What Really Happens When a Founder Shuts Down Their Startup After 8 Years? with Riaz Kanani

Riaz: Last week, we announced that the company I founded eight years ago is going to shut down. That's not something I've had to do very often at all. There is time to sit down, reflect, pause, think about actually what I do next.

Donna: Sometimes you've got to make the difficult decisions as well. How you're handling that.

Riaz: You need to take some time out.

Donna: Riaz Karnani is a serial entrepreneur who built and exited multiple startups. In this episode, he shares what happened when he closed one of his businesses and the lessons that changed how he builds today.

Riaz: We eventually decided that the issue was we were selling the technology, but of course, the people we were selling to are not tech people, they were marketing people.

Donna: You've managed to really make that disconnection between who you are and the stuff that you're building. So I love that. So what's next? Well, I think you said you were going to pause. Don't forget you said you were going to take a break. Hi, everyone. Every now and again, I have somebody on the show who I know is going to be a genuine source of advice and, uh, information for founders that are either looking to start out or are going through the journey right now and just need that little bit of a sense check. So this one is for you guys. I have with me today a serial entrepreneur, and his name is Riaz. Riaz, thank you for joining me on founder, uh, stories. You may have noticed I didn't actually introduce you as Riaz from a particular company. Yes. And I wanted to talk to you today because of how involved you've been in many different businesses in many different guises. That's what attracted me to you. And so I didn't want to make this about a company, about a logo. So I'd just love to talk about you and your journey and I'd like to, first of all, just touch on what you're up to at the moment. And it might be a whole host of things, but what does a day in life look like for you at the moment?

Riaz: Well, it's, it's an interesting time because literally last week we announced that the company I founded eight years ago is going to shut down. And thankfully, that's not something I've had to do very often at all. And. And so in that sense, it's all new right now. But it's weird in the sense that I remember several years ago, it was an exec recruiter who I was speaking to after I had just finished up at one of my previous startups who said, you need to take Some time out, Riaz, and recover from the fact that you've left your baby behind and are starting out next. And at that time, I didn't freelix at all. I was wearing to go, knew what I wanted to do next. And this time I think perhaps because it's been an eight year journey, I feel like there is time to sit down, reflect, pause, think about actually what I do next. And I had some ideas. Um, and perhaps strangely, it may not be in the startup, um, space or were there my own startup next, but maybe we'll come to that.

Donna: I'm sure we will. I'm sure we will. I'm so glad that you came on the show. This is very new. So we've spoken. Just a basic kind of introduction call and this wasn't the case. It was a bug. So I saw new. This is as new to me as it is to our listeners. So I'm gonna try and ask all of the right things that I think they will want to know. But one thing I do know this will do is will will kind of resonate in a way that might provide a level of comfort to some people because they could be forgiven for finding this podcast maybe not sickly, but a little bit overly positive sometimes. Because most of the people that sit there are building something. They've just got all the energy in the world. It's like, go, go, go. They just had investment, they've got loads of cash in the bag. It's like, yeah, go. And that's. And it's a really nice way to kind of build founders up and get them having that level of, kind of motivation. But I think that your story is going to be um, a real balance and a tonic to that and for people to realize that sometimes you've got to make the difficult decisions as well on this journey and will be really useful for them to listen to how you've managed to do that and how you're handling that. But before we get into it, let's stick a pin in it for a second. Could because prior to what's going on in your life at the moment, you have had a very entrepreneurial, very interesting multi dimensional founders story. So let's talk about your journey from education into starting the company eight years ago. Tell us about you.

Riaz: Well, it started a long time ago. I mean, I have been entrepreneurial running my own businesses since I was 16. So before I finished up at school.

Donna: Right. Um, what would you first work?

