My Goodery story: Startup as a vehicle for personal growth

As of today I’ll be handing over responsibility for day-to-day management of Goodery to two of my co-founders who have become close friends: Joshua Smith and Matthew St John. I will still be on the board as a non-executive director and my wife and I will continue as shareholders and customers.

This is a significant moment for me as this venture has both been the most exciting and challenging project I’ve ever undertaken.

You hear a lot of glamorous news about startups and not much of what actually goes on behind the scenes. So I thought I’d share the story of how we got here and how I came to the conviction that Josh and Matti are better suited to take this company forward than I am.

This is a long story, so if you don’t want all the details of the startup journey just read the short announcement I posted on Goodery’s blog: John’s letter to our customers and friends.

Startup as a vehicle for personal growth

My startup mentor Robert Vogel once told me that most people don’t realize starting a new company is one of the best vehicles for personal growth and transformation.

I didn’t really understand what he meant at the time, but Goodery taught me this truth through and through. The emotional energy and pain from this venture have imprinted lessons into my psyche at a deeper level than any textbook could reach.

These lessons aren’t just lessons about how to start and run a business. They’re lessons that reach into the heart of what it means to be human and how one can find love in the face of hatred and fear.

I share this journey in case there are any other entrepreneurs out there struggling with their venture, struggling with themselves and looking for a way through. There’s a way, and it might even be beautiful, but it probably won’t be comfortable…

Pandemic sparked opportunity to do Good

Back in March 2020 when the pandemic was announced, I experienced first-hand the impact it had on small, local businesses. My side venture The Good Host lost 90% of its revenue in just 3 days. Local businesses were either overwhelmed with demand or completely devoid of it.

We saw an opportunity to pivot our Airbnb properties to offer heavily discounted accommodation to NHS staff and other key workers. 80% of our customers at The Good Host were fully supportive of this cause and offered up their homes for this purpose freely. The others panicked and breached their contracts to set up long-term tenancies.

We didn’t mind as we had found a beautiful purpose and a way to survive.

NHS staff as a window for an unmet need

Upon welcoming NHS staff and key workers in our properties, we realized they were struggling to get groceries delivered and some of them didn’t feel comfortable going into shops given the perceived risk of exposure we all had at the time.

This seemed like a clear opportunity for technology to serve the needs of people during lockdown as well as local businesses.

I envisioned a tech platform that would act as a virtual high street—making it easy for small businesses to start selling online and delivering locally with zero emissions. I wanted to make shopping local and sustainably as easy as buying on Amazon.

Imagine if we could get thousands of shoppers across the UK to stop using Amazon and start shopping locally instead?

Josh and Matti jump onboard

Josh and Matti were two people in my network that I spoke to about the idea. They were both quick to devote themselves to the mission. They haven’t wavered since.

There were lots of other people who helped start Goodery (like Jon Osterbrock, Caroline Mayers, Sam Harrons, Nigel Hargreaves and Leon Davies)—but Josh and Matti were the most deeply committed and managed to persevere through the ups and downs of startup life.

They were also the ones that remained steadfast to their values and commitments when the prospect of incoming capital and potential wealth creation surfaced. I am incredibly grateful to Josh and Matti on so many levels.

Without their fellowship and camaraderie I wouldn’t have made it this far. I’m super excited to see what they do with Goodery in the months and years ahead. There are some seriously good things to come!

Three weeks to MVP

Back to the startup journey: We managed to get a revenue-generating MVP up and running for Goodery in just three weeks. We ran two back-to-back Design Sprints and ended up with a working prototype with eCommerce functionality.

We got traction very quickly with the consumer side of the market reaching about $1k MRR in just a couple weeks, but local businesses were slower to adopt due to our commission model at the time.

Blinded by founders bias

I was compelled to move so quickly that I couldn’t slow down and see the clear evidence in front of me: When pitching our offer to retailers, our commission model was frankly unaffordable. We wanted to charge 20% of sales as a fee for selling on our platform and for most retailers this is an unsustainable part of their margin.

Rather than slow down and redesign the pricing structure that would serve the needs of retailers, I looked to wholesalers in order to maintain a healthier margin. We started working with Horizon Wholefoods and Arthur’s Organics to serve the customer demand we generated so easily.

