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Failure, in this context could either mean product or company failure, and the "fail fast" adage is usually applied to product, not company. At least as this ar

Failure, in this context could either mean product or company failure, and the "fail fast" adage is usually applied to product, not company. At least as this article presents the story (executive churn, etc), it sounds like company failure is the main part of it. The issue with "unicorn" failures is that a product can be really successful in objective terms (users, revenue, profit..) but still an investment failure, if it fails to live up to valuations. So, if investors in 200X thought (and paid as if) the company had N potential... N becomes definition of success. They'll also, in all likelihood have already begun to spend accordingly to that N level. Failure of one kind leads to others As I said, it sounds like there are fundamental company issues with Evernote, but it also could be that it's more of a failure to live up to expectations (we should have been slack!) than failure in objective terms. ..I know people who like Evernote.

duxup 7y ago
I often think of the story of the guy who posted here about how his startup "failed" but in reality it just didn't bring in the massive cash flow that was hoped for. IIRC he bought it from the investors for cheap (so they could get it off their books) and then just ran it as one guy (maybe a few more added part time later)... and it does just fine in that conext, and who knows what might happen from there. Kinda makes me think that a lot of Unicorn style world domination or nothing, result in some business opportunities being lost if those are the only two options.
- maxxxxx 7y ago
  "Kinda makes me think that a lot of Unicorn style world domination or nothing, result in some business orotundities being lost if those are the only two options." I think a lot of companies are doomed because of that attitude. Companies with high valuations like Slack, Github and others can't just keep a nice business going but they have to expand like crazy to justify their valuation. And most of them end up converting a very good core product into a big mess.
  - jerf 7y ago
    If you want to be bold, start your Slack replacement now. Do whatever you can to make it easy to transition to your product (API compatibility, integration compatibility, etc.). Be ready to pick up the people who will be disgruntled by Slack in two or three years. You may never be as big as Slack but there's probably a business there.
    - maxxxxx 7y ago
      There probably is but it’s really hard to compete with a company with deep pockets. That’s what I find pretty worrying about these unicorns. They kill a lot of potentially good smaller businesses just by being able to burn a lot of money.
      - tru3_power 7y ago
        How do they “kill” the competition exactly? I understand they have a lot of money, but what do they do with it that makes it impossible to compete? (Honest question)
        maxxxxx 7y ago
        It's much easier to develop a product if you don't need to make money for financing the development. Selling is also easier if you can afford marketing budgets and sales people. As long as they are losing money they are basically selling 1 dollar bills for 90 cents. Hard to compete with that. It's not impossible to compete but just much harder.
        duxup 7y ago
        I work in an industry that is a bit niche and weird SaaS world. There are two companies backed by deep pocket investors who are happy to lose money, their products are straight sold at a loss because they desperately need market share gains to hopefully dominate and survive when they finally worry about profits. Now the company I'm at is doing fine as we're small and such and we haven't lost customers to do the absurdly low cost pricing from the other two companies. But I know of others who have lost customers, nobody can match the pricing, and simply because they don't have the backing they will not survive. It's very possible the two deep pocket companies won't survive either, but it seems like a fairly destructive pattern to have a market torn up ... when the driving force isn't even creating a stable company / what I would think of as typical market forces that help everyone.
- rutierut 7y ago
  You're thinking of Sahil Lavingia, CEO of Gumroad.
  - duxup 7y ago
    Yes, thank you!
- wool_gather 7y ago
  I'd like to read that; it sounds like a good story. Do you happen to have a link?
