You're not worried that this reads a bit like you trashing your co-founders? I assume you mean well, but:
* "Lack of conviction" reads like a moral judgement on the rational business decision to leave a startup that isn't working.
* "Fear" is an emotional word that (to me) implies irrationality; "concern" or "wariness" might be more appropriate, especially because you don't give much context. What are they "afraid" of? A company with no revenue and a 3 month runway?
* In a three-person startup, the "half developer half CEO" probably shouldn't be picking out the ex Goldman developer as good-but-not-excellent for not turning out a feed reader fast enough; why didn't you get it done then? And especially...
* ... when the CEO of that pre-revenue pre-product decides to have the company pay to fly him to SXSW during that dev crisis.
I mean, look, you can do everything right and fail, and everything wrong and still win; startups are a huge risk, keep trying, etc etc --- but you wrote this to get feedback from people, and mine is:
* I wouldn't want you as a cofounder (hey --- my cofounders probably don't want me --- I work my ass off to mitigate that!)
* You seem more engaged with the "lifestyle" of a startup --- lawyers, "networking", advisors, incorporation, "voting" --- than with the reality, which is a mindbending daily grind of work and fear and effort hopefully aimed at getting to cash flow neutral as soon as possible, but most likely aimed right off a cliff.
You're obviously going to do this again; all knocks aside, you read like this stuff is in your blood. Better luck next time.
My first thought was, "Hmmm...so this guy had several co-founders, and all of them left in disgust. What's the common variable?"
Sounds like OP has some personality issues that need to be worked out. And, I got a distinct "mad with power" vibe, as well. Early stage company founders do not need a boss. If they do, they're already doomed to failure. It sounds like this fellow just likes the idea of being chief of something, and isn't all that good at it. Many nerds have started companies without management chops or a good personality, but they made up for it by producing code that solved a problem. I'm getting the distinct impression the OP (who may or may not be strong on the code front) is definitely weak on the management and personality front, but wanted to spend all of this time managing and "networking".
I don't claim to be an expert on this stuff, but I am a nerd, and I do produce (when it's my place to do so, though in my current startup, I produce far less code than my co-founder), and I think I would have ditched this startup, too. Nerds, in general, aren't good at being bossed around, and the kind that start companies definitely aren't good at being bossed around.
But, I agree with you. The guy probably does actually have a good company in him (because dedication and a healthy appetite for risk are the primary requirements...everything else pales in comparison). He just needs to keep assessing how he can do things better next time, particularly when it comes to interacting with co-founders.
Wow-- I think the OP failed to learn a few lessons. The biggie is the seeming lack of empathy for his partners and his apparent belief that he's in charge.
At this level, it's a partnership. As a CEO, it's not your job to lead and have your partners follow. It isn't your job to make unilateral decisions on how you spend your time (networking versus coding). With a small team, you can be a cheerleader, a tiebreaker, and a buck-stops-hear guy... But for the most part-- it's a damn partnership.
And it's pretty clear to me that the poster didn't treat it like one, which is a shame.
I think he's very right about the team needing to have the same level of commitment... His deeper commitment is probably why he felt entitled to "lead", even when PG suggested that that might be the problem.
Yeah I'm worried that it reads like I'm trashing my co-founders, but it's not my intent. I don't think there is any way to reflect on what you learned about what works and what doesn't work in a team environment without the some people interpreting that as trash talking your partners.
A couple of things I should probably point out: the SXSW was supposed to be a team trip and the point was for everyone to have the experience of interacting with a bunch of top notch startup people (we aren't from the valley) and I only proposed it a few weeks ahead of time after we had a lot of people telling us that it was the single most useful thing to attend all year (I didn't even know about it before then). Only two of us ended up going, but that wasn't my intention.
When we landed the YC interview, it meant flying from NYC to LAX for a ten minute interview. We were told that only I needed to fly out, but I said everyone should go because they deserved the trip. This was obviously not the cost-efficient approach, but I think it was a lot better for the team.
As for the Goldman comment, I find this to be a typical programmer retort to any questioning of what they are doing: "If you're so great, why don't you do it yourself?" In fact, I didn't question what he was doing for way too long precisely for that reason, and I think that was a mistake. Now as for doing it myself... there are some areas of technical knowledge that I do not have, which is why I brought people on. Now that I'm on my own again, I'm doing my best to get it done myself.
Hey, you probably wouldn't want me as a cofounder, fair enough. I appreciate the better luck next time comment though.
I very much appreciate what you wrote and am very glad it's available. There are lots of great take-aways for my company and, surely, for a lot of people. I'm in the middle of a major release or I'd respond more-- yet, I'm perplexed to come here and see so many people being negative regarding the post. It takes a lot of guts to work on something feverishly for so long and then put things even more on the line afterwards for a post-mortem. It's nothing but good information for people to take in and learn from.
I also was glad he posted, and didn't find his entries as annoying as some here. Tough crowd, I guess.
However, it may be worth noting that tptacek and SwellJoe both have (fairly) successful startups. I don't, and neither do most of the rest of the people here. So when they say something, it's probably worth listening to.
> I don't think there is any way to reflect on what you learned about what works and what doesn't work in a team environment without the some people interpreting that as trash talking your partners.
Something I've noticed about writing postmortems: focus on "What would I do differently?" and "What mistakes did I make?"
Other people are who they are. You aren't going to change them, and they usually have good reasons for what they do.
Most startups fail because of team issues. Mine did - I tried to keep it going for 2 months after my cofounder left, but couldn't. But then, this is my fault. If we'd been further along in development, he might've felt that the startup was a better bet. If I'd listened to him and released the easy version he was proposing, we might've been further along in development (but then, we had good reasons for not doing so...startups are hard). And he certainly had good reasons for leaving - hell, if I'd gotten into HBS, I probably would've left too.
A professor told us at the start of grad school that the secret to success was to be "humble, gracious, and hard-working". I see only one of those three qualities in the author.
Here we have a CEO that refuses to step down to keep the company together, that gets two votes in group decisions while his partners gets one, and that places all the blame for failure on his cofounders when things go south. The arrogance approaches the comical, it becomes more and more outrageous as one reads along.
What is the first lesson he learned? "Getting the team right". You see, he had a bad TEAM. That explains the company failure. Yep. Not him. Nothing to do with the guy that chased away perfectly competent people that wanted to work with him. Nothing to do with the guy IN CHARGE.
Leadership is a two way street. You can't have control without responsibility! I don't think there is any team that wants to work with that kind of leader. You will never "get the team right" if you see your position that way!
His second "lesson learned" is to connect with people, and by "people" he means networking with potential investors, advisors, other businessmen, etc. Yet he never connected with his own teammates!
