13 ms·

Why I turned down $500K and shut down my startup

648 points by jason_tko 10y ago

selectron 10y ago
Quite interesting. Why couldn't you build in a reward system to using the product? Similar to how games like WOW do?
- zer00eyz 10y ago
  Gamification: it only works to a point. As he pointed out this isn't something people are SO keen on that they want or need to incentivize their employees to do it.
- timoth3y 10y ago
  zer00eyz comment is pretty accurate. Gamification is something that came up during brainstorming, but most business users tend to view all but the most subtle approaches as distracting. We concluded we needed something that actually made their task more efficient or effective.
TempleOS 10y ago
The nigger thinks that a talking space alien is nothing special. I have something far better than investors. I could not buy rights to create the IBM PC future specs. With God, I get full control of the IBM PC hardware.
zer00eyz 10y ago
The underlying idea behind what he did here is sometimes called Ethnography. There was another great article a while back on this going on at adobe/photo shop: https://medium.com/startup-study-group/my-two-years-as-an-anthropologist-on-the-photoshop-team-e700acb7d3d5#.t6m5wue0c https://medium.com/startup-study-group/my-two-years-as-an-an... As far as tools go, ethnography can be very powerful in the right hands.
- grizzles 10y ago
  Great comment. Fantastic article. I wonder if they considered involving both sides of the contract from the get go. When I've negotiated small-mid size deals with other tech savvy folks, I've often thought a two sided chat style interface that I could use sitting next to someone or if they were across town would be ideal. The way I conceptualized it would be a 3rd party tool for making deals where the main feature is standardized clauses for minimal lawyer involvement. Eg. Need a standard confidentiality clause? (Drag Drop). Boom. Let's do business. Commercial lawyers would hate it, but that's sort of the point.
  - rtpg 10y ago
    I think the primary issue is that when you start redlining, everyone has their workflow and the side that's in the "position of power" will use what they feel like using. "Oh check out this contract at FooBarContracts" (counterparty opens link, copies text into word doc, edits) "Here's the latest DOCX with my revisions."
    - grizzles 10y ago
      It could be an iterative process, with niche domain and custom clause support. For small-mid business people interested in GTD, I think there would be enough utility gained by both sides to remain on the platform. For experienced business people, involving the lawyers is an inevitable drag on dealmaking. I bet people involved in frontline sales for (eg. software) would love something like this to exist for fast closes. There are your shadow unpaid product evangelists.
  - epa 10y ago
    You're assuming both sides 1) play nice and 2) actually collaborate in that way. A lot of the time it is David (small corp) vs Goliath (huge corp) where David has to accept terms of Goliath on their standard deals or risk not completing the deal.
- kentlyons 10y ago
  Ethnographers tend to be rather hands off (/against) directly changing who they're observing. Contextual Inquiry (http://www.usabilitynet.org/tools/contextualinquiry.htm http://www.usabilitynet.org/tools/contextualinquiry.htm, http://www.amazon.com/Contextual-Design-Customer-Centered-Interactive-Technologies/dp/1558604111 http://www.amazon.com/Contextual-Design-Customer-Centered-In...) is a fairly light weight method and I think would benefit a lot of startups.
ztratar 10y ago
"It would have been different if we had been debating which plan among several to implement or how to shore up specific weaknesses, but we had nothing." I don't really understand "having nothing" -- you're either creating value or you're not. You guys spotted a real problem, but your v1 solution was meh. There were certainly multiple ways out (and not just tack on gamification), and even if some were long-shots, the uniqueness of a startup is to place those bets.
- santoshalper 10y ago
  I think he just doesn't agree that there were multiple ways out. He seems to believe that they exhausted options and couldn't figure out a path.
- williamstein 10y ago
  He assumed that if he personally couldn't solve a problem in a few weeks of hard work, then nobody coudl. This is kind of naive or possibly arrogant. It also sounds weak to me, coming from academic research, in which people work very hard on problems for years, and sometimes even succeed at solving those problems (famous example: Fermat's Last Theorem).
  - dwwoelfel 10y ago
    He explicitly says in the post that he's not claiming the problem is unsolvable. If I read it right, he even thinks it is possible that he could solve it, but he doesn't want to bet a year of his life on it.
dnautics 10y ago
Why not make an open offer to anyone who thinks they can solve this problem and turn this around?
arcticfox 10y ago
It's pretty surprising to me that there was no way to shift enough of the value gain from "huge gains in efficiency" forward to keep people motivated about the product. For example: use a chunk of the $500k as rewards to push people through the initial adoption. Then presumably the real gains would take over and they'd be happy customers.
- mdorazio 10y ago
  Yes, but would that really be sustainable? Paying every single user to get them to actually use your product is generally a money-losing proposition in the long-term unless you plan to jack up your prices after you lock them in. It's also not at all clear if just offering rewards would be enough to get people to use the product in their daily contracts workflow. Switching from whatever system someone currently uses to a new one for contracts is a huge pain, so it would require a similarly huge up-front commitment. I've seen contract systems switchovers a few times at clients, and pretty much every single person in the trenches has hated it and only done it because it was forced on them from the exec team.
santoshalper 10y ago
It sucks when you realize you have built something that users like, but they don't really NEED. I like the good habits analogy - I built several great workflow apps for a Fortune 500 company in the past few years, but discovered most users don't really want the yoke of workflow and there wasn't enough immediate lift to tempt them. Sorry man. Good call not to waste a year of your life.
- mpbm 10y ago
  "It sucks when you realize you have built something that users like, but they don't really NEED" That's a great point. There are a lot of intractable problems that everybody wishes could be "solved" but the reason they're intractable is that solving them simply requires working harder. They can't be solved with cleverness they just require doing all of the work, rather than doing as much of the work as you absolutely have to. A ton of "solutions" just shuffle the work around. So it's like you have a clean sink, but if you want to use the oven you have to find another place for the dirty dishes. One pseudo-solution that doesn't actually reduce the work is just as good as another, so there's no NEED to switch.
ChicagoDave 10y ago
After this, I'd never give this guy time or money and I doubt anyone else will either. No matter how shitty you feel about your start-up, if you have a willing team and cash, you should see it through. Being an entrepreneur isn't always about having all of the answers. It's very often about not knowing the answers and figuring things out. Especially if you have a team and cash flow and investors. I think this guy needed to take a day off or seven and get his head back on straight. I'm nearly positive every entrepreneur goes through the "doubt" process many times in a given start-up. It's the person that figures out how to renew themselves that ends up succeeding.
- kasey_junk 10y ago
  > The rest of the team kept their day jobs. > The team was excited. Our potential investors were excited. He didn't really have a team and he didn't really have investors. He took a personal risk and found it wasn't working. He shut it down before it got expensive for people other than himself. I applaud this. People, especially around here, need to understand failure is the norm. This person failed fast, well. Nice work. On to the next thing.
  - ChicagoDave 10y ago
    This goes to my core belief that "failing fast" is bad for entrepreneurship. It is far more rare for an initial idea to succeed than one that morphs out of original ideas. Even Facebook started out as something other than what it is now. I have nothing against accepting failure in an idea. My first start-up failed and I had to let it go. It was really fucking hard to do that. But I tried to pivot twice before finally letting it go and I worked at it for a number of years. The people that want us to fail fast don't have entrepreneurs best interests at heart. They're looking for quick wins and the more starts and fails they get, the better _their_ odds of something "popping". But there's something to be said for perseverance. I won't argue that there shouldn't be a balance, and maybe I was too hard on the OP, but it sounded to me like he needed to step away and think about it, not just let it go. But I guess we have to defer to his judgment since it was his idea. I just really don't like fail fast mentality.
- 10y ago
chalam 10y ago
Tim, Interesting comment in there about 'Approvals' being one of the most used feature. Why couldn't you build around that? A more generic approvals solution for any kind of contract.
pookeh 10y ago
Often times, the products we make should really be features of a larger offering. Did you guys explore building on top of your contract tech or getting acquired by a company that requires your tech? for example: 1. Marketplace of services that need contract signing between parties. 2. Project management app for SMBs or freelancers 3. Legal document authoring app that extends to contract signing. There are prolly more ...
encoderer 10y ago
I have to say, I don't agree with this part at all: "But most of the time, customers don’t really want the the features they are asking for. At least not very badly." Customer feedback drives an absurd amount of our roadmap at Cronitor. We have a good idea of the many shortcomings of our product and are constrained primarily by resources in developing it faster. When a customer -- especially somebody on a trial -- puts their thumb on the scale of a specific flaw or deficiency, we look at it as an opportunity to seriously delight that user and at the same time level-up the product for all users after. We don't build everything asked for, but I would say "most of the time, customers know exactly what they need, and we try to give it to them within our ability." A specific example for us would be Etsy, who uses Cronitor on a part of their business and during evaluation asked for a couple API endpoints to expose more advanced functionality.
