5 ms·

Shit I Learned Burning through My Family's Life Savings on a Failed Startup

111 points by MediaSquirrel 17y ago

avner 17y ago
Know when 80% is good enough I consider this an important strategy when executing most tasks. It is an on field guideline in the Marine Corps to aim for a 70% solution to problems in some cases. It is sometimes a better strategy to implement an imperfect plan than to roll out the perfect plan by the time it's too late.
- conover 17y ago
  Voltaire summed it up by saying: "The perfect is the enemy of the good."
  - kimfuh 17y ago
    "Just do it." -- some shoe company
    - SapphireSun 17y ago
      Nike
- dschobel 17y ago
  A good plan, violently executed now, is better than a perfect plan next week. --General George S. Patton
jbyers 17y ago
"The issues that bother you at the beginning will be what kills you later." This section describes a people problem, and I think the headline should be narrowed to that realm. Otherwise, a good, honest list that I believe will ring true to many HN readers.
10ren 17y ago
This is great stuff, kudos to Kevin. The "looks like/is a goose" one reminds me of looking for a "market alternative" (from the book "Crossing the Chasm"). The market alternative is how potential customers presently deal with the problem the new product solves, and it has a name and an existing budget. This helps to communicate what the product is to the customer. If it's hard to find such a market alternative, it's a sign that the product isn't ready to 'cross the chasm' into the mainstream - that is, it won't be attractive to pragmatists (who just want a percentage improvement on existing methods, with minimal change). It's still in the non-mainstream pre-chasm realm populated by techies and visionaries (who think the tech is cool in itself, or who can see a new way to use it to make money, respectively). It might also be that the target market selected isn't suitable, i.e. there might be another application of the technology and for another group of customers, for which there is an existing "market alternative".
JoshTriplett 17y ago
An interesting article, but the title left me with a question that the article completely failed to answer: what about the lesson "don't spend your family's life savings on your startup"?
- Kevinjmireles 17y ago
  I guess that goes to the old saw about don't bet more than you can afford to lose. The losing the life savings generally happens in chunks and you keep hoping things will get better - and then they don't - and suddenly you have the new problem of finding work, which takes more time and burns through more cash. So if you follow some of the lessons in the blog, you won't burn through your life savings. More on that later.
  - gfodor 17y ago
    There is, of course, a corollary to this in that you can often afford to lose more than you think. Most people don't realize this, and hence, never take any risks.
    - freshfunk 17y ago
      My thoughts exactly. When you're out of college, you're used to living on a shoestring budget. You can get by without quite little because you haven't really raised your standards of living around a big salary. When you've worked for a few years, you've likely saved up a decent amount of cash (unless you live a life filled with consumption). You may have to cut back on all the perks but you can still get by. Most of the people I know who want to start a company don't want to risk their current cash flow. Yet all of them have been working long enough where they've likely saved up enough money to go a long time without making money and be ok. I think the only thing is that people raise their standards of living (more expensive rent, big car payments, high rent/mortgage) such that they feel they must continue to make their current salary in order to "survive."
      - Kevinjmireles 17y ago
MediaSquirrel 17y ago
@Kevin Proud of you dude! Your first time on HN and you made it into the Twitter stream. Glad to have u here in blog land!
fizx 17y ago
Now I'm curious as to what the startup did.
- Kevinjmireles 17y ago
  Software for collision repair shops....
akkartik 17y ago
The author had an invaluable experience, but I think the blog post doesn't do it justice. None of the section headings is actually that surprising; it's unlikely he started a business without being aware of all those lessons in the broad strokes. Be ruthless, yes, but why was he unable to be ruthless even when he knew he should be? "Fail fast"? What did he do that violated that? What was he thinking, failing slowly? I wish he could come up with a way to give us more concrete details that add nuance to the broad lessons. Memories will fade, and if all he's saved of them is this blog post, the lessons will follow the life savings. And that would be tragic.
- Kevinjmireles 17y ago
