16 ms·

Lessons learned from my failed startup after 2 years, 300 users and 0 revenue

380 points by sergioschuler 13y ago

malditojavi 13y ago
Great insights, thanks for sharing, Sergio.
nmbdesign 13y ago
This is such a great article, thanks
testrun 13y ago
Very nice article Sergio.
patio11 13y ago
This is a fantastic writeup (and like nearly all worthwhile writing on the subject, I don't necessarily agree with all of it). Two elaborations: 1) General advice to non-technical founders, not specific to this post: If sales is one of your primary skill sets, and you cannot sell one developer on working for you, you may want to have a brief heart-to-heart with yourself on whether you are sufficiently skilled at selling to build a company which will live or die based on your sales ability. 2) His advice about starting with 1 anchor client for a SaaS, expanding to 10 via expenditure of shoe leather, and then starting to worry about scalable approaches to customer acquisition is very, very good. (I don't know if I definitely would endorse the "An Indian company expressed desire to buy something from me other than the thing I was building, so I should have built that instead." That would turn on a lot of things, including how serious that company was about actually buying the thing. There is a world of difference between "I would buy a Widget from you" and "I commit to accepting delivery of a Widget from you, where a Widget broadly does X, my timeframe is Y, and your payment will be $Z." I'd be looking for a letter of intent or a check as a filter for seriousness following that Skype call before making a bet-the-business decision on it, personally, but I obviously don't know the specifics of what was said.)
- sergioschuler 13y ago
  You are absolutely right on both comments! And additional comments: 1) I am not a developer, but I believe having an idea -> finding a developer is the wrong flow. It should be like this: 1. Have the idea. 2. Get customers who give you real money to build this idea. 3. Get a developer by telling "I already have paying customers". 2) Absolutely agree. When I say "I should build that", in fact what I wanted to say was something like "I should have looked for more X prospects that would pay for what they wanted, get their money and then build that".
  - dagss 13y ago
    To me it seems like recruiting of a developer worth anything, from scratch and without an existing team to help you to recruit or lure, must be much more difficult than getting an amazing idea or selling said amazing idea. Is that just because I never tried selling anything? Does anybody have examples of successful startups that proceeded in the way Sergio describes and became successful -- starting out with a business person/team, selling the goods first, then manage to find developer(s) to build it? (It's not rhetorical, I'd love to hear such examples -- the usual stories seem to be revolving around a gang of programmers, or at least a programmer co-founder.)
    - sergioschuler 13y ago
      Look at http://thefoundation.com/ http://thefoundation.com/ , they have some cases about this kind of approach.
    - daigoba66 13y ago
      For the company I currently work for, and at a previous company I worked for, v1 was built by an outsourced development firm long before the first fulltime engineer was hired. Yes it sucked and has since been completly rewitten. But it was a working product that started bringing in revenue and helped raise more money.
    - apineda 13y ago
      Stephanie from https://www.refficient.com/ https://www.refficient.com/ did just that.
etfb 13y ago
Lesson N+1: Hacker News can break your blog's webserver. That's one you only learn through experience. [ETA: which is sad, because I want to read it!]
- sergioschuler 13y ago
  Damn Bluehost, hehe. I wish I knew how to fix it, but a few refreshes seems to go through.
  - etfb 13y ago
    The only solution is to throw money at it until it gets better, isn't it? Or to wait it out. I remember when the word "Slashdot" became a verb, back when "Reddit" was a joke about a frog and a library book and DOS was what Windows ran on. The problem hasn't improved, as far as I know. So no biggie; it's not your fault. Ride it out and you'll be fine. Meanwhile, I'm mostly commenting so I can find your article again later and get to actually read it!
  - drewmclellan 13y ago
    I wouldn't blame your host, actually. It's WordPress. It's a shame it's so often given a free pass on these issues when it really isn't good at handling peaks in traffic.
    - sergioschuler 13y ago
      Any alternatives?
      - diegolo 13y ago
        static html websites
      - danso 13y ago
        Using the popular caching plugins...W3 Total Cache (http://wordpress.org/plugins/w3-total-cache/ http://wordpress.org/plugins/w3-total-cache/) or Super Cache (http://wordpress.org/plugins/wp-super-cache/ http://wordpress.org/plugins/wp-super-cache/) seem to be well liked and I've used both of them without too many issues (I have some weirdness in my WP upgrade path). My blog has been on HN and reddit a few times and has never crashed, even though I'm on the cheapest Dreamhost hosting plan with what seems like 5 to 10 second response times for non-cached pages.
DanielBMarkham 13y ago
There are a lot of things I'm interested in but would not pay for online, but good failed startup stories like this is not one of them. Seriously, if somebody could cull 2 or 3 of these a day and deliver in a weekly or monthly format? It'd be worth a subscription. Thanks for the article!
- dennisgorelik 13y ago
  Why do you need so many failure stories? One failure story per week should be sufficient to be constantly aware of typical problems.
karterk 13y ago
I think for first time bootstrappers, investing some time in a quality blog on a particular field you would like to build products for is really really useful. Apart from having a good audience to launch your first product, it helps you interact with people before you have something to sell to them. You learn more about their problems, the existing market, competition and so on.
readme 13y ago
OP, your biggest mistake is not taking the time out to learn how to code yourself. You said it went on for 2 years, that was plenty of time.
- sergioschuler 13y ago
  INDEED! In fact I started. Did One Month Rails (a couple of months ago). My github (please don't laugh, but do give out advice): https://github.com/sergioschuler/ https://github.com/sergioschuler/
  - Fede_V 13y ago
    Excellent attitude, and good luck. Honestly, when the ratio of 'business people' to technical people in a start up is that high, that raises all sorts of red flags to me.
  - readme 13y ago
    kudos
thu 13y ago
Do people find it really ok to have video and a website spelling "try it free" and then have only an email input form ? I know that testing if demand exists is important, but doesn't it have adverse effect on your reputation to somehow lie to your prospects ?
- darkxanthos 13y ago
  I think you're saying its a lie because there is no product yet? I can see how you think that. If he did build the product first though and one person signed up and he had to pivot to something fairly different, that'd be a lie too then effectively. Except, now he wasted a lot of time building. My POV is if you're only taking email addresses for people to know when it's available anything on the site is just your plan. Plans always change.
  - 6d0debc071 13y ago
    I wonder how the returns work out for sticking 'Email me to when it's ready to be tried' or something. I can see you getting fewer numbers, potentially, but I wonder about the people who are actually interested in the product vs drive by triers. At least seems more respectful of people's time than 'try it free' just for them to have to click through and find out what it's about.
    - sergioschuler 13y ago
      To be frank, I think that is exactly what I used. I just didn't judge was important enough to mention.
mzarate06 13y ago
Such a great write up, thank you for sharing. Question: what are you going to do with the product now?
- sergioschuler 13y ago
  Nothing. It is just sitting there.
ry0ohki 13y ago
"The developer had no intention of being the project’s developer (?) he was not really a developer, he was a computer science graduate who owned a webdev shop and was used to managing, not coding." Heard this story so many times. Amazing how many people join a startup and don't want to do the actual work. Remember that scene in The Social Network where Mark Zuckerberg calls his outsource team about progress on that latest feature? No? Me either.
- sergioschuler 13y ago
  BAM!
aaronbasssett 13y ago
I wonder how much their conversion was impacted by internationalisation problems. It looks like they were attempting to target the US, but their pricing page wasn't localised for that market. Unless they really were charging one thousand nine hundred and ninety dollars per team. Price is shown as £19,90 instead of $19.90 Also due to what I perceived as a thousand separator, not a decimal mark, I initially read the price as nineteen thousand and nine hundred dollars!
- sergioschuler 13y ago
  I forgot that one! I have even a saying for this learning "be local before being global".
guynamedloren 13y ago