- joeemison 10y ago
  For evolutionary features, you're right. But I think the point in the article is that if you're trying to get to product-market fit, your customers' feature suggestions are rarely the ways to get there; you generally have to watch, think, synthesize, hypothesize, and iterate again and again to get to the solution that actually does what you need done.
  - encoderer 10y ago
    That's a little too hand-wavy for me. I think you solve a problem, produce an acceptably bad solution, and as you get traction you improve it. You do it evolutionary because you're not Steve Jobs and improving something continuously is a repeatable, adaptable technique in a way that spontaneous invention isn't. If you never get traction, and can't crack it, then you invested a minimal amount and you can move on. A portfolio approach. I think this is true for both big ideas and little ones. I guess there may be some nuggets of truth deep down in the cw that "users don't know what they want until you give it to them" but I think it's mostly an over-used canard.
    - ben_jones 10y ago
deleted 10y ago
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reilly3000 10y ago
Moving down market is tough. The reason why enterprise ecosystems can flourish is that consultants have a symbolic relationship with software, act as a silent sales force, drive legitimacy and solve the soft issues that make software projects fail. Creating a simple CRM system isn't that hard, but getting mass adoption AND offering a customizable product takes hand holding. Content alone doesn't hold hands, nor does (most) UX. Software that changes how people's jobs work (accounting, CRM, EHR, etc) naturally invites pushback because PEOPLE HATE CHANGE. Maybe the next generation of UX will have change management built into the system, not just tours and tooltips. For now, the burden of software adoption is best served with donuts and somebody how cares enough to make it work for the business that is investing in it.
- prmph 10y ago
  How then do you explain the sometime massively enthusiastic adoption of disruptive consumer software? My understanding is that people seem to resist change in corporate environments because it is a high stakes environment where, for example, the ability to hold onto work "flow" achieved over a long period can make the difference between thriving and failing. Thus software becomes more of a political tool, not necessarily in the sense of office politics, but in the sense of being part of a strategic toolbox by which people grapple with the networks of power they participate in at work. So corporate users are not necessarily resistant to change; they are just strategic about whether and what changes are to their advantage; if the introduction of new software can strengthen their work-related strategies, they can become its champions. I have seen this myself when I used to work for big multinational corporations. To model software adoption in the corporate space, therefore, one might need to employ a theory of power such as Actor-Network theory (in which terms one might think of software as an actor that can be "enrolled" for various ends) A theory of work and instrumentality, such as Activity Theory, is what most people (sometime without knowing it as such) apply to analyze work environments; but paradoxically it is usually the wrong approach to analysis. I see this failure of analysis all the time. In a nutshell, the more instrumental and work-oriented software is, the more necessary it is to analyze it through a power-relations lens.
EGreg 10y ago
People live lives. Companies create products. Sometimes what you build becomes bigger than you. If you want to quit, and everyone else wants to keep going why not let someone else run the show? If you started a chess club, or even a chatroom, and had no time (as the guy says, he only has one life) to be an admin, would you just close down the whole thing and kick everyone out? Maybe. If they really were so passionate they'd pick up the pieces and start their own thing. Your old group might have a way to transfer the accumulated wealth to the new group. Instead of just losing it. I remember writing an article about this a couple years ago called the Politics of Groups: http://magarshak.com/blog/?p=135 http://magarshak.com/blog/?p=135 Here is an excerpt: If the individual - the risk is that the individual may have too much power over others who come to rely on the stream. They may suddenly stop publishing it, or cut off access to everyone, which would hurt many people. (I define hurt in terms of needs or strong expectations of people that form over time.)
- erikb 10y ago
  Great question, imho. But indirectly it is also answered. It seemed like he spent the majority of the power into the project and the others would have joined when it was starting. It's like you have the chess club but other people only come if you are there and maybe even only if you have something special to offer.
  - EGreg 10y ago
    Right but often they come for the chess. It's about the chess for them, so they don't want to have the club shut down on the whim of a single dude.
    - erikb 10y ago
      Okay, you say A, then I say "not A but B", and then you continue the discussion by saying A again?
vinceguidry 10y ago
It seems like the marketing was all wrong. If you're selling to big business, you need a big business sales process. If you can't afford that, you're just pissing in the wind. He was focused on product when he should have been focusing on his sales and on-boarding. Patrick McKenzie has demonstrated that you can do high-touch corporate sales as a small organization or even as a single person. He just needed to figure out how.
Dwolb 10y ago
If we're going with the whole human centered design approach here the writing doesn't sound as though you were thorough enough in the research, analysis, and synthesis. There should have been some guideposts here: who were the power users? what did they love? who were the huge detractors? what was their big issue? how did ContractBeast fit into the ideal world? how were people splitting their work between the old system and ContractBeast? were there network effects for the old system? Yeah we can look at some sort of short term win and long term gain framework, but it's pretty reductionist to a) only depend on that framework and b) not be able to come up with any solutions to fulfill short term wins.
frozenport 10y ago
Can't you just charge them $2.99 for each contract, and go with volume?
- vonklaus 10y ago
  I suspect you would get killed here. You are trying to change user behavior and as noted they don't have short term benefits. This pricing model disincentivises a company because it costs them money up front each time they try it and not showing and value. Essentially they need to add an extra step to their routine & pay for the lack of convenience. This was likened to ecercise by the author. However, if you expect anyone without a top down authority (also mentioned) to do something that is harder & more expensive, they won't. It's why gym memberships bought on Jan 1 are rarely renewed in Feb or March edit: so you are correct, paying for what you use is logical especially vs the value. Here it sounded like the customer has high value, but we discount it steeply for lack of immeadiacy.
capkutay 10y ago
"I was deciding whether this venture was worth committing to another year of 70+ hour weeks. I need a higher level of certainty than investors do because my time is more valuable to me than their money is to them. Investors place bets in a portfolio of companies, but I only have one life." That's the key quote in the article. It's a fair decision from his standpoint but I wonder if saying that will lead investors to question his determination in the future (if he tries a new venture). I suppose the investors could also appreciate that he didn't want to waste more of their money if he didn't believe in the product.
- chris_va 10y ago
  > I suppose the investors could also appreciate that he didn't want to waste more of their money if he didn't believe in the product. Yes, very much so. Startup investments fail all the time, part of the business. Better a clean shutdown than trying to eak out an exit with money that could be better spent elsewhere.
  - trustfundbaby 10y ago
    especially if your heart's not in it for whatever reason
- onion2k 10y ago
  If the situation were really "take the money and do 70+ hours a week for a year" versus "shut down the business" then I'd agree, but that's a false dichotomy. You can run a startup putting in far less time than that; putting in long hours is a choice. You can bring in a team or outsource the parts you don't like. It makes it harder to succee but it's an option. You could (depending on lots of caveats) simply hand the business over to someone else. I respect the author for admitting he didn't want to run the business, and I realise it was his choice to stop in the face of any other options, but I really don't agree with the idea that running a startup requires 70+ hours a week and if you're not willing to put that time in you have to shut down.
  - nostalgiac 10y ago
hyperpallium 10y ago
I guess that's why this top-down market hasn't been disrupted. This guy is seeing clearly. Cutting the old makes way for the new - it would be better if I did this with my own zombie business. And now, the armchair brainstorming: focus on the "contract review and approval" immediate gratification and marginal user wins - if not sufficient benefit for them to buy, make it multi-month free trial, make it a year. After some "months of use", users get the delayed gratification. They become your sales force from within, and CIO's notice the long-term benefits, validated within their own company, and mandate its use top-down. It's a long slow burn and mightn't work.
- hyperpallium 10y ago