Riaz: So that's an interesting question itself because how do you default? I did not Know anything? Yeah, um, I didn't know what a company was. Yeah, I didn't know the idea of a sole trader, a limited company, these all, all things I had no idea about. I set up a, a magazine when I was, I don't even know now, maybe 30 sort of age. That was probably the first venture type thing where I wanted to make some money, get something into the world and create something new. It didn't go anywhere. It was um, more me messing around than it was anything else. And then I set up uh, which nobody I suspect listening will remember but something called a network lamb party, um, which is before the Internet where people literally put very big computers and monitors into the back of their cars and drove to a big hall and then connected all the computers together and played games pretty much non stop from Friday night through to Sunday afternoon. It was great fun. And um, so we did that for a while and then of course the Internet launched um, and then set up uh, and this is probably what I call my first startup where we went in and helped companies get online, get on the Internet. What was it, what was a website, um, and started to do that. Still didn't know anything about limited company or sole trade or any of that sort of stuff. Just did it. Um, didn't even know it was marketing. Took about three or four years for me to realize I'd set up a marketing business which is, is you know, crazy in hindsight but, but yeah that's how I started and like from there I've spent many, many years doing more companies um, as well as about third of my career helping other companies scale as well.

Donna: Yeah. And, and what were you like from a educational perspective because you setting up companies at 13, were you kind of, you know, dunking out of school to do it or did you manage to also.

Riaz: No, I dribbled it with, with what I liked to. I did like learning things. I look back and I can't quite align what I must have been thinking at that age versus what I think today. It's very strange. So I did you know lots of languages at gcse but then I did mostly sciences at uh, A level and so, and I still can't quite get my head about the balance between those two. And um, I didn't fine in my GCSes. I did less so at my A level. Certainly didn't do as well as I should have done. And I suspect you could directly correlate that with the increasing amount of time I was spending doing the uh, website consultancy.

Donna: Yeah. Which you now Label it as you recognize that that's what you would do is helping. So when you say you were helping them with the Internet, you're helping them to navigate, building websites for their companies,

Riaz: et cetera, set up email, set up the website. Um, you know, it was mostly law firms, accountants, businesses on the high street type thing. I literally would just walk through the door, say out and talk about what was happening. They typically run a website because no one had a website in those days.

Donna: Yeah, I do remember it. Prunolino. It's crazy, isn't it? We'll be looking back like this soon about AI. Yeah, uh, emoting, which is. I almost want to kind of bottle a lot of the, the way that we feel about AI now because it'll be interesting to bring it back out again in 10 years and see how ridiculous the concept of it not being around. Is it true? Because when we think about the Internet, it's just some, it's something that was uh, created thousands of years ago actually.

Riaz: It will be completely different.

Donna: Yeah, really, really interesting. And then you, um. Was this kind of the start of if I was no ball for you or did you at some point go, do you know what, I'm going to get a job.

Riaz: I looked for jobs as well as. So I don't think I ever really. I had this sort of plan, this sort of idea and so I was running the consultancy whilst I was at university. Some of my friends joked that I would have meetings in KFC for example, and had no office and, and so I thought maybe I would continue to do that. But I also wanted, I knew nothing about the world.

Donna: Right.

Riaz: I wanted to understand what was around. And so I very nearly got a job at uh, PwC. It was only the dot com bubble bursting that scuppered that entire thing. The first person who knows what my life would have been like had that actually come through and I actually had to make a decision on it. Um, because I'm not sure I would have chosen at that point to turn down what would have been a lot of money. Um, and a lot. And an interesting opportunity at the time because I was setting up the new media division and instead go and set up this video streaming startup which I did after the consultancy. Um, instead, which it sort of span out as some of the things I did at university. I set up a radio station there and did some stuff there and out of that came the next startup.

Donna: So yeah, now you've just touched on a really interesting point which is the corporate versus the startup, do you think? And I Know, it's easy to kind of say in hindsight, do you imagine that if you had have gone to BWC at uh, some point you would have then said, you know what, I'm going to just go and do this anyway. Or do you actually think that, you know, that there is, we can go down multiple paths and life can take us in lots of different ways. I think some of the founders I speak to, certainly the ones that are ah, have been around a bit longer.

Riaz: Yes.

Donna: Have always ended up in their own thing anyway. What's your opinion on that?