Really great writeup, thanks for sharing. I'm left wondering, though, what you actually did over the two years? You imply that you were working on it full time. Two years full time is a lot of time. You can do pretty much anything in that time (including, as others have mentioned, learn to code). > idiot plans, budget forecasts, BUSINESS CARDS, fancy website [and writing articles] I find it hard to believe you can work on those things for two years, day in and day out.
- sergioschuler 13y ago
  Hardly, no, one mistake that I didn't mention (because I am still processing it) is how long we took to have v1 (more than a year). This was a mix of my incompetence, too many features and also an inexperienced developer (in fact we changed developers once too). So, yeah, a looooot of the time was put into building the product, refining it, getting bugs out of the way, testing it again, finding the same bugs... Then there was marketing. Finding more clients, because we believed finding more people meant someone would buy the product. PS: I was not completely full time, the developer was. In those 2 years, I have been freelancing (one needs to eat).
  - devb0x 13y ago
    1 year? Just ship product regularly brother.
antidaily 13y ago
You want to know how to validate your idea faster? Don't have a free plan. Will people give you their credit card... that's what you want to know. And those are the people you want feedback from.
- bfreeman 13y ago
  exactly. that's what he says in the article, no? :)
  - Ravengenocide 13y ago
    Yes. He says that instead of having a "Try it for free" button he should have posted the price and seen how many are interested in the product then.
- wehadfun 13y ago
  Do you want to ask for a credit card with no deliverable?
Elizer0x0309 13y ago
A business person trying to start a tech startup.... It's like a business person looking for musicians to start a band. This is beyond ridiculous. Either bring some skill to the table or go create a "business startup" and stop polluting the industry with yet another failed idea and even worse a "post mortem" of why it failed. PS: This includes Marketing, Managers as well as the Business peanut gallery.
- cblanc 13y ago
  I'm not sure if that's a good analogy for your point. The success of a band often requires more than people that can play music well together The Beatles had Brian Epstein for example (aka The Fifth Beatle)
  - Elizer0x0309 13y ago
    Yes, but the first members are driven with higher goals then just "Starting a business". A business person is driven with the intention of making money. If it were otherwise, they'd learn a trade/skill.
    - sergioschuler 13y ago
      My vision was to get rid of lame managers. Certainly a useful vision.
      - Elizer0x0309 13y ago
        A cube created to make money is different from a cube created for bettering cubes or advancing cube making. Do you get my point? Your motivations are not high enough. What you claim is your intention is not what your actions say.
- bloat 13y ago
  I love the Monkees.
  - 13y ago
wrath 13y ago
Good article but I would look at this "failure" from a glass half full perspective. You "won" because you've learned valuable lessons you can take to your next idea. I've had many products that have not gained many users in their respective marketplaces but I learned from each and everyone of them. All these experiences has brought me where I am today (CTO of a 45+ employee company). No failures in my past as far as i'm concerned; just lots of self teaching (that you can't get in school). >> ""An Indian company expressed desire to buy something from me other than the thing I was building, so I should have built that instead."" I may be the minority but I agree with him but on one condition. If this Indian company wanted to pay a small monthly subscription fee for your product I would never have agreed developing "their" ideas. I would have taken their feedback and put in the big pile with all the other feedback I gathered up. But I would have pitched this Indian company a different story, I would have pitched them a professional services contract instead of a product. I did something similar in the past and it worked out very well because in a business money is king. With no money you can't do the things you need to do, like attend conferences to sell your idea, buying adwords, hiring solid developers, paying yourself a salary so you can devote your time to the idea. In my case the customer was willing to pay ~$10k a month to get what he wanted. We built it for him while building our own product. Once we got big enough and could sustain ourselves without our original customer, I gave the customer away. The developer who maintained the project was interest in taking on the project himself. We came up with a 6 month transition plan, including lots of product/project management help, office space, etc. It was a win/win situation at the end. Doing this is not for everyone though. There are many days I cursed this customers for taking up the majority of our resources. We had to be very good at differentiating between their requirements and the markets requirements. We weren't perfect at it but it worked out in the end.
PythonicAlpha 13y ago
I want to shine some light on one side problem, scratched here: The problem today is (out of the perspective of a developer): To many companies rely on just "hire any (cheap) developer" to ramp up the product. I see it all the time: Quality is not asked for, many companies (specially in the web business) just want the cheapest developers. They search for a student (at best), because he is cheap and will just make a small time estimation and an even smaller fixed price offer for the project. The student will happily work overtime that is not covered by the initial estimation. Than the companies go mad, when either the programmer is running away or the whole project runs into a blind alley (or both at the same time), because the "totally expensive" programmer had not enough experience e.g. with database development and the database structure just lets you shiver. Then the shouting and anger is big: "Damn programmers -- all are liars and lazy!" What went wrong, stated Uncle Bob correctly in his Blog: http://blog.8thlight.com/uncle-bob/2013/11/19/HoardsOfNovices.html http://blog.8thlight.com/uncle-bob/2013/11/19/HoardsOfNovice... But the "cheap, cheap!" culture seams to be unstoppable. If you tell people in advance about "quality" and "professionalism", they don't listen or just laugh at you. It seams, all the people just have to find out the hard way -- but I guess, even than most of them will not learn at all.
- sergioschuler 13y ago
  I believe this is a marketing problem (from the developers). See, I am a non-tech founder, I don't understand why X is cheaper than Y. If I perceive the same benefit, I will get the cheapest one. (This is hypothetical, but not so much: I understand a bit of tech and even so I don't have so much clue on how to judge a developer besides what he shows me he had done).
  - PythonicAlpha 13y ago
    You are right, that developers are most of the time bad marketers. But I must disagree with the notion "... besides what he shows me had done" (I admit that might not have been your point, but I still want to loose a word or two about it). That's a problem intrinsic with software: What you "see" is not what you get. You see a perfect polished UI, but you get a sack of bugs! So this criterion is not usable at all. The intrinsic values of a program are not visible to non-developers at all. Even software-companies have a hard time, deciding which criterion to choose as a base for decisions. I think, when you look at cars or houses, people are more likely to ask a professional to decide about the condition of the car or house. Also everybody that loves his car (and life) will bring his car to some person that has read some books about motors and does repair the brakes "half-prize" in his back-yard. But in software practice, you just want to see some polished front lids of cars and decide that the brake repairs will be fine.
kyberias 13y ago
I just love the brutal honesty expressed compactly. Full of useful information for all startup-founders. I'm sure many are currently making the exact same mistakes.
Killah911 13y ago
I don't understand people's (not necessarily the OPs)utter obsession with philosophies. Especially in the startup world when being adaptive and surviving is key. Lean Startup, great book, decent ideas, not the religion that it's become. I'm sick of hearing, hey do this the lean way and it'll "significantly improve" how well you do, after all it's the blueprint for success. Personally, I don't buy into that. Here's my view of success in reality: do whatever works (that's legal & up to your moral standards), be opportunistic and get lucky (yes, hard work and measuring metrics alone don't do crap). MVP and idea validation are great concepts & helpful common language. In hindsight all "successful" startups seem to have a "pattern", but in all seriousness, there isn't a friggin algorithm for success in startups, otherwise algorithms would've replaced entrepreneurs a long time ago. (Although selling success patterns & software based on such to wantreprenuers is a great idea) I'm sorry the Sergio's experience happened. It's easy force cause and effect onto a narrative. It very well could have been that the developer Sregio met was at a point in his life where he really just wanted to build something great and did end up building the awesomest thing. Instead of trying to dissect the reasons his startup failed, had luck been a little more favorable, we might be trying to analyze how it became a huge success. Bottom line, my heartfelt congratulations to Sergio on being successful at stepping up, despite the risks and having a crack at it. If you had never stepped up and we all gave in to our negative biases and overanalyzed the crap out of everything before we started we'd still be polishing stone wheels. I know how shitty it feels. But remember, hindsight is 20-20 and cause and effect should really be cause+luck and effect. Hope you're a better entrepreneur and will be back in the game soon.