  Still fascinated! Couple ideas using Crossing the Chasm (CtC): 1. Your vision is crucial to your determination. Your vision is disrupting SMB CLM with "huge gains in accuracy and efficiency". You can only start the fire with those also inflamed with your vision - those who care. It seems only CIO's (anyone else?). The CtC idea is to target those few adventurous CIO's ("visionaries") who want to leapfrog the competition with this new, unproven approach. Reach them through those very, very few CIO's who are excited by the idea itself ("enthusiasts") - just because it's a clever, efficient, elegant approach to a broken process. They exist, just not many. So: if you try to appeal to users, it must be those users who are excited by what causes the "huge gains in accuracy and efficiency". Otherwise they'll carry the wrong torch to the CIO. 2. The other CtC idea is "niches": pick out the types of customer who would really benefit from your solution. e.g. inaccuracy causes chronic problems for them/losing customers/bad publicity; CLM is a dangerously high cost center; they can't keep up with sudden demand and are losing sales; they can't adjust to changing contracts, and lose opportunities; (new) regulations/legislation makes inaccuracy very expensive. Plus, it would open up a new market; overtake a competitor; resist a competitor. These also excite upper management. Applying it gratifying users: are some businesses constantly approving contracts, and importing templates (or should be)? Maybe during M&A; law/consultancy firms? Choose your customers to suit you.
advertising 10y ago
Sounds like the right move. If you had discovered this when you were 6 months in, spent 50% of the cash and had employees would you have made the same decision? To pull the plug and return remaining capital vs trying to make it work.
epynonymous 10y ago
that's why i firmly believe you have to find the idea that you're really interested in because that's what will pull you through those 70+ hour work weeks or through those days where you're on the brink of failure wanting to fold shop. there are many ideas that are interesting and probably could be good businesses (lifestyle or startup), but can you overcome all those things not just on sheer will power, but just because that's what you enjoy spending your time on?
- elliotec 10y ago
  Or bootstrap a lifestyle business with an idea that you're really interested in and spend exactly as much time as you feel like working on it, making money and not answering to investors.
  - epynonymous 10y ago
    awesome, you sound like you have experience creating a lifestyle business. i'm in the midst of starting one myself.
e12e 10y ago
It sounds like most of the customers had a flawed process - or perhaps an actual process that was different from the process they felt they should have. Perhaps they were even in breach of some guidelines legal had drawn up, or even laws or statutes on acquirement. And it sounds like the product automated a good, sound process. One that was different from the customer's actual, current process. I don't know how one could hope to sell a new process (incidentally along with an automation framework) without massive training, and, well, consulting. I'm a little surprised they didn't take the opportunity to pivot. Maybe none of their beta users were interested in the 100x(?) investment buying such a package would cost? It sounds like they found a different market, smaller in number of customers, larger in revenue - and chose to walk away because: software is fun, human process is hard and boring? It's a valid choice to be sure, but it strikes me as a little odd. I thought the idealised, naive idea of a computer system being more important than the human systems it enables was more of a delusion limited to Silicon Valley, than a general problem. I'm reminded of how model-view-controller was internally known as model-view-controller-user, and how shortening it to mvc[1] was probably a terrible mistake that obscured most of the valuable idea behind the concept (that of mapping the users mental model of domain knowledge to widgets on the screen and on to the data models used by the software). [1] according to a talk Trygve gave, but it kind of shines through in his brief history of mvc too: https://heim.ifi.uio.no/~trygver/themes/mvc/mvc-index.html https://heim.ifi.uio.no/~trygver/themes/mvc/mvc-index.html
timoth3y 10y ago
Hi. Tim here. I'm delighted that this article struck such a chord. I'll try to answer the most common questions here. I wish I could answer everyone directly. 1) I called it off before anyone sent money or quit their jobs. The only one who lost money or a job because of ContractBeast was me. If the money was in the bank and the team on board we would have gone ahead. That's why I had to make that decision when I did. 2) I'm not saying there was no solution. There might have been, but the team and I could not find one. Think of it this way. You and a team decide to summit a mountain. It's a high-risk endeavor. After weeks of going over your maps and equipment you just can't see a plausible way up. Do you call it off or set out hoping you'll be able to figure it out. It doesn't mean no one can do it. I means I could not do it with that team and that equipment. 3) Why didn't we leverage the contract approval features that customers loved? We tried. The problem was that those kinds of approvals were not core workflow for SMBs. It was useful when importing contract templates, but was not used much after that. Nice feature but not important enough to get companies to sigh up for multiple seats, which is what we needed. 4) Whats going to happen to the code and to Tim? No decisions yet. I'm open to suggestions on both counts.
- cft 10y ago
  When PayPal started, they were beaming money between PDAs. Then after a while when their curves were no good, they noticed that some confused users thought that their Confinity website that described how to beam money, was actually the place itself to transfer money to others. Then they pivoted. Then this new product was not viral. Then they started paying $10 when you open the account.
  - seibelj 10y ago
    Please don't down vote this comment. He is making a salient point about why it might not be a good idea to quit at such an early stage. Whether it was the right decision for Contract Beast or not, he is trying to provide a counterpoint to the idea of giving up by providing an alternative anecdote. Some people in a similar situation could use the boost.
    - 10y ago
leroy_masochist 10y ago
> I left my job in January so i could work on ContractBeast 70+ hours a week. The rest of the team kept their day jobs. That was fine. It made my final decision easier. Reading between the lines here, I'm picking up some resentment. I think an underlying cause of the decision to walk away from ContractBeast might have been a specific subtype of founder burnout -- the kind that happens when you feel like you're pulling more than your share of the weight, and/or you feel like you're more committed to the company/project than the rest of your team is. There's a downvoted comment at the bottom of this thread stating that the commenter would never give this guy money. That's a bit harsh, but at another point in the comment he makes a very (IMO) valid observation that burnout is at play here and the author should have taken some time off. That rings true to me. Also, > Weeks of brainstorming and dozens of hypotheses later, we had nothing. Not a single, plausible way of providing our users with the instant gratification their cerebella so desperately crave. > With no clear path forward, investors ready to wire funds, and the team ready to quit their day jobs, I decided to pull the plug. Is it just me or does this seem like there's a big hole in the plot here? The whole team spent several weeks trying to figure out how the product was going to get traction, came up with zero good ideas, and everyone's still ready to quit their jobs and work on this full-time? Assuming this is accurate and absent further details, I can think of two non-mutually-exclusive hypotheses for how this might have actually happened: 1) "We had nothing" was really "I had nothing". Either because of a failure on the part of the author to communicate with the team, or their indifference upon hearing the author's description of the problem in question, the only person really working on solving the problem was the author. To the extent that this was the case, it would certainly have exacerbated the "I'm working way harder on this than my cofounders are" burnout described above. 2) It's also possible that the other prospective cofounders and/or early team members were aware of the headwinds facing ContractBeast and just really, really hated their day jobs and were thinking, "I honestly don't even give a shit if this company works out, I just want to go somewhere I can get paid while not having to deal with my current boss, and if it fails it's not a big deal, it's a startup, they fail all the time and I'll be able at a minimum to use the newfound flexibility in my schedule and relative seniority in the organization to make myself much more available for interviews at other companies."
chrismcb 10y ago
I'm sure the fact that this was in private beta had nothing to do with the fact customers weren't using it all the time.
Steeeve 10y ago
500K is not a lot of time. It's six months with a small team and maybe not even that considering you need to either have time to pitch another round of funding or get to the point where you can pay the bills independently. If you don't see a path to something strong enough to get you to the next level in that amount of time, there is no choice but to walk away. Every idea to fix it takes time to develop, and with whatever time remains you have to make progress with sales and the existing customer base. With any given product and the right team you can get there, but the only way to get the right team to commit is with a passionate belief that you will get there before you run out of money. If you spend the time trying to build a roadmap out of whatever options you can come up with, and none of those options give confidence given time and budget constraints... well, then you've done all you can do. It's not hard to come up with a list of reasonable options to move forward with, but it is hard to come up with one that's worth committing to. If you've grown to the point where you can man up and make the decision to walk away early, you have a good future.
amenghra 10y ago
Selling products to SMBs is hard. Most small businesses will often take the free trials but won't be willing to pay for a product if it entails a financial commitment. I have seen a small companies use student licenses instead of paying for the more expensive commercial license in order to save every possible penny.
ordbajsare 10y ago
>decaf coffee There is the problem
matchagaucho 10y ago
The challenge with CLM is that you're constantly competing with users desire to use MS Word. Moving everything to the cloud would be far more efficient. But the corpus of legal text captured in Word and Legal's preference for redlining email attachments is the status quo.