  Check out my posting Product Adoption: Lessons on how to maximize product adoption and avoid common pitfalls: http://kevinjmireles.wordpress.com/2006/08/03/product-adoption/ http://kevinjmireles.wordpress.com/2006/08/03/product-adopti... I appreciate the encouragement and challenge to write some more. I'll see what I can do to live up to your request but no guarantees as I'm trying to put some of the lessons to use=).
dirtbox 17y ago
So many of these things resonate for me, I'm troubled by a good third of the problems, or the seeds of the problems outlined here. Some sterling advice that I'm going to heed well. I think the nature of the failed startup is irrelevant as much of the advice is raw, yet vague enough to apply to many areas. Almost all startups are based on a good idea, their success or failure rests almost entirely on the back of the choices you make along the way. Thanks for sharing this.
zackattack 17y ago
if it really added 10% to the bottom line, why not take payment on commission?
- Kevinjmireles 17y ago
  Getting people to change their habits is hard. After all shouldn't you be going to gym instead of watching mindless videos on Youtube? But are you? Read my post for some key product lessons http://kevinjmireles.wordpress.com/2006/08/03/product-adoption/ http://kevinjmireles.wordpress.com/2006/08/03/product-adopti...
greenlblue 17y ago
I like the goose metaphor and I see it in education all the time. We constantly tell undergraduates that learning math is not just about crunching numbers but about learning how to abstract and reason more efficiently and yet the tests and homework assignments tell a different story so the undergrads just learn how to crunch numbers.
Kilimanjaro 17y ago
Never spend more than $1000 in a startup unless you start getting revenues, say $100 or $200 and growing. Then invest proportionally to the revenue. With cheap VPS in the $20 and say $500 in average design, I fail to see how you should over spend in chasing a dream highly probable bound to fail.
- jon_dahl 17y ago
  If you're only willing to spend $1000 on a startup, and you count your own time (which you should), then you're going to have a rough time as an entrepreneur. Startups require risk and sacrifice. Maybe not bankrupt-your-family sacrifice, but sacrifice nonetheless.
  - notlikely 17y ago
    No offence, but your comment is incredibly silly. There are plenty of successful businesses that started on kitchen tables with miniscule budgets and grew organically as the founders learned as they went along. The cliche of the macho startup entreprenuer working 100 hours weeks and burning through cash for five years is not how many people become successful. Plenty of people start quietly in their spare time and build as they go along. Startups require risk and sacrifice - yes, this is true. But not all businesses demand your internal organs and your wallet.
    - jon_dahl 17y ago
      I hate the macho startup cliche as much as you. 100 hour weeks don't help a startup - they hurt - and it's never a good idea to dig a hole deeper than you can get out of. But if you count your own time, which is worth AT LEAST $20/hour (if not $100), then you aren't going to get very far if you're only willing to commit $1000. Even if you don't count your own time, many opportunities require significantly more than $1K. Success in a startup comes from tenacity more than anything else. If you aren't willing to make a real commitment (as the GP was suggesting), you're setting yourself up to fail.
      - 17y ago
adamtmca 17y ago
I just read Rework. There is a chapter called "learning from mistakes is overrated." It cites a Harvard business study that showed that startup founders who launched a startup and failed had about the same odds of success in their second startup as someone who was launching their first. While I've learned valuable lessons from my (many) failures it's a nice reminder that there is also a lot to be learned from our successes.
dnsworks 17y ago
"Fail quickly" always annoyed me. The part that annoys me the most is that institutionalized tend to view "I failed to the tune of several million dollars" as validation of somebody's investment worthiness. Sure there are lessons to be learned in failure. More often than not, the lesson seems to be "I learned how to convince VCs to give me money for a bad idea and an incompetent team!"
- Kevinjmireles 17y ago
  Fail quickly doesn't mean let your company fail. The goal is to figure out what doesn't work.Too many people try to develop a perfect product, etc... instead of investing the minimum amount required to get feedback and test the concepts with customers, stakeholders etc... It's better to discover that your great idea won't work with a paper sketch than to discover the issues after you've invested 6 months in development. So fail quickly is about taking risks, making mistakes and learning as rapidly and as cheaply as possible - so ultimately you can be successful in the long run.
charliesome 17y ago
All I can think when reading this blog post is: Owned.

