Interview, Fireside Chat
What Shutting Down Your Startup Feels Like - Avni Patel Thompson of Poppy with Kat Manalac
- Avni Patel-Thompson, a Y Combinator partner, outlines the shutdown of her childcare venture, Avni, scheduled for December after approximately one year of operation, driven by the conclusion that the business model lacked scalability and viability.
- The company initially aimed to build a "modern village" by vetting local caregivers, but scaling from 100 to 500 weekly bookings revealed fundamental economic shifts that transformed the work into a gig economy role, altering the labor pool's willingness to participate.
- Despite maintaining a growth rate of 5% to 10%, the business failed to achieve the 15% to 20% acceleration required for significant traction, prompting a realization around Thanksgiving that the company was on a trajectory to failure despite $2 million in funding providing over three years of runway.
- A pivot was deemed infeasible at the time due to insufficient cash reserves and the necessity of cutting 75% of the staff, with a success probability for acquisition estimated at less than 2% to 3% following the withdrawal of likely acquirers.
- The decision to close, made after consulting mentors and investors, was framed as a strategic choice to control the narrative, with communications scheduled to be transparent to all staff and investors.
- Operational closure is planned for December 3rd, allowing a two-week administrative window before operations cease on December 17th, with the timing intended to provide a holiday period for processing the decision.
- Future plans involve a pause in entrepreneurial activity until at least January 4th for personal healing, followed by an exploration of new problems facing working mothers through diverse learning activities rather than an immediate return to full-scale venture creation.
- The speaker rejects the narrative of failure, asserting that the company successfully served thousands of parents and hundreds of caregivers even though it did not achieve the intended scale, and expects the narrative of serial entrepreneurship to evolve to allow for more fluid transitions between ventures.