Next, he finally finds fault in his own leadership. You see, he is too much of a consensus seeker so he can't get things done quick enough! Obviously, he places too much trust in his cofounders. THAT is what he believes his problem is.
Then there's this little gem: "Then I decided not to take Paul Graham’s advice to make the other partner our CEO for the sake of civility (a decision I stand by fully), which effectively ended the company." You would rather your company fail than not be in charge? What kind of leader is that? You still stand by the decision that killed the company? What does that say about you?
Good leaders are famous for taking credit for failure, even when it is not entirely their fault. They also DON'T take credit for success. They let others give the credit to them unbidden. That's what causes their subordinates to at first respect them, and eventually love them.
Dear author: does that sound like you?
I'm sorry if I'm a little harsh; as I read this it is blowing my mind a little more with every paragraph.
I don't really think this is fair, but I can see why it can come across that way. I wouldn't step down as CEO to keep a team together that did not want to be together. This is not to be confused with being unable to step aside for someone who is more suited for the position. That wasn't what was going on here.
I placed a great deal of trust in my team for nearly a year and some of that came back to bite me. Yes I did list a lot of flaws, but they were not flaws that everyone had in common, they were the things that stood out to me as being problematic across the length of the venture and, well, I thought I mentioned a lot of things I thought I should do differently. But I am open to hearing more.
"I wouldn't step down as CEO to keep a team together that did not want to be together". You use this word "CEO" as if it means something. It doesn't.
In a three-person (or two-person, by the time this particular piece of drama came to a head) company, there is a team, and there are players, and if the team is running well there's a team lead --- who's there because the team believes they'll function better with a leader. If the team wants to sound "all grown up", they'll call the leader a "CEO". My team still doesn't call Dave the CEO.
Using the word "CEO" in this situation is a "tell". Think about what you're saying.
>This is not to be confused with being unable to step aside for someone who is more suited for the position.
How was the other person not more suited for the position? The company couldn't survive under you, it might have under him. Do you care more about being in charge or having a successful business? Can you picture yourself working in a successful startup where you are not the CEO?
Time is your most valuable resource, so in that respect... if he was working 2x more than anyone else on the team and they were questioning his lack of commitment... that's just weird.
Unless you have quit your full-time job, you have no idea what it is like to be truly committed to your idea. No idea whatsoever. I would say "lack of conviction" is an understatement for cofounders that have not quit. They have one foot on the dock and one foot in the boat. When the boat begins to sink...they just lift their foot off the boat and forget it ever happened.
If you can't make payroll, you offer no health insurance, and you have no money, your "full-timers only" rule locks out a huge portion of the talent market. People with talent and experience have better startup options than you seem to be acknowledging.
If you're just getting started, and you have no leverage, picking up part-time founders makes perfect sense.
I'm assuming we are talking about a blend of full-time and part-time cofounders. Let's say you are the full-time cofounder. Before you take the plunge, you better make sure you find out if your "part-time" cofounders will ever plan on quitting their full-time jobs. If they say no to you, will you be prepared for the day they decide to quit?
They will never be as devoted as you will be. They will never be as committed. Sure they may be talented and will write tons of code for you - but what happens if they leave and you have to figure out how all of their code worked?
I'm sure you've read all the articles written by other entrepreneurs about how much dedication it takes to build a company. There are always exceptions to the rule (del.icio.us), but I'd say most successful startups require your full attention.
An easy solution is to have uneven ownership. If you're quitting your day job to work full-time on something, and I'm drawing a salary and working 20 hours/week on a side project, I'll expect you to be a minority partner.
Vest everyone's shares too - if I bail on you early, I might just have a few % of the company when I leave.
I think it's OK to have varying levels of commitment. Of course, the CEO should be 100% in the game. But I've worked with developers part-time, as partners, and found them reliable and committed with a lower number of hours.
There are no "decision making rights" in a 3 person startup. Anybody can disagree strongly enough to leave and kill the team. Leaders lead. They don't dictate.
First, thanks for sharing. It's really hard to talk about past failures and yet so valuable. I learned more from your story than reading 20 "How to Succeed" articles.
Second, I just want to share one thing I've learned. There's a lot of pyschology mumbo jumbo in your analysis but all that really matters is the numbers. How many pageviews/users/sales/conversions did you have? Etc.
One thing I've learned about Internet startups is that you absolutely cannot force them. The market dictates your success plain and simple. It sounds like you guys weren't listening to the market; you were not paying enough attention to the numbers. That's really the only thing you should pay attention to. A month into my startup last year, one of the co-founders said to me and the other partner:
Him: "Guys, I've discovered a pattern in our traffic."
Me: "Well, what is it?"
Him: "Every week it decreases."
Me: (Proceed to ignore the importance of this simple statement and pursue the idea for 5 more months, believing that because we had a good team and we thought the idea was good we could succeed, which was too bad because from month 1 the market was giving us PRICELESS advice--we should have been working on a different idea)
Every other mistake was irrelevant because the only thing that matters is the numbers.
Let me just jump in on a topic that I've seen a few times, and one that I think throws programmers for a loop. It's the whole "premature scalaculation" thing.
Did you know the 3 guys who built YouTube initially didn't start it out as a video site? It was a dating site! Even more, did you know they didn't even use a version control system? The philosophy was "push once a day, make some type of change that the user can see." They also were focused on building out features, not worrying too much about scalability at first.
The guy who started PayPal said that one of the most painful parts were the times where he had to delete massive amounts of his own code. He said one of the biggest flaws of engineers is to write "the perfect code." And yet, 90% of it gets destroyed shortly after it's written.
I'm not an advocate of crap code. In fact, at our startup, we write very good code and follow the API models of companies like Google and Flickr so as to have a scalable product and architecture with clean, readable, commented code. But when you're a startup, you have different priorities.
I'd say maybe the first 6 months (an arbitrary number) don't worry about scalability. You don't even have a user ;) Why not worry about how you'll get your first 100 users, or better yet, how you'll get your first 100 users happy, as Paul Buchheit puts it?
On a final note, I read someone else mention about the CEO thing. In my opinion, you don't need a CEO until you at least have user growth down. Yes, you want investors, but try to offset most of that work to PG or whoever else is investing. It's in their interest that you succeed too. You should be working day and night with your engineers, building the product. It will make the future fundraising and meetings much easier, just think about Google and Andy Bechtolsheim.
I really enjoyed reading this, and I think you're going to go far in the future. Sometimes we get dealt some bad cards, and the only thing you can do is to fold 'em and wait for the next hand. Stay persistent, stay focused, and kick ass.
> Did you know the 3 guys who built YouTube initially didn't start it out as a video site? It was a dating site!
Really? Source? I knew that the they'd created the "I was at a party and realized there was no good way to share videos" story for the press. But I thought the actual story was that they'd done market research about trends that were changing the technology landscape, and came up with the rise of cellphone video and broadband access. From there, it was a short leap to "let's put video online".