111 points by MediaSquirrel 17y ago

avner 17y ago

Know when 80% is good enough I consider this an important strategy when executing most tasks. It is an on field guideline in the Marine Corps to aim for a 70% solution to problems in some cases. It is sometimes a better strategy to implement an imperfect plan than to roll out the perfect plan by the time it's too late.

conover 17y ago
Voltaire summed it up by saying: "The perfect is the enemy of the good."
- kimfuh 17y ago
  "Just do it." -- some shoe company
  - SapphireSun 17y ago
    Nike
dschobel 17y ago
A good plan, violently executed now, is better than a perfect plan next week. --General George S. Patton

jbyers 17y ago

"The issues that bother you at the beginning will be what kills you later." This section describes a people problem, and I think the headline should be narrowed to that realm. Otherwise, a good, honest list that I believe will ring true to many HN readers.

10ren 17y ago

This is great stuff, kudos to Kevin. The "looks like/is a goose" one reminds me of looking for a "market alternative" (from the book "Crossing the Chasm"). The market alternative is how potential customers presently deal with the problem the new product solves, and it has a name and an existing budget. This helps to communicate what the product is to the customer. If it's hard to find such a market alternative, it's a sign that the product isn't ready to 'cross the chasm' into the mainstream - that is, it won't be attractive to pragmatists (who just want a percentage improvement on existing methods, with minimal change). It's still in the non-mainstream pre-chasm realm populated by techies and visionaries (who think the tech is cool in itself, or who can see a new way to use it to make money, respectively). It might also be that the target market selected isn't suitable, i.e. there might be another application of the technology and for another group of customers, for which there is an existing "market alternative".

JoshTriplett 17y ago

An interesting article, but the title left me with a question that the article completely failed to answer: what about the lesson "don't spend your family's life savings on your startup"?

Kevinjmireles 17y ago
I guess that goes to the old saw about don't bet more than you can afford to lose. The losing the life savings generally happens in chunks and you keep hoping things will get better - and then they don't - and suddenly you have the new problem of finding work, which takes more time and burns through more cash. So if you follow some of the lessons in the blog, you won't burn through your life savings. More on that later.
- gfodor 17y ago
  There is, of course, a corollary to this in that you can often afford to lose more than you think. Most people don't realize this, and hence, never take any risks.
  - freshfunk 17y ago
    My thoughts exactly. When you're out of college, you're used to living on a shoestring budget. You can get by without quite little because you haven't really raised your standards of living around a big salary. When you've worked for a few years, you've likely saved up a decent amount of cash (unless you live a life filled with consumption). You may have to cut back on all the perks but you can still get by. Most of the people I know who want to start a company don't want to risk their current cash flow. Yet all of them have been working long enough where they've likely saved up enough money to go a long time without making money and be ok. I think the only thing is that people raise their standards of living (more expensive rent, big car payments, high rent/mortgage) such that they feel they must continue to make their current salary in order to "survive."
    - Kevinjmireles 17y ago

MediaSquirrel 17y ago

@Kevin Proud of you dude! Your first time on HN and you made it into the Twitter stream. Glad to have u here in blog land!

fizx 17y ago

Now I'm curious as to what the startup did.

Kevinjmireles 17y ago
Software for collision repair shops....

akkartik 17y ago

The author had an invaluable experience, but I think the blog post doesn't do it justice. None of the section headings is actually that surprising; it's unlikely he started a business without being aware of all those lessons in the broad strokes. Be ruthless, yes, but why was he unable to be ruthless even when he knew he should be? "Fail fast"? What did he do that violated that? What was he thinking, failing slowly? I wish he could come up with a way to give us more concrete details that add nuance to the broad lessons. Memories will fade, and if all he's saved of them is this blog post, the lessons will follow the life savings. And that would be tragic.