Achille’s heel

By choosing to work with wholesalers, we immediately shifted ourselves into the role of being a stock-holding retailer. We needed to buy and manage inventory—pack boxes, quality control and manage staff. Oops.

Unbeknownst to me, this small decision was the one factor that completely hamstrung the business from scaling. Worse yet, it brought the operations into a territory I had literally no experience with and wasn’t interested in.

Rather than onboarding a wide range of local businesses onto the platform and focusing on our core proposition (enabling people to people sell online and deliver locally with zero emissions), we focused on generating revenue with healthier margins as a retailer.

This model was fundamentally unscalable. This was our first huge mistake.

Arthur’s Organics

At this time we were working very closely with Tony Park at Arthur’s Organics as our family had been buying fruit and veg boxes from him ever since we moved to Norfolk. He was an organic veteran and a patient, friendly gentleman.

While many of the local businesses were too busy and stressed to talk to us, Tony was happy to have a chat and never seemed in a rush—even though he was working 60-70 hours a week.

About three weeks into our relationship Tony asked me, “Maybe you’ll buy my business one day…”

I remember being taken aback, but I said, I guess it depends how much you want for it…

Chasing shiny objects

Tony was generating about £10k in weekly recurring revenue at the time. When I considered how this revenue would look on our P&L when we approached investors to raise capital, I got excited about how we might make this deal work.

Unfortunately I didn’t consider the massive burdens associated with acquiring and running a longstanding retail business that deals with organic perishable goods and operates in a laid-back family fashion.

This was my second huge mistake.

Nail in the SEIS coffin

When I made Tony an offer for his business, I felt confident about the value I was getting in acquiring his customer base and revenue stream. Little did I know that I was about to buy a long-standing business (started trading 17+ years ago) that would make Goodery ineligible for SEIS—a key tax relief that de-risks seed stage investments for investors by a factor of nearly 10x.

If an upper-tax rate investor is able to claim SEIS on a £10k investment, they would only risk to lose £1,350. Therefore, almost all angel investors make investment offers subject to SEIS…

Norfolk solicitors anyone?

Tony and I agreed not to engage solicitors for the deal as the fees would’ve accounted for a huge portion of the sale price, so I just used a business acquisition template from Rocket Lawyer and asked a local solicitor to glance over the agreement before signing.

Third huge mistake.

Of course the local Norfolk solicitor had no idea about raising startup capital with SEIS and missed the consideration entirely. I signed the deal with Tony and therefore made Goodery ineligible for SEIS.

Oops.

Unfortunately it took me six months to figure this out, and the SEIS rejection letter from HMRC came at a really bad time… 😫

WTF? This ain’t my first rodeo 🤠

If you’re reading this you might be wondering, WTF was this guy doing?

In a span of just over three months I made three huge mistakes:

  1. I missed clear signals from the market that our model was wrong
  2. I spent serious cash buying a business in an industry I had no experience with that I had no interest in running
  3. I lost my new startup’s ability to raise angel investment

Beneath the surface of it all

Looking back, it was incredibly clear. Since the pandemic was declared in March I was operating in fight or flight mode. I had deep, unresolved trauma from my past that had been triggered by some events in my personal life.

I was living in community with toxic relationships that I struggled to resolve. It was lockdown and I couldn’t get out of my home.

Here I was: An extroverted American having left Bay Area tech startups working with a bunch of designers and software engineers to live in community on a permaculture smallholding in rural Norfolk with a bunch of people who weren’t working and believed that money was inherently bad.

I was out of my depth in every dimension: comfort zone obligated, support structures gone.

Chronic stress

I was living in a constant cycle of stress that I met only with a high intensity drive for achievement. I woke up at 5.30 or 6am and did a 7-minute workout followed by yoga, a quick meditation, sometimes a run and then work.

Rather than slow down and allow myself to arrive in the present moment, to watch the pandemic unfold and patiently respond in an appropriate way for me personally—I ran at it with everything I had believing that if I only built a startup that changed the world I would feel better about myself and my current situation.

Hello, sanskara. Nice to meet you

There is a Hindu concept of sanskara which refers to unprocessed emotional energy that bundles itself in our bodies and acts as a magnet for events in our life to trigger it so it can be released.

My entire life I had avoided negative emotions and never really learned to process them. I was constantly reaching to the world outside myself to calm the choppy waters within. Then of course at 30 years old, the conditions around Goodery forced me to meet face to face with all the unprocessed emotions, all the trauma and all of my fear.