  - tnorthcutt 7y ago
    https://medium.com/s/story/reflecting-on-my-failure-to-build-a-billion-dollar-company-b0c31d7db0e7 https://medium.com/s/story/reflecting-on-my-failure-to-build...
  - duxup 7y ago
    https://medium.com/s/story/reflecting-on-my-failure-to-build-a-billion-dollar-company-b0c31d7db0e7 https://medium.com/s/story/reflecting-on-my-failure-to-build... Thanks to rutierut who remembered it better than I did ;)
- JumpCrisscross 7y ago
  > Unicorn style world domination or nothing, result in some business opportunities being lost Most business activity in America is far from the Bay Area. It concerns itself with the sorts of quotidian businesses opportunities you speak of.
- StephenCanis 7y ago
  This also opens up the opportunity for a lot of lifestyle businesses. It may, at first, seem like a major downside having a venture backed startup competing directly with you. However, they are likely following an all or nothing strategy and there is a chance they go bust. If they end up closing down or pivoting they have helped to create the market and all their users will be looking for an alternative.
  - codesushi42 7y ago
    Completely true, Pinboard is a good example in regard to Delicious going bust.
    - duxup 7y ago
      I wish there was a way to know about ... what followed, I was wondering what happened after Delicious just sort of rotted away.
      - bostonvaulter2 7y ago
        IIRC pinboard actually ended up buying delicious
        wyclif 7y ago
        @idlewords can tell you about it.
- MrBuddyCasino 7y ago
  Gumroad?
- magashna 7y ago
  Investors want another Google, some people are perfectly happy with niche boutique product, and when all that investor money comes in it obscures what made that original product great. It's a shame that some great products only failed because of inflated expectations. If they had just stayed the course, they would've been fine.
tempodox 7y ago
> ...if it fails to live up to valuations. Or it was the failure of the investors to gauge the potential properly and start out with too high expectations. Why should that count as company failure?
- usrusr 7y ago
  If the only thing a company achieves is wealth transfer from investor to founder (in the form of wages and/or a sub-valuation exit), then it's not a success but a failure. Unless you take founder economic gain as the sole success metric, but them it's not a company but a fraud scheme. The line between victim and perpetrator blur in interesting ways when a sub-valuation exit is a win for some investors and a loss for others. It's a somewhat funny situation: if you feign optimism to access stupid money you're a fraud, but if you are just as stupid as the money and believe it yourself, everything is fine.
hkmurakami 7y ago
There's the question of whether such companies would have reached the point of a solid business without the help of a massive cash infusion though.
codesushi42 7y ago
The failure is that start up founders and investors fail to recognize that revenue is your KPI to optimize for in the long run, with a goal of making a profit in the not so distant future. Business is not a social network, and success isn't measured by how many friends/users/downloads you have. Money is the bottom line. Of course if you give something away for free or sell it cheap enough at a loss, you'll get a lot of "customers". I could do the same by opening a free taco stand on the street. But it is in no way a sustainable business model.
- danjac 7y ago
  What if your business model were to get a huge investment from some rich friends, give away free tacos, put all the other taco stands in your town out of business, become a taco stand monopoly, and then charge for tacos at any price you want?
  - codesushi42 7y ago
    I see what you're getting at, and that's the logic some VCs seem to be using. But rarely does it ever work, because you'll need to start charging sooner than later, even at a loss. And once you do, competition will show up. See Uber vs Lyft. You'd be better off investing in a real business with a real revenue plan. Still, yes, your model works in an environment where collusion can take place. Which is why collusion and the VC aristocracy is so damaging.
  - jacques_chester 7y ago
    If you put other taco stands out of business, their assets are cheap to buy. Tada! You are now competing with someone whose cost base is lower than yours. Value creation doesn't come from the absence of other value creators.