Riaz: No, I think it's right. Even when I'm running my own startup, I'm playing with other ideas. Um, I'm always playing with new technology. If you look at my career right the way through, it's always been data, it's always been psychology, it's always been how do people engage with new types of technology. So I was deeply into VR on point and blockchain when those technologies were coming out to see where they would go, even though I never really ended up building a business out of it. And so even uh, if I was in the corporate world, I would still have been doing that, uh, on the side. That's kind of my passion. Really.

Donna: Yeah, that sort of emerging technology and innovation. And then you mentioned the decisions that you did make, which was to go and set up your own company, uh, which was in emerging technologies. Um, so tell us about that. I know a little bit about it, but I want, I want you to sell.

Riaz: Yeah, it's, it was an interesting time. Right? It was a time when everyone was full of energy, full of hype about the Internet. I think a lot of people say, oh, when you start a business it's a big thing. And I can, I can understand why you, you know, people think that, but it never really, I didn't ever sit down and go, oh, this is a really big decision. That's really a high risk decision. I just did it because the technology that we were working with was amazing. Um, and again today we take audio and video for granted. Mobile phones can play bad, computers can play that. At that time, 20 to 30% of computers could play the audio video back because of the technology. I thought so whenever you put video On a website, 70% of the people who turned up would not be able to play that content. And we had a piece of technology that 98% of the world could play back. And I'm there 2021 thinking, well this is a no brainer. Didn't matter that the competition was Microsoft Apple.

Donna: It does sound like a bit of a no brainer to me.

Riaz: Yeah, it's like 3x3 wants to cut through, right? I'm a company, I want to get as many people watching it as possible. And um, we banged on doors for 12 months and we never got a single response. And we were, you know, banging our heads on the wall going, what's the problem? And we eventually decided that the issue was we were selling the technology. And because we were all tech people, we were all focused on that. But of course the audience, the people we were selling to are not tech people. They were marketing people, they were advertisers, they were, um, focused on a completely different metric, a completely different thing. And eventually we built a video advertising network and we launched that. And as soon as we launched that, the door never stopped being open, the phones never stopped me. We had BigRay.

Donna: Really good point. Really, really good point. I have a lot of tech founders on the show and one of the reasons, or one of the things that divides the successful from the not so successful is not always to do with the product or the quality of the product is that you try and sell the technology and not the outcomes. So you're talking to the wrong people. You start with your ICP and then think about their pain points and then sell that solution as opposed to sell the technology which you're in the clever and no one understands what you're talking about. So there's your first, um, absolute tip of the day. And by changing that, what made you realize that? Did you get some advice?

Riaz: No, honestly, almost all the advice I received in that 12 months was useless. We did ask for advice, um, we were open to it, but it was always outdated. Thinking about things in a way that just didn't chime with the Internet and what was possible. I mean, people would tell us that we should sell this as a licensed product. Right? Exactly. As people sold software in those days, um, um, to companies. And of course we didn't know it back then, but what we built was something akin to a SaaS product before it was coined sort of thing. And we knew that marketers would buy in that way because they didn't have the capability to go and buy big software licenses for what we were doing. But equally, I mean, at one point we translated this model again. Today for those that are involved in advertised marketing, you sell advertising on something called a CPM basis, which is effectively the cost per thousand adverts. But the way we were selling to people back then, they all understood the way TV adverts were sold, we were selling video. So uh, that's how they saw the world and say for a short period of time while the market caught up, we were selling on a TV model rather than on a CPN model as the rest of the was being sold. And so again you had to adapt to the market and shift and turn. And really that was where listening to the market, talking to customers, that was the key thing for us there. Don't get me wrong, I still believe today that actually the quality of mentorship and advice today is streets ahead of what it was then. Um, 20 years because we had a lot more tech on to be in the company.

Donna: But I still get. I agree though. I still think feedback from customers and listening to those guys still trumps anything that you're going to find out from having their business.

Riaz: Ah, Coach, I have perhaps a controversial slant to that as well in that you shouldn't always listen to your customers.

Donna: So you should showing your own map.

