Explore

3: Co-founder Conflicts and the Pivot

This episode of TinySeed Tales follows Colleen Schnettler's startup journey as she navigates co-founder conflict and a major business pivot. The episode begins with a surprising revelation - Colleen is "breaking up" with her co-founder Aaron, and explores how they resolved their conflict and decided to shut down their current product to build something entirely new.

Co-founder Relationship Challenges

Colleen and Aaron faced a serious co-founder conflict stemming from their different levels of commitment to the business. Colleen had just stopped consulting (which was bringing in $20,000/month) to focus full-time on their startup, while Aaron was still working part-time.

"I am full-time and he is part-time, and that is just what works for us with our family situation and things like that. But I feel so much pressure to make this work, and to me it seems like, well, if it doesn't work for him, then he just stays at his job and nothing changes where if it doesn't work for me, it's a huge deal."

The conflict culminated in an emotional multi-day discussion about their commitment levels, goals, and partnership structure:

"It's not even just what do you want with the business, but what do you want with your life? What are your goals? What are we doing here? And those things are really important to be on the same page."

Colleen admits that she should have addressed these issues earlier:

"This issue with Aaron had been simmering for a long time and I was talking to everyone except for Aaron about it. I'm happy that we had it out, but we could have done that six months earlier."

After honest communication, they decided to continue working together:

"I'd rather do this with you than without you even given the constraints that we have. We are a great partnership. We have complementary skill sets and it's really nice. I mean, I really enjoy having a co-founder."

The Pivot Decision

Colleen realized their original product (Refine, a reporting tool for Rails) wasn't working as expected. After extensive customer interviews, she discovered fundamental issues with their business model:

"What we were doing I realized is we were building a productized consulting business because what was happening to us is people would come in and they buy refine... As part of that, they wanted us hands on the code in their app, making it match their UI perfectly."

The red flags that pushed them toward a pivot:

They were building a productized consulting business rather than a scalable product

Integration was difficult for customers

They had to catch customers early in their lifecycle

They lacked competitors, suggesting the market wasn't validated

Their revenue model (licensing a Ruby Gem) didn't align with developer purchasing behavior

"There was this red flag that we didn't have any competitors. And you know how at first you're like, 'oh, great, we don't have any competitors.' Then you're like, 'oh, there's a reason.'"

The New Direction: Hello Query

Colleen and Aaron decided to reset their business entirely:

"We're shutting it down. So MRR is at zero, so that's super fun and we're building something new."

They've renamed their company to Hello Query and pivoted to building hosted internal reporting for teams. This solution addresses similar problems to their original idea but with a more viable business model:

"We're solving a very similar problem to what we initially set out to solve. We're just solving it in what we think is just a cleaner way."

The advantages of the new direction include:

A proper SaaS model instead of software licensing

A much larger market (anyone with a database, not just Rails developers)

More flexible pricing options (per seat)

Better distribution opportunities through partnerships

Challenges of the Pivot

Colleen acknowledges the challenges of their new direction, particularly competition:

"This is a crowded field. There are several competitors in the space, but what I'm hearing from people, even at the air quotes, 'easiest' ones to use are not easy."

She describes moments of doubt during their pivot process:

"We start doing competitor research and we find this company that has built literally what we just described and they have raised $15 million and we're like, 'oh no, how are we going to compete with these guys?'"

Lessons on Customer Validation

Colleen shares an important lesson about customer validation from their first product:

"What I learned later is I didn't ask those people a lot of questions. I just was so happy to have their money... It came out that people were using it on hobby projects and they thought it was cool and they wanted to support us. But the hobby projects is again, not the kind of business we're trying to build."

For Hello Query, she's being more careful with validation:

"One of the things I'm trying to be very careful with on these customer interviews, and if we do pre-sell, will be 'what are you using this at work? Is this something you really need? Is this going to solve the problem you have at work?'"

Despite the challenges, Colleen remains optimistic about their new direction and her journey as a founder:

"Since I stopped consulting, which was only three weeks ago, I'm just having the best time. This is amazing, right? It feels like freedom and it's just like, wow, all of these things I have always wanted to do. I can now do them."

The episode demonstrates the reality of early-stage startups: the importance of co-founder communication, the willingness to pivot when necessary, and the ongoing challenge of finding product-market fit.

Want to print your doc?
This is not the way.

Try clicking the ⋯ next to your doc name or using a keyboard shortcut (

CtrlP

) instead.