It only took a trigger.

The pressure was mounting up, so it wouldn’t have taken much, but this trigger was a heavy one.

Bleeding cash; running out of time.

We had just moved Arthur’s Organics to a larger premise, bought two electric courier vans and got the warehouse operational with a new e-commerce platform.

There was a whole host of capital expenditure that I financed personally, assuming we’d maintain the same level of sales and would be able to pay it back over a 6-12 month period. My wife wasn’t happy about the risk, but I convinced her it was a no-brainer. 🙄

Then lockdown ended and we lost 50% of our revenue. We started burning through £10k a month. I had to constantly put personal money into the business to fund the operations. I hired a PA to help me manage all the plates I was spinning. I was bringing on contractors to help expedite the migration of Arthur’s Organics into the modern world so we could reduce labour costs.

I’d managed to get a lead investor to commit £80k at a £3M valuation and felt like everything was going according to plan. We only had £340k more to raise and then we’d be off to the races…

I had about 4-6 months of runway. The fundraising advisor I was working with assured me I’d close the round within 3 months.

Enter conflict, stage left

One of the founding team members had started demanding a lot of my time and attention—needing a lot of recognition and emotional energy from me. I was too busy to see the need for deep connection and kept moving at a fast pace.

Most of the founding team was earning sweat equity on the same basis: An agreed daily rate x Number of days worked. The sweat equity would be valued against whatever valuation we were able to achieve from investors.

Pretty standard stuff. Normally I would’ve gotten all this in writing, but it was the pandemic and we all believed each other’s best intentions.

Fourth huge mistake.

When money equals worth

I remember the moment when the trigger arrived as clear as anything. We were driving to a meeting and this team member asked me, “So, how much equity am I getting in Goodery now that an investor has come onboard?”

We walked through the numbers out loud and he agreed the cash value of the sweat equity he’d earned. It was roughly £13k.

“So what percentage is that?” He asked.

“Well, £13k divided by £3M is 0.4%.” I said.

“… I feel sick to my stomach.” He repeated, “I feel so sick, so sick to my stomach.”

Then he got angry. Really angry.

He said he didn’t want anything to do with me or with Goodery anymore. He said I was a horrible, manipulative person and that I would pay him his money—or else.

I remember thinking to myself “What money? We agreed sweat equity…

But in his mind, money was the only way to repay the wound he had felt when I shared a percentage figure that felt so disproportionately small compared to value of the contributions he felt he made.

All of this was happening on the surface for both of us, but there was a stream moving much deeper that held the keys to incredible personal growth—at least it did for me personally. I hope it did the same for him.

Triggering sanskara

Looking back, I can see very clearly that the way this founding team member behaved was almost identical to my father. Growing up, my father was an incredibly hard working man who served others—often at detriment to himself.

He was unbelievably kind and patient.

Until something would trigger him. Then he’d explode.

It only happened a handful of times and he never hurt me, but as a child and an adolescent, I found the experience totally overwhelming. One minute: loving kindness. The next minute: explosive anger.

They say trauma happens when you experience something that you are totally incapable of processing. Then it gets stuck deep within you and comes back in the form of depression, anxiety and fear.

Then it becomes a magnet in you that inevitably draws events towards you that force you to process that which you were unable to process. The instinct is to run away.

But the secret is to surrender.

(So I later learned when my friend Tobias Barnes Hoffmeister gifted me The Surrender Experiment)

Feel what you need to heal

This founding team member’s pain and resulting aggression tipped me over the edge. I was being kept up at night with the chatter of my inner voice.

Despite my attempt to surrender to what life was doing, I couldn’t. I was clinging on to my vision of startup success.

This team member sent me an invoice for £17k along with a series of threats, including one to hold me and my family “personally accountable” for what I had done…

Rather than slow down and engage a solicitor or a mediator to resolve the issue, I collapsed under the weight of this conflict and the cascading effects I feared it would have.

Fifth huge mistake.

Our agreement was clear: It was sweat equity not cash. He was unlikely to carry through with this threats, but my wife didn’t want to take the chance.

She encouraged me to just pay it off and move on. But by that point, we had put nearly all of our available savings into the business and we were running out of cash. I couldn’t pay it off immediately.

I needed time.

Welcome winter lockdown

This was now late September 2020. The darkness of winter and rumors of a second lockdown loomed in the shortening of each autumn day.