luisivan 13y ago
I made all of those mistakes, and also learnt the hard way. Great post.
red_anorak 13y ago
>> "SEO and social media bullshit" This stuff does seem like bullshit when you're working on it, but it's unfortunately crucial these days. It takes so long to build up the brand and visibility that I don't believe you have the option to just do it once you've got the product right. Unless you've got the investment, firepower or notoriety to get chins wagging then you've got a long road ahead of you. Good SEO actually sounds like one of the things you got right to me. But maybe you spent too long on it
- sergioschuler 13y ago
  I understand where you are coming from. I agree it is essential for any business that uses the web. But if you have the wrong product, no matter the amount of SEO, you will get nothing out of it. What I want to say is that SEO is important, but not more important than finding the pain and the product.
snorkel 13y ago
... one of the prospects was an HR person from a huge Indian manufacturer. They wanted the system NOW and wanted to speak to me. [...] I just needed to build what they wanted. I know startups that charged down the other path, being hyper responsive to their big customers, and they suffered for it because their biggest customer steered the product vision straight to crazy town. Such startups essentially become the contract development shop of a few big customers, living and dying by the whims of those big customers. Yes, you can pay the bills, but you're essentially working full-time for a few customers rather than building your own enterprise.
al2o3cr 13y ago
"Instead of surfing the wave and adapting my idea to what a real prospect client was telling me they wanted" FFS don't do this. There are far too many startups beached on the shores of "well, this one SRS BZNS client wanted us to change what we were doing so we did. Where'd all the rest of our clients go?" I'm not saying "don't pivot", but "just making what they wanted" (where N(they) = 1) turns you into a poorly-paid contract developer who's also paying to host the result, not an entrepreneur.
- rpedela 13y ago
  I personally would view building something for X client a viable option if it was going to be a large sum of money. Then use that money to fund the company and the product you really want to build and sell. It can be hard to get that one or two clients who can fund the company, but it is a viable strategy as long as you have the right mindset. We, Datalanche, had this opportunity but unfortunately (like most deals) it didn't work out. Had we successfully made the deal, it would have been a multi-million dollar contract which would have easily funded the entire company and the flagship product and we wouldn't have given away any control.
- CanSpice 13y ago
  I don't think you have to ask "Where'd all the rest of our clients go?" when you don't have any clients to begin with.
Kiro 13y ago
Four business guys? That's four too many. Just learn how to code and build your own stuff.
thehme 13y ago
This is a great article full of truth. My respects to the author because it takes courage to accept one's mistakes, but it's critical for getting up and moving forward in a better direction. How many ideas are sitting in my brain, but all I can think of is how to exactly am I supposed to validate that any of them are worth my life?! I mean, really, a startup will mean I will have no life. With my loved one in a startup already, I don't know if I could really start something without the support. Looking back, were any of the big companies that started as a small STARTUP founded by poor people? I think not. I haven't heard a single story of an actually poor person, who founded a startup and is now rich.
at-fates-hands 13y ago
"Since we were 3 business people, we spent all this time into idiot plans, budget forecasts, BUSINESS CARDS, fancy website… all useless things which in the end did not contribute to anything." I've been apart of a lot of startups and this is far and away the best advice. It was a common theme with two startups I worked for during the boom years. One CEO's hubris was stunning. 10 million privately funded and he blew most of it on season tickets and suits at stadiums to "entertain" big prospects (nevermind we didn't have any "big" prospects at the time!), remodeled the office to the tune of a few hundred thousand dollars, it goes on, but you get the idea. When you're in a startup, it really is about getting your product shipped, and making sure that's where the focus is. Great writeup and glad you saw the errors of your ways. Lots of people never gain the wisdom you have until after two or three failed attempts.
- kylereeve 13y ago
  Did you work at Entertainment 720?
  - at-fates-hands 13y ago
    Nope. One of the startups was a telecom company, the other an educational software company. The telecom company was the one that burned through all the millions. They had an exclusive contract with one of the regional bells and were trying to make high speed internet accessible to the masses. They were banking on fiber instead of the existing DSL which ran over copper. Essentially using T1 fiber to give high speeds at the cost of copper DSL. They thought they had a home run with a growing base of clients, and were trying to get acquired more than build the next Frontier Telecommunications. They had a crazy story, maybe sometime I'll let the details go. That was a crazy time for sure.
    - hanley 13y ago
      I think you missed the reference. They were referring to a company from the TV show Parks & Recreation. See here https://www.youtube.com/watch?v=jX0ZF8f8G0A https://www.youtube.com/watch?v=jX0ZF8f8G0A
pmcpinto 13y ago
Great write up, I think this point is crucial: Founder roles and expectations. Even if the goal/role is to be the non tech founder, it's important to learn the basis of html, CSS and Javascript. It will give you another perspective when you think about how to implement an idea.
- advertising 13y ago
  I learned this one the hard way. Started as two founders, one techincal, one biz dev (I'm the biz dev). We brought on a third (largely my doing), as more of the operations / finance side. Didn't set roles, and my biggest gaff of all was to not make him vest. After a year, the third founder turned into a maniacal control freak and almost sank us. Finally departed, but took his equity with him. My biggest lesson so far is be very careful who you partner with and ALWAYS vest. Or another way to put it, you don't need to worry about the good times, it's the bad times you need to consider and pre-negotiating the divorce is critical.
christopop 13y ago
Thanks for sharing this man!
narrator 13y ago
I would like to thank everyone who posts these failure stories. We get too many effortless success stories here and often forget that failure is the norm and not the exception. It's a bit like how those books on software anti-patterns are so helpful. Sometimes it's more helpful to focus on what not to do.
usablebytes 13y ago
The last para - If there is just one thing you should learn, it is: Just speak to prospects and extract their pain, then sell the painkiller (before building the product). If they are willing to buy, do take their money and invest that money into building the product. Is that really possible? Making someone pay for a product that doesn't yet exist? How can you do that?
- sergioschuler 13y ago
  Look at http://thefoundation.com/three-students/ http://thefoundation.com/three-students/, those guys do that over and over again.
- monkeyspaw 13y ago
  This concept really is the holy grail of people who like to talk about startups. I think there are some mis-perceptions about the idea. Here is how I how found the concept useful, in my company. Startups who focus on revenue rather than growth can use this technique as a success metric (duh). Rather than using active users, etc., as proxy metrics for success, this method is a very direct one to measure how marketable your idea is. Get one success banked, then you can start to optimize -- pretty neat! However, it's also incredibly difficult to do. So the second purpose becomes this: a proxy to evaluate the importance (in your customers' eyes) of the problem you solve. If you're solving a problem that everyone in the banking industry desperately needs solved, they will be more willing to try something that isn't feature-complete (or in existence). So while few people will actually buy your product before it exists, using that as the goal can help you in your business development. You can figure out the problem's importance (and, believe me, it's better to solve a hair on fire problem than to solve a minor inconvenience). You can get feedback from people who are actually willing to pay -- this signals they are probably your customer! (So it helps you prioritize feedback, and sort people you talk to into actual / window-shopper type customers). What the gurus don't tell you is this is very difficult to actually accomplish, at first. But after several iterations, you can get valuable feedback from people who are closer to having skin in the game. And, of course, there is the chance that someone will have such a big problem that they want to pay you to solve it right now. If you can find that big fish, and their problem is similar enough (or uses core technology sufficiently similar to your "productized" version), then you can partially pay to make the product. (This comes with the caveats about how you don't want to be a slave to a single customer, etc. But we're having luck developing our core technology in the process for the big customer, and will re-use it for our product.)
