Some of the greatest accomplishments in the world are happy accidents that would have never been discovered without failure.
One famous case is Dr. Spencer Silver, a scientist at 3M who in 1968 tried to create a strong adhesive but only ended up developing a weak, pressure-sensitive one.
Years later, a colleague by the name of Art Fry used Silver’s adhesive to adhere his bookmark securely to a page in his hymnal. It led to the creation of Post-it Notes.
Russia-born entrepreneur, Yaakov Karda, bootstrapped and sold his online chat business, Chatra in 2022 for a few million dollars. It would have never existed if he hadn’t lost thousands of dollars and six years creating a failed customizable jean business.
That business would never have happened if he hadn’t decided to leave an unfulfilling career track in molecular biology after studying for five years.
Here’s how Yaakov salvaged years of seemingly bad calls to become a successfully exited founder and influential figure in the Israeli tech scene.
Entrepreneurship Is a Bit Like Science
Yaakov grew up in Russia during the late 90s collapse of the Soviet Union. Much of his entrepreneurial drive he credits to his stepfather who was forced to switch from engineering to entrepreneurship to salvage what was left of his heavy industrial plant in the rubble of the Soviet Union’s collapse.
Yaakov’s entrepreneurial journey started in university. He was studying for a degree in molecular biology when he abruptly concluded he didn’t want to be a scientist anymore. At least, not the traditional kind in an academic setting.
Science is all about what we call validated learning. You learn about the scientific mindset of hypothesis, experiment, and validation, which are all part of entrepreneurship
“I liked science, but I didn’t want the life of a researcher,” he says. “I’m forty right now and most of my classmates who did not abandon it are still students. In business, if you are reasonably successful, you can get money but in academia, you work even on Christmas and you’re often paid unfairly. In this field, there truly is no work-life balance. I wanted to be rich and be my own master.”
However, he believes a science background prepared him for entrepreneurship as well as any MBA course.
“I think that life sciences give you a very good basis for becoming an entrepreneur,” he says. “Science is all about what we call validated learning. You learn about the scientific mindset of hypothesis, experiment, and validation, which are all part of entrepreneurship.”
Yaakov and his wife at the time were students in the same field. After much deliberation, they decided to move to Italy to study fashion. His wife to study fashion design and Yaakov to study fashion marketing.
People Customize Computers – Why Not Jeans?
Shortly after his move, Yaakov first heard of a program by Dell letting customers configure the computers they wanted to buy pre-sale.
Yaakov loved this concept of increased personalization and individuality popularized by Web 2.0. This was the Myspace era where the internet was considered a shiny place for self expression. Yaakov wanted to transplant Dell’s concept into the fashion world.
At the time, the director of Yaakov’s fashion program happened to be the former commercial director of Levis. With the blessing of this influential man and his connection to VCs, Yaakov recruited his childhood friend, Slava Olesi as technical cofounder and his classmate in Italy based out of Mumbai for production to create Getwear jeans. It was a business letting customers custom design jeans online before buying them.
For six years, Yaakov and his cofounders tried to build Getwear into a profitable business even spending $100,000 on a custom-built website. But, it turned out, customizable jeans were much less desirable than customizable computers.
“We had a couple of business assumptions that proved wrong,” says Yaakov. “We thought people would design perfect jeans then share over social media so friends would see what they’ve done. Turns out people didn’t want to share when they ordered so we had to rely on paid ads and that got more expensive. We also needed a large scale for the economics to work.
“With a price point of $99 for our standard jeans, which were made in India, Getwear was out of place compared to the artisanal jeans that are handcrafted in the US (or Japan) by rugged, tattooed lumbersexuals. And we couldn’t compete with the mass-market prices of brands like Levi’s or Lee either. ”
Yaakov and his team tried just about every marketing tactic under the sun, but Getwear just refused to grow at a rate that justified their expenditures.
Finally, in 2014, Yaakov read the book, Lean Startup by Eric Ries, realizing Getwear was in the classic startup Valley of Death. The book describes the Valley of Death as:
“You have a minimum viable product (MVP) and a little customer interest. Or you have an MVP you’ve been iterating for months and have customers, but no serious traction. Or you have a solid product some customers are passionate about but little organic growth. Or you have a pretty impressive number of paying customers, but can’t figure out how to find more. Or you’re growing and feel poised for a breakout, but your margins are virtually nonexistent and you are skating on the edge of insolvency.”
On January 12, 2015, Yaakov called Slava and their jean producer in India (a close personal friend of Yaakov’s who ran production out of his house) and they pulled the plug on the business. They’d lost a lot of money and were on their way to missing rent payments.
Struggling to Pay the Bills
After the death of Getwear, Yaakov and Slava needed to find a new project quickly to pay the bills. Yaakov had recently moved to Tel Aviv, Israel, and was trying to establish a life there. Fortunately, he had a new idea.
While struggling to find a modern customer support solution for Getwear, Yaakov had previously realized most solutions were underfunded and ineffective.
