This is a story of perseverance beyond almost logical reasoning but not the happy ending you’d expect. Because this is not a Walt Disney world, it’s the real world.

And Nikki Durkin, an 18-year old all the way from Australia learned this the hard way when her startup baby – 99dresses – failed after 4 years of giving it her all, including her education.

As a young tech founder, she had a big vision and big courage but no experience. That is no reason to NOT start a company though. Nikki started small with her company that traded fast-fashion cheap dresses. She identified a need for many young women like herself who would buy dresses, wear them once, and then put them in the back of the closet to be forgotten. So she started trading her dresses with her friends and BOOM.

A new idea was born.

After multiple obstacles, Nikki won a competition with some good prize money, packed her bags and set off to the US to interview at the Y Combinator. Despite all odds, she made good progress and got an investor to bite. But not after she recruited two co-founders – a criterion at the Y Combinator – received the signed papers for funding, but just to have both co-founders ditch her the next day. With a tail between the legs she had to call up the investors one by one and they dropped her the same way except one.

So with her investment of $105 Nikki went back home, found another co-founder, and started building her dream. With major VISA issues her launch in the US was delayed by a couple of months and the competition started spotting the same gap she did.

By the time she finally made it to New York with her co-founder they had to hustle and that they did. Their traction was remarkable and they thought they were slaying it.

But the proof is in the pudding and a business model is like building a house. If you have flaws in the execution plan you can hide it in the beginning but at some point, the house is going to come crashing down if the foundation and plans are faulty.

So let’s see what happened to 99dresses.

A flawed business model can only hide for so long

There is a reason for cashflow projection

Not just 6 months or a year. But 2 years. 5 years. 10 years.

And I am not saying that Nikki didn’t do this with 99dresses but I am also not saying that she did. The problem came in when they gained some traction in New York and managed over 1000 transactions per week and grew their revenue as they took a percentage of each transaction.

It looked promising.

And then things started to unfold and despite their continued growth, the revenue was not enough. Because they played in the cheap fast-fashion space, the revenue per transaction was also relatively small. And they started running out of well, runway.

99dresses needed scale. And a lot of it to make ends meet but even 1000 transactions per week was not enough.

And this is where long-term cashflow projections might have shown the flaws earlier. Perhaps they did have projections but overestimated the selling prices of the dresses and the cut they would have taken. Perhaps they overestimated the volume they would constantly be selling or trading. Perhaps there were untold challenges.

And you can see how online retailers like Takealot make up for this particular challenge by not only having transactions fees, but also charging storage fees and delivery fees to their merchants because they clearly understand that transaction fees alone will never be enough.

A lack of experience can be a good thing and a bad thing

Now why am I saying this?

I think it can be a really good thing if a startup founder lacks experience in certain instances because their perception is not tainted by corporate dynamics, politics and unnecessary admin. They can dream big and hopefully find a co-founder with a more realistic perception to keep them grounded.

But it can also be a bad thing because the lack of experience means you are not learning from old mistakes, you are making them as you go on and sometimes too big a mistake is enough to put an end to your dreams.

Nikki found herself a co-founder eventually and a team to build a mobile app so she made up for her personal lack of tech expertise. But her lack of business expertise also caused a couple of stumble blocks along the way, some of which she admitted herself could’ve been handled differently. Read her heartfelt story of how she managed the highs and lows of 99dresses here.

But Nikki was figuring out how to do business, how to manage a team, how to run a tech startup, and how to pitch to investors etc. all in one go. And it is not unheard of to succeed in this space if you were to just look at Mark Zuckerberg and his success. But the big difference here is that Mark had one big distinguishing factor – his coding abilities. He had a strength that played in his favour despite his young age as a founder and dropping out of college. Nikki also dropped out of college to pursue her startup, but despite her perseverance, lacked an X-factor that could set aside her startup from all the others.

My takeaway

It’s both inspiring and sad to read her recount of the 4 years she spent on her startup. You can see the hard lessons she learned but her resilience is admirable to push through and keep trying because she was not about to give up on her dream.

Here are my takeaways from her startup’s journey:

• Competitive advantage is not just a term, it’s a real factor for a startup. While doing research on 99dresses, I was struggling to find the competitive edge in the story. Sure, they traded cheap dresses versus their competition trading designer dresses but the barrier to entry was almost non-existent. I cannot pinpoint what set them aside because anyone with coding abilities and a closet (or friend’s) full of clothes could have started this. It is crucial to stand out in some way from your competitors.
• Start small, test and then go big. By this I mean that Nikki started in Australia but her big dream was to launch in the US. She had a lot of local success but had her heart set on the US and that move potentially cost her the success of her startup. All the money she had won from the competition was spent on plane tickets and accommodation in the US. Yes, she got investors there but she could’ve gotten investors in Australia and built a strong sustainable business before hauling ass over a different continent entirely. We should all dream but sometimes a bit of patience before we take on the BIG dream goes a long way.
• As I said, her perseverance is admirable. She had 3 of 4 real lows where the company looked to be failing and she picked herself up, pivoted, and got traction again. Many people would’ve given up after the first hurdle. It is a lesson to be learned from a young 18-year-old to not give up so easily when things get tough. Know when to quit yes, but also know that you’ve tried everything.

My last takeaway is the importance to plan ahead and put your idea through best and worst case scenarios. It is possible that they did just that but underestimated or overestimated certain aspects of the business. But projections are not a once-off thing, it is continuous as you validate (or don’t) your assumptions, and keep reiterating your business model to identify flaws in time.

Here is to big dreams with small beginnings 😊