lordnacho 10y ago
"When users are unhappy but can’t explain exactly why, they often express that dissatisfaction as a series of tangential, trivial feature requests." This bit resonates the most with me. I worked on a project worth little traction where we'd keep getting feature requests from the client facing team members for things that were of minor value but sometimes major effort. It grinds you down over time as you realise there's no real demand. Eldorado isn't over the next hill. Sometimes it feels like the people giving feedback are just too eager to please you with positive feedback.
- timoth3y 10y ago
  Users mean well. Basically, they want to be part of the process. They are trying to help you solve the problem. It's way too easy to fall into the "If we just had this one feature" trap. Sales staff love coming up with feature requests and the developers love having something they can sink their teeth into. It feels like progress, but it's not.
- aedron 10y ago
  > Sometimes it feels like the people giving feedback are just too eager to please you with positive feedback. This is an important observation. As someone once said, "no one wants to crush your dreams". If you present people an idea for a business plan, most people will say that is sounds very interesting, nice opportunity, they'd definitely consider buying that, etc. If you show them something you made, they will say it's great and politely have a little conversation about it. It is very easy for perennially optimistic (/self-deluded) entrepreneurial types to take this kind of feedback as validation, when in fact it is nothing of the sort. The only validation is this: Are they giving you money for it? That is when you know you've made something of value, not a second before.
- bsdpython 10y ago
  I have a long list of features that I want to implement at some point. When I get feedback from users for those same features I move them up somewhat in my priority list. If it's something that's not on my list I add it to the bottom of the list and re-evaluate it's importance a few days later. I think it is a good way to avoid immediacy bias and keep a handle on what's a true priority.
getgoingnow 10y ago
Why is Paul Graham defining a word that's already well defined and understood? Go to Google and type in "define startup" and you will see that: startup = a newly established business I think the reason he wants to redefine the term is so that people associate starting a business with rapid growth, which will benefit him personally. How do you achieve growth in almost all cases? By taking VC money. What happens when you take VC money? Investors expect an exit. So, even though he says you don't need to take venture funding or 'exit', he really wants people to do that, because he can make money from it.
- mediascreen 10y ago
  I think Graham's definition aligns much better with general usage of the word than a definition that would make the new ice cream stand at the corner a startup.
  - vertex-four 10y ago
    Really, only on HN and other "startup forums". Anywhere else... well, do you think even an ice cream stand is immediately a viable, profitable business? Usually not. The space between "having a registered company" and "actually in the black and stable" is a startup.
    - mediascreen 10y ago
      I would still say that, to most people, a startup implies more than just a newly started business. I have never seen or heard someone who has just started a small brick and mortar business (without grandiose expansion plans) refer to it as a startup. That said, I'm not a native english speaker and I don't live in US - maybe it's more common than I think.
      - tedmiston 10y ago
        You're correct. We'd just call them small businesses. Though I have seen some small businesses working in technology refer to themselves as startups without really understanding the definition (or because they're trying to sound "sexy" to recruit developers).
angelbob 10y ago
This story has a ridiculous amount of integrity. You did what was right, even when convention went the other way. Future investor reaction to it will tell us what they think of actually bucking convention to do the right thing.
icu 10y ago
I think the entrepreneur failed to assess why it had to be him to solve the market problem and give birth to the company. Sometimes it's not necessary to assess this because you are compelled to act and you can't stop. In this case I think had he asked this hard question sooner he would have found his heart wasn't in it. Either way dropping it was the right thing to do. In comparison my 'why' for the thing I'm working on makes my soul burn and is a limitless well of determination. Call it 'Conviction/Opportunity' pull.
redneck_ 10y ago
Tl;dr I burned out.
agentgt 10y ago
I don't know much about contract management so take most of what I have to say as an ignorant opinion. I'm trying to figure out how ContractBeast's problem of continuous usage is any different than almost all the business tools out there that require human intervention (with the exception of email, and MS office suite). It seems every investor and entrepreneur has this desire to make "crack" and not just tools. Good tools don't need to be used all the time. They don't need to provide some sort of gamification, feedback loop, or enjoyment. As for money making good business tools don't need even need to be used by the user... in fact they really should be automated. I know this because we had some of the some problems ContractBeast did and the key was not getting the endusers involved at all. Automate and integrate so they are almost out of the loop completely (again I don't know much about CLM... maybe this isn't possible). As far as top down selling it is almost impossible in the B2B market to do something different. Managers force users to use tools and those users use MS Office most of the time but those tools still get bought and eventually those tools do provide value (aka sales force).
DarkIye 10y ago
it was a bad idea #savedyouaclick
rkwz 10y ago
> About 35% of our users continued to use the system at least three times per week after completing registration. OT, but curious, how is it possible to get this kind of engagement data? Querying DB to get number of logins per week? But that doesn't mean that they're "using" the system. Google Analytics? I'm not aware of any such GA feature Third party analytics? Surveys?
- dimfeld 10y ago
  Heap Analytics and Fullstory are two popular systems (among others) for this sort of thing. They record and instrument your user sessions much more comprehensively than GA does.
- akamaozu 10y ago
  Multiple ways. Using just your database, you can store records when users complete certain actions. Eg. When a contract is uploaded, modified, when new people are invited to collaborate over it ... That way you simply query for user actions over a period. I use Google Analytics to do the same thing via events. Fire events when actions take place, review the data in your dashboard.
dharma1 10y ago
If you don't believe in what you're doing then I think it could have been a mistake to take the money and carry on. If the team and investors believed in the product, perhaps you could have asked if some of the current team were willing to take it on, and make it work. You could have retained a bit of equity for the year and the hard work you put in so far without having to commit any longer yourself.
spupy 10y ago
"I’ve started four companies in the past with a mixture of exits and bankruptcies, so I understand that this is what startups are supposed to do, [...]." As someone completely unfamiliar with the world of startups, this sentence baffles me. If this describes your track record, how do you even get funding? Obviously I'm not an investor, but this sentence alone is a massive red flag.
- bshanks 10y ago
  Merely knowing that something often or even usually fails is not enough information to conclude that it's a bad bet -- in order to compute that, you also need to know how much money it makes when it succeeds. For example, if you expect something to fail 80% of the time but to gain >400% the other 20% of the time, then the bet has positive expected value.
- exclusiv 10y ago
  If you've done more than a few startups - you'll have some failures. Think of the success rate of startups as a whole. It's like 10%. So if you are at 50%, that's a reasonable bet.
Chyzwar 10y ago
Nope, His business was perfectly reasonable. He could become next Taleo/Atlassian/Slack, grow slower but dominate space. He only needed to extend offer with with self hosted version.
spectrum1234 10y ago
Great article. However given its by a ~4 time founder the logic to shut it down doesn't apply to most people reading it (first time founders).
moribondus 10y ago
ContractBeast would have accumulated lots of data that would be compelling for its users. The only problem is that you cannot hand out that data directly: How much did someone else pay for the same contract? What conditions did he get? If you find a way to effectively use this information without actually revealing it, you would have found the compelling feature that you were looking for. ContractBeast would have become the go-to place to check if your contract actually makes sense.
veritas213 10y ago
"ContractBeast did not address the problem of providing a significant, consistent and immediate benefit" Neither does insurance but its pretty much a no brainer for most companies. Contact management isnt suppose to give instant gratification. Its supposed to provide peace of mind knowing you will not miss important dates in the FUTURE. Hate to say it but Mr Romero seems to have given up way too early. All the smart people on HN someone will pickup the baton and run with this idea.
tyingq 10y ago
Having some experience dealing with the "purchasing" side of the house at large companies, I can guess part of what might have gone wrong. Contract Beast's customers were likely exclusively these "purchasing" people, and thus, that's where the feature requests and feedback were coming from. But, in the end, the success of the product within a customer company is often more driven by the "non purchasing" users...the actual departments that are trying to buy (or sell) something. It's not unusual for the wants/needs of these people to be completely different than the purchasing department. I watched several attempts for contract management software fail because of this. In the end, what won out was narrowing the solution down to the biggest pain point...implementing just e-signatures. That got rid of all the manual print / sign / scan-or-fax cycle, which everyone could agree on.