subbu 13y ago
__If there is just one thing you should learn, it is: Just speak to prospects and extract their pain, then sell the painkiller (before building the product). If they are willing to buy, do take their money and invest that money into building the product.__ This advice always seemed like a stretch to me. Does anybody pay for a product that's not ready yet?
- brickcap 13y ago
  "Does anybody pay for a product that's not ready yet?" Isn't kick starter build around that concept? If people think something is looking good and might help them considerably they might be open to pay for developmental costs.
  - AndrewKemendo 13y ago
    Kickstarter isn't designed for business, but rather it is designed for art in the general sense (which sometimes has business applications), so I don't think Kickstarter is a good example.
- sergioschuler 13y ago
  Believe it or not, it happens, just look at the cases at the foundation
devb0x 13y ago
Damn that's well written. Of course I can also show some business cards and some bull. But when push came to shove, my target market were not prepared to pay. As always, I am always keen to connect with bright people and good ideas.
guilloche 13y ago
Questions for peer founders: As a developer and solo founder, I just can not finish a serious project in one year. For example, it took me two years to get version 1 of torapp guilloche designer (www.torapp.info). We did not get consistent/significant customers and need a new product to survive. To evaluate more ideas and to be familiar with respective areas took me another year easily (without deep knowledge in the area, how can you beat your competitors?). So how can you guys roll out a product in 3 months? How can you quickly pivot? (pick up ideas and evaluate them quickly)
- koide 13y ago
  It certainly will depend on the actual product A LOT. A vector editor is very complex compared to the typical CRUD-based with a little business logic that lots of SaaS products are in the end.
  - tgflynn 13y ago
    "typical CRUD-based with a little business logic that lots of SaaS products are in the end" Isn't the market for that sort of thing getting crowded by now ?
    - koide 13y ago
      Not quite. I think that most startups where technology is not their raison d'etre still fit that bill.
atmosx 13y ago
Firstly, the Indian corporation which contacted him, apparently was asking for something totally different. If they were asking about 3 or 4 features that could be added, I don't think that it would be a problem. But the author didn't do anything wrong there. They were looking for a developer probably not a product or not his product whatsoever. If you accept his argument as true, that he should switch and follow the tide, then you might as well start looking for freelancer developer job. < J/K> Awesome quote: > The result of this was that in the end we had to hire a full-time (and paid) developer. So we had zero revenue, 4 co-founders and a paid employee (which was effectively the only one doing real work). I laughed really hard reading this line. My girlfriend came from next room to make sure I was okay!!! That's awesome, like 4 guys watching a movie, say the 'Social Network', and deciding to do a startup!!! </ J/K> Jokes apart, I think the author has got it all wrong. There are ten million reasons why a small startup failed. Most of the time is hard to tell exactly why. But seriously, only people who have proved time and again their ability to deliver a product to the market and are famous for turning ideas into money, are able to struck deals before having a product. And we probably all know them (Jobs, Musk, etc). For the rest of us that's not how things work, I'm sorry to say that he is still getting it all wrong. In the real world, you can't sell something that doesn't exist, these things happen only on Wall Street.
owenversteeg 13y ago
The website was down for me at first but after 27 refreshes I managed to get it. Here's a mirror: http://pastebin.com/avMpRwrU http://pastebin.com/avMpRwrU
advertising 13y ago
A mistake I made early on was trying to provide a product as cheap as possible. Constantly worried that no one would pay what we asked for. Basically being afraid to ask for the value it was really worth. I think there was a comma/period swap, but if I'm reading correctly it looked like the product was positioned at $30 / mo? Assuming that's correct - it's really not a meaningful amount to any company that has enough employees and management to actually be a user of the product. I think a $30 / mo with a free 30 day trial period (once product launches and they can actually try it ;) ) that requires a credit card for the trail could have worked. Would still need a product to actually try, but that's not much different than saying get a free trial and just taking in email addresses. If anyone remembers the Minimalytics / Small HQ folks - I thought they did a good job with their signups. The only thing for me was I disappointed by how minimal their product was in beta. It was so basic I didn't have any use for it, and running our own startup, didn't have time to wait. We ended up building it internally. I probably would have converted to a paying user if it was more developed at beta. Not their fault though, they did a good job I thought(if you're reading Small HQ).
davemel37 13y ago
I think a more important lesson to learn here is to have the uncomfortable conversations ASAP. The sooner you communicate clearly, the fewer opportunities there are for misunderstandings. If I had to give founders one piece of advice it would be, "Just Ask"... Ask for the sale, ask what youll get in exchange for equity, ask, ask, ask...
tim333 13y ago
Thanks for the write up - It's always better to learn from other people mistakes. I think however you and the most of the other posters miss the most basic problem because they mostly seem not to have tried the site and that is that, to me at any rate, it seems the product is not very good. It seems to be basically a 40 question form with questions like "People in the team know the weaknesses and strengths of other team members." that you mark from 1-10 and is not customizable. Personally I hate that stuff - you spend ages filling the thing out and then when you find the average response is say 7 what do you do then? There's not obvious action. If you had a form with a question saying say "what do you thinks the biggest problem with your team?" and people were able to say anonymously that say "there were four founders without the right experience and only one dev really working" then that would at least be useful. I think before worrying about the market etc you should have tested your system on real teams to see if it actually helped them much. This could have been done with zero or little tech - say either a paper questionnaire or just write your questions in an email and have people email their answers back to you. The fact that 200 people tried the product and none bought does imply a product problem but it if you define your product as trying something to fix team management problems then I think the issue is not that there is no demand for that but that your product does not work in that regard. If it was me and I could code a bit, rather than scrap the thing I think I might try changing it to see if it could be made to work at the team improving level. You could say cut it to say five 0-10 type questions and five "what's the biggest problem?" type questions and then try that with a couple of real teams and see if they found it helpful.
- sergioschuler 13y ago
  Your evaluation certainly have merits and a lot of it we confirmed when speaking to clients later. Just one thing to make clear: I have 5+ years of team management/leadership development and I used a similar tool I created and evolved (in paper form) to improve a loooot of teams. So the tool works - BUT you are correct, it is a pain to apply and you probably need consultancy to get out of the team management hole if you are not a skilled manager.
sebastianconcpt 13y ago
Thanks for sharing your experience and insights Sergio. It takes balls to do that shrinking ego experience in public. I'm sure something good will come out of it.
ymn_ayk 13y ago
Priceless lessons from the real world for the people who want to build a product. Thank you.
pcharles 13y ago
good stuff man