There a lots of stories of how the company started, the press not being the most reliable. Check out the ACM talk one of the founders gave earlier at uiuc.
I believe the idea was sparked after one of the founders read a particular wired article.
The genesis section starts around 25 minutes in. Looks like we're both right: they mention the Wired article at 25 minutes in, then the cell-phone video aspect (via Indian Ocean tsunami) at 29:00, and the other enabling technologies (including broadband) at 31:41.
Lol you can see the two kids in the orange sitting on the stairs in the middle of the screen. I'll say that the stairs were very uncomfortable.
I saw an e-mail that one of the founders wrote, and I can't remember where it was.. maybe at the second meeting which was private/not recorded. The contents of the e-mail were asking friends to tell their friends, and they offered to pay girls to sign up on the site and upload videos (thinking it would draw in guys).
It's kind of silly to argue how YouTube started--the argument I was trying to make initially was that your code will probably be erased shortly after it's written, especially if you're not sure what your company will be working on.
There's a lot of good stuff in here, but I wonder how much of it you can really be seen without looking at things from inside a startup. A lot of is based on what Paul's written and while I've read most of his essays, I didn't really get some of the points until they were up close.
It's kind of like earlier today I was struggling through a paper written on a topic of advanced mathematics that I'd never worked on before. I asked a friend with a PhD in math if he could explain it to me. He used the same terms that I didn't understand from the paper in his explanation. So, I stared at the paper for another two hours. I doodled on my whiteboard. I could visualize the solution to the problem, but I couldn't work out the mechanics. Eventually it dawned on me, and it was really simple ... in retrospect.
I think a lot of things are like that. Parents try to warn their kids about their mistakes and it rarely works. I think the real lesson, perhaps, is to not be afraid to fail. Bite off more than you can chew and be willing to fail and learn from it. You'll definitely make mistakes, and your startup may fail, but you can at least be certain that you'll learn an enormous amount in the process and that you'll be able to carry that knowledge with you the next time you take a swing.
Similarly, I've noticed that proverbs and aphorisms only become useful after you've been burned by violating them a bunch of times. It's weird because you can be told them and understand what they mean immediately, but just because you understand what they mean doesn't make them meaningful. Or something. It's almost like you aren't able to fully grok the proverb until you have a certain outlook on life or the right schemas or perspectives, but it's impossible to gain those just by hearing the original saying.
(This is really hard to describe for some reason, I feel like I'm missing a word or a concept or something. Perhaps something to do with constructivism.)
That can be explained, in part at least, by the fact that proverbs are often oversimplifying overgeneralizations, contradictory with each other, such that for every situation in life there is at least one proverb that seems like it 'would have helped'... and a bunch of others that would have been unhelpful or misleading. At hindsight time, our pattern-craving minds are more eager to recall the truisms that best apply.
It's an instance of a more general pattern: your rational mind is superseded by another, more primitive part of you, which really only understands one type of "argument"--Pavlovian conditioning. A lot of things started to make sense when I began viewing myself this way (e.g. willpower).
The second major revelation was that this primitive part should not be dismissed as weakness or a useless carryover from a different evolutionary era. I know that in my case, if I always acted in ways that seemed perfectly rational to me at the time, with nothing inhibiting me, I'd be dead many times over by now.
Yeah, but why? Why should it be true? Logically I see no reason why experience should matter, but it clearly does. I should be able to just read a proverb and grok it and be better off for it, but I can't, it doesn't work that way. Why?
I should be able to just read a proverb and grok it and be better off for it, but I can't
Maybe proverbs are more tags than content, like labels on bottles: the label tells you what's in the bottle, but to absorb it you have to drink the contents.
If that's right, then proverbs' main value is in retrospect - i.e. they help to organize experience and talk about it, but not to replace it. I know I've sometimes snorted at a proverb as being totally obvious, or a useless cliche, only to get hammered by experience and later go, "Oh, so that's what it meant."
For things in the realm of an idealized problem solving domain, say mathematics or chess, you can learn a lot from a proverb. But many insights in life can't be reduced to writing, especially those involving either self-mastery or other people (and startups, alas, involve both).
If you read the history of an event how does that compare to living through it? Can you learn to ride a bike from a book? The challenge with a startup--like many other things in life--is that you need to integrate many different inputs, your own hopes and fears among them, and negotiate a working consensus with your co-founders.
How about, if you think about something all the time, you'll be thinking about it when it's relevant, and so it'll influence your actions. If you don't, you won't be, and it won't. And one thing we think about a lot is certain past events.
I think we don't take advice seriously at first due to the sacrifices we have to make to truly embrace it. Advice gets crap-filtered. This is as it should be, because at first you don't really know if it's good advice -- maybe that proverb just doesn't apply in this situation, maybe it's just something that sounds reasonable but isn't actually true, etc.
You can be told, "look both ways before you cross the street," but it takes being hit by a car to really convince you to make the sacrifice of abandoning your current thought process whenever you approach a road.
There is nothing wrong with your cofounders. They are who they are and that's that. You spend the entire time looking for reasons to blame others, but my friend you should look into a mirror tonight because that is where you will face the problem.
You should try to develop your ability to pick partners, but even with a great partner you sound like someone who is way too emotional.
I thought I would never say this to anyone, but you are not ready to be a CEO. If the guys you thought would help you change the world, were not ready to confirm with your strategy and you stood there trying to fight it instead of explaining it, then you need more time and experience.
> I thought I would never say this to anyone, but you are not ready to be a CEO.
That's never a productive thing to say to someone. Either it's true - in which case one of the symptoms of their unreadiness is that they won't hear you - or it's false, in which case you're just wrong.
There've been many times when I've thought it about someone, but the only thing you can do there is avoid working for/with them.
I am inexperienced, and I probably wasn't ready to be the CEO for this venture.
It seems that a lot of people here took my posts to be me just blaming my partners, but that must be a light reading because I definitely talk about my own shortcomings, and I take responsibility for what ultimately happened. I've been looking in the mirror constantly for the last three months, and posting here is part of that process of reflection too.
You can't make judgments without knowing the business plan and how they executed it. It's quite likely the entire venture was doomed and this guy held it together long after it would have been unsalvageable otherwise.
From what I've observed, part of being a founder and CEO is having a huge amount of confidence in yourself. I think erring on the side of overconfidence is much better than the other direction.
People who are really successful in these roles seem to be completely unafraid in business situations where a lot of fear would probably be warranted.
And there are always lots of people standing by and ready to offer up plenty criticism...
Here's the thing. If your company isn't over let's say 10 or 20 people, you aren't a CEO. You just sound like a presumptuous amateur. I could tell where the article was heading just from the number of "CEO" instances. And the title of course.
