Ask HN: Why did your startup fail? - red_flags_q
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alex_c
Oh boy! Which one?

Startup #1: we did not recognize the need to bring in the talent we lacked
(graphic design). We had an interesting but ugly product in a space where
looks were important - had some traction but not nearly enough.

Startup #2: we did some market research, got some interest from prospective
clients, got excited and started building our MVP before fully validating the
requirements. Spent a lot of effort on a feature that ended up much more
complicated than we expected, that in retrospect did not belong in the MVP.
Ran out of money / energy and we gave up (too early, I still think).

...around this point I switched to freelancing and let others take the risks.

Client startup project #1: did not do much/any market validation before
starting, and had no clear marketing plan. Built and launched, failed to get
traction, folded.

Client startup project #2: did not do much/any market validation before
starting, and had no clear marketing plan. Built and launched, failed to get
traction, folded.

Client startup project #3: did not do much/any market validation before
starting, and had no clear marketing plan. Built and launched, failed to get
traction, folded.

I can keep going but it's getting a bit repetitive :)

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Pandabob
Can you expand on the lack of market validation? What else would validating
include, apart from interviewing users (qualitative research)? What kind of
useful quantitative research could one do? The obvious answer I can come up
with is building a landing page with a sign-up field to gauge interest, but
what other useful quantitative research can one do to validate the market?

~~~
alex_c
"What else would validating include, apart from interviewing users"

Interviewing (prospective) users would actually be a good start. Some of the
B2C projects I worked on did not do this until after launch.

B2B - I've worked on projects that did not have a single prospective client
lined up before development started (let alone before MVP launch). I think
there is a certain optimism entrepreneurs have in the face of rejection -
sometimes it takes the form of "no one is interested right now, but we just
need to have an MVP to show them and then they will become interested!"

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scottndecker
If you're looking for potholes to avoid when starting a company, I'd encourage
you to read Inspired by Marty Cagan. Not a startup book per se, but a
fantastic read on how to eliminate the 4 types of risks for any product
(value, usability, feasibility, and business viability risks).

~~~
nestorherre
Not the OP but always thankful when relevant books get recommended. Thank you.

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gumby
We were super excited by the technology and didn't focus enough on what
customers actually cared about.

Relatedly: we addressed a need all the CIOs we talked to were in their top 3
concerns. But what we forgot was concern #0: not losing their job. Basically:
if you use startup S's product and increase sales by 5% you're a hero, but if
startup S's product fails you can be fired. While if you stick with your
current crummy approach, if it fails, well, it's the industry standard. It's
worth costing the company 5% of revenue to make sure you don't lose your job.

~~~
unforeseen9991
The "Nobody ever got fired by buying IBM" factor

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nickelcitymario
"Abandoned" might be a better term than "failed" in my case. I founded two
bootstrapped startups.

In both cases, I had an idea for a product that didn't exist yet and that I
was confident I could build. In both cases, I failed to appreciate how quickly
other well-funded startups would show up and beat me to market with products
that were more robust than anything I could build on my own in my free time.
(To be clear: I'm not saying they stole my idea. I'm saying good ideas have a
tendency to be arrived at independently by many.)

I've also been involved with many clients and employers who have looked to
cash-in on startup ideas. For some, the ideas were just bad (oops). But for
every good idea, someone else did it better and faster.

Lessons I've learned:

1) Not every idea is a good one. (Learned this very early on, thankfully, but
everyone thinks their ideas are awesome... and they're not.)

2) If I have a truly good idea for a new product that does not exist yet, the
odds are exceptionally high that lots of other people have that idea too. So
time is not on my side.

3) This is where the VC value is. VCs can get you the resources to build a
team, launch an MVP, and scale. If there are no VCs at my table, the odds are
they're funding someone else that I'll eventually see as a competitor.

All of which is to say: If I were to do it again, I'd focus all of my initial
energies on getting funded and building a team. Going it alone is just a
terrible idea, unless it's a passion project that I don't mind seeing "fail".

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torte
First time around it was a very small one-man operation (just me). I think my
main problem at that time was that I lost track of what I wanted to build
because I fell in love with the underlying technologies too much. Typical case
of when something new came around which seemed a better fit, I switched over.
I guess I was still not experienced as I should have been at that time. In the
end I was not sure what I was actually creating and lost motivation.

The second time there were different issues (and I was not alone). Product-
wise we focused on the wrong thing. We tried to mostly build something which
was already provided from our competitors (just improve it) and did not focus
on something more original first which could have given us an edge.
Financially we invested into the wrong things early on, even we did not need
them yet (like marketing tooling). In the end we were simply out of fuel
(money).

Third time is a charm and I am currently involved in a few businesses (most of
them not even started yet) beside a full-time job. It looks like my current
problem is that I want to do many things at the same time, so will have to
reduce what to focus on soon.

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dejv
I had quite a lot of failures, but one of the most interesting was/is my
software for managing wineries.

Go niche they said and I did. I also picked real pain point: doing compliance
tracking in EU is ridiculous process and it is often called as a biggest
burden of wineries.

It turned out that small to mid sized wineries really hate doing paperwork,
but they dont like to do it on computer as well. So after four years I found
being in limited marked with product that my customers seeing more like
necessary evil and with high cost of getting new people converting to core
users.

Once they did convert they tend to stay for years (zero churn for customers
that make effort to start using it systematically).

I do have some customers and I do keep the doors open, I even do additional
development as I see fit, but I dont see bright future for the product. Four
years of fulltime work went into building it, but hey thats how it goes.

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umanage
My startup failed because we were too late to ship our minimal viable product.
We waited too long to make it perfect and by then a competitor had shipped
their imperfect product and captured our market.