380 points by sergioschuler 13y ago

malditojavi 13y ago

Great insights, thanks for sharing, Sergio.

nmbdesign 13y ago

This is such a great article, thanks

testrun 13y ago

Very nice article Sergio.

patio11 13y ago

This is a fantastic writeup (and like nearly all worthwhile writing on the subject, I don't necessarily agree with all of it). Two elaborations: 1) General advice to non-technical founders, not specific to this post: If sales is one of your primary skill sets, and you cannot sell one developer on working for you, you may want to have a brief heart-to-heart with yourself on whether you are sufficiently skilled at selling to build a company which will live or die based on your sales ability. 2) His advice about starting with 1 anchor client for a SaaS, expanding to 10 via expenditure of shoe leather, and then starting to worry about scalable approaches to customer acquisition is very, very good. (I don't know if I definitely would endorse the "An Indian company expressed desire to buy something from me other than the thing I was building, so I should have built that instead." That would turn on a lot of things, including how serious that company was about actually buying the thing. There is a world of difference between "I would buy a Widget from you" and "I commit to accepting delivery of a Widget from you, where a Widget broadly does X, my timeframe is Y, and your payment will be $Z." I'd be looking for a letter of intent or a check as a filter for seriousness following that Skype call before making a bet-the-business decision on it, personally, but I obviously don't know the specifics of what was said.)

sergioschuler 13y ago
You are absolutely right on both comments! And additional comments: 1) I am not a developer, but I believe having an idea -> finding a developer is the wrong flow. It should be like this: 1. Have the idea. 2. Get customers who give you real money to build this idea. 3. Get a developer by telling "I already have paying customers". 2) Absolutely agree. When I say "I should build that", in fact what I wanted to say was something like "I should have looked for more X prospects that would pay for what they wanted, get their money and then build that".
- dagss 13y ago
  To me it seems like recruiting of a developer worth anything, from scratch and without an existing team to help you to recruit or lure, must be much more difficult than getting an amazing idea or selling said amazing idea. Is that just because I never tried selling anything? Does anybody have examples of successful startups that proceeded in the way Sergio describes and became successful -- starting out with a business person/team, selling the goods first, then manage to find developer(s) to build it? (It's not rhetorical, I'd love to hear such examples -- the usual stories seem to be revolving around a gang of programmers, or at least a programmer co-founder.)
  - sergioschuler 13y ago
    Look at http://thefoundation.com/ http://thefoundation.com/ , they have some cases about this kind of approach.
  - daigoba66 13y ago
    For the company I currently work for, and at a previous company I worked for, v1 was built by an outsourced development firm long before the first fulltime engineer was hired. Yes it sucked and has since been completly rewitten. But it was a working product that started bringing in revenue and helped raise more money.
  - apineda 13y ago
    Stephanie from https://www.refficient.com/ https://www.refficient.com/ did just that.

etfb 13y ago

Lesson N+1: Hacker News can break your blog's webserver. That's one you only learn through experience. [ETA: which is sad, because I want to read it!]

sergioschuler 13y ago
Damn Bluehost, hehe. I wish I knew how to fix it, but a few refreshes seems to go through.
- etfb 13y ago
  The only solution is to throw money at it until it gets better, isn't it? Or to wait it out. I remember when the word "Slashdot" became a verb, back when "Reddit" was a joke about a frog and a library book and DOS was what Windows ran on. The problem hasn't improved, as far as I know. So no biggie; it's not your fault. Ride it out and you'll be fine. Meanwhile, I'm mostly commenting so I can find your article again later and get to actually read it!
- drewmclellan 13y ago
  I wouldn't blame your host, actually. It's WordPress. It's a shame it's so often given a free pass on these issues when it really isn't good at handling peaks in traffic.
  - sergioschuler 13y ago
    Any alternatives?
    - diegolo 13y ago
      static html websites
    - danso 13y ago
      Using the popular caching plugins...W3 Total Cache (http://wordpress.org/plugins/w3-total-cache/ http://wordpress.org/plugins/w3-total-cache/) or Super Cache (http://wordpress.org/plugins/wp-super-cache/ http://wordpress.org/plugins/wp-super-cache/) seem to be well liked and I've used both of them without too many issues (I have some weirdness in my WP upgrade path). My blog has been on HN and reddit a few times and has never crashed, even though I'm on the cheapest Dreamhost hosting plan with what seems like 5 to 10 second response times for non-cached pages.

DanielBMarkham 13y ago

There are a lot of things I'm interested in but would not pay for online, but good failed startup stories like this is not one of them. Seriously, if somebody could cull 2 or 3 of these a day and deliver in a weekly or monthly format? It'd be worth a subscription. Thanks for the article!

dennisgorelik 13y ago
Why do you need so many failure stories? One failure story per week should be sufficient to be constantly aware of typical problems.

karterk 13y ago

I think for first time bootstrappers, investing some time in a quality blog on a particular field you would like to build products for is really really useful. Apart from having a good audience to launch your first product, it helps you interact with people before you have something to sell to them. You learn more about their problems, the existing market, competition and so on.

readme 13y ago

OP, your biggest mistake is not taking the time out to learn how to code yourself. You said it went on for 2 years, that was plenty of time.

sergioschuler 13y ago
INDEED! In fact I started. Did One Month Rails (a couple of months ago). My github (please don't laugh, but do give out advice): https://github.com/sergioschuler/ https://github.com/sergioschuler/
- Fede_V 13y ago
  Excellent attitude, and good luck. Honestly, when the ratio of 'business people' to technical people in a start up is that high, that raises all sorts of red flags to me.
- readme 13y ago
  kudos

thu 13y ago

Do people find it really ok to have video and a website spelling "try it free" and then have only an email input form ? I know that testing if demand exists is important, but doesn't it have adverse effect on your reputation to somehow lie to your prospects ?

darkxanthos 13y ago
I think you're saying its a lie because there is no product yet? I can see how you think that. If he did build the product first though and one person signed up and he had to pivot to something fairly different, that'd be a lie too then effectively. Except, now he wasted a lot of time building. My POV is if you're only taking email addresses for people to know when it's available anything on the site is just your plan. Plans always change.
- 6d0debc071 13y ago
  I wonder how the returns work out for sticking 'Email me to when it's ready to be tried' or something. I can see you getting fewer numbers, potentially, but I wonder about the people who are actually interested in the product vs drive by triers. At least seems more respectful of people's time than 'try it free' just for them to have to click through and find out what it's about.
  - sergioschuler 13y ago
    To be frank, I think that is exactly what I used. I just didn't judge was important enough to mention.

mzarate06 13y ago

Such a great write up, thank you for sharing. Question: what are you going to do with the product now?

sergioschuler 13y ago
Nothing. It is just sitting there.

ry0ohki 13y ago

"The developer had no intention of being the project’s developer (?) he was not really a developer, he was a computer science graduate who owned a webdev shop and was used to managing, not coding." Heard this story so many times. Amazing how many people join a startup and don't want to do the actual work. Remember that scene in The Social Network where Mark Zuckerberg calls his outsource team about progress on that latest feature? No? Me either.

sergioschuler 13y ago
BAM!

