Revisiting Secret Ingredients: The Story Of How I Closed My First Startup
Three years ago, I had a tough call to make. One of the most difficult decisions I have ever made. And finally, I did it. My assistant and I wrote the email telling 4,000 people that I had given up, that I was closing my startup, Secret Ingredients.
I asked her to hit the send button and I went home. I turned out the lights and curled up on the couch with the dogs. I was hoping to sleep it off. That it would magically go away, but I knew there would be backlash. When people spend 10+ hours on a website, entering all of their family recipes and uploading photographs, it gets personal. We knew that, and that’s what we loved about this business. My loyal assistant promised to handle it.
The phone rang but I ignored it. She left a voicemail on my home line, knowing I could hear it. “Kate, pick up!” The emails that came back were not the angry emails we expected, instead they were emails begging us not to close. Customers were very sad but kind about the news, and everyone wanted to order before it was too late.
There was no time for a pity party.
Although I felt numb inside. Our inventory was sold off in a fire sale, and our customers rushed to finish their books. I finalized all the accounting records, sold off furniture and equipment, talked to vendors, and quickly moved all my files and product samples into a storage unit.
In November of 2008, my business had 10,000+ unique visitors, 62% new visits, a database of 42,000 user-entered recipes, and a valuation of a couple million dollars (accurate or not). We were close to releasing a new version of the site that fixed production issues and offered a better user experience. We had printing partners, users in 49 states and 3 international customers, and a successful PR track record. By the end of December, it was over. I lost a huge amount of money and so had my investors. It felt awful. So awful that I decided to not think about it.
So what happened?
It is a difficult story to summarize, but I learned valuable lessons that are critical to small businesses and tech startups. Things were not perfect on the production end, and the technology had a way to go. We were close, but there was an unfortunate series of events with several developers that finally did the business in. And the timing could not have been worse – all of this went down two weeks after the financial crisis in October 2008. I could have pulled in $20-30K from investors, but I was not convinced that it would be enough to keep us going until the economy improved. And attracting new developers to a startup at that time without money seemed unlikely.
Maybe I made the wrong decision.
To many of you, I had a small number of customers. Successful startups see this number of customers in a day or a week. But this was before social media had taken off for brands and these were not normal customers. These were passionate users who spent many hours on our website, manually entering their family recipes, hundreds of them, and uploading their photographs. Because of this, our users demanded a high level of customer support and a high-quality product. And when we made them happy, they bought more. Why wouldn’t they? After the initial labor it took to make a cookbook, reordering more for a special occasion took two seconds. And our customers who were attracted to our heirloom books did not blink at the $195 price tag. Our Keepsake Cookbook customers bought enough for the whole family, often 20-30 books at a time.
I worked very hard for these customers. I had contractors involved, but I was the only employee. I worked day and night making this business happen. I was in my early twenties when I started building it, alone, in the South – not the most technically inclined area of the country. It took two years to build the product and website. It was an incredible amount of work, and I feature creeped.
In 2006 and the first quarter of 2007, we cranked out a series of successful PR campaigns. We realized that local news shows love food, so it was a great fit. I appeared on local news several times in North Carolina, as well as Chicago ABC7, Tucson’s KGUN, and DayTime, a show that airs in the Southeast. Secret Ingredients appeared in Modern Bride, Woman’s Day, Good Housekeeping’s Quick & Simple, and newspapers on the east coast. I appeared on radio shows throughout the country, and bloggers heard about us and wrote us up – all without being approached.
Customers wrote in with their family stories to win free cookbooks. Their stories were so personal; it made us feel very connected to our audience. We sent out customer surveys and received many positive and constructive responses. The phone rang most days, and rang off the hook all day before major holidays.
In June 2007, I moved the business to Seattle. I was amazed by the support in the tech startup community, although there was something about being a young, nontechnical woman with a Southern accent that made it difficult for people to take me seriously. And ultimately I think the lack of support was a large contributing factor that prevented success.
One of my advisers put it best:
“You have these things in your favor:
1. Website with automation
2. Partners (printers) that want to work with you
3. A process on how to take orders and make cookbooks
4. Proven PR and marketing methods
5. Customers (this is a big one) that want what you have to offer
To be honest, the biggest negative I see is your lack of experience… Don’t give up, keep networking and look for those individuals or companies that fit what you are doing.”
Unfortunately, I did not find support fast enough. And our technology challenges and mistakes were too expensive.
REVISITING SECRET INGREDIENTS
Last weekend, I cleaned out my storage area. Scrappy Face, my new startup, is launching soon, and that helped me feel ready. Ready to lay eyes on Secret Ingredients for the first time after three years. I went through every file, wireframe, and note. I saw all the work I had put into this business, and it broke my heart all over again.
I felt numb. I felt like someone I loved had died, and that I was cleaning out her personal belongings.
All I could think was, “How did I let this go?” How did I put so much time into something only to pull the plug?
And after years of questioning myself, I realized that I did a good job. I failed often, but I got an incredible amount accomplished for an inexperienced, young Southern girl. And I got my money’s worth – every penny of it and it was well spent.
This trip down memory lane reminded me all over again that startups are hard. They become who you are and what you love. They take a lot from you and it gets incredibly personal. But the experience is worth it – or it was for me. Without Secret Ingredients, I would be in a completely different place in life. Probably a less interesting one, doing something I am not so passionate about. And for that I am grateful.
And hopefully this post got you more interested in what I am up to with Scrappy Face :) If you have a startup and need help, check it out.
Thank you to Scrappy Face for giving me the opportunity to make things easier for small businesses and to apply all that I learned with my first startup and through my consulting work. I feel so fortunate to have another opportunity to build something new.
