of being prepared for these discussions and how her proactive communication strategy helped ease the process.
"questions from Twitter and I think this one could have been related to a few things but Oscar when asked what was the biggest hurdle you had to overcome from investors and so on the topic of investors..."
Building a Supportive Investor Relationship
Avni talks about the supportive relationships she built with her investors, which made the closure of Poppy less painful. She shares how having investors who believed in her mission helped her navigate the difficult conversations surrounding the shutdown.
"point there was disagreement on what that was being deployed towards like I was open for that conversation so super super importantly when I started to have the conversations I shot out that emails I ..."
Understanding the Reality of Failure
In this segment, Avni discusses the reality of failure in entrepreneurship and how it doesn't define her worth. She reflects on the lessons learned from Poppy's journey and the importance of transparency and accountability in the startup process.
"people that I have on my cap table but that was also work that was also a decision made very early that we were only going to have the folks that really believed in the mission and I can say that that..."
The Emotional Toll of Shutting Down
Avni shares her emotional journey after shutting down Poppy, highlighting the challenges of detaching her identity from the company. She discusses the importance of processing her feelings and the impact of the closure on her personal life.
"had the backing of the people whose money you took and you were like I think I I think you know I have stored a stewardship and duty to that but they gave me the gift is saying no I understand like th..."
Lessons for Future Founders
Avni offers advice to future founders on the importance of transparency and communication with investors. She emphasizes that while not every venture will succeed, the lessons learned can be invaluable for future endeavors.
"agree with that and I'll say it's like it's painful it's hard when it's going well it's super easy like I've got all the emojis and the expansion marks and the bolding and that's all really fun and wh..."
The Path Forward After Closure
Avni discusses her thoughts on moving forward after the closure of Poppy. She reflects on the importance of taking time to process the experience and the potential for new opportunities that may arise from the lessons learned.
"going to happen for a great percentage of the portfolio I believe that they'd rather have the transparency the honesty and like you know visibility and absolutely and most of your investors I assume i..."
Finding Closure and New Beginnings
In this segment, Avni talks about the significance of finding closure after shutting down Poppy. She shares her journey of self-discovery and the realization that her passion for the caregiving space remains, despite the end of her startup.
"that it's like a very much like a swirl right so so I think as I was thinking about how to make this decision I tried to break it down into well who-who are my constituents right so I have duty to inv..."
The Pain of Letting Go
Avni Patel Thompson shares the emotional turmoil of shutting down Poppy, emphasizing the heart-wrenching process of letting go of her team and the responsibilities that come with it. She discusses the importance of ensuring her users and employees are taken care of during this difficult transition, highlighting the legal and logistical challenges involved in the shutdown.
"and myself because I don't think you can um and this is just me speaking from my experience but I actually didn't talk to any of my friends I couldn't I had lots of friends that were reaching out beca..."
Finding Closure During the Holidays
Avni reflects on her decision to announce Poppy's shutdown in December, using the holiday season as a time for her team and users to process the change. She explains how this timing allowed for a natural break, giving everyone space to grieve and consider their next steps, while also conserving resources for severance and support.
"a little bit of that capital that might go towards like severance are doing this as brightly as possible for your employees not a ton but a little bit of breathing room and so in doing that then you k..."
The Grieving Process of a Founder
Avni discusses the grieving process she experienced after shutting down Poppy, likening it to losing a significant part of her life. She emphasizes the emotional complexity of this experience and the support she received from fellow founders who understood her feelings, highlighting the importance of allowing oneself time to heal.
"give myself and then there's a lot of folks that will reach out and say hey we I think we should go grab coffee and like what's next and all that stuff I also set myself a goal to say like I'm not goi..."
What Trying Looks Like
Avni articulates her perspective on failure and the importance of viewing the shutdown of Poppy as part of the entrepreneurial journey. She stresses that the narrative around startups often overlooks the messy realities of trying and failing, and she encourages others to embrace the learning that comes from these experiences.
"no also like it so is interesting I was talking to a friend they were saying like your daughter's kind of get it yeah you know they're for insects so no they only know that I so it's funny they they'r..."
The Myth of One-Time Success
Avni challenges the common belief that successful entrepreneurs only succeed on their first attempt. She shares her insights on the importance of persistence and learning from each venture, arguing that the narrative should shift to acknowledge the multiple attempts and failures that often lead to eventual success.
"also this conversation or for other folks who are in similar situations one thing over the last six months was I don't know if I can shut you it feels like a dead end it feels like failure it feels li..."
Navigating Investor Relationships
Avni discusses the complexities of managing investor expectations during the shutdown of Poppy. She reflects on the importance of transparency and responsible communication with investors, emphasizing how the amount of capital raised can influence the dynamics of these relationships and the pressure founders face.
"built for three and a half years was I mean it was meaningful it was valuable but more than that it was learning so again this is like the way that I think about things almost academically is that my ..."
Finding Passion After Poppy
Avni discusses her process of self-reflection following the shutdown of Poppy. She expresses her desire to explore her passions and interests, particularly in addressing the challenges faced by working mothers. This segment highlights her commitment to finding meaningful work that aligns with her values and experiences.
"right I'm still hopeful that that's what I'm gonna do I have faith so I mean yeah how are you thinking about what's next I know you don't have a thing you're not here to announce like a venture fund b..."
Embracing Creativity and Exploration
Avni shares her approach to creativity and exploration post-Poppy. She describes engaging in various activities, such as coding and cooking classes, to foster inspiration. This segment emphasizes the importance of allowing oneself the freedom to explore different interests without the pressure of immediate outcomes.
"specifically it does it start another sure do I go work with someone for some period of time to like again learn I think the other thing that needs to be understood is that startups are like ultimatel..."
The Importance of Kindness
In this heartfelt segment, Avni discusses the role of kindness in her journey after shutting down Poppy. She emphasizes the need for self-kindness and understanding during challenging times, both for herself and in her interactions with others. Avni reflects on how kindness can create space for growth and exploration.
"to say I'm gonna start another company what it's going to be I don't know so that's kind of how I'm thinking about it I I personally can't see myself going back to a big company I've done that for a g..."
Redefining Success and Failure
Avni challenges the narrative that shutting down Poppy equates to failure. She articulates her belief that Poppy fulfilled its mission by serving parents and caregivers, even if it didn't scale as intended. This segment encourages a broader conversation about success and the importance of staying true to one's mission in entrepreneurship.
"look like it to your team to your users to not labour under false pretenses to call it have super hard conversations but then kind of move forward and so it's really really weird but I mean maybe that..."