aaronbasssett 13y ago

I wonder how much their conversion was impacted by internationalisation problems. It looks like they were attempting to target the US, but their pricing page wasn't localised for that market. Unless they really were charging one thousand nine hundred and ninety dollars per team. Price is shown as £19,90 instead of $19.90 Also due to what I perceived as a thousand separator, not a decimal mark, I initially read the price as nineteen thousand and nine hundred dollars!

sergioschuler 13y ago
I forgot that one! I have even a saying for this learning "be local before being global".

guynamedloren 13y ago

Really great writeup, thanks for sharing. I'm left wondering, though, what you actually did over the two years? You imply that you were working on it full time. Two years full time is a lot of time. You can do pretty much anything in that time (including, as others have mentioned, learn to code). > idiot plans, budget forecasts, BUSINESS CARDS, fancy website [and writing articles] I find it hard to believe you can work on those things for two years, day in and day out.

sergioschuler 13y ago
Hardly, no, one mistake that I didn't mention (because I am still processing it) is how long we took to have v1 (more than a year). This was a mix of my incompetence, too many features and also an inexperienced developer (in fact we changed developers once too). So, yeah, a looooot of the time was put into building the product, refining it, getting bugs out of the way, testing it again, finding the same bugs... Then there was marketing. Finding more clients, because we believed finding more people meant someone would buy the product. PS: I was not completely full time, the developer was. In those 2 years, I have been freelancing (one needs to eat).
- devb0x 13y ago
  1 year? Just ship product regularly brother.

antidaily 13y ago

You want to know how to validate your idea faster? Don't have a free plan. Will people give you their credit card... that's what you want to know. And those are the people you want feedback from.

bfreeman 13y ago
exactly. that's what he says in the article, no? :)
- Ravengenocide 13y ago
  Yes. He says that instead of having a "Try it for free" button he should have posted the price and seen how many are interested in the product then.
wehadfun 13y ago
Do you want to ask for a credit card with no deliverable?

Elizer0x0309 13y ago

A business person trying to start a tech startup.... It's like a business person looking for musicians to start a band. This is beyond ridiculous. Either bring some skill to the table or go create a "business startup" and stop polluting the industry with yet another failed idea and even worse a "post mortem" of why it failed. PS: This includes Marketing, Managers as well as the Business peanut gallery.

cblanc 13y ago
I'm not sure if that's a good analogy for your point. The success of a band often requires more than people that can play music well together The Beatles had Brian Epstein for example (aka The Fifth Beatle)
- Elizer0x0309 13y ago
  Yes, but the first members are driven with higher goals then just "Starting a business". A business person is driven with the intention of making money. If it were otherwise, they'd learn a trade/skill.
  - sergioschuler 13y ago
    My vision was to get rid of lame managers. Certainly a useful vision.
    - Elizer0x0309 13y ago
      A cube created to make money is different from a cube created for bettering cubes or advancing cube making. Do you get my point? Your motivations are not high enough. What you claim is your intention is not what your actions say.
bloat 13y ago
I love the Monkees.
- 13y ago

wrath 13y ago

Good article but I would look at this "failure" from a glass half full perspective. You "won" because you've learned valuable lessons you can take to your next idea. I've had many products that have not gained many users in their respective marketplaces but I learned from each and everyone of them. All these experiences has brought me where I am today (CTO of a 45+ employee company). No failures in my past as far as i'm concerned; just lots of self teaching (that you can't get in school). >> ""An Indian company expressed desire to buy something from me other than the thing I was building, so I should have built that instead."" I may be the minority but I agree with him but on one condition. If this Indian company wanted to pay a small monthly subscription fee for your product I would never have agreed developing "their" ideas. I would have taken their feedback and put in the big pile with all the other feedback I gathered up. But I would have pitched this Indian company a different story, I would have pitched them a professional services contract instead of a product. I did something similar in the past and it worked out very well because in a business money is king. With no money you can't do the things you need to do, like attend conferences to sell your idea, buying adwords, hiring solid developers, paying yourself a salary so you can devote your time to the idea. In my case the customer was willing to pay ~$10k a month to get what he wanted. We built it for him while building our own product. Once we got big enough and could sustain ourselves without our original customer, I gave the customer away. The developer who maintained the project was interest in taking on the project himself. We came up with a 6 month transition plan, including lots of product/project management help, office space, etc. It was a win/win situation at the end. Doing this is not for everyone though. There are many days I cursed this customers for taking up the majority of our resources. We had to be very good at differentiating between their requirements and the markets requirements. We weren't perfect at it but it worked out in the end.

PythonicAlpha 13y ago

I want to shine some light on one side problem, scratched here: The problem today is (out of the perspective of a developer): To many companies rely on just "hire any (cheap) developer" to ramp up the product. I see it all the time: Quality is not asked for, many companies (specially in the web business) just want the cheapest developers. They search for a student (at best), because he is cheap and will just make a small time estimation and an even smaller fixed price offer for the project. The student will happily work overtime that is not covered by the initial estimation. Than the companies go mad, when either the programmer is running away or the whole project runs into a blind alley (or both at the same time), because the "totally expensive" programmer had not enough experience e.g. with database development and the database structure just lets you shiver. Then the shouting and anger is big: "Damn programmers -- all are liars and lazy!" What went wrong, stated Uncle Bob correctly in his Blog: http://blog.8thlight.com/uncle-bob/2013/11/19/HoardsOfNovices.html http://blog.8thlight.com/uncle-bob/2013/11/19/HoardsOfNovice... But the "cheap, cheap!" culture seams to be unstoppable. If you tell people in advance about "quality" and "professionalism", they don't listen or just laugh at you. It seams, all the people just have to find out the hard way -- but I guess, even than most of them will not learn at all.

sergioschuler 13y ago
I believe this is a marketing problem (from the developers). See, I am a non-tech founder, I don't understand why X is cheaper than Y. If I perceive the same benefit, I will get the cheapest one. (This is hypothetical, but not so much: I understand a bit of tech and even so I don't have so much clue on how to judge a developer besides what he shows me he had done).
- PythonicAlpha 13y ago
  You are right, that developers are most of the time bad marketers. But I must disagree with the notion "... besides what he shows me had done" (I admit that might not have been your point, but I still want to loose a word or two about it). That's a problem intrinsic with software: What you "see" is not what you get. You see a perfect polished UI, but you get a sack of bugs! So this criterion is not usable at all. The intrinsic values of a program are not visible to non-developers at all. Even software-companies have a hard time, deciding which criterion to choose as a base for decisions. I think, when you look at cars or houses, people are more likely to ask a professional to decide about the condition of the car or house. Also everybody that loves his car (and life) will bring his car to some person that has read some books about motors and does repair the brakes "half-prize" in his back-yard. But in software practice, you just want to see some polished front lids of cars and decide that the brake repairs will be fine.

kyberias 13y ago

I just love the brutal honesty expressed compactly. Full of useful information for all startup-founders. I'm sure many are currently making the exact same mistakes.

