Shoelace’s Close Call: The Story Behind the AdTech Startup’s Near Demise

In the fast-paced world of startups, the journey from conception to realization can be filled with unexpected challenges, requiring entrepreneurs to remain agile and adaptable. Reza Khadjavi, co-founder and CEO of Shoelace, embodies this entrepreneurial spirit through his journey, which took him from the brink of failure to newfound success with his current venture, Motion. This story illustrates the evolution of a business, the importance of resilience, and the power of learning from adversity.

Khadjavi's entrepreneurial journey began with an unconventional choice: dropping out of Concordia University in 2008. His decision was rooted in a desire to learn through practical experience rather than traditional education. Together with his brother, Ali, he embarked on various business ideas, ultimately settling on a dry-cleaning service named Nettoyeurs Express. This venture allowed them to pick up laundry from customers, have it cleaned by local businesses, and then deliver it back to them. However, Khadjavi envisioned a more streamlined operation that relied on a software platform to enhance customer service, enabling users to select their delivery dates effortlessly. Lacking the necessary capital to hire a developer, Khadjavi took it upon himself to learn coding, dedicating his nights to building the platform while managing deliveries during the day.

This self-taught programming journey sparked a newfound passion for software development in Khadjavi, who recognized the potential of technology to transform businesses. Following the sale of Nettoyeurs Express, he accepted a position as a software developer at Hubba, a rapidly growing startup in Toronto. It was during this time that he met Alexander Sloan and David Berglas, who would later become his co-founders. The trio shared a workspace and a vision, often discussing the potential of launching their own startup. Their collaborative spirit and shared ambitions led them to eventually leave Hubba in 2015, fueled by a desire to create something impactful in the tech space.

With a sense of confidence and optimism, the founders initially explored various ideas before honing in on the burgeoning world of digital advertising. They recognized an opportunity to simplify Facebook ad targeting for e-commerce businesses, as many merchants struggled with the platform's complexity. In response, they developed a product that streamlined the process of setting up Facebook ads by automating key tasks, allowing brands to launch campaigns quickly and effectively. They named their new startup Shoelace, reflecting the idea of connection and collaboration.

Shoelace launched in 2015 and quickly gained traction, benefiting from the expertise of its founding team. Their acceptance into the Boomtown Accelerator in Boulder, Colorado, provided valuable resources and mentorship that helped them refine their business model. The company began attracting customers and generating revenue, raising around $2 million in initial funding through various small investments. Khadjavi described this period as a time of optimism and growth, as the company approached profitability.

However, in 2018, the startup faced a significant turning point. The digital advertising landscape underwent drastic changes, and the core business model of Shoelace began to falter. Algorithm updates from platforms like Facebook, combined with increased competition from larger players, made it difficult for the company to maintain its growth trajectory. Cash reserves dwindled, and the team faced the stark reality of either pivoting or potentially closing the business altogether.

This period of crisis forced Khadjavi and his co-founders to reassess their strategy. Recognizing the need for a pivot, they drew on the lessons learned from their previous experiences and explored new opportunities within the advertising space. The challenges they faced with Shoelace fueled a desire to innovate and adapt. Their realization that the video advertising segment was growing rapidly led them to redirect their focus. They envisioned a new platform, Motion, that would automate the process of creating, testing, and optimizing video ads, providing businesses with a streamlined solution to enhance their marketing efforts.

With the launch of Motion, Khadjavi and his co-founders embraced a fresh start. The new platform quickly gained popularity among both small businesses and larger enterprises, as the demand for video content surged in the digital marketing landscape. Motion capitalized on the insights gathered from their previous venture, applying them to a new, more relevant market.

By 2023, just a few years after pivoting to Motion, the startup successfully closed a $30-million USD financing round, demonstrating the viability of its business model and the perseverance of its founders. This achievement marked a significant turnaround for Khadjavi and his team, validating their vision and hard work.

The story of Khadjavi and his co-founders serves as a reminder of the unpredictable nature of entrepreneurship. Their journey from the rise and fall of Shoelace to the successful pivot to Motion illustrates the importance of resilience, adaptability, and learning from failure. The experiences that led them to the brink of collapse ultimately shaped their approach to building Motion into a thriving business.

Today, Motion stands as a testament to the power of perseverance and the ability to pivot in the face of adversity. The lessons learned from their journey with Shoelace continue to inform the company’s strategy and operations, guiding Khadjavi and his team as they navigate the ever-evolving landscape of digital marketing. Their ability to pivot effectively not only salvaged their entrepreneurial aspirations but also positioned them for success in a new arena.

In conclusion, the narrative of Reza Khadjavi and his journey from Shoelace to Motion encapsulates the essence of entrepreneurship: a willingness to embrace change, learn from setbacks, and remain dedicated to one’s vision. The road to success is rarely straightforward, and this story exemplifies how challenges can serve as catalysts for growth and innovation. As Khadjavi and his co-founders continue to build Motion, they carry forward the invaluable lessons learned along the way, ready to face new challenges and seize opportunities in the dynamic world of technology and digital marketing.