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- 🌋 Don't grow too fast
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Hey Founders,
Welcome to The Runway Ventures, a weekly newsletter where I deep dive into startup mistakes and lessons learned to help you become a better founder.
Let’s get to it! 🚀
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Today at a Glance:
☠️ 1 Failed Startup → Valadoo
⚠️ 2 Mistakes → Growth without a sustainable business model
🧠 3 Lessons Learned → Focus on solving a niche problem
🔗 The Runway Insights → How to find more customers on LinkedIn
💰 Southeast Asia Funding Radar → Marketnode raises Series A led by HSBC
☠️ 1 Failed Startup: Valadoo
🚀 The Rise of Valadoo
Valadoo was founded by 3 Indonesian students in 2010. Back then, Jaka Wiradisuria was the co-founder and CEO of the company.
It was an online travel startup that offered curated travel guides and packages for Indonesian destinations.
The Problem — Indonesian middle-class and overseas travellers struggled to explore and travel in Indonesia.
The Solution — Valadoo curated and offered travel packages highlighting Indonesian destinations by working with local communities, travel experts, hotels, operators, and travel agents.
Customers could easily plan and book trips without the hassle of coordinating multiple elements individually.
😍 Guess what? Customers loved it, especially for foreign travellers because it was so convenient and a reliable travel solution in a fragmented market like Indonesia.
🏝️ In short, Valadoo was like Klook that we know today.
In 2012, Valadoo received a major investment from Wego — a Singapore-based hotel and flight booking company that wanted to expand its reach in Indonesia. With the investment, Valadoo grew and expanded rapidly.
📉 The Fall of Valadoo
Despite its initial success, Valadoo struggled to maintain growth and profitability. It grew at all costs and failed to build a sustainable business model.
To make things worse, a merger with another company (Burufly) didn’t yield the expected results. The merger eventually killed Valadoo as it ran out of cash and was unable to raise a new round.
📌 Here’s what happened to Valadoo:
Dec 2010 — Valadoo was founded.
May 2012 — Received major investment from Wego and started growing rapidly.
Had more than 160,000 visitors on its website in Q2 and a 300% increase in order inquiries.
Achieved 500% sales growth in the last 3 months.
🤝🏻 2014 — Valadoo acquired Burufly to penetrate and engage Indonesia’s younger demographic through its social platform.
Back then, Valadoo was a commerce platform and Burulfy was a social platform (Pinterest for local travel).
Acquiring Burufly allowed Valadoo to rejuvenate its brand for higher conversion with its social aspect.
Despite efforts to revive the brand post-merger, Valadoo still faced ongoing operational difficulties.
May 2015 — Valadoo was shut down due to the lack of funding.
📈📉
Growth at all costs + Unsustainable business model + Failed merger = Valadoo’s downfall
Even though Valadoo gained significant traction and investment in its early days, business is still business. Without a clear path of profitability, together with failed merger attempt and other operational challenges, Valadoo eventually had no choice but to shut down.
Want to learn more about Valadoo’s downfall?
⚠️ 2 Mistakes
Mistake 1: Growth without a sustainable business model
My co-founders and I, we looked at growth, growth, growth, not noticing that a sustainable business model was lacking. It was too late that we realised this.
After the investment from Wego, Jaka and his co-founders focused on growth without having a sustainable business model. Here’s how the business model worked back then:
Valadoo worked with local operators to package their tour packages.
For every tour package sold on its website, Valadoo took a margin out of the transaction.
💸 It seems very easy to make money (but was it?)
Jaka thought the same too. He thought that this business model would work for a travel tech startup like Valadoo. Unfortunately, the customer acquisition cost was too high and Valadoo was still losing money.
In the end, Valadoo grew too fast, burned too much cash (especially after acquiring Burufly), wasn’t profitable, and couldn’t fundraise, leading to its downfall.
Mistake 2: Didn’t solve a niche problem in travel
Indonesia is such a big place, we could not become the champion of any one region. We were not really able to make a strong case for why people should use Valadoo over their Google search results.
This mistake was actually shared by Jaka during his interview with Tech in Asia.