Riaz: Yeah. Yes, partly, yes. Your customers know what they need today and typically they will spend minutes, you'll be very lucky if it's an hour a week thinking about your product in your marketplace. Right. And so you can sit down with them, you can talk to them.

Donna: Yeah.

Riaz: But they're talking to you off the cuff based on the little amount of time that you really spend with you, you and your business and only you know where you're trying to get to. And so you have to take the bits of information that you get from your customers and then translate it uh, into. Well, this is where the market's going. This is. Yeah, things going to happen.

Donna: Yeah.

Riaz: So that is also.

Donna: Yeah, we had Darren from PAJU on and he said exactly the same thing and he also made a small apology before we said it as well. So I think it is a controversial.

Riaz: It's not the covailing opinion on the Internet.

Donna: No, absolutely. But you are right, you gotta live in the real world and you build it. You can't just get thrown all over the place by someone's nuanced ideas around what they think your product should do because it fits them. Yes, I completely agree with that. And so you are uh. And the kind of bit in the middle, if you like, between building that business and did you exit that business?

Riaz: Yes, eventually exited to um, company called Silverpot, which we then built up and then exited to IBM to be their marketing cloud. So that was a nice 10 year journey.

Donna: Nice.

Riaz: Um, yeah.

Donna: And then there's a whole lot of stuff which probably take about four years to talk about. And then between that and the business that you started eight years ago.

Riaz: Right.

Donna: And you've got involved in other businesses, you're a serial investor, you just, you seem to just love business and you've got a real eye for it and a real taste for it. Yeah. And I think that's probably true from the age of 13 when you didn't know what a limited company is. I think probably there's that 13 year old Riaz is still living, living on very much. And you just seem to love this world and so you've got been heavily involved in businesses. I'm sure you've provided heaps of value to startup founders and then the business that you started eight years ago.

Riaz: Yep.

Donna: Tell us a little bit about that journey.

Riaz: So it was 2016 and I did what I always tend to do, but I normally do it whilst uh, I'm working on something full time. I wasn't working full time at all. I was just mentoring and coaching at the time. And I ended up setting up half a dozen projects in different areas. So one of them was VR, one of them was Internet of Things, one of them was Blockchain. And actually marketing was not in the six. Most of my consulting work was marketing, but it wasn't a dedicated project with a new idea. And the year went by and I basically turned around and said, okay, I can't be building six different projects, as I call them, um, forever. We need to pick one and we need to run with that. And so we started to assess each of the things we were working on. And astonishingly out of that fell out this idea for a marketing technology, um, based on the consulting work that I'd been doing over the previous 12 months. And all the other projects I'd been working on I decided were not where the focus should be. And what we realized was that um, B2B buyers were browsing the web differently. They were much more digitally savvy, their behavior was changing. Whenever behavior changes, there's an opportunity. And so we designed a platform that could basically solve for that problem. And uh, we basically created and uh, I would have laughed at you if you told me I was going back to the advertising world at the time. We ended up building this advertising platform but brought the capabilities of targeting people in companies on LinkedIn to the wider Internet so that you could laser target um, your audience. And we had this hypothesis that what that would mean is instead of it being large enterprise who typically spend most of the money on the Internet, for B2B advertising, it would extend down the market to much smaller organizations. It may have taken me eight years but that hypothesis was wrong. It didn't happen. And um, in reality it's merely the fast growing or more enterprise sized companies that still continue to spend in that digital display. So the space, um, most of the money that I thought was going to end up in that space has gone towards LinkedIn. Inside Do10 advertising is growing. Yeah, significantly, year on year.

Donna: You're a true business guy though because you seem completely unfazed by this uh, business. Right. You know you invest in things. Some of them you sell to IBM. Happy days. Some of them you might have taken me eight years but I was wrong and I think both are really commendable. And yeah, it's great but it's not, not great to hear of a business closing down. But the way that you just talk about it is just absolutely inspirational. Probably more so than I uh, did an exit to IBM because it's more real and authentic, uh, and shows that you've managed to really make that disconnection between who you are and the stuff that you're building. So I love that. So what's next? Well, I think we're setting, going to pause. Don't forget SETI said something great. So I'm going to hold you to that. You said it on film.