648 points by jason_tko 10y ago

selectron 10y ago

Quite interesting. Why couldn't you build in a reward system to using the product? Similar to how games like WOW do?

zer00eyz 10y ago
Gamification: it only works to a point. As he pointed out this isn't something people are SO keen on that they want or need to incentivize their employees to do it.
timoth3y 10y ago
zer00eyz comment is pretty accurate. Gamification is something that came up during brainstorming, but most business users tend to view all but the most subtle approaches as distracting. We concluded we needed something that actually made their task more efficient or effective.

TempleOS 10y ago

The nigger thinks that a talking space alien is nothing special. I have something far better than investors. I could not buy rights to create the IBM PC future specs. With God, I get full control of the IBM PC hardware.

zer00eyz 10y ago

The underlying idea behind what he did here is sometimes called Ethnography. There was another great article a while back on this going on at adobe/photo shop: https://medium.com/startup-study-group/my-two-years-as-an-anthropologist-on-the-photoshop-team-e700acb7d3d5#.t6m5wue0c https://medium.com/startup-study-group/my-two-years-as-an-an... As far as tools go, ethnography can be very powerful in the right hands.

grizzles 10y ago
Great comment. Fantastic article. I wonder if they considered involving both sides of the contract from the get go. When I've negotiated small-mid size deals with other tech savvy folks, I've often thought a two sided chat style interface that I could use sitting next to someone or if they were across town would be ideal. The way I conceptualized it would be a 3rd party tool for making deals where the main feature is standardized clauses for minimal lawyer involvement. Eg. Need a standard confidentiality clause? (Drag Drop). Boom. Let's do business. Commercial lawyers would hate it, but that's sort of the point.
- rtpg 10y ago
  I think the primary issue is that when you start redlining, everyone has their workflow and the side that's in the "position of power" will use what they feel like using. "Oh check out this contract at FooBarContracts" (counterparty opens link, copies text into word doc, edits) "Here's the latest DOCX with my revisions."
  - grizzles 10y ago
    It could be an iterative process, with niche domain and custom clause support. For small-mid business people interested in GTD, I think there would be enough utility gained by both sides to remain on the platform. For experienced business people, involving the lawyers is an inevitable drag on dealmaking. I bet people involved in frontline sales for (eg. software) would love something like this to exist for fast closes. There are your shadow unpaid product evangelists.
- epa 10y ago
  You're assuming both sides 1) play nice and 2) actually collaborate in that way. A lot of the time it is David (small corp) vs Goliath (huge corp) where David has to accept terms of Goliath on their standard deals or risk not completing the deal.
kentlyons 10y ago
Ethnographers tend to be rather hands off (/against) directly changing who they're observing. Contextual Inquiry (http://www.usabilitynet.org/tools/contextualinquiry.htm http://www.usabilitynet.org/tools/contextualinquiry.htm, http://www.amazon.com/Contextual-Design-Customer-Centered-Interactive-Technologies/dp/1558604111 http://www.amazon.com/Contextual-Design-Customer-Centered-In...) is a fairly light weight method and I think would benefit a lot of startups.

ztratar 10y ago

"It would have been different if we had been debating which plan among several to implement or how to shore up specific weaknesses, but we had nothing." I don't really understand "having nothing" -- you're either creating value or you're not. You guys spotted a real problem, but your v1 solution was meh. There were certainly multiple ways out (and not just tack on gamification), and even if some were long-shots, the uniqueness of a startup is to place those bets.

santoshalper 10y ago
I think he just doesn't agree that there were multiple ways out. He seems to believe that they exhausted options and couldn't figure out a path.
williamstein 10y ago
He assumed that if he personally couldn't solve a problem in a few weeks of hard work, then nobody coudl. This is kind of naive or possibly arrogant. It also sounds weak to me, coming from academic research, in which people work very hard on problems for years, and sometimes even succeed at solving those problems (famous example: Fermat's Last Theorem).
- dwwoelfel 10y ago
  He explicitly says in the post that he's not claiming the problem is unsolvable. If I read it right, he even thinks it is possible that he could solve it, but he doesn't want to bet a year of his life on it.

dnautics 10y ago

Why not make an open offer to anyone who thinks they can solve this problem and turn this around?

arcticfox 10y ago

It's pretty surprising to me that there was no way to shift enough of the value gain from "huge gains in efficiency" forward to keep people motivated about the product. For example: use a chunk of the $500k as rewards to push people through the initial adoption. Then presumably the real gains would take over and they'd be happy customers.

mdorazio 10y ago
Yes, but would that really be sustainable? Paying every single user to get them to actually use your product is generally a money-losing proposition in the long-term unless you plan to jack up your prices after you lock them in. It's also not at all clear if just offering rewards would be enough to get people to use the product in their daily contracts workflow. Switching from whatever system someone currently uses to a new one for contracts is a huge pain, so it would require a similarly huge up-front commitment. I've seen contract systems switchovers a few times at clients, and pretty much every single person in the trenches has hated it and only done it because it was forced on them from the exec team.

santoshalper 10y ago

It sucks when you realize you have built something that users like, but they don't really NEED. I like the good habits analogy - I built several great workflow apps for a Fortune 500 company in the past few years, but discovered most users don't really want the yoke of workflow and there wasn't enough immediate lift to tempt them. Sorry man. Good call not to waste a year of your life.

mpbm 10y ago
"It sucks when you realize you have built something that users like, but they don't really NEED" That's a great point. There are a lot of intractable problems that everybody wishes could be "solved" but the reason they're intractable is that solving them simply requires working harder. They can't be solved with cleverness they just require doing all of the work, rather than doing as much of the work as you absolutely have to. A ton of "solutions" just shuffle the work around. So it's like you have a clean sink, but if you want to use the oven you have to find another place for the dirty dishes. One pseudo-solution that doesn't actually reduce the work is just as good as another, so there's no NEED to switch.

ChicagoDave 10y ago

After this, I'd never give this guy time or money and I doubt anyone else will either. No matter how shitty you feel about your start-up, if you have a willing team and cash, you should see it through. Being an entrepreneur isn't always about having all of the answers. It's very often about not knowing the answers and figuring things out. Especially if you have a team and cash flow and investors. I think this guy needed to take a day off or seven and get his head back on straight. I'm nearly positive every entrepreneur goes through the "doubt" process many times in a given start-up. It's the person that figures out how to renew themselves that ends up succeeding.

kasey_junk 10y ago
> The rest of the team kept their day jobs. > The team was excited. Our potential investors were excited. He didn't really have a team and he didn't really have investors. He took a personal risk and found it wasn't working. He shut it down before it got expensive for people other than himself. I applaud this. People, especially around here, need to understand failure is the norm. This person failed fast, well. Nice work. On to the next thing.
- ChicagoDave 10y ago
  This goes to my core belief that "failing fast" is bad for entrepreneurship. It is far more rare for an initial idea to succeed than one that morphs out of original ideas. Even Facebook started out as something other than what it is now. I have nothing against accepting failure in an idea. My first start-up failed and I had to let it go. It was really fucking hard to do that. But I tried to pivot twice before finally letting it go and I worked at it for a number of years. The people that want us to fail fast don't have entrepreneurs best interests at heart. They're looking for quick wins and the more starts and fails they get, the better _their_ odds of something "popping". But there's something to be said for perseverance. I won't argue that there shouldn't be a balance, and maybe I was too hard on the OP, but it sounded to me like he needed to step away and think about it, not just let it go. But I guess we have to defer to his judgment since it was his idea. I just really don't like fail fast mentality.
10y ago

chalam 10y ago

Tim, Interesting comment in there about 'Approvals' being one of the most used feature. Why couldn't you build around that? A more generic approvals solution for any kind of contract.

pookeh 10y ago

Often times, the products we make should really be features of a larger offering. Did you guys explore building on top of your contract tech or getting acquired by a company that requires your tech? for example: 1. Marketplace of services that need contract signing between parties. 2. Project management app for SMBs or freelancers 3. Legal document authoring app that extends to contract signing. There are prolly more ...

