Startup post-mortem: lessons from a shuttered recruitment startup

7 Nov, 2017

Dan Kelsall was working “crazy” hours, had dipped into his personal savings and had moved from his city centre home back in with his dad to try to keep his business afloat.

Vonkel, the digital job application app, counted the likes of Natwest and TalkTalk as customers, had thousands of users and had been invited to take part in the prestigious Pitch@Palace competition.

Yet, the 30-year-old says he felt only relief when he decided to close down the business in October. He can reel off a list all the things that went wrong – “I was naïve and some decisions were just dumb” – and says the 18 months of running the business has given him the equivalent of five to ten years of invaluable commercial experience.

“I had sleepless nights when it was all going wrong and it took me two months to figure out I was going to close it down,” Kelsall says. “When you’ve built something you hang onto it as long as possible but I should have closed it down two months earlier.”

Rethinking recruitment

Kelsall was working as a recruitment consultant in Manchester when he hit upon the idea for Vonkel, which he believed could play to the strengths of job candidates who didn’t necessarily have the qualifications on paper.

“I was looking around in recruitment and thinking that a lot of young people were being missed the way the system was,” he says. “They didn’t have the right qualifications or experience but they had the potential, the drive and the passion to grow into roles, but employers weren’t very good at recognising that.

Vonkel startup post-mortem
Dan Kelsall pitches Vonkel at the Northern Stars 2017 regional heat in Liverpool.

His app would allow employers to post videos about job vacancies and young people to respond by uploading short videos of their own. “There was no set way of doing it, it was up to them how they presented themselves,” Kelsall says.

While still working in recruitment, he made an early version of the app, put out feelers to test the water and drew up lists of angel investors with experience in tech. After contacting them all and securing a number of meetings, he struck a deal with one who could offer mentorship and contacts as well as the agreed investment.

Cracks start to appear

As a condition of the investment, he gave up his job straight away to concentrate full-time on Vonkel and, in a bid to attract job seekers to the app, offered employers the chance to use it for free for a short time. Six months in, the business was growing steadily, with the app being used by the likes of Barclays, Natwest, Mamas & Papas, and TalkTalk. Interviews were being arranged off the back of the videos, and vacancies were being filled.

Yet, cracks had begun to appear, firstly with the tech side of things, which Kelsall had chosen to outsource. “I started learning to code and, as I learned more and more, I looked over our own tech and saw a lot of basic errors,” he says. “We didn’t have the expertise in the business so I’d outsourced it outside the UK because I couldn’t afford the rates here, even with the investment.

“Even with my basic knowledge I could see there was a lot of spaghetti code so, as we scaled the business, it would have required a complex reboot that could have taken about six months.”

The wrong kind of growth

The pace of growth was also too fast, Kelsall believes, due to him pursuing larger employers first. They were slow to respond to his requests, yet wanted a quick response when they asked for additions to be made to the app. It was also difficult to get hold of the relevant person, something he believes would have been different if he’d signed up small businesses instead.

“It would have slowed down growth and we would have been able to iterate a lot better, with more accurate feedback,” he says, adding that the rate of growth his customer base was experiencing compared with the development of the tech infrastructure could have led to major problems further down the line.

“We didn’t have the funding to move quick enough for the larger businesses, and when they wanted a function improving they wanted it doing straight away.”

A handshake deal

Then there was the investment model he had entered into. Rather than signing a contract, he and his investor simply shook hands on their deal, which he concedes now was “just dumb.” The cash trickled through on a monthly basis, with Kelsall submitting a business case for each instalment.

“As much as that seems good because you don’t spend what you don’t have, the problem was I could only afford a junior development team on this basis,” Kelsall says. “I was so naïve because it was my first startup, and somebody had offered me the money and a chance to make it work. I took a handshake and the money in the bank as a sign that everything was fine, but it was crippling us and I didn’t have a leg to stand on.”

In all, Vonkel received just over half of the money promised and Kelsall received one mentoring session in nine months. But he was stuck between a rock and a hard place. The business received other investment offers but the situation with their existing investor, who did not want to budge on his share of the business, acted as a red flag to others.

