We started DataOne Innovation Labs in March 2016. Like a lot of bootstrapped companies, we began as a services business, building data and analytics products for clients through our network.
Early on, one opportunity looked like it could change everything.
The deal
A senior person we knew through our network wanted us to build a product with them. Our team was good at exactly this kind of work, the opportunity looked big, and it was moving fast. So we signed an agreement and committed to it.
Then we did the thing that made it hurt: we invested almost all the money we had earned so far into building that product. It seemed big enough to focus on.
How it fell apart
Within about six months, the partnership fell apart. Whatever we had invested, in money and in progress, was gone. We had also made the classic mistake of not having a lawyer properly involved in the agreement, so we had very little to fall back on.
For a small, bootstrapped team, that’s the kind of hit that can end a company.
It didn’t end ours. DataOne kept going for years after that, built Shoppr.ai, and the team eventually joined Whatfix. But I still think about what we should have done differently.
Lesson 1: Do the due diligence, even when the deal feels good
When things are going well, people come to you with opportunities, and it’s easy to assume that anyone who seems to be doing well is a safe bet. We didn’t do enough research or background checks. We moved forward on trust and momentum.
The bigger the commitment, the more homework it deserves. Talk to people who have worked with them before. Understand their incentives. Ask the uncomfortable questions before you sign, not after.
Lesson 2: Pay for a good lawyer, and actually listen
Always have a good legal advisor, and do every contract or agreement on their advice. Yes, it costs money. Pay the fees. It’s a small price compared to what a bad agreement can cost you.
Early-stage founders often skip this because cash is tight. That’s exactly when a bad contract hurts the most.
Lesson 3: Don’t let one bad deal define the company
There will be moments when it feels like everything is failing and nothing is moving. What got us through was going back to the basics: doing good work for customers, with dedication. Customers came back. The business got its footing again.
A failure like this is expensive tuition. The only thing worse than paying it is paying it twice.
I first told this story at an eChai Ventures session on learning from failures. If you’re weighing a partnership like this right now, I’m happy to talk it through: me@nikunjthakkar.com.