encoderer 10y ago

I have to say, I don't agree with this part at all: "But most of the time, customers don’t really want the the features they are asking for. At least not very badly." Customer feedback drives an absurd amount of our roadmap at Cronitor. We have a good idea of the many shortcomings of our product and are constrained primarily by resources in developing it faster. When a customer -- especially somebody on a trial -- puts their thumb on the scale of a specific flaw or deficiency, we look at it as an opportunity to seriously delight that user and at the same time level-up the product for all users after. We don't build everything asked for, but I would say "most of the time, customers know exactly what they need, and we try to give it to them within our ability." A specific example for us would be Etsy, who uses Cronitor on a part of their business and during evaluation asked for a couple API endpoints to expose more advanced functionality.

joeemison 10y ago
For evolutionary features, you're right. But I think the point in the article is that if you're trying to get to product-market fit, your customers' feature suggestions are rarely the ways to get there; you generally have to watch, think, synthesize, hypothesize, and iterate again and again to get to the solution that actually does what you need done.
- encoderer 10y ago
  That's a little too hand-wavy for me. I think you solve a problem, produce an acceptably bad solution, and as you get traction you improve it. You do it evolutionary because you're not Steve Jobs and improving something continuously is a repeatable, adaptable technique in a way that spontaneous invention isn't. If you never get traction, and can't crack it, then you invested a minimal amount and you can move on. A portfolio approach. I think this is true for both big ideas and little ones. I guess there may be some nuggets of truth deep down in the cw that "users don't know what they want until you give it to them" but I think it's mostly an over-used canard.
  - ben_jones 10y ago

deleted 10y ago

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reilly3000 10y ago

Moving down market is tough. The reason why enterprise ecosystems can flourish is that consultants have a symbolic relationship with software, act as a silent sales force, drive legitimacy and solve the soft issues that make software projects fail. Creating a simple CRM system isn't that hard, but getting mass adoption AND offering a customizable product takes hand holding. Content alone doesn't hold hands, nor does (most) UX. Software that changes how people's jobs work (accounting, CRM, EHR, etc) naturally invites pushback because PEOPLE HATE CHANGE. Maybe the next generation of UX will have change management built into the system, not just tours and tooltips. For now, the burden of software adoption is best served with donuts and somebody how cares enough to make it work for the business that is investing in it.

prmph 10y ago
How then do you explain the sometime massively enthusiastic adoption of disruptive consumer software? My understanding is that people seem to resist change in corporate environments because it is a high stakes environment where, for example, the ability to hold onto work "flow" achieved over a long period can make the difference between thriving and failing. Thus software becomes more of a political tool, not necessarily in the sense of office politics, but in the sense of being part of a strategic toolbox by which people grapple with the networks of power they participate in at work. So corporate users are not necessarily resistant to change; they are just strategic about whether and what changes are to their advantage; if the introduction of new software can strengthen their work-related strategies, they can become its champions. I have seen this myself when I used to work for big multinational corporations. To model software adoption in the corporate space, therefore, one might need to employ a theory of power such as Actor-Network theory (in which terms one might think of software as an actor that can be "enrolled" for various ends) A theory of work and instrumentality, such as Activity Theory, is what most people (sometime without knowing it as such) apply to analyze work environments; but paradoxically it is usually the wrong approach to analysis. I see this failure of analysis all the time. In a nutshell, the more instrumental and work-oriented software is, the more necessary it is to analyze it through a power-relations lens.

EGreg 10y ago

People live lives. Companies create products. Sometimes what you build becomes bigger than you. If you want to quit, and everyone else wants to keep going why not let someone else run the show? If you started a chess club, or even a chatroom, and had no time (as the guy says, he only has one life) to be an admin, would you just close down the whole thing and kick everyone out? Maybe. If they really were so passionate they'd pick up the pieces and start their own thing. Your old group might have a way to transfer the accumulated wealth to the new group. Instead of just losing it. I remember writing an article about this a couple years ago called the Politics of Groups: http://magarshak.com/blog/?p=135 http://magarshak.com/blog/?p=135 Here is an excerpt: If the individual - the risk is that the individual may have too much power over others who come to rely on the stream. They may suddenly stop publishing it, or cut off access to everyone, which would hurt many people. (I define hurt in terms of needs or strong expectations of people that form over time.)

erikb 10y ago
Great question, imho. But indirectly it is also answered. It seemed like he spent the majority of the power into the project and the others would have joined when it was starting. It's like you have the chess club but other people only come if you are there and maybe even only if you have something special to offer.
- EGreg 10y ago
  Right but often they come for the chess. It's about the chess for them, so they don't want to have the club shut down on the whim of a single dude.
  - erikb 10y ago
    Okay, you say A, then I say "not A but B", and then you continue the discussion by saying A again?

vinceguidry 10y ago

It seems like the marketing was all wrong. If you're selling to big business, you need a big business sales process. If you can't afford that, you're just pissing in the wind. He was focused on product when he should have been focusing on his sales and on-boarding. Patrick McKenzie has demonstrated that you can do high-touch corporate sales as a small organization or even as a single person. He just needed to figure out how.

Dwolb 10y ago

If we're going with the whole human centered design approach here the writing doesn't sound as though you were thorough enough in the research, analysis, and synthesis. There should have been some guideposts here: who were the power users? what did they love? who were the huge detractors? what was their big issue? how did ContractBeast fit into the ideal world? how were people splitting their work between the old system and ContractBeast? were there network effects for the old system? Yeah we can look at some sort of short term win and long term gain framework, but it's pretty reductionist to a) only depend on that framework and b) not be able to come up with any solutions to fulfill short term wins.

frozenport 10y ago

Can't you just charge them $2.99 for each contract, and go with volume?

vonklaus 10y ago
I suspect you would get killed here. You are trying to change user behavior and as noted they don't have short term benefits. This pricing model disincentivises a company because it costs them money up front each time they try it and not showing and value. Essentially they need to add an extra step to their routine & pay for the lack of convenience. This was likened to ecercise by the author. However, if you expect anyone without a top down authority (also mentioned) to do something that is harder & more expensive, they won't. It's why gym memberships bought on Jan 1 are rarely renewed in Feb or March edit: so you are correct, paying for what you use is logical especially vs the value. Here it sounded like the customer has high value, but we discount it steeply for lack of immeadiacy.

capkutay 10y ago

"I was deciding whether this venture was worth committing to another year of 70+ hour weeks. I need a higher level of certainty than investors do because my time is more valuable to me than their money is to them. Investors place bets in a portfolio of companies, but I only have one life." That's the key quote in the article. It's a fair decision from his standpoint but I wonder if saying that will lead investors to question his determination in the future (if he tries a new venture). I suppose the investors could also appreciate that he didn't want to waste more of their money if he didn't believe in the product.

chris_va 10y ago
> I suppose the investors could also appreciate that he didn't want to waste more of their money if he didn't believe in the product. Yes, very much so. Startup investments fail all the time, part of the business. Better a clean shutdown than trying to eak out an exit with money that could be better spent elsewhere.
- trustfundbaby 10y ago
  especially if your heart's not in it for whatever reason
onion2k 10y ago
If the situation were really "take the money and do 70+ hours a week for a year" versus "shut down the business" then I'd agree, but that's a false dichotomy. You can run a startup putting in far less time than that; putting in long hours is a choice. You can bring in a team or outsource the parts you don't like. It makes it harder to succee but it's an option. You could (depending on lots of caveats) simply hand the business over to someone else. I respect the author for admitting he didn't want to run the business, and I realise it was his choice to stop in the face of any other options, but I really don't agree with the idea that running a startup requires 70+ hours a week and if you're not willing to put that time in you have to shut down.
- nostalgiac 10y ago

hyperpallium 10y ago

I guess that's why this top-down market hasn't been disrupted. This guy is seeing clearly. Cutting the old makes way for the new - it would be better if I did this with my own zombie business. And now, the armchair brainstorming: focus on the "contract review and approval" immediate gratification and marginal user wins - if not sufficient benefit for them to buy, make it multi-month free trial, make it a year. After some "months of use", users get the delayed gratification. They become your sales force from within, and CIO's notice the long-term benefits, validated within their own company, and mandate its use top-down. It's a long slow burn and mightn't work.