“We looked at what was present at the time and everything was outdated,” he says. “Browser-based chat widgets were so poorly executed and if you reloaded the page, the conversation was lost.”
At Getwear, Yaakov’s team had built a messaging product to chat with their production facility in India. It was built on an obscure framework called MeteorJS which offered real-time messaging, the kind popularized by the likes of Slack today. However, Slack had launched in 2014 and only just started to gain attention in 2015.
“We thought, ‘Why don’t we bring the live chat features people are using on mobile to web browsers?’”
The new application was a modern messaging interface for websites that combined a website widget and an operator/agent dashboard. It sported a Slack-like interface for the app and a Facebook Messenger-like interface for the widget.
“We wanted to become a one-window solution for all inbound inquiries,” he says. “Wherever customers contact you with questions, be it through the live chat on their website, Facebook, or email, they would get one nice, conversational interface. That was our new nuance.”
Yaakov and Slava built Chatra in five months and held their breath. Fortunately, the seemingly futile years of Getwear were finally about to repay them.
The Lifesaving Email List
Yaakov soon discovered an interesting marketing edge at Chatra: many of their most loyal customers from Getwear were in tech and he still had all of their emails.
We ended up with a bunch of web designers and front-end developers. The kind of people for whom blending the border between reality and the internet was interesting
“Getwear was geeky because who wants to order custom jeans?” he says. “We originally thought it would be fashion-forward people and urban dwellers. We ended up with a bunch of web designers and front-end developers. The kind of people for whom blending the border between reality and the internet was interesting.”
They launched a newsletter to all of their former Getwear customers with a link to a free trial. In two weeks, the former Getwear customers started converting to paid customers. Yaakov then saw a network effect as Getwear customers shared Chatra with their colleagues at work.
They posted Chatra on Product Hunt in April of 2016 and became product of the day in one day. Then they posted Chatra in application stores like Shopify and quickly became the top applications for messaging. These high rankings would push them even faster to the top of any new channel where they listed the product.
Yaakov was also fortunate in that he wasn’t the first to build this type of application. Slack had already primed businesses for two years to look for better internal software. As many founders will tell you, the first mover always does all the work convincing businesses to do things differently. Second movers capitalize off the hype.
“Slack created an expectation for business software to look nice and not corporate,” Yaakov adds.
Even though most users who joined Chatra didn’t pay immediately, they were still an opportunity for growth. Yaakov included a link to their website at the bottom of the free version of the chat widget. At first, the link said “Powered by Chatra,” later Yaakov tweaked it to say “Get Chatra,” and that small change rocketed the chat box link to their primary acquisition channel.
By the end of 2016, Chatra reached breakeven with a client roster that included mostly small-to-medium businesses in the ecommerce space. It also included some larger outliers including the Texas Department of Justice.
And just as Chatra started to pay Yaakov and Slava a living wage, a surprise chance to sell the business emerged.
The Secret French Buyer
While Chatra grew fast for a year, Yaakov could see he was running out of options for growing the business.
“It was not hockey stick growth. There was little for us to do to increase it much,” he says. “In our field, ad prices rise because of VC-backed businesses buying indiscriminately. It was obvious that we should either go upmarket and compete with intercom.io with VC funding or we sit back and do nothing.”
Yaakov began seriously considering selling Chatra but held out for a VC multiple sale price. Chatra was a profitable and growing SaaS business after all. He fielded a couple of calls from buyers unwilling to meet his mark. Then, one day, he received an email from a French investment bank representing an anonymous buyer. This new buyer had no reservations about his price range.
It turned out that Yaakov’s business was potentially getting acquired as part of a larger acquisition run by Paris-based ecommerce sales and marketing automation business, Sendinblue (now Brevo since 2023). They acquired two other businesses in the same round of buying totaling $47 million for all three.
The sale moved quickly. Chatra received a letter of intent and entered due diligence within days. In hindsight, Yaakov wishes he’d been more prepared for the diligence process as they had to go through it twice.
“The buyer was trying to raise money from their existing investor to acquire our company so we had to undergo third-party due diligence for the investor too,” says Yaakov.
On December 21st, 2022, Brevo acquired the entire business including employees. Yaakov went from a busy CEO to a man with lots of money but not much to do. A far cry from where he’d been eight years ago.
“Chatra was hard to let go – it was like home to me,” says Yaakov. “But I could feel myself stagnating. From a personal psychology standpoint, I needed to move on.”
The Important Part Is to Try
Unlike some founders post-acquisition, Yaakov admittedly struggled with life after his sale. He and his wife divorced after many years together and he continued working in an advisory role for Brevo unsure of where to go next.
Today, roughly two years later, Yaakov says he’s finally in the headspace again to start working on new projects. While he thinks his desire to pay the bills helped him build an extremely useful and profitable tool, he wants to work on a larger project to help other people. Right now, he’s started co-founder.cc, an outlet where he shares his expertise and experience to help founders succeed.
After all of his struggles, Yaakov believes success is not the final destination but the process of doing something great. Put everything you have into your projects – you may create the thing you actually needed to build along the way.