Kevinjmireles 17y ago
Check out my posting Product Adoption: Lessons on how to maximize product adoption and avoid common pitfalls: http://kevinjmireles.wordpress.com/2006/08/03/product-adoption/ http://kevinjmireles.wordpress.com/2006/08/03/product-adopti... I appreciate the encouragement and challenge to write some more. I'll see what I can do to live up to your request but no guarantees as I'm trying to put some of the lessons to use=).

dirtbox 17y ago

So many of these things resonate for me, I'm troubled by a good third of the problems, or the seeds of the problems outlined here. Some sterling advice that I'm going to heed well. I think the nature of the failed startup is irrelevant as much of the advice is raw, yet vague enough to apply to many areas. Almost all startups are based on a good idea, their success or failure rests almost entirely on the back of the choices you make along the way. Thanks for sharing this.

zackattack 17y ago

if it really added 10% to the bottom line, why not take payment on commission?

Kevinjmireles 17y ago
Getting people to change their habits is hard. After all shouldn't you be going to gym instead of watching mindless videos on Youtube? But are you? Read my post for some key product lessons http://kevinjmireles.wordpress.com/2006/08/03/product-adoption/ http://kevinjmireles.wordpress.com/2006/08/03/product-adopti...

greenlblue 17y ago

I like the goose metaphor and I see it in education all the time. We constantly tell undergraduates that learning math is not just about crunching numbers but about learning how to abstract and reason more efficiently and yet the tests and homework assignments tell a different story so the undergrads just learn how to crunch numbers.

Kilimanjaro 17y ago

Never spend more than $1000 in a startup unless you start getting revenues, say $100 or $200 and growing. Then invest proportionally to the revenue. With cheap VPS in the $20 and say $500 in average design, I fail to see how you should over spend in chasing a dream highly probable bound to fail.

jon_dahl 17y ago
If you're only willing to spend $1000 on a startup, and you count your own time (which you should), then you're going to have a rough time as an entrepreneur. Startups require risk and sacrifice. Maybe not bankrupt-your-family sacrifice, but sacrifice nonetheless.
- notlikely 17y ago
  No offence, but your comment is incredibly silly. There are plenty of successful businesses that started on kitchen tables with miniscule budgets and grew organically as the founders learned as they went along. The cliche of the macho startup entreprenuer working 100 hours weeks and burning through cash for five years is not how many people become successful. Plenty of people start quietly in their spare time and build as they go along. Startups require risk and sacrifice - yes, this is true. But not all businesses demand your internal organs and your wallet.
  - jon_dahl 17y ago
    I hate the macho startup cliche as much as you. 100 hour weeks don't help a startup - they hurt - and it's never a good idea to dig a hole deeper than you can get out of. But if you count your own time, which is worth AT LEAST $20/hour (if not $100), then you aren't going to get very far if you're only willing to commit $1000. Even if you don't count your own time, many opportunities require significantly more than $1K. Success in a startup comes from tenacity more than anything else. If you aren't willing to make a real commitment (as the GP was suggesting), you're setting yourself up to fail.
    - 17y ago

adamtmca 17y ago

I just read Rework. There is a chapter called "learning from mistakes is overrated." It cites a Harvard business study that showed that startup founders who launched a startup and failed had about the same odds of success in their second startup as someone who was launching their first. While I've learned valuable lessons from my (many) failures it's a nice reminder that there is also a lot to be learned from our successes.

dnsworks 17y ago

"Fail quickly" always annoyed me. The part that annoys me the most is that institutionalized tend to view "I failed to the tune of several million dollars" as validation of somebody's investment worthiness. Sure there are lessons to be learned in failure. More often than not, the lesson seems to be "I learned how to convince VCs to give me money for a bad idea and an incompetent team!"

Kevinjmireles 17y ago
Fail quickly doesn't mean let your company fail. The goal is to figure out what doesn't work.Too many people try to develop a perfect product, etc... instead of investing the minimum amount required to get feedback and test the concepts with customers, stakeholders etc... It's better to discover that your great idea won't work with a paper sketch than to discover the issues after you've invested 6 months in development. So fail quickly is about taking risks, making mistakes and learning as rapidly and as cheaply as possible - so ultimately you can be successful in the long run.

charliesome 17y ago

All I can think when reading this blog post is: Owned.