After weeks of trying to salvage the relationship with this founding team member, it was clear that we were done. Despite making commitments to our entire team to accept the agreement we all initially made, he changed his mind and insisted on getting paid and leaving the company.

I negotiated to pay him off over a year, thinking I was about to raise £420k in the next few months so it wouldn’t matter.

Angels, HMRC & The Judge

I was able to secure another £100k of commitments from investors in October and then decided to apply for SEIS so that we would have the ability to close a small round before the end of the year to be followed on.

Six weeks later HMRC responded with a letter enquiring about the acquisition of Arthur’s Organics, hinting that they thought we were ineligible for SEIS.

While previously I was operating full of confidence and conviction about our vision and it’s inevitability, I started struggling with the overwhelming experience of anxiety and fear.

I no longer felt safe.

The toxic relationships in our community still hadn’t resolved and the threats that this founding team member made were ruminating in my mind day and night. HMRC just tipped me over the edge.

My inner voice which was previously my greatest ally turned into my greatest enemy and began acting as Shirzad Chamine calls “The Judge” in his book Positive Intelligence( which I highly recommend).

I was doubting myself and questioning everything:

What if HMRC actually denies us SEIS? What if all the investors back down? What if we go under and I can’t pay him? What if he shows up at my house? How would Tony feel if I ran his entire business into the ground? How could I have been so stupid?

The gavel comes home

Then sure enough, after hiring a proper startup solicitor in London to correspond with HMRC, I got a letter on December 21st with what I feared most.

HMRC denied our application for SEIS and gave us no right to appeal—all on the basis that we acquired Arthur’s Organics: A company that was trading more than 7 years before the date of our application.

My solicitor said there was no point in responding. It was done. There was nothing we could do other than start a new company with a new brand and start from scratch with a new tech platform.

The British government was forking out tens of billions in furlough and bounce back loans to keep dying companies afloat and then some tax inspector at HMRC decides to deny a tech startup SEIS because they violated a subclass in the SEIS tax code from 1984. There was no consideration for the broader economic context or the fact we were raising money so we could help small businesses survive.

Welcome to the UK, young entrepreneur

I remember telling this story to a family office (an ultra high net worth family) in the Bay Area and they broke out in laughter.

You’re telling me they denied you the ability to raise capital because you grew quickly and acquired a small company? What a joke! This is why we never invest in the UK, the government intervenes too much…

I laughed with them, but it still felt raw at the time. Now I know the game and would navigate the waters differently, but I am very unlikely to start another company in the UK for these reasons and many others.

Back to the story: Happy Christmas

I remember going to the Goodery warehouse late Christmas Eve to help with packing boxes. It was the first time I had done anything operationally since starting the business.

I was always the one orchestrating growth and delegating tasks to everyone els. I never actually touched the carrots or the parsnips. I never felt the soil on my hands.

I was too busy trying to make a tech company grow as fast as I could. I was too busy running from the wounds within.

The bold, vulnerable American in me wanted to break down and share the news with the team: We’d been denied SEIS and we wouldn’t be able to raise money as we thought.

But instead, I carried on packing boxes and held everything in. I didn’t want to ruin people’s Christmas. The reserved, cold British way had seeped in.

Three months of runway: What to do…

While I tried to take some time off over Christmas, I spent most of it speaking to investors, my solicitor and advisors trying to figure out what to do. It was clear that £120k of the £180k we’d raised was off the table as the offers were expressly subject to SEIS.

I didn’t feel comfortable accepting the remaining £60k as I felt uncertain of my ability to deliver a return without SEIS. If I couldn’t raise angel investment, it was going to be that much harder to raise capital. If I couldn’t raise capital, I couldn’t build tech. If I couldn’t build tech, what was I going to do?

Run a veg box company that I had no idea how to run?

Work 60-70 hour weeks for a humble wage?

I wanted out. I didn’t want the company to go under, but I wanted out.

Finding a buyer

I found a prospective buyer within a month of searching, but the deal took two months to complete. The buyer was a serial entrepreneur with a portfolio of food businesses who was happy putting in the capital required to make Goodery work as an organic retailer. His vision was to make it a national organic brand like Riverford and Abel and Cole.

I could get on board with that.

