From raising a million and speaking in Beverly Hills alongside, to liquidation and the Number 14 Leith bus; a cautionary tale from Scotland’s start-up scene

If, in Internet years, we’re reaching Postmodernity then 2004 was very much the Middle Ages; Facebook was still the pastime of a nerdy Harvard student, Twitter and Instagram had yet to twinkle in their founders’ eyes, and online dating was something only the weirdest of weirdos did.

So when I registered, built a simple website and started posting a new photo every day, it was a pretty unusual thing to do. Perhaps even a little weird. I had no real aspirations for it. On the contrary, it was just the latest in a long line of nerdy online projects I’d undertaken to provide a distraction from the stresses of running a busy digital agency (the previous being a foul-mouthed swearing version of the classic eighties game Simon).

There’s some irony then that 10 years and 3,652 photos later Blipfoto had become a full-time job for fourteen people and reshaped my whole identity. My fledgling idea had unexpectedly blossomed into a worldwide community of daily photojournalists, who’d collectively documented six million days of human life.

We were receiving a million visits a month, we’d won a Bafta Award, I’d met the Queen and picked up Steve Wozniak as a penpal. The British Library deemed our users’ content of such historical importance it began archiving everything for the benefit of future generations. We’d raised more than a million pounds in investment, and I was jet-setting around America speaking at conferences in Beverly Hills alongside Tony Blair and while negotiating a partnership deal with one of the world’s biggest photography brands.

Over the following days and weeks, I discovered the striking parallels between a startup failing, and a close relative dying.

Four short months later, when a crucial round of investment failed to materialise, we ran out of cash and the board took the decision to appoint a liquidator. I suddenly found myself jobless, heading home to Leith on the number 14 bus wondering what the hell just happened.

Over the following days and weeks, I discovered the striking parallels between a startup failing and a close relative dying. You find yourself dealing with somber suited men who’ve made unusual career choices, and friends offering condolences and concern for your mental wellbeing. Official documents have to be produced and the contents of neglected cupboards sorted out. It was a hard pill to swallow but came with a very welcome side order of relief.

What unfolded with Blipfoto over the next nine months is a tale for another time, but its users eventually crowdfunded just enough cash to set up a Community Interest Company and take ownership of the product. They now run the service purely for the benefit of its community—something I think is still unique in social media and, at least for me, a fitting final chapter.

I’ve been asked many times what I wish I’d done differently. I’ve never been big on regrets so that’s a tough question to answer—but there are certainly four lessons I’ll always carry with me:

-First, Blipfoto happened almost by accident—I didn’t set out to build a product or a new business. It’s never bad advice to create something for yourself if you want others to want it too (Slack being a perfect recent example) but, because we’d established a large user base before taking it seriously as a business, we inadvertently stored up some big problems. To take proper control of growth it’s vital to articulate a clear value proposition to a particular type of person. But if two-thirds of an already sizeable user base doesn’t identify with the way you position the product it becomes very difficult to grow. The harder we tried the worse the results.

-Second, although we raised a fairly sizeable chunk of funding, it came through five separate rounds of investment over a period of just four years. Any founder who’s raised equity investment knows how much time and effort is involved in courting investors, agreeing a deal and getting it over the line (for those that haven’t, it’s at least three times as much as your worst estimate). Doing that as often as I did was insane. I spent more than half of my time fundraising—time that could and should have been spent on the product and growth. It would have been more sensible to raise enough to buy the time to get a handle on growth, or steer clear of investment altogether. A small initial raise set us on a trajectory I simply didn’t anticipate.

-Third, while the support and incentives on offer to Scottish startups is envied around the world, it can have a downside. When you take into account EIS relief, the board and consultancy fees often imposed by investors, and the commissions angel groups partnering with the SIB Co-investment Fund routinely deduct from your investment, it’s entirely possible for an investor to find him or herself in profit regardless of the success of the venture. Having investors without any real skin in the game exerting influence is a particularly unhealthy place for a founder—especially when you’re expected to risk everything against future success. We had some brilliant investors whose support was unconditional (literally), but I’ve had first-hand experience of this scenario playing out too.

-Fourth and finally, we have a wonderful, thriving tech startup scene in Scotland, but it’s easy to get a bit of investment and recognition within that community and feel like a winner—the success of your business will naturally follow, right? Wrong. It’s no coincidence that few of us heard of this weird startup called Skyscanner until they were doing a million in monthly revenue; instead of being seen in all the right places they’d been focussing their energy exactly where it needed to be—on the product, users and growth.

When the Blipfoto fallout began to settle I discovered what it means to be middle class, middle aged and unemployed—it’s called ‘consulting’. I’m really enjoying the opportunity to bring some of my experience to bear on other companies and was particularly fortunate to join a small core team transforming the Scottish Government’s CivTech programme from a hair-brained idea into one of the most ground-breaking tech accelerators in Europe.

Meanwhile—and with my four points above very firmly in mind—I’ve been quietly beavering away on the Next Big Thing, which should start to see the light of day later this year. In the startup world we’re told failure is more of an elixir than a poison, I guess I’ll find out soon enough if that’s true.

Joe Tree’s article is the cover story for the Spring edition of FutureScot Magazine in The Times Scotland: Download the PDF.