hyperpallium 10y ago
Still fascinated! Couple ideas using Crossing the Chasm (CtC): 1. Your vision is crucial to your determination. Your vision is disrupting SMB CLM with "huge gains in accuracy and efficiency". You can only start the fire with those also inflamed with your vision - those who care. It seems only CIO's (anyone else?). The CtC idea is to target those few adventurous CIO's ("visionaries") who want to leapfrog the competition with this new, unproven approach. Reach them through those very, very few CIO's who are excited by the idea itself ("enthusiasts") - just because it's a clever, efficient, elegant approach to a broken process. They exist, just not many. So: if you try to appeal to users, it must be those users who are excited by what causes the "huge gains in accuracy and efficiency". Otherwise they'll carry the wrong torch to the CIO. 2. The other CtC idea is "niches": pick out the types of customer who would really benefit from your solution. e.g. inaccuracy causes chronic problems for them/losing customers/bad publicity; CLM is a dangerously high cost center; they can't keep up with sudden demand and are losing sales; they can't adjust to changing contracts, and lose opportunities; (new) regulations/legislation makes inaccuracy very expensive. Plus, it would open up a new market; overtake a competitor; resist a competitor. These also excite upper management. Applying it gratifying users: are some businesses constantly approving contracts, and importing templates (or should be)? Maybe during M&A; law/consultancy firms? Choose your customers to suit you.

advertising 10y ago

Sounds like the right move. If you had discovered this when you were 6 months in, spent 50% of the cash and had employees would you have made the same decision? To pull the plug and return remaining capital vs trying to make it work.

epynonymous 10y ago

that's why i firmly believe you have to find the idea that you're really interested in because that's what will pull you through those 70+ hour work weeks or through those days where you're on the brink of failure wanting to fold shop. there are many ideas that are interesting and probably could be good businesses (lifestyle or startup), but can you overcome all those things not just on sheer will power, but just because that's what you enjoy spending your time on?

elliotec 10y ago
Or bootstrap a lifestyle business with an idea that you're really interested in and spend exactly as much time as you feel like working on it, making money and not answering to investors.
- epynonymous 10y ago
  awesome, you sound like you have experience creating a lifestyle business. i'm in the midst of starting one myself.

e12e 10y ago

It sounds like most of the customers had a flawed process - or perhaps an actual process that was different from the process they felt they should have. Perhaps they were even in breach of some guidelines legal had drawn up, or even laws or statutes on acquirement. And it sounds like the product automated a good, sound process. One that was different from the customer's actual, current process. I don't know how one could hope to sell a new process (incidentally along with an automation framework) without massive training, and, well, consulting. I'm a little surprised they didn't take the opportunity to pivot. Maybe none of their beta users were interested in the 100x(?) investment buying such a package would cost? It sounds like they found a different market, smaller in number of customers, larger in revenue - and chose to walk away because: software is fun, human process is hard and boring? It's a valid choice to be sure, but it strikes me as a little odd. I thought the idealised, naive idea of a computer system being more important than the human systems it enables was more of a delusion limited to Silicon Valley, than a general problem. I'm reminded of how model-view-controller was internally known as model-view-controller-user, and how shortening it to mvc[1] was probably a terrible mistake that obscured most of the valuable idea behind the concept (that of mapping the users mental model of domain knowledge to widgets on the screen and on to the data models used by the software). [1] according to a talk Trygve gave, but it kind of shines through in his brief history of mvc too: https://heim.ifi.uio.no/~trygver/themes/mvc/mvc-index.html https://heim.ifi.uio.no/~trygver/themes/mvc/mvc-index.html

timoth3y 10y ago

Hi. Tim here. I'm delighted that this article struck such a chord. I'll try to answer the most common questions here. I wish I could answer everyone directly. 1) I called it off before anyone sent money or quit their jobs. The only one who lost money or a job because of ContractBeast was me. If the money was in the bank and the team on board we would have gone ahead. That's why I had to make that decision when I did. 2) I'm not saying there was no solution. There might have been, but the team and I could not find one. Think of it this way. You and a team decide to summit a mountain. It's a high-risk endeavor. After weeks of going over your maps and equipment you just can't see a plausible way up. Do you call it off or set out hoping you'll be able to figure it out. It doesn't mean no one can do it. I means I could not do it with that team and that equipment. 3) Why didn't we leverage the contract approval features that customers loved? We tried. The problem was that those kinds of approvals were not core workflow for SMBs. It was useful when importing contract templates, but was not used much after that. Nice feature but not important enough to get companies to sigh up for multiple seats, which is what we needed. 4) Whats going to happen to the code and to Tim? No decisions yet. I'm open to suggestions on both counts.

cft 10y ago
When PayPal started, they were beaming money between PDAs. Then after a while when their curves were no good, they noticed that some confused users thought that their Confinity website that described how to beam money, was actually the place itself to transfer money to others. Then they pivoted. Then this new product was not viral. Then they started paying $10 when you open the account.
- seibelj 10y ago
  Please don't down vote this comment. He is making a salient point about why it might not be a good idea to quit at such an early stage. Whether it was the right decision for Contract Beast or not, he is trying to provide a counterpoint to the idea of giving up by providing an alternative anecdote. Some people in a similar situation could use the boost.
  - 10y ago

leroy_masochist 10y ago

> I left my job in January so i could work on ContractBeast 70+ hours a week. The rest of the team kept their day jobs. That was fine. It made my final decision easier. Reading between the lines here, I'm picking up some resentment. I think an underlying cause of the decision to walk away from ContractBeast might have been a specific subtype of founder burnout -- the kind that happens when you feel like you're pulling more than your share of the weight, and/or you feel like you're more committed to the company/project than the rest of your team is. There's a downvoted comment at the bottom of this thread stating that the commenter would never give this guy money. That's a bit harsh, but at another point in the comment he makes a very (IMO) valid observation that burnout is at play here and the author should have taken some time off. That rings true to me. Also, > Weeks of brainstorming and dozens of hypotheses later, we had nothing. Not a single, plausible way of providing our users with the instant gratification their cerebella so desperately crave. > With no clear path forward, investors ready to wire funds, and the team ready to quit their day jobs, I decided to pull the plug. Is it just me or does this seem like there's a big hole in the plot here? The whole team spent several weeks trying to figure out how the product was going to get traction, came up with zero good ideas, and everyone's still ready to quit their jobs and work on this full-time? Assuming this is accurate and absent further details, I can think of two non-mutually-exclusive hypotheses for how this might have actually happened: 1) "We had nothing" was really "I had nothing". Either because of a failure on the part of the author to communicate with the team, or their indifference upon hearing the author's description of the problem in question, the only person really working on solving the problem was the author. To the extent that this was the case, it would certainly have exacerbated the "I'm working way harder on this than my cofounders are" burnout described above. 2) It's also possible that the other prospective cofounders and/or early team members were aware of the headwinds facing ContractBeast and just really, really hated their day jobs and were thinking, "I honestly don't even give a shit if this company works out, I just want to go somewhere I can get paid while not having to deal with my current boss, and if it fails it's not a big deal, it's a startup, they fail all the time and I'll be able at a minimum to use the newfound flexibility in my schedule and relative seniority in the organization to make myself much more available for interviews at other companies."

chrismcb 10y ago

I'm sure the fact that this was in private beta had nothing to do with the fact customers weren't using it all the time.