It seems that when Valadoo was launched, it didn’t focus on a particular travel niche and was just marketed as a marketplace for travellers to find tour packages or services.
That means if travellers could spend more time googling around, they could easily plan their tours in Indonesia without using Valadoo.
📍 Positioning is key.
🧠 3 Lessons Learned
Jaka Wiradisuria (CEO of Valadoo)
Lesson 1: Have a sustainable business model from Day 1
💸 Easy money is gone. Investors and VCs are more conservative nowadays, making it very hard for startups to fundraise during the market downturn. Therefore, It’s almost safe to assume that you won’t be able to raise the next round in the next 1-3 years.
🤑 What does that mean? It means you need to have a sustainable business model from Day 1. Even better, be profitable from Day 1.
Sure, you can lose some money when you’re getting started. But if you keep burning cash to chase the “growth”, no amount of money will save you. Sad, but true.
🌟 Key Takeaways:
As a founder, profitable confidence is key.
Once your startup is profitable, you’ll be more confident to take more risks, make bold moves, and grow your business sustainably.
Start a service (agency model) to serve your customers before building a product. Because this helps you:
Identify a niche problem and find paying customers from Day 1.
Learn repeated challenges and requests from your customers.
Have the runway to build a product that you know your customers will use.
As Paul Graham at YC often said, “Do things that don’t scale.”
Service first, product later 🤝🏻
Lesson 2: Focus on solving a niche problem
If you solve a broad problem, 2 issues happen:
Your customers can’t see your differentiated value proposition compared to other options.
It’s extremely difficult for you to find customers.
It’s perfectly fine to start small before you target adjacent markets. The bottom line is that you should solve a niche problem for a niche market such that your customers will PAY you.
🌟 Key Takeaways:
Find a niche problem that’s painful and frequent for your potential customers such that they are willing to pay you to solve their problems.
Your solution should be a painkiller, not vitamin.
Painkiller is necessary, vitamin is supplementary.
Pre-sell your service or product first before building anything:
🎁 If you’re in B2C, charge them with an irresistible price and bonus.
💼 If you’re in B2B, get a paid POC for a certain trial period from customers.
After the trial period, if customers are happy, start charging them a longer period of paid contract.
P.S. A Letter of Intent (LOI) for a free POC doesn’t mean anything (it just means I’m keen but I don’t want to pay)
Remember, the strongest validation of the problem you’re solving is when your customers pay you (not when they say they want but never pay). Big difference.
Lesson 3: Integration is important for post-acquisition
We didn’t have much runway after the merger with Burufly.
It wasn’t clear how much Valadoo spent to acquire Burufly, but it was clear that Valadoo struggled financially after acquiring Burufly.
Why? Integration.
Jaka said that he underestimated how hard it was to integrate two companies, especially in terms of people and technology.
People — Employees from different companies had different cultures and expectations.
Technology — Merging two technology platforms was a challenge as Valadoo was built using Drupal, while Burufly was on Django. In the end, the tech integration didn’t happen as Valadoo ran out of cash.
🌟 Key Takeaways:
🧐 If you want to acquire a company, conduct thorough due diligence and make a realistic plan to execute the integration post-acquisition to ensure a smooth transition with minimum impact on the business.
🤝🏻 Employees from both companies should be given transparent briefings on potential changes in workflow and expectations for alignment.
🧑🏻💻 Tech integration roadmap should be planned a few months before to ensure a smooth migration or integration between two systems to minimise disruption.
🔗 The Runway Insights
💰 Southeast Asia Funding Radar
That's all for today
Thanks for reading. I hope you enjoyed today's issue. More than that, I hope it has helped you in some ways and brought you some peace of mind.
You can always write to me by simply replying to this newsletter and we can chat.
See you again next week.
- Admond
🤝🏻 Join our founders community on Discord:
Building a startup is one of the toughest things you can do. Why struggle alone when you have our community to help and support you.
This is the founders community I wished I had when I first started.
Disclaimer: The Runway Ventures content is for informational purposes only. Unless otherwise stated, any opinions expressed above belong solely to the author.
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