Killah911 13y ago

I don't understand people's (not necessarily the OPs)utter obsession with philosophies. Especially in the startup world when being adaptive and surviving is key. Lean Startup, great book, decent ideas, not the religion that it's become. I'm sick of hearing, hey do this the lean way and it'll "significantly improve" how well you do, after all it's the blueprint for success. Personally, I don't buy into that. Here's my view of success in reality: do whatever works (that's legal & up to your moral standards), be opportunistic and get lucky (yes, hard work and measuring metrics alone don't do crap). MVP and idea validation are great concepts & helpful common language. In hindsight all "successful" startups seem to have a "pattern", but in all seriousness, there isn't a friggin algorithm for success in startups, otherwise algorithms would've replaced entrepreneurs a long time ago. (Although selling success patterns & software based on such to wantreprenuers is a great idea) I'm sorry the Sergio's experience happened. It's easy force cause and effect onto a narrative. It very well could have been that the developer Sregio met was at a point in his life where he really just wanted to build something great and did end up building the awesomest thing. Instead of trying to dissect the reasons his startup failed, had luck been a little more favorable, we might be trying to analyze how it became a huge success. Bottom line, my heartfelt congratulations to Sergio on being successful at stepping up, despite the risks and having a crack at it. If you had never stepped up and we all gave in to our negative biases and overanalyzed the crap out of everything before we started we'd still be polishing stone wheels. I know how shitty it feels. But remember, hindsight is 20-20 and cause and effect should really be cause+luck and effect. Hope you're a better entrepreneur and will be back in the game soon.

luisivan 13y ago

I made all of those mistakes, and also learnt the hard way. Great post.

red_anorak 13y ago

>> "SEO and social media bullshit" This stuff does seem like bullshit when you're working on it, but it's unfortunately crucial these days. It takes so long to build up the brand and visibility that I don't believe you have the option to just do it once you've got the product right. Unless you've got the investment, firepower or notoriety to get chins wagging then you've got a long road ahead of you. Good SEO actually sounds like one of the things you got right to me. But maybe you spent too long on it

sergioschuler 13y ago
I understand where you are coming from. I agree it is essential for any business that uses the web. But if you have the wrong product, no matter the amount of SEO, you will get nothing out of it. What I want to say is that SEO is important, but not more important than finding the pain and the product.

snorkel 13y ago

... one of the prospects was an HR person from a huge Indian manufacturer. They wanted the system NOW and wanted to speak to me. [...] I just needed to build what they wanted. I know startups that charged down the other path, being hyper responsive to their big customers, and they suffered for it because their biggest customer steered the product vision straight to crazy town. Such startups essentially become the contract development shop of a few big customers, living and dying by the whims of those big customers. Yes, you can pay the bills, but you're essentially working full-time for a few customers rather than building your own enterprise.

al2o3cr 13y ago

"Instead of surfing the wave and adapting my idea to what a real prospect client was telling me they wanted" FFS don't do this. There are far too many startups beached on the shores of "well, this one SRS BZNS client wanted us to change what we were doing so we did. Where'd all the rest of our clients go?" I'm not saying "don't pivot", but "just making what they wanted" (where N(they) = 1) turns you into a poorly-paid contract developer who's also paying to host the result, not an entrepreneur.

rpedela 13y ago
I personally would view building something for X client a viable option if it was going to be a large sum of money. Then use that money to fund the company and the product you really want to build and sell. It can be hard to get that one or two clients who can fund the company, but it is a viable strategy as long as you have the right mindset. We, Datalanche, had this opportunity but unfortunately (like most deals) it didn't work out. Had we successfully made the deal, it would have been a multi-million dollar contract which would have easily funded the entire company and the flagship product and we wouldn't have given away any control.
CanSpice 13y ago
I don't think you have to ask "Where'd all the rest of our clients go?" when you don't have any clients to begin with.

Kiro 13y ago

Four business guys? That's four too many. Just learn how to code and build your own stuff.

thehme 13y ago

This is a great article full of truth. My respects to the author because it takes courage to accept one's mistakes, but it's critical for getting up and moving forward in a better direction. How many ideas are sitting in my brain, but all I can think of is how to exactly am I supposed to validate that any of them are worth my life?! I mean, really, a startup will mean I will have no life. With my loved one in a startup already, I don't know if I could really start something without the support. Looking back, were any of the big companies that started as a small STARTUP founded by poor people? I think not. I haven't heard a single story of an actually poor person, who founded a startup and is now rich.

at-fates-hands 13y ago

"Since we were 3 business people, we spent all this time into idiot plans, budget forecasts, BUSINESS CARDS, fancy website… all useless things which in the end did not contribute to anything." I've been apart of a lot of startups and this is far and away the best advice. It was a common theme with two startups I worked for during the boom years. One CEO's hubris was stunning. 10 million privately funded and he blew most of it on season tickets and suits at stadiums to "entertain" big prospects (nevermind we didn't have any "big" prospects at the time!), remodeled the office to the tune of a few hundred thousand dollars, it goes on, but you get the idea. When you're in a startup, it really is about getting your product shipped, and making sure that's where the focus is. Great writeup and glad you saw the errors of your ways. Lots of people never gain the wisdom you have until after two or three failed attempts.

kylereeve 13y ago
Did you work at Entertainment 720?
- at-fates-hands 13y ago
  Nope. One of the startups was a telecom company, the other an educational software company. The telecom company was the one that burned through all the millions. They had an exclusive contract with one of the regional bells and were trying to make high speed internet accessible to the masses. They were banking on fiber instead of the existing DSL which ran over copper. Essentially using T1 fiber to give high speeds at the cost of copper DSL. They thought they had a home run with a growing base of clients, and were trying to get acquired more than build the next Frontier Telecommunications. They had a crazy story, maybe sometime I'll let the details go. That was a crazy time for sure.
  - hanley 13y ago
    I think you missed the reference. They were referring to a company from the TV show Parks & Recreation. See here https://www.youtube.com/watch?v=jX0ZF8f8G0A https://www.youtube.com/watch?v=jX0ZF8f8G0A

pmcpinto 13y ago

Great write up, I think this point is crucial: Founder roles and expectations. Even if the goal/role is to be the non tech founder, it's important to learn the basis of html, CSS and Javascript. It will give you another perspective when you think about how to implement an idea.

advertising 13y ago
I learned this one the hard way. Started as two founders, one techincal, one biz dev (I'm the biz dev). We brought on a third (largely my doing), as more of the operations / finance side. Didn't set roles, and my biggest gaff of all was to not make him vest. After a year, the third founder turned into a maniacal control freak and almost sank us. Finally departed, but took his equity with him. My biggest lesson so far is be very careful who you partner with and ALWAYS vest. Or another way to put it, you don't need to worry about the good times, it's the bad times you need to consider and pre-negotiating the divorce is critical.

christopop 13y ago

Thanks for sharing this man!

narrator 13y ago

I would like to thank everyone who posts these failure stories. We get too many effortless success stories here and often forget that failure is the norm and not the exception. It's a bit like how those books on software anti-patterns are so helpful. Sometimes it's more helpful to focus on what not to do.

usablebytes 13y ago

The last para - If there is just one thing you should learn, it is: Just speak to prospects and extract their pain, then sell the painkiller (before building the product). If they are willing to buy, do take their money and invest that money into building the product. Is that really possible? Making someone pay for a product that doesn't yet exist? How can you do that?