“It seems like common sense now but I just didn’t have anything in writing and it just killed it,” he says.

When his investor later withdrew from the business, Kelsall spent three months funding it from his own savings. While he was the only one working on it full-time, he says he had a team of people ready to move over when the time was right, including a chief technology officer, a marketing expert and a videographer.

Vonkel startup post-mortem

Back living at home with his dad in Bury, he worked long hours in attempt to make it work. “I don’t think there are working hours when you run a business, which is a bit dangerous sometimes, but you do what needs to be done,” he says. “I worked crazy hours and would then think what have I actually achieved in that time.”

Network error

As a young entrepreneur he also got caught up in networking, something he says he would not spend time on again. Some of the events he attended were “a bit pointless for new startups” and took him away from the business at a time when it needed him.

“There’s a good startup community in Manchester and a lot of events, but 80-90 percent of them don’t add to your business,” he says. “It’s nice to feel part of the community and speak to people going on similar journeys but, in reality, if you don’t get a client meeting out of it then what have you achieved?

“A lot of startup bosses play at being entrepreneurs but they get so wrapped up in that community aspect of it that it takes them away from building their startups.”

The importance of mental health

Working such long hours, pouring in so much effort and then spending time promoting his business after-hours must have taken its toll on Kelsall’s health. He believes all entrepreneurs will suffer from mental health problems at some stage by nature of what they’re doing. Yet, he says as a community they are afraid to voice their problems – something he says needs to change.

“There’s a lot of anxiety and everyone gets it. Mental health problems in business are just part and parcel of the ride,” he says. “There are stages in everybody’s journey where they struggle, and it doesn’t matter if your business is struggling or not.

“One thing with the startup community is that it’s all positivity for positivity’s sake. We all walk around shaking hands and talking about how well our businesses are doing when, in reality, not a lot of people are honest about what’s actually going on under the hoods.

“It would be beneficial to people to talk about how it really is at these startup events and support each other through how difficult it can be. It would be great to hear people say ‘yes, I’ve f**ked up’ or ‘I’m feeling like crap.’”

Time to quit – for now

Kelsall closed down Vonkel in October just a month after he had pitched at Tech North’s Northern Stars in Liverpool. Even though the business was struggling, he says he was determined to carry on in case it opened up an opportunity for it to continue. The following week he was due to attend Pitch@Palace but with all the business’s problems, and a family bereavement, he withdrew from the competition.

“I thought, ‘why am I bothering to go down there?’” he says. “Sometimes it’s the hardest thing to hold up your hands and says ‘this is it, it’s time to call it a day.’ It was a relief, that was the weird thing because I didn’t ever think it would be, but there’s so much I’ve learned from it.”

Still living with his dad – who lent him petrol money to get to pitches, he believes he wouldn’t have come so far without the support around him. “A lot of people don’t realise that when you become an entrepreneur you take that risk and there are so many more people involved who make sacrifices on your behalf,” he says.

At the beginning of November, he started work content writing for a Bolton software business, though he hasn’t ruled out going it alone again further in the future.

“This hasn’t put me off running a business again, which isn’t to say that I won’t be in my current job for a long time,” he says. “I think there will be a stage in my life where I go out on my own – once you’ve got the bug it stays with you.”

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  1. I hear you. On all of it. As have been there. What I would say though is that the networking part is perhaps how he networked rather than networking itself. Ie if you are just looking for client sales directly this won’t happen but if you are looking for referrals then this is possible. Also networking with the right people would have got him more tech and investment help and more mental health help too perhaps? It feels like using networking for only what you can get out of it kinda misses the point. The community IS everything.

    1. Nice to see a raw and honest take on the ups and downs of running your own business. I saw Dan speak about Vonkel at Natwest’s Entrepreneurial Startup; with a background in recruitment marketing, I was impressed that someone was shaking up the recruitment industry with video technology. It’s definitely true that Manchester is a great city to network and meet other startups and freelancers, but agree you need to retain commercial commonsense and prioritise opportunities that generate real business leads.