In 2013, I and Saad were invited to the bay area by a large seed accelerator. The business was doing great. We were posting not only insane revenues, but equally great profits. We were also posting decent growth month over month. In a way, we didn’t need the seed funding. But we did need the acceleration. And our goal was to get the right mentorship to grow our business beyond what we were doing already.
But we were rejected. They said no and we didn’t understand why. This is the email they sent us
I’m sorry to say we decided not to fund you guys. We were very impressed by your numbers so far. But what deterred us was that this is basically an arbitrage business. You don’t have users in the sense that e.g. Dropbox has, and thus no lock-in with them. Which means you make money for a while, perhaps a lot of money for a long while, but then conditions change and your revenues dry up.
Over the next few years, it started to make more sense to me. As the business did go down, the revenues actually did dry up, and I tried to see the things that they had said.
They were right and I was wrong and unless I acknowledge that, I can not be right in the future. I learnt a great deal from this experience. I understood the importance of having a lock-in with users as opposed to simply having users. With this knowledge, I can finally build businesses that will last longer.