Riaz: Yes, yes. I may well have to take that snippet and play it back to me many times. Um, the theory is, is that I will take a break. Um, I know I will be playing with new technology and new things. I am already I was two or three weeks ago through two or three months. I always am and so I will continue to do that. Um, but then I suspect rather than found my own business again next I will go into another existing business to scale up. It's actually my, that's really actually where my specialisms are or my real skills are. Uh, and um, it's actually where I love to be. There's this, this phrase 0 to 1, 1 to 10 sort of thing where 0 to 1 is when you're starting the business and trying to get to actual um, product market fit and then you're starting to grow and scale into the marketplace. And it's that scaling part that I actually enjoy. I know that that's really where I would like to go back and now's a great time with AI coming into the market. I think we're beyond the point now of where the very early AI startups have started. Not by very long. Couple of years, of course. Couple of years. That's the point. Where you're starting to scale. And so there's lots of interesting.

Donna: Definitely, definitely. I'm working with some other advising some clients at the moment. And where we're at now is people starting to realize that having a really good product isn't enough and being able to say that it's built on AI is now not enough either. It used to actually be enough to put it in the door because people are curious, but that is a bit old hat now. So, um, things like a proper robust go to market strategy will always be needed even if you've got the coolest product on the market. And I actually feel like that what's happened with your business could be a really positive thing for other businesses, businesses that are looking to scale and because somebody with your skill set around growing businesses, but also your technical abilities as well, who is now maybe got a little bit more time on their hands after they've paused. I have to say, ah, don't be coming after him yet. I want to be very strict about this. Um, would be a real asset to scale up founders. How can people reach out to you to talk to you about their businesses?

Riaz: I continue to be LinkedIn crazy. So LinkedIn is by far the best way.

Donna: Don't go dark on us there.

Riaz: You're still in Lintel, right?

Donna: Cool. Okay. So I do think it's, um, if someone is building something, I think they should have a chat with you and because you are so honest and I think you'll just tell them as it is and also give them some advice, which in the nicest possible way is that advice from someone who's really been in the trenches and has been around before the Internet and has kind of really adopted every single piece of innovation from back then right up until now. And I'm sure you'd be a huge asset to, um, any tech company that is doing that 1 to 10 phase of their business. But um, yeah, what would you say? Just kind of like, let's play us out. Tell us a couple of kind of words of wisdom, if you will, or tips that you would give to anybody who's much, much earlier on in their journey as a founder.

Riaz: That's an interesting question. When you're really early in the founder journey, I think it's like a roller coaster. And if you imagine basically you get really big highs, but you also get really big lows. And the trick is to work out how to flatten those big highs and big lows. You need to be increasingly effectively building the team around you always to make sure that you're giving yourself enough time as a founder to be looking forward and not constantly chasing your tail of what's happening not just yesterday, but also today. And that's probably, uh, one of the biggest things that I would say to founders.

Donna: That's a really good analogy actually. So keep that, which was a constant rather than like a massive up and a massive down. I'm going to take that advice, I think just try and be a little bit more balanced. Yeah, it's easier said than done.

Riaz: It's easier said than done. And it's out of your control at the very early days. You will get big highs. You know, I remember with one of my starters, Google signed up, right? And we got the notification through that some person at Google had signed up for our platform and you know, we all looked at each other wide eyed and, and obviously that was a massive high for us at that point. Um, but then you get the lows of one of your clients not renewing your, uh, some bug in the product is threatening to pull the whole thing.

Donna: The worst day ever.

Riaz: Ah, but you just take it one step at a time. Um, and slowly but surely it will go one of two ways. But if it's going well, it will start to balance it.

Donna: Definitely. Really, really good advice. Riaz, thank you so much for spending the time with us. Please do pause and take some reflection time and really kind of enjoy what you've done, what you built, and the impact that you've had on many, many businesses. And I've definitely learned a lot from chatting to you today, as I'm sure listeners have as well. And I'm sure that they'll be reaching out to you as well. Thank you so much for joining us.

Riaz: Thanks.