Everything looked good and we agreed heads of terms quickly, but after six weeks of negotiations, the deal started to falter. I only had three weeks of runway. I was totally burned out and terrified of what would happen if the company went under.

Would I be held personally liable for all the creditors? Would I be humiliated as a public failure for taking risks?

Deep within me I knew the deal with this buyer was bad and that I should walk away and find another option, but I desperately wanted out. I wanted to release the chronic stress that was making my eye twitch, making me irritable and anxious.

I wanted to be me again.

Hoping for the best

I made a lot of concessions in the last two weeks of negotiation and accepted whatever was required to get the deal done. Unfortunately, it didn’t last.

The relationships deteriorated quickly and the business landed back in my lap within three months.

But fortunately those three months gave me room to breathe. I meditated daily. I practiced yoga. I ran three times a week. I started seeing a counsellor. I spent time with friends.

Lockdown ended.

The days got long again.

Discerning what’s next

Sophie was eight months pregnant when the relationship with the buyer really fell apart. But we didn’t manage to agree a resolution until 8pm on the evening Sophie went into labour. It was intense.

I told Josh and Matti that I couldn’t possibly continue running the business like this. I had put nearly all of our savings into Goodery and hadn’t paid myself a penny.

I had turned down two offers for stable jobs and had been pushed out of my comfort zone in every way possible.

I needed to make a living and get back to a stable mode of being again.

The boys step up

Josh and Matti had firm conviction that if the relationship with the buyer wasn’t able to be resolved, they would step up and take over the business. They managed to secure personal loans from a friend to buy the company six months of runway.

They managed to get a place at Cambridge Social Ventures to help them raise non-SEIS capital and take the business to the next level.

They managed to build relationships with local growers to set Goodery’s first market garden in motion.

They’re working on the ground with suppliers, customers and the team to live out Goodery’s mission—far better than I ever could.

Looking back at success and failure

Goodery was in some ways the biggest failure of my life. In other ways, it was the biggest success.

It was a failure in that I made a lot of mistakes and didn’t achieve what I set out to achieve: I didn’t raise huge amounts of money and build a tech platform to help local businesses compete with Amazon.

It was a success in that I learned a lot about business and gained an incredible amount of skills: financial management, fundraising, mergers and acquisitions, negotiating, risk mitigation, etc.

Looking within

I was able to look clearly at parts of myself that I had long neglected. I was able to come to terms with my underlying belief that if I wasn’t a prodigy changing the world I wasn’t good enough.

I was able to persevere in a dark time with very little support.

I didn’t give up.

What we did achieve

I started a business that has planted over 3,000 trees and delivered over 12,000 orders to customers across Norfolk with net zero emissions. We’ve generated over £450k in revenue since launching in March 2020 and have raised less than £100k to get there.

Working with organic farmers, local businesses and conscious consumers—together we have laid the groundwork for a circular economy here in Norfolk that can be built upon for a more sustainable way of feeding people without destroying the planet.

While I didn’t redesign the world’s food value system, I gave everything I had.

Here’s to Josh & Matti

I’m very grateful for Josh and Matti stepping up to take the business forward and for everyone in their lives who has supported them to make this leap. It’s not easy running a business, let alone one that is trying to fight climate change in a world of fossil fuels and industrial agriculture subsidies.

It’s not easy running a business, let alone trying to do it while taking care of yourself and people around you.

Goodery is going to do some amazing things. Check out the letter I wrote to customers giving them a sneak peek:

John’s letter to our customers and friends

Reach out

If you’re an entrepreneur going through a challenging time, I’d be more than happy to jump on a call and listen. If you’re an interested observer, well done you for reading through this tome and getting all the way to the end!

What’s next?

I’m super excited about the next chapter of my journey and will be writing and sharing more about this shortly. Check out my Twitter profile for a sneak peek of things to come:

https://twitter.com/iamjohnellison

P.S. — I’ve joined Terra’s 12-week Learning for Climate Action Bootcamp and Happy Startups 20/20 Vision Program to get clarity on what I’m doing next.

I've started a blog where I'll share my journey at Terra (and hopefully the journey of a few others on the course will join me) here:

https://climate-journey.ghost.io/

Happy Habits along the way

I’m also having lots of fun experimenting with a free weekly newsletter called Happy Habits—sharing the insights I gained from reading through the science of well-being and applying what I learned from BJ Fogg to get through the challenging times I shared above.