Much of this has probably already been said but here are some of my observations. First, the lessons page was so long that I wonder whether they have really been learned. Had they been learned it would have been stated in a sentence or two. Rather, what you ended up with is a web page that you _wish_ you could have had weeks ago, to express much of your thinking at the time during the crisis.
The main thing that stuck out was how you seemed to be a programmer as an after thought. Particularly with the voting scheme; did you not have a genuine belief about the right way to pursue certain tasks? Whether from the beauty of a design, or the long standing approach it might have, or from a quick tweak to an existing infrastructure. I also don't think its enough to 'marvel' at two or more viewpoints. Just the fact that they can exist isn't enough, as you do a disservice to both/all parties unless you go with a decision, hopefully one that jives in some way with an internal model of how you see or have come to see things, and thus consistent.
Finally, I got the sense that you were 'hosting a party but constantly worrying about whether people are having a good time'.
These aren't meant to be brutal comments its just I think your series deserves an honest response!
Absolutely your fault. You just can't see it. You wasted money, wasted time and wasted people when given everything in the world. You need to personally change by becoming humble.
if I suggest this to you, what would your reaction be:
- Call up all the old team members and apologise honestly, blaming everything on yourself
If you instantly thought it is something you would never do, then you've not learned.
I suppose it's good for the greater community to be able to read this. But really, what good are you accomplishing here for yourself? I read this and think, "Well, I should probably steer clear of that guy."
My startup has its ups and downs. Lately it's had several downs. C'est la vie. People are always telling me I should be blogging about this stuff. I don't see how it would do me much good until I'm at the point where my product is doing what it needs to do. Otherwise I think I'd just be telegraphing to people to steer clear.
Well, if it's doing some good for the greater community then I must be doing some good for myself. There are going to be a lot of people that disagree with what I'm saying in my posts and probably would want to steer clear of me. Then again hopefully there will be a few interesting people that I get to connect with through this that I wouldn't have otherwise, and that is worth it to me.
I think I remember Marc Andreesen writing that the best way to start a startup is when a pre-gelled team meets a new opportunity. Can't find the blog entry in question, but he suggested that any other founding scenario has drastically lower odds of success.
I thought I had a fairly strong team, with 4 other guys that I'd known (and been fairly close to) in college. Over the year we worked, they all dropped away, one by one. They just had better opportunities come up, and when it comes to the actual daily grind, startups...kinda suck. I'm lucky; I escaped with all the relationships intact, probably stronger than they were before, and one of them just sent me a job offer last month to come work with him (hmm, I wonder if that still stands, in light of the recent financial crisis ;-)). A lot of that came from deliberately taking the short end of the stick on many occasions, eg. I put in the lions share of work and did not take a leadership position. Many others aren't so lucky, and lose their friends in addition to their startup.
I'd also add that it's really important to have worked with people on a project, not just in social settings, and for them all to be on the same page regarding what they want with their life. A lot of people really want to be an employee: they can't deal with the uncertainty and random bad luck that comes with being in a startup. It's a losing strategy to try and force them into a startup; it's not good either for them or for your startup.
> Connect With People to Thrive
I was a little skeptical of this: when I wrote up my postmortem, one of my lessons was "If you're doing anything other than building your product or getting users, you're wasting your time." But there's always the possibility that I'm the one who's wrong: after all, we both killed our startups. ;-)
I think, in hindsight, that I'd look at it this way: Don't expect to get anything out of networking if you don't have a kickass product. However, don't expect to get anything out of networking anyway. If you do it without any expectations whatsoever, just taking an interest in the people around you, you might build some useful connections.
The other thing that struck me: it seems like your startup dissolved before it got to the daily grind of actually trying to build something people want. And that's the part that's really depressing. I never thought that emotional stability would be the limiting factor in startups, but ultimately, that's what killed mine. I remember talking to a coworker who'd previously done a few startups, before starting one, and he told me "Make sure you come out with your sanity intact." I quit because I felt like that was slipping away, and I was becoming someone I didn't really want to be.
Are you going to continue with this same concept, or going to start on something new? What are you going to do differently now to make sure that the startup succeeds? Or this this Part IV of your blog? :)
Based what I've read about this startup, and on the facts presented, it is difficult to tell whether Orian or his co-founders were in the right. It would require to place all of their efforts under a microscope - we don't know how much time Orian sacrificed to go out of his way to find venture funding, etc.. versus the other partners who may have been slaving away over the code. My guess on the whole venture falling through is this - the other partners felt like they were doing more work and putting in more into it than Orian was, probably because they felt that networking is a lightweight activity. Or because networking sounded to them like a more glamorous activity, rather than coding. Or, maybe because they felt they wanted an equal share in the leadership. Whatever the case may be, we don't know how much coding and networking took place.
Orian's case brings up a good question that I've dealt with in the past, and I am sure is on the minds of many startup founders here - how important is it that the co-founders are all technical, and are all coders? Is it, "product first, marketing second?" Or is it equally just as important to have a strong "networking" guy on the team? If so, what are his roles, just networking, or coding as well? What about a guy who is doing the coding but feels he could do networking just as well, is it unfair to him?
Going back to Orian... judging based on other factors, there seems to have been some trust impediments in my opinion - having two votes when all other things being equal is not a fair distribution, even for the sake of maintaining decision-making. Trust between partners is more important than decision making, otherwise the whole thing falls apart.
Rather than take apart Orian's flaws, I am trying to understand if this startup could have been saved.
What if Orian went to his parners, and said, "Guys, how about we all participate in the networking?" (Assuming he did his equal share of the coding by working on the demo.) Maybe this would have generated some further excitement and instilled trust in them? AND, it would become self-evident whether or NOT the networking efforts equaled the coding efforts. I know that some may argue this is not a good solution, because concentrating on networking would have further removed them from realizing a product, but at least it could have played a role in bringing the team back, which it sounds was their first priority. Another thing, higher visibility and transparency. If all the partners were stuck in the same office all day long, maybe this lack of trust would diminish? Maybe a regular status meeting to keep tabs on everyone's progress? What does everyone (including Orian) think, what would be possible solution in their case?
Obviously I can't give an unbiased representation of all the facts... so, I did my best to convey what I felt was behind what went down. I appreciate that you see the nuance in this. What I can say is that we spent a lot of time talking about all our concerns, on many different occasions. So on the one hand, this is part of why I was a little surprised by what happened in the end, and on the other, it's why I feel there probably wasn't much to be done to save the company at that point.
Excellent post, interesting to here the issues another startup has gone through... I get the complaints other have, but still thought this was an interesting read.
I think the core problem is YOU lost belief in your product.
It is very common for successful companies to have key founders quit before payday and during shitty times. The company lives through the tough times.