duxup 7y ago

I often think of the story of the guy who posted here about how his startup "failed" but in reality it just didn't bring in the massive cash flow that was hoped for. IIRC he bought it from the investors for cheap (so they could get it off their books) and then just ran it as one guy (maybe a few more added part time later)... and it does just fine in that conext, and who knows what might happen from there. Kinda makes me think that a lot of Unicorn style world domination or nothing, result in some business opportunities being lost if those are the only two options.

maxxxxx 7y ago
"Kinda makes me think that a lot of Unicorn style world domination or nothing, result in some business orotundities being lost if those are the only two options." I think a lot of companies are doomed because of that attitude. Companies with high valuations like Slack, Github and others can't just keep a nice business going but they have to expand like crazy to justify their valuation. And most of them end up converting a very good core product into a big mess.
- jerf 7y ago
  If you want to be bold, start your Slack replacement now. Do whatever you can to make it easy to transition to your product (API compatibility, integration compatibility, etc.). Be ready to pick up the people who will be disgruntled by Slack in two or three years. You may never be as big as Slack but there's probably a business there.
  - maxxxxx 7y ago
    There probably is but it’s really hard to compete with a company with deep pockets. That’s what I find pretty worrying about these unicorns. They kill a lot of potentially good smaller businesses just by being able to burn a lot of money.
    - tru3_power 7y ago
      How do they “kill” the competition exactly? I understand they have a lot of money, but what do they do with it that makes it impossible to compete? (Honest question)
      - maxxxxx 7y ago
        It's much easier to develop a product if you don't need to make money for financing the development. Selling is also easier if you can afford marketing budgets and sales people. As long as they are losing money they are basically selling 1 dollar bills for 90 cents. Hard to compete with that. It's not impossible to compete but just much harder.
      - duxup 7y ago
        I work in an industry that is a bit niche and weird SaaS world. There are two companies backed by deep pocket investors who are happy to lose money, their products are straight sold at a loss because they desperately need market share gains to hopefully dominate and survive when they finally worry about profits. Now the company I'm at is doing fine as we're small and such and we haven't lost customers to do the absurdly low cost pricing from the other two companies. But I know of others who have lost customers, nobody can match the pricing, and simply because they don't have the backing they will not survive. It's very possible the two deep pocket companies won't survive either, but it seems like a fairly destructive pattern to have a market torn up ... when the driving force isn't even creating a stable company / what I would think of as typical market forces that help everyone.
rutierut 7y ago
You're thinking of Sahil Lavingia, CEO of Gumroad.
- duxup 7y ago
  Yes, thank you!
wool_gather 7y ago
I'd like to read that; it sounds like a good story. Do you happen to have a link?
- tnorthcutt 7y ago
  https://medium.com/s/story/reflecting-on-my-failure-to-build-a-billion-dollar-company-b0c31d7db0e7 https://medium.com/s/story/reflecting-on-my-failure-to-build...
- duxup 7y ago
  https://medium.com/s/story/reflecting-on-my-failure-to-build-a-billion-dollar-company-b0c31d7db0e7 https://medium.com/s/story/reflecting-on-my-failure-to-build... Thanks to rutierut who remembered it better than I did ;)
JumpCrisscross 7y ago
> Unicorn style world domination or nothing, result in some business opportunities being lost Most business activity in America is far from the Bay Area. It concerns itself with the sorts of quotidian businesses opportunities you speak of.
StephenCanis 7y ago
This also opens up the opportunity for a lot of lifestyle businesses. It may, at first, seem like a major downside having a venture backed startup competing directly with you. However, they are likely following an all or nothing strategy and there is a chance they go bust. If they end up closing down or pivoting they have helped to create the market and all their users will be looking for an alternative.
- codesushi42 7y ago
  Completely true, Pinboard is a good example in regard to Delicious going bust.
  - duxup 7y ago
    I wish there was a way to know about ... what followed, I was wondering what happened after Delicious just sort of rotted away.
    - bostonvaulter2 7y ago
      IIRC pinboard actually ended up buying delicious
      - wyclif 7y ago
        @idlewords can tell you about it.
MrBuddyCasino 7y ago
Gumroad?
magashna 7y ago
Investors want another Google, some people are perfectly happy with niche boutique product, and when all that investor money comes in it obscures what made that original product great. It's a shame that some great products only failed because of inflated expectations. If they had just stayed the course, they would've been fine.

tempodox 7y ago

> ...if it fails to live up to valuations. Or it was the failure of the investors to gauge the potential properly and start out with too high expectations. Why should that count as company failure?

usrusr 7y ago
If the only thing a company achieves is wealth transfer from investor to founder (in the form of wages and/or a sub-valuation exit), then it's not a success but a failure. Unless you take founder economic gain as the sole success metric, but them it's not a company but a fraud scheme. The line between victim and perpetrator blur in interesting ways when a sub-valuation exit is a win for some investors and a loss for others. It's a somewhat funny situation: if you feign optimism to access stupid money you're a fraud, but if you are just as stupid as the money and believe it yourself, everything is fine.

hkmurakami 7y ago

There's the question of whether such companies would have reached the point of a solid business without the help of a massive cash infusion though.

codesushi42 7y ago

The failure is that start up founders and investors fail to recognize that revenue is your KPI to optimize for in the long run, with a goal of making a profit in the not so distant future. Business is not a social network, and success isn't measured by how many friends/users/downloads you have. Money is the bottom line. Of course if you give something away for free or sell it cheap enough at a loss, you'll get a lot of "customers". I could do the same by opening a free taco stand on the street. But it is in no way a sustainable business model.

danjac 7y ago
What if your business model were to get a huge investment from some rich friends, give away free tacos, put all the other taco stands in your town out of business, become a taco stand monopoly, and then charge for tacos at any price you want?
- codesushi42 7y ago
  I see what you're getting at, and that's the logic some VCs seem to be using. But rarely does it ever work, because you'll need to start charging sooner than later, even at a loss. And once you do, competition will show up. See Uber vs Lyft. You'd be better off investing in a real business with a real revenue plan. Still, yes, your model works in an environment where collusion can take place. Which is why collusion and the VC aristocracy is so damaging.
- jacques_chester 7y ago
  If you put other taco stands out of business, their assets are cheap to buy. Tada! You are now competing with someone whose cost base is lower than yours. Value creation doesn't come from the absence of other value creators.