Steeeve 10y ago

500K is not a lot of time. It's six months with a small team and maybe not even that considering you need to either have time to pitch another round of funding or get to the point where you can pay the bills independently. If you don't see a path to something strong enough to get you to the next level in that amount of time, there is no choice but to walk away. Every idea to fix it takes time to develop, and with whatever time remains you have to make progress with sales and the existing customer base. With any given product and the right team you can get there, but the only way to get the right team to commit is with a passionate belief that you will get there before you run out of money. If you spend the time trying to build a roadmap out of whatever options you can come up with, and none of those options give confidence given time and budget constraints... well, then you've done all you can do. It's not hard to come up with a list of reasonable options to move forward with, but it is hard to come up with one that's worth committing to. If you've grown to the point where you can man up and make the decision to walk away early, you have a good future.

amenghra 10y ago

Selling products to SMBs is hard. Most small businesses will often take the free trials but won't be willing to pay for a product if it entails a financial commitment. I have seen a small companies use student licenses instead of paying for the more expensive commercial license in order to save every possible penny.

ordbajsare 10y ago

>decaf coffee There is the problem

matchagaucho 10y ago

The challenge with CLM is that you're constantly competing with users desire to use MS Word. Moving everything to the cloud would be far more efficient. But the corpus of legal text captured in Word and Legal's preference for redlining email attachments is the status quo.

lordnacho 10y ago

"When users are unhappy but can’t explain exactly why, they often express that dissatisfaction as a series of tangential, trivial feature requests." This bit resonates the most with me. I worked on a project worth little traction where we'd keep getting feature requests from the client facing team members for things that were of minor value but sometimes major effort. It grinds you down over time as you realise there's no real demand. Eldorado isn't over the next hill. Sometimes it feels like the people giving feedback are just too eager to please you with positive feedback.

timoth3y 10y ago
Users mean well. Basically, they want to be part of the process. They are trying to help you solve the problem. It's way too easy to fall into the "If we just had this one feature" trap. Sales staff love coming up with feature requests and the developers love having something they can sink their teeth into. It feels like progress, but it's not.
aedron 10y ago
> Sometimes it feels like the people giving feedback are just too eager to please you with positive feedback. This is an important observation. As someone once said, "no one wants to crush your dreams". If you present people an idea for a business plan, most people will say that is sounds very interesting, nice opportunity, they'd definitely consider buying that, etc. If you show them something you made, they will say it's great and politely have a little conversation about it. It is very easy for perennially optimistic (/self-deluded) entrepreneurial types to take this kind of feedback as validation, when in fact it is nothing of the sort. The only validation is this: Are they giving you money for it? That is when you know you've made something of value, not a second before.
bsdpython 10y ago
I have a long list of features that I want to implement at some point. When I get feedback from users for those same features I move them up somewhat in my priority list. If it's something that's not on my list I add it to the bottom of the list and re-evaluate it's importance a few days later. I think it is a good way to avoid immediacy bias and keep a handle on what's a true priority.

getgoingnow 10y ago

Why is Paul Graham defining a word that's already well defined and understood? Go to Google and type in "define startup" and you will see that: startup = a newly established business I think the reason he wants to redefine the term is so that people associate starting a business with rapid growth, which will benefit him personally. How do you achieve growth in almost all cases? By taking VC money. What happens when you take VC money? Investors expect an exit. So, even though he says you don't need to take venture funding or 'exit', he really wants people to do that, because he can make money from it.

mediascreen 10y ago
I think Graham's definition aligns much better with general usage of the word than a definition that would make the new ice cream stand at the corner a startup.
- vertex-four 10y ago
  Really, only on HN and other "startup forums". Anywhere else... well, do you think even an ice cream stand is immediately a viable, profitable business? Usually not. The space between "having a registered company" and "actually in the black and stable" is a startup.
  - mediascreen 10y ago
    I would still say that, to most people, a startup implies more than just a newly started business. I have never seen or heard someone who has just started a small brick and mortar business (without grandiose expansion plans) refer to it as a startup. That said, I'm not a native english speaker and I don't live in US - maybe it's more common than I think.
    - tedmiston 10y ago
      You're correct. We'd just call them small businesses. Though I have seen some small businesses working in technology refer to themselves as startups without really understanding the definition (or because they're trying to sound "sexy" to recruit developers).

angelbob 10y ago

This story has a ridiculous amount of integrity. You did what was right, even when convention went the other way. Future investor reaction to it will tell us what they think of actually bucking convention to do the right thing.

icu 10y ago

I think the entrepreneur failed to assess why it had to be him to solve the market problem and give birth to the company. Sometimes it's not necessary to assess this because you are compelled to act and you can't stop. In this case I think had he asked this hard question sooner he would have found his heart wasn't in it. Either way dropping it was the right thing to do. In comparison my 'why' for the thing I'm working on makes my soul burn and is a limitless well of determination. Call it 'Conviction/Opportunity' pull.

redneck_ 10y ago

Tl;dr I burned out.

agentgt 10y ago

I don't know much about contract management so take most of what I have to say as an ignorant opinion. I'm trying to figure out how ContractBeast's problem of continuous usage is any different than almost all the business tools out there that require human intervention (with the exception of email, and MS office suite). It seems every investor and entrepreneur has this desire to make "crack" and not just tools. Good tools don't need to be used all the time. They don't need to provide some sort of gamification, feedback loop, or enjoyment. As for money making good business tools don't need even need to be used by the user... in fact they really should be automated. I know this because we had some of the some problems ContractBeast did and the key was not getting the endusers involved at all. Automate and integrate so they are almost out of the loop completely (again I don't know much about CLM... maybe this isn't possible). As far as top down selling it is almost impossible in the B2B market to do something different. Managers force users to use tools and those users use MS Office most of the time but those tools still get bought and eventually those tools do provide value (aka sales force).

DarkIye 10y ago

it was a bad idea #savedyouaclick

rkwz 10y ago

> About 35% of our users continued to use the system at least three times per week after completing registration. OT, but curious, how is it possible to get this kind of engagement data? Querying DB to get number of logins per week? But that doesn't mean that they're "using" the system. Google Analytics? I'm not aware of any such GA feature Third party analytics? Surveys?

dimfeld 10y ago
Heap Analytics and Fullstory are two popular systems (among others) for this sort of thing. They record and instrument your user sessions much more comprehensively than GA does.
akamaozu 10y ago
Multiple ways. Using just your database, you can store records when users complete certain actions. Eg. When a contract is uploaded, modified, when new people are invited to collaborate over it ... That way you simply query for user actions over a period. I use Google Analytics to do the same thing via events. Fire events when actions take place, review the data in your dashboard.

dharma1 10y ago

If you don't believe in what you're doing then I think it could have been a mistake to take the money and carry on. If the team and investors believed in the product, perhaps you could have asked if some of the current team were willing to take it on, and make it work. You could have retained a bit of equity for the year and the hard work you put in so far without having to commit any longer yourself.

spupy 10y ago

"I’ve started four companies in the past with a mixture of exits and bankruptcies, so I understand that this is what startups are supposed to do, [...]." As someone completely unfamiliar with the world of startups, this sentence baffles me. If this describes your track record, how do you even get funding? Obviously I'm not an investor, but this sentence alone is a massive red flag.

bshanks 10y ago
Merely knowing that something often or even usually fails is not enough information to conclude that it's a bad bet -- in order to compute that, you also need to know how much money it makes when it succeeds. For example, if you expect something to fail 80% of the time but to gain >400% the other 20% of the time, then the bet has positive expected value.
exclusiv 10y ago
If you've done more than a few startups - you'll have some failures. Think of the success rate of startups as a whole. It's like 10%. So if you are at 50%, that's a reasonable bet.

Chyzwar 10y ago

Nope, His business was perfectly reasonable. He could become next Taleo/Atlassian/Slack, grow slower but dominate space. He only needed to extend offer with with self hosted version.

spectrum1234 10y ago

Great article. However given its by a ~4 time founder the logic to shut it down doesn't apply to most people reading it (first time founders).

moribondus 10y ago

ContractBeast would have accumulated lots of data that would be compelling for its users. The only problem is that you cannot hand out that data directly: How much did someone else pay for the same contract? What conditions did he get? If you find a way to effectively use this information without actually revealing it, you would have found the compelling feature that you were looking for. ContractBeast would have become the go-to place to check if your contract actually makes sense.

veritas213 10y ago

"ContractBeast did not address the problem of providing a significant, consistent and immediate benefit" Neither does insurance but its pretty much a no brainer for most companies. Contact management isnt suppose to give instant gratification. Its supposed to provide peace of mind knowing you will not miss important dates in the FUTURE. Hate to say it but Mr Romero seems to have given up way too early. All the smart people on HN someone will pickup the baton and run with this idea.

tyingq 10y ago

Having some experience dealing with the "purchasing" side of the house at large companies, I can guess part of what might have gone wrong. Contract Beast's customers were likely exclusively these "purchasing" people, and thus, that's where the feature requests and feedback were coming from. But, in the end, the success of the product within a customer company is often more driven by the "non purchasing" users...the actual departments that are trying to buy (or sell) something. It's not unusual for the wants/needs of these people to be completely different than the purchasing department. I watched several attempts for contract management software fail because of this. In the end, what won out was narrowing the solution down to the biggest pain point...implementing just e-signatures. That got rid of all the manual print / sign / scan-or-fax cycle, which everyone could agree on.