sergioschuler 13y ago
Look at http://thefoundation.com/three-students/ http://thefoundation.com/three-students/, those guys do that over and over again.
monkeyspaw 13y ago
This concept really is the holy grail of people who like to talk about startups. I think there are some mis-perceptions about the idea. Here is how I how found the concept useful, in my company. Startups who focus on revenue rather than growth can use this technique as a success metric (duh). Rather than using active users, etc., as proxy metrics for success, this method is a very direct one to measure how marketable your idea is. Get one success banked, then you can start to optimize -- pretty neat! However, it's also incredibly difficult to do. So the second purpose becomes this: a proxy to evaluate the importance (in your customers' eyes) of the problem you solve. If you're solving a problem that everyone in the banking industry desperately needs solved, they will be more willing to try something that isn't feature-complete (or in existence). So while few people will actually buy your product before it exists, using that as the goal can help you in your business development. You can figure out the problem's importance (and, believe me, it's better to solve a hair on fire problem than to solve a minor inconvenience). You can get feedback from people who are actually willing to pay -- this signals they are probably your customer! (So it helps you prioritize feedback, and sort people you talk to into actual / window-shopper type customers). What the gurus don't tell you is this is very difficult to actually accomplish, at first. But after several iterations, you can get valuable feedback from people who are closer to having skin in the game. And, of course, there is the chance that someone will have such a big problem that they want to pay you to solve it right now. If you can find that big fish, and their problem is similar enough (or uses core technology sufficiently similar to your "productized" version), then you can partially pay to make the product. (This comes with the caveats about how you don't want to be a slave to a single customer, etc. But we're having luck developing our core technology in the process for the big customer, and will re-use it for our product.)

subbu 13y ago

__If there is just one thing you should learn, it is: Just speak to prospects and extract their pain, then sell the painkiller (before building the product). If they are willing to buy, do take their money and invest that money into building the product.__ This advice always seemed like a stretch to me. Does anybody pay for a product that's not ready yet?

brickcap 13y ago
"Does anybody pay for a product that's not ready yet?" Isn't kick starter build around that concept? If people think something is looking good and might help them considerably they might be open to pay for developmental costs.
- AndrewKemendo 13y ago
  Kickstarter isn't designed for business, but rather it is designed for art in the general sense (which sometimes has business applications), so I don't think Kickstarter is a good example.
sergioschuler 13y ago
Believe it or not, it happens, just look at the cases at the foundation

devb0x 13y ago

Damn that's well written. Of course I can also show some business cards and some bull. But when push came to shove, my target market were not prepared to pay. As always, I am always keen to connect with bright people and good ideas.

guilloche 13y ago

Questions for peer founders: As a developer and solo founder, I just can not finish a serious project in one year. For example, it took me two years to get version 1 of torapp guilloche designer (www.torapp.info). We did not get consistent/significant customers and need a new product to survive. To evaluate more ideas and to be familiar with respective areas took me another year easily (without deep knowledge in the area, how can you beat your competitors?). So how can you guys roll out a product in 3 months? How can you quickly pivot? (pick up ideas and evaluate them quickly)

koide 13y ago
It certainly will depend on the actual product A LOT. A vector editor is very complex compared to the typical CRUD-based with a little business logic that lots of SaaS products are in the end.
- tgflynn 13y ago
  "typical CRUD-based with a little business logic that lots of SaaS products are in the end" Isn't the market for that sort of thing getting crowded by now ?
  - koide 13y ago
    Not quite. I think that most startups where technology is not their raison d'etre still fit that bill.

atmosx 13y ago

Firstly, the Indian corporation which contacted him, apparently was asking for something totally different. If they were asking about 3 or 4 features that could be added, I don't think that it would be a problem. But the author didn't do anything wrong there. They were looking for a developer probably not a product or not his product whatsoever. If you accept his argument as true, that he should switch and follow the tide, then you might as well start looking for freelancer developer job. < J/K> Awesome quote: > The result of this was that in the end we had to hire a full-time (and paid) developer. So we had zero revenue, 4 co-founders and a paid employee (which was effectively the only one doing real work). I laughed really hard reading this line. My girlfriend came from next room to make sure I was okay!!! That's awesome, like 4 guys watching a movie, say the 'Social Network', and deciding to do a startup!!! </ J/K> Jokes apart, I think the author has got it all wrong. There are ten million reasons why a small startup failed. Most of the time is hard to tell exactly why. But seriously, only people who have proved time and again their ability to deliver a product to the market and are famous for turning ideas into money, are able to struck deals before having a product. And we probably all know them (Jobs, Musk, etc). For the rest of us that's not how things work, I'm sorry to say that he is still getting it all wrong. In the real world, you can't sell something that doesn't exist, these things happen only on Wall Street.

owenversteeg 13y ago

The website was down for me at first but after 27 refreshes I managed to get it. Here's a mirror: http://pastebin.com/avMpRwrU http://pastebin.com/avMpRwrU

advertising 13y ago

A mistake I made early on was trying to provide a product as cheap as possible. Constantly worried that no one would pay what we asked for. Basically being afraid to ask for the value it was really worth. I think there was a comma/period swap, but if I'm reading correctly it looked like the product was positioned at $30 / mo? Assuming that's correct - it's really not a meaningful amount to any company that has enough employees and management to actually be a user of the product. I think a $30 / mo with a free 30 day trial period (once product launches and they can actually try it ;) ) that requires a credit card for the trail could have worked. Would still need a product to actually try, but that's not much different than saying get a free trial and just taking in email addresses. If anyone remembers the Minimalytics / Small HQ folks - I thought they did a good job with their signups. The only thing for me was I disappointed by how minimal their product was in beta. It was so basic I didn't have any use for it, and running our own startup, didn't have time to wait. We ended up building it internally. I probably would have converted to a paying user if it was more developed at beta. Not their fault though, they did a good job I thought(if you're reading Small HQ).

davemel37 13y ago

I think a more important lesson to learn here is to have the uncomfortable conversations ASAP. The sooner you communicate clearly, the fewer opportunities there are for misunderstandings. If I had to give founders one piece of advice it would be, "Just Ask"... Ask for the sale, ask what youll get in exchange for equity, ask, ask, ask...

tim333 13y ago

Thanks for the write up - It's always better to learn from other people mistakes. I think however you and the most of the other posters miss the most basic problem because they mostly seem not to have tried the site and that is that, to me at any rate, it seems the product is not very good. It seems to be basically a 40 question form with questions like "People in the team know the weaknesses and strengths of other team members." that you mark from 1-10 and is not customizable. Personally I hate that stuff - you spend ages filling the thing out and then when you find the average response is say 7 what do you do then? There's not obvious action. If you had a form with a question saying say "what do you thinks the biggest problem with your team?" and people were able to say anonymously that say "there were four founders without the right experience and only one dev really working" then that would at least be useful. I think before worrying about the market etc you should have tested your system on real teams to see if it actually helped them much. This could have been done with zero or little tech - say either a paper questionnaire or just write your questions in an email and have people email their answers back to you. The fact that 200 people tried the product and none bought does imply a product problem but it if you define your product as trying something to fix team management problems then I think the issue is not that there is no demand for that but that your product does not work in that regard. If it was me and I could code a bit, rather than scrap the thing I think I might try changing it to see if it could be made to work at the team improving level. You could say cut it to say five 0-10 type questions and five "what's the biggest problem?" type questions and then try that with a couple of real teams and see if they found it helpful.

sergioschuler 13y ago
Your evaluation certainly have merits and a lot of it we confirmed when speaking to clients later. Just one thing to make clear: I have 5+ years of team management/leadership development and I used a similar tool I created and evolved (in paper form) to improve a loooot of teams. So the tool works - BUT you are correct, it is a pain to apply and you probably need consultancy to get out of the team management hole if you are not a skilled manager.

sebastianconcpt 13y ago

Thanks for sharing your experience and insights Sergio. It takes balls to do that shrinking ego experience in public. I'm sure something good will come out of it.

ymn_ayk 13y ago

Priceless lessons from the real world for the people who want to build a product. Thank you.

pcharles 13y ago

good stuff man