What has served me well is to have an attitude that I am going to go along on this ride(my startup) regardless of my cofounders. Until you can sustain that belief, your start-up will live on(hopefully with your co-founders--but not necessarily).
There's never really just one point of failure. There is maybe a so called turning point, one mistake that is then daisy chained with other mistakes. Soon enough the compounded mistakes lead to an overall failure. You have passion, dedication, and more. The founders there weren't right, and now you've learned something pretty damn valuable. Time to move on and start something new, don't let one failure ever stop you.
Do you mean Blank's emphatic appeal to unconditionally fire or everybody in "bizdev" in distressed startups?
Or his emphatic appeal to iteratively build a market for your evolving product rather than over-invest in engineering, miss your sales estimate, and fail to service negative cash flow in a "Noh play" of blame and catastrophe?
I think the "death spiral" scenario Blank describes in the book (using WebVan) happens less often now, but still, people don't talk to their target market enough. Maybe this is why people who are making things for themselves tend to do well, they can skip this step and still come out OK.
At least now more true than ever though.
David recommends taking a more tangible approach. We might not get away with pie-in-the-sky stuff in this economy anymore.
Maybe I just wasn't clear. What I got from this article was the very simple "Get Real" concept. No need to focus on intangibles until you have the only tangible that matters:
your product.
I agree this concept is so "basic" but if this article is making top page, perhaps we still have some more beating to do?
Thanks to everyone for their feedback. I'm a bit overwhelmed by the response. I've done a follow-up post to more concretely respond to some of the main threads here.
as a friend told me once, when you add a second person to your team and it's the wrong person, your overall performance will fall under 100% of what you could be doing alone.
This is what I sometimes feel that I'm unfortunately experiencing myself (we are two).
I second this opinion. The last position a tech startup needs to worry about filling is a CEO, CMO, etc.
A CEO twittering all day long, hanging out / socializing / spending money at conferences and meetups is NOT going to bring ANY value to the startup at all.
You first need a product!
Once you have a product out of the door, a proven idea and a cash flow you can start worrying about filling up those hi-procrastination roles. Until then worry about finding people who can code, can design, can hack, can do anything that has a measurable outcome.
As much as I wish you were correct, reality says otherwise.
When I was 100% a geek, I would agree with you: the product (code) is everything, who cares about those other minor business annoyances?
Reality: how programmers does it take to implement a good product that people will buy? More than you can afford. How do you afford them? Raise money. Which for you may mean "pitch to dumb rich people", but that's still a CEO's job.
At any time in the project development, a good pitch to the right business partner can turn the company around and greatly improve its prospects. Yes, if you don't do any of those "CEO" things, you may still succeed because you push through an amazing product. But why take the chance? Try to do everything well, the product development, as well as the CEO/pitching part.
I don't think a network is very crucial to a startup's survival.
I think the value of the technology is.
IMO, where value exists, everything naturally follows, including people/companies that want to network with value.
I found the story to be rather depressing, yet there were a few points that were - to me anyway - glaringly obvious.
Someone focusing on suit type endeavors when that someone is an engineer/geek/hacker/techie/[insert name for us here] is irresponsible in that it amounts to a gross misallocation of resources.
In other words, any double digit IQ'er wearing a suit can network, but not everyone can design and code and troubleshoot, which is what creates value.
I agree with your point in the very early stages of a company
Networking for the purpose of getting to know people can be useful, but during the early stages of a startup if you are out talking to people your goal should be to understand your target market better. Otherwise, don't worry about networking instead of coding until you need to raise money.
I completely disagree with this point...
"Someone focusing on suit type endeavors when that someone is an engineer/geek/hacker/techie/[insert name for us here] is irresponsible in that it amounts to a gross misallocation of resources."
What do you plan to do if that person doesn't exist? Wait to sell your product until you can hire one? Get another co-founder to go out and raise money? PG talks about Sam Altman pitching phone execs the early days of Loopt to great success, and his background was CS not sales.
"any double digit IQ'er wearing a suit can network, but not everyone can design and code and troubleshoot, which is what creates value."
There are two fallacies here.
First, the fallacy that everyone can network equally well. Some people are incredible at networking, they can network so well that they are a valuable asset to a company for that reason alone. (See Keith Ferazzi) Everyone can "network" but only certain people can make their network pay very well.
Second, that only coding creates value. A great product still doesn't sell itself. What do you think Apple would be without brilliant marketing? You can have the best product in the world technically, but in terms of market value you have nothing if its not sold.
"PG talks about Sam Altman pitching phone execs the early days of Loopt to great success, and his background was CS not sales."
Of note is that while pitching execs in the early days he was also doing at least 2x the development work of anyone else. He didn't stop coding until long after we had a fully functional demo application that was good enough to raise our series A.
If that person does not exist, then one needs to be hired eventually, as it would be better to wait than to have a person not adept at the task doing it wrong.
I am sure that some are better than others at networking, my point was (minus my admittedly harsh figurative description) that high intelligence and knowledge are best applied to something that mandates intelligence, as opposed to something that does not mandate a high level of intelligence and knowledge. Those kinds of activities (networking, sales, marketing) do not mandate exceptional intelligence, from what I have seen those mostly require innate skill and experience. Many people can network, sell, and market. Not many can code.
Now, I mentioned more than coding when I referred to what I believe creates value, however I will respond to your point by saying that
1) creating value is conducive to attracting attention IMO
2) I did not state that there should be no networking/marketing/promotion at all, I wrote that it should not be done before a product is ready, and that it should be done by someone adept at it (usually not a propeller head like me, for example, although I am sure some guys are skilled at those activities as well as tech work)
"Those kinds of activities (networking, sales, marketing) do not mandate exceptional intelligence, from what I have seen those mostly require innate skill and experience. Many people can network, sell, and market. Not many can code."
I still think this is arguable, you describe what separates star marketers from the rest is "innate skill" in this case innate marketing/sales/networking skill. However, I think I can equally make the case for star marketers. I'll discuss you're argument from the marketing perspective because its the area I'm most familiar with and feel most qualified to speak for.
Marketing isn't just a game of follow these rules and you will be successful, its not just a matter of experience either. If it were, marketing agencies wouldn't be differentiable and campaigns like Absolut wouldn't have cult-like status. Just as there is an so described "innate skill" for programmers I would argue that there is a similar type of "innate skill" that separates the best marketers from the rest. To say that intelligence on the same level as programming isn't mandated for marketing is demeaning to that profession as a whole and represents a misunderstanding of what really goes into a well defined marketing strategy. Admittedly, it may not be as quantitatively measured as programming, but that does not mean it requires less intelligence or is less demanding.
