Apu Gupta was watching Airbnb flourish, becoming more convinced that the “sharing economy”--renting out or collecting a fee for someone else to use your stuff or space--offered rich opportunities in a number of sectors.
In May 2011, he and a partner decided to dive in. The idea was Storably, a website that allowed people to rent out their excess storage or parking inventory.
The environment was ripe. In July of that year, Airbnb landed more than $100 million in funding and had a billion-dollar valuation. Against that backdrop, Gupta and his team were able to raise $750,000 in seed funding in August. They built the Storably website and launched in September, getting got impressive local attention, even securing TV news coverage on all of their local stations.
And it bombed.
“It was just like crickets chirping. At our peak I think we had 2,918 visitors to the site, which, in the land of consumer anything is like having a retail store open your doors and one person visits your store,” Gupta remembers.
They redoubled their efforts, expanding to another city to see if things would work better in New York. They even went door to door and handing out flyers, but the idea just didn’t stick. But they were also burning through money.
Gupta knew it was time to ‘fess up to investors that things weren’t going well. He explained to them what was going on, and asked what kind of traffic and transaction levels they’d have to reach before the investors would back Storably in a Series A round of funding. They would need to grow tenfold. At the rate they were spending money, compared to how fast they were growing, it just wasn’t going to happen.
“It made it so much easier to just objectively say, ’We have to shut this down now because every day we stay in business there is just another dollar lost,’” he recalls. He even offered to refund the remaining money.
Not so fast, his investors replied. Impressed at the care Gupta was taking with their cash, they told him to go back to the drawing board and come up with another startup idea. So, Gupta and Storably’s chief technology officer, Nick Shiftan, took a month off to come up with their next big thing. They brainstormed 70 possible ideas. Out of those, roughly seven seemed both viable and exciting to them. They tested a few, building rudimentary websites and mock-ups. But it was the concept for Curalate--number 63 on the brainstorming list--that held the most promise.
In December 2011, as they worked, Instagram was big and Pinterest was exploding. Curalate would use image-based algorithms to analyze posts and report to brands which of their products people are sharing and discussing. Various add-on services would allow brands to link to customers’ photos of their products and to respond directly when individuals post product images.
Their beta launch was in March 2012 and by the time they officially launched in 2012, they already had 60 brands. One of their most effective marketing methods was tweeting major brands their Pinterest stats. Gupta says he couldn’t believe that almost every one of them wanted to get in touch and meet.
“We tweeted Oscar de la Renta and before I knew it, we were in their atelier in New York for a meeting. It was crazy. It worked,” he says.
The investors were impressed, too. In July 2012, Gupta and his team closed a $3 million Series A round for the company that included Storably’s original investment team. They announced the round six months later. Today, Curalate helps more than 400 brands from companies like Gap, Carnival Cruise Lines, Michael Kors, and Kraft Foods make sense visually driven social media like Pinterest and Instagram.
Looking back, Gupta is just glad he made the decision to shut down Storably when they did, even though it was difficult to admit to investors that the company was failing. By the time the Curalate concept became reality, there was only a month and a half of cash left.
Bottom Line: “We thought we were going to get an earful, and they instead said to us, ‘Listen, you know what most entrepreneurs don’t know. When they see a body on the table and they say it’s in a coma. You guys at least had the maturity to say it was dead, and that in and of itself makes us want to back you,’” he recalls.
[Image: Flickr user Ahmad Alnaibari]