In 2014, Aazar, a Pakistani entrepreneur, decided to create an Uber for logistics and awkward items trying to solve a problem he and many other people were having: Bringing items from Pakistan to Germany. He soon validated the idea and built the product. But a combination of bad marketing and bad team fit led to their failure.
Hi Aazar! What's your background, and what are you currently working on?
Hey there! My name is as Aazar - I am 29 years old and I am from Karachi, Pakistan. However, since 2014 I am living in Munich where I work as a marketing and business professional. I came to Germany, after working two years in a telecom company in Pakistan, with the objective of studying abroad - I am really enjoying it.
Already in Germany, a few years ago I built Lieferoo, which basically was the BlaBlaCar (the long-distance Uber) for logistics and awkward items that couldn't be transported in packages. For example, if people wanted to move a cat, they would use Lieferoo, as they couldn’t transport it on a package.
I was the founder and CEO of the company and my duties were everything related to marketing, sales, business plan, and finances.
The business model of Lieferoo was based on a commission. We took 10% of the earnings that the people who traveled with the package earned.
My first failed startups helped me build a next startup that is ECOMPLY.io. ECOMPLY is a GDPR SaaS solution for Digital Companies to get rid of GDPR documentation. (Managing Director) and my current role at VP Growth at Userpilot.com. Userpilot helps you increase user onboarding & adoption through powerful & event-driven product experiences. Code-Free.
What motivated you to start Lieferoo?
I was working for a corporate Telecom company and in Pakistan for two years in B2B Corporate Sales and I saw that I wasn't growing enough. I was a really good sales & marketing person in that company, but I was not getting rewards enough. So, I started disliking my corporate life and the corporate structure.
When I came to Germany as well, I started working for a big company that was acquired by Intel. But I soon understood that big companies were not my thing and that I had to join a startup.
But rather than start working on my own business, I first wanted to have some experience in the startup industry so I joined a startup in Advertising Tech and that was my first startup experience. It was an incredible experience and I gain a lot of knowledge because I learned a lot about how startups work.
My motivation to start Lieferoo was not only to make a lot of money but also to make some impact in the world.
I also wanted to solve my personal problem which consisted of bringing things from Pakistan to Germany. I like a lot some unique stuff that is from Pakistan so I used to constantly ask my friends to bring me different things. Every time someone traveled to Pakistan I asked for certain things that couldn’t be found in Germany.
But it then started to be quite annoying for me. I wanted to pay for someone who could just bring these things. I thought: “If people are paying other people to transport them, why wouldn’t people pay other people to transport them certain things?”.
For example, the tea in Pakistan is very specific and I love it, but in Germany, it was really expensive. I soon also found that there were other people in Mexico and other cultural countries who wanted products from other parts of the world. That’s when I thought that I was solving a big problem.
Before Lieferoo I was also studying consumer affairs and technology management at the Technical University of Munich. I wanted to move into only marketing as in Pakistan everything was marketed through traditional channels
It’s great to emphasize that before Lieferoo, I also failed to build one business in a coaching center but we did not invest much time in it. ;)
This occurred when I was in University. I was really good in college at College Admissions, so I wanted to start a college admission test business so as to help people get into my University. It completely failed.
The business idea was quite simple: we gave a free test version so that people could come to do it and receive the results and find if they were good enough for the college. If the results were low, they would come to a series of classes where we would teach them how to do the test properly.
The failure reason was our location. We did these tests and classes in a small house located horribly where nobody could see it. Also, my target market wasn’t prepared to pay for the classes – they just wanted to see if they could pass the test (the majority didn’t).
How did you build it?
So first of all, I did quite a lot of validation for Lieferoo.
My first idea was to build a platform to connect people from Pakistan and Germany so that one person that was traveling to the other country could bring what another person in the other country wanted.
I created a survey and shared it on different platforms so as to validate if this was something that people wanted. I also talked to around 100 people who used to travel. It took me around one or two months to figure out if this was something people needed. I even made a group on Facebook of people who were interested in bringing stuff from Pakistan to Germany or from Germany to Pakistan, and a lot of people joined it.
Soon, a huge number of people were asking about what I wanted to build and I found a group of people on my Facebook who had the same problem.
Many Pakistani friends also wanted to buy electronics and in Pakistan, it was much more expensive than in Germany. So, they started posting on Facebook asking if anyway knew someone who was traveling to Germany.
That was when I realize I had to put more focus on the Facebook group.
Anyway, only a few months before I realized that I have to pivot soon. Bringing stuff from abroad is pretty much risky because of two reasons: illegal drugs and taxes.
Drugs was a really risky problem. The same with taxes, as if people wanted to bring something from Pakistan, they would have to pay tax on it.
It was this weird combination and this operational problem which made me think that I had to pivot to domestic long-distance stuff, such as chairs, tables, etc.
After a few months of working on the project, I finally launched Lieferoo website which looked like Airbnb but for domestic logistics. But I faced a big problem: People still did everything through Facebook and didn’t sign up to the platform.
I really enjoy the process of building the platform because I never had built a website and a and a software product before - it was very interesting for me.
I didn’t have to build it myself. I told my co-founder how I wanted the product to look like and he built it.
The one smart thing I did was to co-found the project with a tech person I met in University. This way, I didn’t have to pay anything to a developer and it was quite easy and fast to make the MVP.
People began signing up the project and putting stuff there that they needed to be transported. But really few people signed up in the supplier side. There were lots of things needed to be transported, but nobody to do it. I remember that a guy even wanted some stuff to be moved from Munich to San Francisco!
There was one competitor of mine called Nimble which had the same problem. There were a lot of people putting stuff and nobody was able to take it.
Which were your marketing strategies to grow your business?