I do agree with your point that creating value is conducive to attracting attention, but by no means is it a limiting factor. There are plenty of historical examples where things of little to no value, when marketed well, rose to great success. (The pet rock, among other things)
I've done a fair amount of both programming and marketing, and while I don't claim to be a "star" at either, I still cringe when people dismiss one or the other categorically as being of little added value. It happens from both sides and most of the time just represents a lack of understanding of the efforts that go into either.
I referred to a combination of innate skill and experience, not one or the other.
I did not say that marketing was a follow the cookbook type endeavor either.
Problem with this point is that, neither one of us in this small debate has any hard data to back up or counter our respective points (does any exist? I personally doubt it) which are highly subjective anyway, mostly based on anecdotal perception.
I stick by my opinion however, and can point to the relative number of programmers versus marketing people in the global workforce as indicative of what I am saying . . . if more people were smart enough to program, as opposed to market, they would . . .
Marketing has its place, but to an admittedly occasionally arrogant geek such as myself (who has come across some incredibly, impossibly dumb marketing types) they are figuratively just the people who stand outside the shop on the sidewalk and try to get people to step inside and look at the wares . . .
"I stick by my opinion however, and can point to the relative number of programmers versus marketing people in the global workforce as indicative of what I am saying . . . if more people were smart enough to program, as opposed to market, they would . . ."
Can you further explain here? Market forces will determine where people go, salaries will rise until people move into those positions. The number of people in given positions is not indicative at all of the skill of the people taking those jobs.
"Marketing has its place, but to an admittedly occasionally arrogant geek such as myself (who has come across some incredibly, impossibly dumb marketing types) they are figuratively just the people who stand outside the shop on the sidewalk and try to get people to step inside and look at the wares . . ."
I agree with you that this is an extremely arrogant viewpoint. I've met many stupid programmers but I don't assume the same of all programmers. I also think you're confusing the roles of sales and marketing but that's beside the point.
Discounting the value of people who aren't like you isn't a very great way to get anywhere in life, especially as an entrepreneur.
The numbers speak for themselves. That is obvious.
You are not reading what I write. I did not mention skill, I mentioned intelligence. Those are not the same.
It is quite simple. Look at all occupations. There are more non-intellectually demanding jobs than there are intellectually demanding jobs. There are more dumb people than smart people on the planet. That is obvious.
Speaking of market forces, why are programmers on average paid more than marketing and sales people?
You have met stupid programmers? Interesting. I agree that not all are extremely bright, however, anyone who is truly stupid will not be able to even learn how to program, much less become worthy of the title programmer, whereas, I have seen some nearly illiterate folks working in marketing, and sales, and I realize those two are different, even though I do not bother to differentiate between the two when making reference to them.
"Discounting the value of people who aren't like you isn't a very great way to get anywhere in life, especially as an entrepreneur."
"You are not reading what I write. I did not mention skill, I mentioned intelligence. Those are not the same."
Innate skill and intelligence are pretty much the same thing. (Although I would argue that intelligence can grow as a function of effort).
"Speaking of market forces, why are programmers on average paid more than marketing and sales people?"
The pay of programmers vs. marketers is pretty comparable. Check salary.com
"Neat, now you are starting the personal attacks."
No, just responding to your multi-post personal attack against marketers/bizdev with one against arrogance. Its up to you whether to take it personally.
I have more points I could make, but this doesn't seem to be going anywhere useful so I'm done with this discussion.
Ok, fine, lets be precise. First, innate skill is an oxymoron then because "skill" implies that it is learned (see dictionary) and "innate" implies it is not.
As far as "on average" goes, where do you think salary.com/payscale.com get their data, averages of real-world salaries.
2 a: the ability to use one's knowledge effectively and readily in execution or performance b: dexterity or coordination especially in the execution of learned physical tasks
3: a learned power of doing something competently : a developed aptitude or ability <language skills>
IMO, where value exists, everything naturally follows, including people/companies that want to network with value.
This is overly optimistic about the capacity of your fellow man to recognize value. Sometimes you just have to tell them what the value is, and if you don't have a network, you have no one to tell. Sounds ridiculous to nerds like you and I, I know, but if you spend a little time in the corporate world you'll begin to see how much major purchase decisions are made based on what a trusted individual recommends. A lot of times the "trusted" individual is a vendor with a vested interest in selling something. This actually works better in the long run than you might think, because most people work in the same business for many years, and if one vendor screws them (while seeming very nice), they have time to learn and change to another vendor (probably also someone they've spoken to before).
But, I do think the OP does have some prioritization issues. It always comes back to the product. If you don't have a great product, you don't have a company worth networking for.
Eh... founders should always be talking with different, intelligent people and soaking up ideas. If that's what you mean by networking, fine. But I think the networking tptacek refers to is the type that's organized X times/mo. and for the purpose of professional development. It's those ad hoc events where this group is encouraged to co-mingle with this one.
It has its place, but just as useful at times is getting together with a group of peers you trust and exchanging notes. Having a few beers and talking about what challenges you're having, what breakthroughs you've made...
I think the tradtional idea of networking is overemphasized among a lot of startups (and sometimes dangerously so) because it's an abstraction away from the work that keeps them alive. You've got to make sure you keep a watchful eye on your schedule and don't confuse attending X and Y event for Z productivity.
Agree, networking is over-emphasized. We did a lot of networking at the outset, with no particular plan or strategy, and it doesn't feel like time well spent.
Not sure I'm saying "my kind of networking meets X times per month", but I will say this: we organized monthly meetups for the professionals in our market (computer/network security), made it as all-inclusive as we could, and it's been far more valuable to us than the vanity networking we did early on.
Isn't this one of the major recurring criticisms of valley culture? That all those people do is go to parties with the same people every night?
Sorry, I was unclear. What I meant was (at least from waht I gathered from your post) that you're skeptical of vanity networking and that you favor less formal gatherings done in the spirit of meetups.
I thought you might have been, but I just wanted to plug the idea of organizing market-specific meetups to network with customers, prospective employees, and partners --- people who can actually help your business --- do this!
As someone who has gone through Y Combinator early on, I think networking was actually a bit under emphasized. A lot of networking can be useless if you don't follow up in depth; but our company has gained immeasurably by identifying people who have built and scaled businesses (technically and otherwise) and then got them to sit down for an hour or two and teach us about an area that we're weak on.
I agree that "professional networking" is often a waste of time, but meeting other startups and potential users and sharing ideas has always been valuable to me. That's what I was trying to say by referring to "connecting" and not just "networking". Maybe there's a better word...
Yeah but would you have startup destroying conflicts over whether or not founders were bringing in investors and advisors before you had a product?
I'm not sure I'd question the commitment of people who were actively building the product either. It sounds like this startup really had some forward momentum with people getting stuff done. I'm not sure the authors expectations were reasonable, and I think he had to work fairly hard to kill this startup.
I think that courting investors and obtaining advisors is one thing, general networking is another, which is what I am referring to, and by general networking I mean building contacts/telling people about what you are doing/determining who can provide you with what.
