Lessons Learned from a Failed Startup

By GRAHAM DICKIE
Special Contribution to Silicon Hills News

Jonathan Placa, photo by Graham Dickie

Jonathan Placa, photo by Graham Dickie

People are to led to entrepreneurship for a number of reasons. They want to strike gold. They feel like they have a need in their own life no one else is addressing. Other types of work bore them. For 27-year-old Jonathan Placa, it was the desire to be his own boss — an inclination that runs in his family.

In the late ‘70s, before Jonathan was born, his father James Placa became self-employed, trading a company job for selling nail polish out of his car trunk in Newark, New Jersey. He gambled his life, the business’s future was uncertain, and he set an example for his son.

“There were many years that I questioned myself,” James said.

But in a time when the word startup didn’t even exist, numbers were always handled on paper, and banks avoided small ventures, James took a night job as a bartender to pay rent and his undertaking, a cosmetics business, survived. It remains operating today.

James’ experience had a profound influence on Jonathan, who disliked the powerlessness he felt in a large workplace. Jonathan set aside stability after college to pursue his aspirations in the fast-moving tech-world, to make it like his father. However, his first business would miss one important part: the long-term growth.

Going in, though, Jonathan had few doubts.

“It was sort of natural to say, ‘Hey, it’s my possible, my father created a business,’” Jonathan said.

Jonathan started his first company with his brother Jimmy and college roommate Orie Steele in New York City but moved it to Austin shortly thereafter. The trio set out to fix manufacturing issues that dogged James’ business, now called HABA.

“You created a manufacturing business; I’m going to create one that solves all the problems that you talk about,” Jonathan said.

He noticed that small manufacturers like his father often had difficulty finding competent engineers to design their products — an issue that can make or break a company’s ability to scale.

Jonathan’s startup — called ProtoExchange — tried to address this problem by morphing into a vessel to connect manufacturers with quality engineers. The company’s AngelList profile touted that it could minimize overhead for companies while providing engineers with opportunities to improve their skillsets.

But did Jonathan succeed like James?

“[That] unfortunately did not occur,” Jonathan said with a laugh.

The startup was abandoned earlier this year, even though it was turning a profit at the end of 2014. Jonathan said he and his partners ended ProtoExchange because it was sliding into a “completely average marketplace” as it expanded, a common problem for startups. His love for it shrunk along the way.

The business was also slowly beginning to consume all of Jonathan’s life, and he was skeptical it could continue to grow. Clients on both ends became less lucrative, and Jonathan decided he had enough.

“We weren’t really passionate about it,” Jonathan said. “We started to ask ourselves, ‘Is it worth it to grind through all of this bullshit and are we happy where we’re at? Are we happy with the product?’”

Jonathan now holds the position of operations manager at another Austin startup called NarrativeDX. While it is not his own company, he does have a good deal of control there. He said he is constantly dreaming about what his next creation will be. In other words, he is not pivoting away from entrepreneurship. He and Steele, his former business partner, still hang out and fly drones together.

Jonathan and his father talk frequently these days, too, but not much about business.

“I had tough time understanding what Jonathan’s business model was,” James said of ProtoExchange. “However, I was all for him to try.”

Editor’s note: Graham Dickie is a student at the University of Texas at Austin. He wrote this story for Professor Rosental Alves’ Entrepreneurial Journalism class. It is reprinted here with permission.

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