It's not a full story, just a list of main events, considered as foundation to get the picture.
- July 2021: founding of 10K Riders. Honestly, I was kinda confident in success because of prior heading of AppQuantum: since 2018, when it was non-even-a-company with a team of 2 juniors and useless portfolio, until it became noticeable player with multimillions profits and dozens of cases. Sure, it wasn't solely my merit — yet enough for me to be optimistic.
- Autumn 2021: first months seems like success: we've polished business model, hired nice people and within first months we've got some roas-positive tests. At the end of 2021 we had a team of ~25 specialists, working with 30+ studios over 40+ game projects, 2 of which had passed the tests and went for scale. There was no profit yet, but the sun at the horizon shined bright.
- Jan-Feb 2022, first major strike: we broke up with investors and should find finances within a month — that's all the money bag we had. Luckily, I've found 2 great offers within deadline.
- 28 Feb 2022: where the hell has happen. Both offers vanished that instant (one along with company that made it) — so as other opportunities for business with russian founders. Next several months while I was in search of money, no salaries were paid, no releases succeed, debts growing, studios withdrawing, people leaving or getting stress breakdowns.
- Summer 2022. We've finished the deal with new investors and received first tranche. Most of that was directed to deal with debts accumulated in last months. What's left should’ve been enough just roughly for half a year. Within this time we've completely rebuilt all the company and it's model to maximize changes in a short terms despite loosing so much valuable assets on the way here.
- Nov-Dec 2022. Money run out, we've cut the staff and closed almost all projects except for a few promising: — 2 of those will show profit at golden cohort and end shortly after — 1 will make us able to survive next six months (still earning some) — the last 1 might had happen as a huge hit, yet we lost the partner
- spent ~$1.6m - earned ~$350k - returned ~$250k back to investors before close - total loss around $1m
Fail is a fail. But what's more important: why and how. And there where we'll start to reflect.
In early 2021, I was far from my prime: I gave it all to the previous company: 3+ years of bursting growth; 3 to 150 employees; 0 to XX mils profits; longest vacation: two days in a row. In terms of effort and dedication, it was not work but war.
Yet despite all that (or probably because of that..?) I felt I couldn't reach my goals there and was not valued enough. Tried fixing it in-house, but it didn't work out, so I got exhausted, disappointed, and in a deep personal crisis. By the summer of 21, I deeply needed two things: leave the company and a long time to recover.
And then some investors reached me and offered to start my own company in terms of “now or never.” I overestimated that offer, was scared to miss a lifetime opportunity, underestimated the need for recovery, and rashly agreed. Further events just dug me deeper into all that personal clusterfuck.
In my defense, I clearly let it known to future co-founders and investors before the deal, and to the core team shortly after. Co-founders heard the most sincere and cringy version, smth like:
Hi guys. We can start a business together, but I'm kinda burned out, feel depressed, and might break down soon. Honestly, I myself might be the most crucial risk of business. So think twice before answering.
For the rest, it was smoothed, but the point was the same.
I mean initial investors. Not many people know the names and I also won't name them to allow myself to wright sincere story. It was dysfunctional partnership that led to pulling money off at the worst time possible. We had incompatible personalities, a lot of unnecessary conflicts and I didn't feel like an equal partner as I was supposed to be.
First dumb thing of me to agree on monthly tranches covering the past month's expenses. I have agreed on this and don't blame anyone, but you should NEVER EVER AGREE ON THIS. That makes cash gaps inevitable so my comp and savings became cash reserves for covering the gaps.
Once it wasn't enough and I've asked for an advance to avoid delay in salaries. The answer was: “We need to be sure why you need this, so first make the reports (that we didn't ask before) and then we'll talk”. Yeah, It's totally right to justify the unplanned allocation of cash — but I believe good partners in crisis should help first and figure out why that happened only after. I was forced to drop all the stuff I did at the moment, few days have been spent on the report, cash has been received, and salaries have been paid with a small but delay. But then I told to investors that it was not a partnership I was happy with. It was already boiling point, so we talked, they suggested breaking up, and I agreed.
Right before that, we had an argument about what we shouldn't do cause it might directly compete with their assets. Sound reasonable? — Yeah, if we ignore that it wasn't what we agreed before. We did compromise, but the bad aftertaste stayed.
I can through more illustrations but don't wanna make this text look like whining and blaming others. Trying to be unbiased I should say that investors didn't make smth morally or legally unacceptable and unlikely intended to screw me. But it never was and never could become a good partnership, break up was predefined and I was a huge mistake to take that deal in the first place.
Let's clarify: I'm not denying any responsibility, clearly there were my mistakes. But they occurred and thus their consequences became inevitable before the business even started.
That's why I call them 'disadvantages' and don't mix them with operational/business mishandles.
Also, there are two factors I won't mention, though both clearly affect us in a bad way: late 2021 mobile market fall and Putin’s war of early 2022 — but speaking of those two is like scolding at clouds so we'll skip that.
There was also a lot of people, partners and factors that might be consider as a huge luck or ‘unfair advantage’ — but it would be too long to cover them all (I actually love most of our team, they know), so I decided to mention two most major:
Anastasia Romakha, my ex. cofounder and most valuable asset. This person is a machine: stable and reliable as a rock, deep-thinking, fast-learning, trustworthy, never avoiding hard job or tough decisions. She was the main reason we've survived after loose funding.
If you need high-level manager to fix the mess, survive the crisis and make things done — drop everything now and go hire her (as far as I know, she is not interesting in this kind of responsibility anymore, but it's your problem).
Stan Gorozhankin, representing Embria as new investors. It might be just in a contrast with initial investors, but the facts are: those guys were best partners I can imagine. They believed in us, helped with issues, never pressed, dictated, never added problems or showed distrust. Once our opinions differed and they took a position “we strongly disagree, but it's for you to decide” (unimaginably with previous partners).
Also, Irina Rosenberg is a great COO, filled with energy and ideas, always ready to help and proactively using the synergy of all the assets at full.
If ever again I’ll start raising a capital — Stan and Embria will get first and best offer :)
One more thing
I've mentioned above that we've got first successful tests pretty fast. Moreover, it was really good ones: first returned x1.8 of test budget, second x4. It was pure ROAS, w/o organic. So, how could it have gone wrong?
Well, simple: both were merge2. Nowadays, most of the market players are aware that merge2 is a genre with the highest drop in performance from the 'golden cohort' to actual scale. Although by mid-2021, this wasn't as obvious.
It's not like we didn't get this at all: I've monitored the markets, openly talked with competitors and the problem soon comes clear. But I believed I had a solution (in fields of meta & monetization) that should help us break through — yet appeared not so effective. It's more of wrongdoing / mishandling situation than some external disadvantage, but for story we won't need that anymore and I just wanted to explain that nuance.