I agree with the second part of your comment.
On the other hand, some folks take being pragmatic to an extreme, as in no order/uniformity/quality control/structure/thought into design/effort to identify possible future issues and a general just get whatever done in a hurry and push it out the door attitude . . . which is all just as bad as too much formally define roles/establish this and that and the other/talk about and plan stuff to death/posture around with this and that and the other . . .
I agree with all of that. I mean the author may have been saved a lot of hassle further down the track with failing quickly, or he might have killed a good potential company - I really can't say even though I put forth an opinion on it.
If you have good people, some funding, a demo and the start of a code base then thats a lot to lose over your expectations on networking and days of the week devoted to the startup. Even if the truth is more networking and fulltime cofounders would have helped.
You know, maybe I didn't make it clear enough that I thought we had a great thing going right up to the end. But what happened when we landed YC was that a lot of stuff came to the surface that hadn't been addressed well enough before, including a partner's belief that a lot of my effort up to that point had been worthless and he didn't trust me to do any better going forward. That was a pretty rough pill to swallow, especially after being responsible for most of the YC application, leading the three interviews we did to get accepted and building the front end for what we demoed.
I certainly may have killed the startup by emphasizing things that I thought were important, but it doesn't make any sense to think I was actively trying to kill it. My point was that I was blindsided by what happened in the end, so now I've gone back to think about how we got there and, you know, these are some of the conclusions I've drawn and of course they could still be wrong.
I got the impression you thought you had a good thing. I guess my key question would be this: Given everything the startup had going for it, do you think the conflict points (networking, time commitment, and a few others) were sufficiently important to stake the startup on?
On the one hand you could feel in retrospect that the conflict points were important enough that the startup could never have succeeding without the direction you were pushing - so you were lucky it ended swiftly. On the other hand if you think your startup had a good chance of success even if you hadn't won those battles, then you may want to look at your conflict resolution.
No, the conflict points that are being discussed here a lot were not sufficiently important to stake the startup on at the time when we were faced with having to walk away. The real point was that by the time we went to Boston to meet with PG and get some advice, my partner had decided he could no longer trust me or my judgment and wanted to leave, and I felt the same way about him. While I wish that could have been avoided, I don't think anything that could have been done at that point would have changed the ultimate outcome for this team.
After spending a few months thinking "okay, so how did it get to that point, and I didn't even realize it" I wrote my reflections. I still think the startup has a good chance of success, but not with the dynamics that were at play then.
Not always. There are times to put your head down and build (depending on team composition and what your business is doing, of course)
It totally depends on the product, but from the YC PoV, you have 3 months to build something that dazzles investors. Generally, YC discourages hunting for networking/bizdev/funding deals because you have EXACTLY ONE SHOT to impress a room full of the most important early stage investors on the planet.
But YC also requires you to be in the same location as the other startups and to attend two dinners each week, plus it encourages visiting the YC partners during "office hours".
Personally, that strikes me as a bit too generic for a tech startup. The value of the startup stems from the value of the technology it produces, not the value of the network of contacts one of the founders has built. While networking can be valuable, allocating resources to networking BEFORE there is a working product is a huge mistake.
Well, that really depends on what you define as value. There are plenty of tech companies out there that created tons of "valuable" code but were not successful because somebody else got the attention or was able to strike one critical deal.
As for allocating resources to networking before there is a working product, check out www.path101.com. I met these guys when they did an open brainstorming session with nothing but a preliminary pitch deck and not a line of code. Being open from very early on enabled them to find angel investors and their first employees, and when it came time to doing an alpha launch they had tons of people that had been eager to try the thing out for months.
I agree that vaporware has been successfully marketed before, however, that is not my idea of creating value, so I agree that it depends on how one defines value, and I would not want that - marketing non-existent products - to become the meaning of value within the context of a tech startup, that is best left to a marketing/publicity outfit if you ask me. I also think it is wrong to conduct market studies under the guise of a real product offer.
What happens when it turns out that the bullet points with features cannot be implemented, or are simply not the best solution for the users?
I find pg's thoughts on the subject of how problems may end up being redefined as they are being worked on to be very wise advice.
There are some great companies built without a product. Often times you can fake sell before a product exists and give a refund to prove that a market exists before development. Otherwise all your product dev can be wasted.
I know successful (>10M revenue) companies who have mocked up a brochure and sold it this way. Their thought was "if they don't bring out a credit card right away you aren't solving a pain, you dont have a product".
True, Microsoft is an example, Gates went out and bought what would become MS-DOS, AFTER he made the deal with IBM. However, this has to be looked at in context - he had the money to buy it from someone else.
Right, I remember reading something to that effect once . . . that event sort of proves both opposing opinions doesn't it? Yes, you can make money by selling vaporware, and yes, it is evil and abominable people/companies that do it (which is why I won't do it)
I wouldn't go as far as labeling it evil - as long as you have the resources and the "follow-through" to make vaporware into a real product. It took a significant amount of resourcefulness to land a deal with IBM, whether it was easy because of prior contacts, or hard-earned from the ground up, is notwithstanding. However, the final product was delivered, and the quality was good is most respects. But Gates' goal was not to build a product from the start, and Orian's goal was, which makes the situation quite different.
I think it is evil because it basically amounts to making a bet with other people's money . . . I realize that "what if" scenarios sound unrealistic at times, however . . . seriously, what if - in that particular case with Gates, for example - the product had turned out to have some major showstopping flaws?
Consumers/users ALWAYS get screwed in those type of scenarios. I don't believe in taking risks with other people's money.
When I said "fake sell" I was meaning using it to prove a market. The process is as follows:
1. Create mockup/demo/realistic brochure/non-functional physical prototype
2. Go to your target market. Count number of targets
3. Try to sell them the product at the target price
4. Once they hand over their credit card etc, just hand it back.
5. Tell them thanks very much for their support, but this was a test so you can make sure the market wants the product, if they want we can contact them when/if the product is ready.
6. Do your stats. What proportion of the target market you sampled bought the product. Extrapolate to the estimated population to get an idea of how many units you can sell.
[rinse and repeat to make your product more attractive to the market]
It's the only way I have ever heard of turning a snake-oil, soothsayer business plan into one that can statistically show the uptake of your product in the market.
Yeah. Your way wastes everyones time as the product isn't right from the start and it's harder to build a great business, as you don't know if you'll ever get paid. Everyone to their own though. I'd rather be sure.
Oh, "my way" involves solving the problem of "how to find out what users want" WITHOUT resorting to shady little tactics.
I refuse to believe that there is no other way of conducting a market study other than resorting to sneaky, dastardly little tactics. Why? because there ARE other ways.
