Why Milaana ended and how it will live on
Wednesday, July 22, 2015/
Honest reflection is a lot like the startup journey – it is hard and gritty but if you throw yourself into the process it will transform and strengthen you.
This piece is for anyone involved (or interested!) in the journey of startups, especially regarding social enterprises and the duality of success and failure. It is an analysis of four factors that led to the closure of Milaana’s operations, the startup I founded, as well as what will live on.
I have taken great care to ensure this blog is a true reflection of the organisation by also integrating the insights of our team. You’ll notice the term ‘I’ used heavily when discussing Milaana’s failings and ‘we’ regarding the successes. This is because as Milaana’s founder and leader I failed to steer Milaana to economic viability, but as a team and community we were successful in achieving a lasting impact.
Failures or fault lines?
Milaana.org was created as an online marketplace for cause-driven projects. We found our niche between internship and volunteer platforms by focusing on supplying community projects for student internships and skilled, young volunteers for organisations.
We also worked hard not just to facilitate connections but to create materials to increase the likely success and impact of these projects. We had a viable mode. Founding Milaana in July 2013, we took the prototype to market in September 2013 and validated the need. Upon launching our crowd funded MVP in June 2014, we started receiving subscription fees from registered organizations. This proved the next stage of growth was feasible so long as we stayed lean.
It can feel liberating to use the terms ‘fuck-ups’ or ‘failures’ but in reality, the things that hurt us most weren’t monumental doozies. They were the hundreds of little decisions that I made, which prioritized impact and process over income and profit. These accumulated over time and when I finally acknowledged the position we were in, I was looking over the edge of a fault line towards Milaana’s economic failure.
Every social entrepreneur must balance two forces – maximizing community benefit on one side and maximizing profit on the other. The reality is these forces have been pulling in opposing directions for too long, creating a fault line through which far too many fall. I failed to manage this balance and Milaana fell into the gap.
What I did wrong
Any founder will tell you that the hardest thing to do each day is to prioritize how to spend your finite time. My focus centred on impact (what we created), connections (who created it) and an authentic process (how we created it). In retrospect, I should have put more focus to developing a strong team of co-founders, driving high-margin sales, saturating the local market before scaling and finally, raising capital to fund the growth needed to reach sustainability. These areas could have prevented the lack of funds and founder burnout that marked the end of Milaana’s operations.
The four factors that led to Milaana’s closure
1. Not having a founding team
If I had assembled a strong team of co-founders, I possibly could have dealt with some of those aforementioned problems. With their added experience, time and energy a team of co-founders would also ensure I wasn’t the organisation’s main constraint and in the end, liability.
That’s not to say I was alone. Throughout our journey we had incredible students in a variety of three-to-six month roles and their energy, ideas and decisions were core to our development. But none had ownership stakes. I raised the possibility with some, but the timing and/or our inability to pay, thwarted these attempts.
We also had an informal group of ‘wise ones’ including mentors, advisors and non-executive directors who I’d call upon for advice and send monthly board reports to. Strategically adding to this group and formalising it as a board would have provided further support, but it was in the trenches where help was really needed.
2. Scaling before validating
In the middle of 2014, we moved to Sydney to work from ATP Innovations and test our ability to scale and remotely manage teams. We grew our team from three people based in one location, to 24 across two states in a matter of months. It forced us to develop the core systems and processes that would allow further expansion and I learnt SO MUCH from being based in Australia’s heartland of tech startups. But it was too fast, too soon, we’d only just launched our minimum viable product (MVP) a few months prior.
By not saturating our local market first, we were scaling with a partially, but not fully validated, model and a platform that still required a lot of manual input. Inconsistencies in communication and team co-ordination were also creating problems. I made the mistake of not personally engaging in all of the hiring decisions which meant we were putting A LOT more effort into people management for reduced (or certainly unequal) output.
3. Reduced focus on sales
Spending so much time and effort managing our sudden interstate growth meant that I was also increasingly distant from customer experience and sales. Furthermore, to ensure positions were filled, we had to sustain a ratio of 20:1 in terms of students registered for each position. With a strong baseline of 100 plus organisations, we quickly fell behind in student numbers. Engaging students was more expensive in terms of marketing and had no immediate financial reward. So we built our volunteer teams (through student societies) around this purpose.
4. Money, money, money!
We ran an incredibly lean ship! With a $10,000 loan for the prototype, $20,000 in crowdfunding and grants for the MVP, our small (but existent!) income then went to operational costs and marketing. With just this, we not only survived two years but we developed quickly and provided a valued service. However, the structure of our model meant our growth (a core motivating factor for our team) would potentially stagnate without capital.
Milaana’s low fee, subscription model for organisations required a high volume of users to be sustainable. Reaching this point would allow us to pursue revenue streams with much higher profit margins. First, by integrating the private sector, including corporate social responsibility projects, and connecting corporate staff as mentors on existing impact placements. Second, helping our proven students enter the job market by partnering with like-minded recruitment firms. To reach the required volume, it became clear we needed substantial investment (i.e. $250,000) to support a full-time team, further product development and to fund a marketing drive.
I waited until we had solid growth, which took until late 2014, before chasing any sort of impact investment. The pursuit took me to Washington D.C. in May 2015 to pitch at the global semi-finals of a venture capital competition, the 1776 Challenge Cup.