My marketing strategy was just Facebook – I worked as much as possible in the social platform because the whole Lieferoo audience was there. I tried to get people to find us using all Facebook tools, such as groups, personal posts, and pages.
I never carried out any other digital marketing other than having a landing page website and putting it on Google. This was a big mistake! I never marketed it really well. I didn’t even invest in Facebook advertising. I should have actually not only talked to people but also put some money.
My innocent idea was to make thousands of dollars with my business whose marketing efforts were based completely on word of mouth.
What were the causes of Lieferoo failure?
The main cause of failure of Lieferoo was that I didn’t promote it correctly and the bad team fit.
As for the team, the problems began when one of the co-founders moved back to Nepal. He stopped being passionate about the product. He was just a developer – He got thirty percent of the equity but he was not completely committed to the idea.
We also had another problem which was that If you are a student in Germany, you can't have your own business.
If you have your own business, then you have to go through a big process which includes visiting the city registration and telling them what you are doing - that’s a lot of paperwork and 9 months of approval to get started..
As I didn't want to go through that process, I hired a German who became the managing director of the company - he was just the guy charged of documentation.
The problem was that this guy was not committed either passionate about the project.
So, all in all, the team was a big problem. They weren’t passionate about the product and about the problem we were trying to tackle. They were just doing something they were curious about and interested about.
As for the marketing problems, I did not put enough money in promotion. I didn’t go to enough events, or I didn’t post enough on Facebook groups about the product.
A third problem was also that I didn’t speak German well enough. When Germans wrote on my website, I did not understand them really well. I could not talk to customers because of this same problem.
And I think there was a fourth problem, related to German beliefs on crowd shipping and carpooling. Uber and AirBnB are not really working well in Germany. People tend not to trust each other enough.
They thought - If I give a package to someone I don’t know, they can take it away from me. That’s why I went through insurance process at the same time as well.
It's very difficult in Germany for people to trust in online services like that. Most of them think that it's a scam - having that trust in the people to a new service like Lieferoo was very difficult.
And the payment was a big problem. I wanted to follow the BlaBlaCar model, so, initially, it was free. We took care of everything and then once the package was received, people had to pay. But they distrust this.
The key moment that made me realize the website was going to fail was when I realized there were over 25 requests of products to be transported, but there was not even one shipment deliver. I understood people were not going to trust the product and that the shipping of products would be difficult.
Another important moment was when hinted me to failure that I had this bear that I wanted to it to travel the whole world if traveled around 30 countries already by people to people but then the problem was and we used to take pictures of it, but then the beer was lost.
Nowadays, after all the mistakes have been made, I think that I should have had to try one more pivot and move to the B2B market. I would have just said hey, you have some stuff extra offices and we have some stuff. The only reason why I didn’t do this was that I didn’t speak German. One lesson from this is that if you want to build a business in a specific market, you should at least know the language people in that market speak.
By the end, there were only two people left in the team. That was when we realized that the team wasn’t working and that Lieferoo was a failed startup. So, we shut down.
The good thing was that the startup was still in the MVP stage – nobody had put a lot of money on it. The biggest loss was time: we worked one and a half years on it.
I learned a lot about team management, marketing, sales and idea validation. It cost me some hundreds of Euros, but it still was a really valuable learning which taught me not only how to manage startups but also who to trust.
Which were your biggest mistakes and challenges you had to overcome?
My biggest challenge was that I didn’t know how to code or build applications. I was depending a lot on my co-founders, who weren’t really into the project so didn’t care about improving the site. I didn’t even know how the features of the platform work.
I still think that having a technical co-founder is a really great strategy. But I also think that a proper co-founder who works full-time on the project is also a key point.
We were not full-time. Otherwise, things could have been different and if we worked with somebody originally from Germany, then it would have been much easier – we could have tried other traction channels too!
As for disadvantages, there were some:
- I didn’t know how to programme and couldn’t speak German fluently.
- The team was not full-time and more focused on other things.
- The market of Lieferoo. There were no competitors, which nowadays I know it’s not a great signal. Every startup that tried to do something similar, failed. There were some international competitors, like for example in the U.S., where the market is much more open and people tend to trust more on online services.
Which were your expenses? Did you achieve some revenue? In the end, how much money did you lose?
I think we messed around 5,000€. My personal money was 4,200€. The biggest problem was the amount of time we dedicated: Around six months full-time and one-and-a-half-year part-time.
I lost a lot of money, especially when shutting down. I was forced to pay so as to be able to shut down. I had to pay everything on my own as my co-founder rejected to do it.
The bank was also a disaster - they didn’t care about us. They didn’t pick up the phone, respond to letters, etc.
If you had to start over, what would you do differently?
If you could talk to my former self before Lieferoo, I would tell him to focus on pivoting. Try to find a different way about how people are doing business and try to find traction there.
When starting, I wished I had spent more time on idea validation and understanding the market, and less time on German bureaucracies.
I also wish I had spent less time paying attention to the opinion of the first people. I know it sounds quite paradoxical as I am wishing I had spent more time on idea validation. But I now believe that when validating marketplaces, you have to do it in bulk. Maybe hundreds or thousands of people.
Which are your favorite entrepreneurial resources?
My favorite book is definitely “Hard Things about Hard Things” by Ben Horowitz.
I form part of SaaSClub, which is an awesome community of SaaS entrepreneurs (I run a SaaS so it helps me a lot).
Another book that I really like is Disciplined Entrepreneurship by Bill Aulet. And here is a tool to help you with that book.
As for podcasts, I tend to listen TheStartupChat and the SaaS Podcast.
Finally, this Facebook group has taught me a lot about SaaS businesses.
Where can we go to learn more?
Here's my website. You can also check out my Medium, Twitter, LinkedIn, and UserPilot’s (my SaaS) blog.