Also, nice strawman, I obviously did not counter with "conduct NO market studies/surveys" - I came back with "that's dishonest and I don't believe in it".
Funny, how I have set up services (granted, not products) that made me money and I did not have to resort to cheap little deceptive tricks.
1. How can you be sure someone wants to pay for something unless they bring out their credit card? I would love to know a better way.
2. Is it unethical to sell a product that isn't right for the market, and promote half truths like most advertising does? Which is better in the long run?
I would rather have a product I can be statistically confident is going to sell because users have wanted to pay for it. There's no debating whether it's right for the market or not.
Thanks for the discussion by the way, this is fun :). If you do have a better way I'd love to know.
As I mentioned, finding out what the users want is a worthwhile problem in and of itself. There can be no one true formula, as not all scenarios are the same.
What has worked for me in the past (for the provision of services) has been a combination of becoming intimately acquainted with a process, and talking to people who carry out this process regularly, both with the intention of identifying where a need can be fulfilled. I am not talking about a bullet list of features to checkmark or cross out, that's junk, users don't LIE about a feature that they say they need and then don't, no, users simply do not know what they truly need a lot of the time, I don't focus on getting them to tell me a feature per se or a highly detailed aspect of the service I aim to provide them with (because what the hell do they know about the work I am doing, they know about the work they do, which is why I go to them) I focus on obtaining information and insight from them. I aim to give people what they need, as opposed to what they want . . . why? because if you just give them what they need, they will thank you for it later when they realize that this is what they needed, if you give them what they want, they will later realize that is not what they needed, but will not blame themselves for it, they will blame you.
Market surveys and market studies in many ways shapes and forms have been, are, and will continue to be used to great success, the problem with your variation is that it involves deception. You don't bs people and trick them into taking your marketing survey under the guise of a product offer.
I am seriously curious to know how many times you have seen that work. I would think that many people would resent the tactic and retaliate by not purchasing your product, or they would lose their trust in you (and rightly so, you done suckered them once) and therefore respect.
It's interesting to note how many thousands of products have been researched, developed, and taken to market to great success, without deception tactics.
As for success, it was introduced to me by a very successful serial technology entrepreneur, investor & advisor with at least one personal 200M exit, and multiple smaller or similar size.
I guess we will agree to disagree on the ethics. I personally don't find it any different than deceptive advertising that is used in the majority of sales channels worldwide, the many deceptive claims of products overstating the benefits, understating negatives etc.
I see what you are saying about the widespread consumer deception, it is true, and yes - we can agree to disagree.
I simply refuse to do it because others are, and believe that successful market studies can be carried out without deceptive tactics.
This general attitude and outlook on my behalf actually mostly derives more from sheer pride than from any sort of assumed moral superiority - I simply can't sleep at night if I think that I applied or relied on anything other than my own merit to achieve something, and deceptive/slick tactics make me feel as though I cheated because I was unable to do it the hard way . . . that kind of thing.
I will close by conceding that I may be wrong about this, however, I might also just end up identifying more user needs in a highly accurate manner with my approach, which is conducive to even greater profits.
Well, I don't disagree that things can be done that way, but I do not think it is the right thing to do, for several reasons. Why learn to design/program just to pull a total suit move and sell vaporware/vaporproducts? If that is what you want to do, then just fake sell as you said, and then hire a few coders from India who can put whatever together for peanuts and then call that good (I would not be able to sleep at night ever after however). Also, those kinds of maneuvers are best left to suits - who are good at those kinds of things - instead of tech people, who are normally better at building things as opposed to pulling marketing maneuvers.
Even if you're a top-notch developer, it still takes an order of magnitude more time to develop an actual product than to put up a product description and a few mockups, and you can still expect 90% of your products to fail. You can easily spend years of development time on products that nobody wants. Why waste all that talent?
I had/have the same aversion to selling things that don't exist that you have. But honestly, I think that the next time I do a startup, I'm going to do it that way. I get really sick of speculatively building things that nobody wants. Why not make sure they want it first and then build it?
Plus, two of my favorite startups - DropBox and RescueTime - both used this approach (though perhaps with a little less dishonesty - they clearly marked it "demo"), and their products are better for it.
It will be worth your time. Its kind of like Stephen Key's approach, but more for technology/products.
Often times first thing I want to do is jump into code, and it's the last thing you should be doing. Proving the market is critical, and the only way you can prove it exists (for most companies) is to fake sell.
When people tell you, I would buy it if it had this feature, they are often lying. Unless they are willing to pony up their credit card, you haven't solved the problem imho.
I think that the objective is a market study, for which I believe there are some tried and tested methods, although it occurs to me that in this field those may not apply as so many other things, however if that is the case, then I believe "how to find out what the users want without selling vaporware/other questionable tactics" is a worthwhile problem to tackle in and of itself.
Selling vaporware is to me similar to using users as unwitting beta testers, I don't believe in it, I think we should be upfront like the examples you cited: if it is a beta let people know, if it is vaporware, let people know, if it is a demo, let people know.
When I say fake sell I mean do the transaction then provide a refund.
In my opinion it's the ethical thing to do, not just for you but for your users. Why bother creating a product if it's never going to get traction in the market? You won't be able to afford to support it well, and it won't develop into a great business unless you get significant revenue. This is more unethical for the users, as you'll have to fold or let is stagnate. Why risk it?
Time is a valuable resource. Wasting people's time with a marketing survey under the guise of a product offer is not my idea of ethical. I would fly off the frickin' handle if someone wasted my time for me like that, using a deceptive little trick like that.
* "Lack of conviction" reads like a moral judgement on the rational business decision to leave a startup that isn't working.
* "Fear" is an emotional word that (to me) implies irrationality; "concern" or "wariness" might be more appropriate, especially because you don't give much context. What are they "afraid" of? A company with no revenue and a 3 month runway?
* In a three-person startup, the "half developer half CEO" probably shouldn't be picking out the ex Goldman developer as good-but-not-excellent for not turning out a feed reader fast enough; why didn't you get it done then? And especially...
* ... when the CEO of that pre-revenue pre-product decides to have the company pay to fly him to SXSW during that dev crisis.
I mean, look, you can do everything right and fail, and everything wrong and still win; startups are a huge risk, keep trying, etc etc --- but you wrote this to get feedback from people, and mine is:
* I wouldn't want you as a cofounder (hey --- my cofounders probably don't want me --- I work my ass off to mitigate that!)
* You seem more engaged with the "lifestyle" of a startup --- lawyers, "networking", advisors, incorporation, "voting" --- than with the reality, which is a mindbending daily grind of work and fear and effort hopefully aimed at getting to cash flow neutral as soon as possible, but most likely aimed right off a cliff.
You're obviously going to do this again; all knocks aside, you read like this stuff is in your blood. Better luck next time.
[edit: toned down very slightly].