The ultimate winners were already making $100,000s or even millions. It was at this competition, that reality hit me. Impact investment is in its infancy, especially in Australia. Even with our demonstrated viability we weren’t cute enough (frontline impact) for philanthropic investors or ‘billion dollar enough’ for the rest of the investment community. Another 12 months of further demonstrating our viability and pitching my heart out would increase our chances but the reality of my personal circumstances had also hit.
The result: Founder burnout and operational closure
I’d reached a point where I was ‘running on empty’, both financially and emotionally. I’d graduated from university over a year ago and the paid consulting work I did here and there was great but it couldn’t cover my costs. My parents had generously plugged the holes but 12 months of this was the limit.
Even if I could secure long-term co-founders (including a front- and back-end expert to continue product development), it would still take at least one more year of everyone volunteering to reach an almost viable level. I even experimented with reducing my engagement and seeking part-time work but this wasn’t a practical solution. Stepping back at this crucial stage without a clear replacement was unfair to our team and would result in stagnation. It was either – get investment NOW, or ‘call it’ whilst we were still ahead.
How do we define startup success?
We measure Milaana’s success by the extent to which we achieved the following;
- Making a lasting IMPACT (What we do)
- Forming meaningful CONNECTIONS (Who does it)
- Being GENUINE in our PROCESS (How we do it)
- Being financially SUSTAINABLE (How we continue doing it)
Whilst I was unable to find a way that meant we could achieve the latter point, our team still feels that Milaana was a success because of the three we did achieve.
1. Making an impact
Two markets are facing painful shortages. First university students need access to quality, real-world learning experiences to prepare for their careers. Secondly community organisations need to engage skilled volunteers that will improve their sustainability and increase their impact. From these emerged the specific problem that our platform addressed – students and community organisations have SO much to offer each other (and the community) but they need a better way to connect.
We knew we were creating social good but how much good? To what end? With the support of the Impact Academy, we defined and measured our impact according to the number of successfully completed Impact Placements. A placement is deemed successful when it has clearly generated positive impact for the organisation, the student and the overall community. So while we registered 100 plus organizations, 900 plus students and had 200 plus applications through the site, our baseline impact was the 58 plus success stories. You can find some of these stories here, including those of our team.
Over 65 students joined the Milaana Tribe in positions ranging from university ambassadors to national and state coordinators. It was such a privilege to watch individual members transform with the confidence, community and purpose they found in Milaana. People— like Sophie who started as a talented but shy social media hero, then formed and led a whole editorial team! When she finished, she continued to mentor the new team whilst becoming a paid writer, launching her own cause-driven enterprise and finishing her degree!
2. Forming meaningful connections
As our name implies, Milaana’s focus and my core philosophy, is centred on facilitating connection. It is safe to say that 60% of my time and probably 80% of our team’s time and effort was spent on human interaction and building a community. We did this in three ways – online through our digital platform, as well as offline through in person ‘Connect’ events and of course, within the Milaana family.
Through our ‘Connects Events’, we brought like-minded students together with local social innovators. At these meetings we shared the basics of social enterprise and our #dowelldogood philosophy, as well as tips for their Impact Placements. We’d then hand over to home-grown social entrepreneurs and charities that brought our words to life with their stories, visions and opportunities to engage. The energy was always electric when the networking began and the real connections formed. These events also caused huge spikes in traffic and conversations on our digital platform.
3. Living our impact through our processes
Quite simply, we wouldn’t exist if we didn’t approach Milaana in a way that was authentic and that inspired others to engage in our vision and impact. To us authenticity means:
- Living our service and the #dowelldogood philosophy. Ensuring every action we take benefits not only ourselves, but also creates value for the broader community.
- Being true to our DNA as not a tech startup, but a human startup. An organisation that embodied our collective values.
- Being ever humbled by, and grateful to, the community that created us. The mentors, community champions and students, who dedicated their energy, talent, time, money and connections to support us.
Understanding your shortcomings personally, and as a leader, is a sobering and at times painful process but it brings with it a sense of peace when all has brought to light, including the successes and what will live on.
If I had taken the time out for this depth of reflection during the journey, perhaps I wouldn’t need to write this piece at all. But with this process now complete, I’m letting go of the ‘perhaps’ and the ‘what-ifs’. The vision for Milaana now is to be a valuable open source resource and to actively support all who wish to facilitate community engagement.
It’s a fundamental law of physics that energy cannot be created or destroyed, it simply transforms from one form to another. So it is with Milaana. I observed a gap, then tapped into the energy of a whole community and guided this energy to facilitate connections and impact within the form of Milaana. The original form is no longer, but everything created during this experience will continue to evolve. By open sourcing, I just want to give it a little nudge so that our desired impact can perpetuate. How ‘successful’ our open source experiment goes on to be simply depends on whether there are leaders stepping up to take hold of this energy and transform it to best serve own communities. If you are interested in getting involved, visit our Open Source Materials and get in touch.
Thanks to all those that have made this experience and these lessons possible and to all through whom Milaana’s vision lives on.
Hollie Gordon is the founder of Milaana. This is an edited version of a piece that originally appeared on Milaana’s blog.