Ilya Rekhter: Founders, embrace the sink-or-swim moment

Airbnb’s founders were funding the company on credit cards in 2008 and desperate for cash when they began selling special-edition cereal boxes: “Obama O’s” for then-presidential candidate Barack Obama and “Cap’n McCains” for John McCain.

It was a pivotal moment that changed the trajectory of the company.

At the time, Airbnb was a fledgling startup whose concept of travelers renting rooms and houses from one another hadn’t gained traction. The cereal worked, buying the founders enough time to learn of the hotel-room shortages in Denver, the host city for the Democratic National Convention that year. The hotel-room shortage created a natural use case for Airbnb, which helped alleviate the accommodation crisis and paved the way for the company to become what we know it as today.

Would Airbnb exist if its founders hadn’t gambled on a cereal stunt, or if the presidential election had fallen on a different year? For founders, these moments serve as a reminder of how fragile startups are and how a few pivotal moments can snatch victory from the jaws of defeat.

Sink or swim

Pivotal moments like Airbnb’s cereal gamble are what get founders out of bed in the morning. “Obama O’s” and “Cap’n McCain’s” might be unique to Airbnb, but sink-or-swim moments like the one they went through are a rite of passage that founders remember vividly.

For me, that sink-or-swim moment came in 2012, while I was building my last startup, DoubleMap. To the outside world, things were going well at the company. My team and I had built an Uber-like app to track buses and had signed several university customers, including our alma mater, Indiana University. I had quit my job to build the company full time.

To add to our momentum, Bloomington Transit, a public transit system that operated in parallel with IU Campus Bus, had released a request for proposals with the intent of bringing more tech functionality to its fleet. This was the moment we had been waiting for! Bloomington Transit was familiar with our software, shared the majority of its rider base with IU Campus Bus and even operated out of the same garage. We were a shoo-in to win the bid, right?

Fear crept in as soon as I read the requirements of the RFP. Yes, Bloomington Transit was interested in many of the features we offered, but the majority of requirements were for features we hadn’t remotely considered building. We would surely lose the bid, and as much as missing out on growth would sting, the worst part was that we would have a competitor operating in our backyard. In the same garage as IU Campus Bus. At our alma mater!

The mother of invention

Fear spiraled into a feeling of doom. Why would anyone else work with us when the public transit system at our alma mater went with a different company? And what the heck were these other requested features, anyway? It didn’t matter; this was our sink-or-swim moment, so we would build whatever we had to.

The requirements called for a system that would audibly announce upcoming bus stops for visually impaired riders to know when to get on and off the bus. Certainly a technical challenge.

My initial thought was that we’d be better off selling funny-sounding presidential cereal. “Romney’s Raisin Bran” had a nice ring to it. The moment passed, and our team got to work.

The submission deadline loomed large, which meant our team was simultaneously developing software, designing hardware and drafting the proposal. It was a stressful time, but it felt rewarding to be in the trenches as one team. We pulled an all-nighter to get the bid done and submitted the proposal with the paper still warm from the print shop. We did it!

Crickets.

The adrenaline of submitting the bid wore off and quickly turned into the realization that we hadn’t won anything yet. This was just the beginning.

A few weeks later, we received an invitation for an in-person presentation. We had been selected as a finalist! This meant we were in serious contention for the project, but we couldn’t shake the feeling that this could be a way to let the local company down easy. Imposter syndrome at its finest.

We prepared meticulously for the presentation, and our new features performed well during the demo. The Bloomington Transit team members thanked us and said we would hear from them soon.

“Soon” turned into nearly three months of radio silence. Did they select a different company? Were they on vacation? Whatever the reason, a negative response felt inevitable.

Conclusion

Nearly 12 years have passed since then, but I remember Friday, Dec. 21, 2012, like it was yesterday. I was shopping for a winter coat when I felt my phone buzz. It was an email from Bloomington Transit. This was it.

I clenched the coat rack and began scanning for the word “unfortunately” as if it were a college acceptance letter. Instead, it read “congratulations,” so I impulsively yelled “YES” in the middle of a quiet store. Other shoppers must have thought I had found the best coat ever!

This was our pivotal moment, and we had survived.

Best of all, the tool we had built for visually impaired riders propelled us to be able to compete for larger, more complex projects, which played a pivotal role in Ford’s decision to acquire DoubleMap in 2019.

Fast forward to today, and I’m facing a new set of challenges with my current company, Megawatt. It’s only a matter of time before we encounter our sink-or-swim moment. Luckily, it’s an election year, so I have “Biden’s Berry Crunch”’ and “Trump’s Trix” to fall back on in a pinch.•

__________

Rekhter is co-founder and CEO of Megawatt.