~~~
gary__
Funny, so many people say that competitors don't matter. What size was your
market?

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smudgymcscmudge
I screwed up backups and lost a lot of data customers trusted us with. Maybe
we could have recovered from that, but it sent me into a depression that kept
me from doing anything professionally for the next two years. That was twenty
years ago, and I’m still ashamed to talk about it with anybody who knew me
then.

The startup was just me and one other guy. He went on to become a priest. That
fits his personality perfectly based on how quick he was to forgive me.

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h2oliu
The majority owners felt that it wasn’t important to keep the only person who
knew the product employed.

The literally felt they could exit with a patent and a prototype that none of
the remaining people understood.

The engineer spent 3 months cleaning up previous bad engineering decisions,
and spent another year making the product strong enough to be used as a test
system.

Then they did a round of funding, but paying that engineer was not where the
money was going to go.

~~~
RantyDave
Heh. Been there, done that: The marketing/sales side messed up, fire all the
developers.

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drspacemonkey
Most recent startup I worked for had a decent concept for an entirely new kind
of advertising channel, but the CEO was more interested in fantasizing about
running a unicorn than actually building the company. We had the following
problems:

\- Relied on legacy systems built by large, entrenched companies

\- No consideration given to interchange fees that nearly guaranteed operating
at a loss

\- Repeatedly burned clients by drastically over-promising, delivering late,
then abandoning support beyond minor bugfixes

\- Poor project management (more interested in tweaking JIRA than answering
critical questions)

\- No product ownership

\- Refusal to build MVPs or prototypes to prove concepts were feasible before
trying to turn them into finished products

\- Extreme lack of focus

The company still exists because keep having to get money from more and more
questionable sources (most recent round came from an investor who is wanted by
the Chinese government for corruption). Assuming they continue to operate, I
wouldn't be surprised if they got raided and shut down for one financial crime
or another.

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citrablue
We built a huge dataset that we thought could be usedfor supply chain
management, but the only successful p/m fit was by putting it on the web and
putting ads on it. Even when we got to 5 figures/mo in ad revenue, we insisted
on a different model.

So we ignored the thing that was working in favor of our "vision".

Ended up in an acquihire for garbage money.

~~~
dahart
> Ended up in an acquihire for garbage money.

Congrats! Your startup didn't fail. ;) Seriously, an acquihire for not enough
money is sooo much more valuable a story than we lost everything and died...

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eberfreitas
We hired too much too early. We didn't measure the impact of employees on our
revenue so we had more people working on the product but we where not growing
with it. Then, we took too long to fire those people or find ways to make the
structure work.

------
mtmail
Apple store changed their terms of service. We were lucky pre-launch and
haven't invested too much time. Another startup with 6 people (future
competitor?) closed their shop shortly after.

~~~
throw03172019
Is this Apple retail store or the App Store?

~~~
mtmail
App Store. 6 years ago they announced a better search for apps and disallowed
alternative search engines.

------
lkrubner
Far more startups die of suicide than homocide and that was true of the last
startup that I worked at, which I’ve written about here:

[https://www.amazon.com/Destroy-Tech-Startup-Easy-
Steps/dp/09...](https://www.amazon.com/Destroy-Tech-Startup-Easy-
Steps/dp/0998997617/ref=as_sl_pc_tf_til?tag=smashcompany-20&linkCode=w00&linkId=2292ad04b2b6e409785d2e4cdd570c70&creativeASIN=0998997617)

------
ARothfusz
I've been at a number of failed startups. Here are some of the things that
hurt or eventually killed us. Note that these can apply to projects within
large companies as well. YMMV.

* We changed business models so our customers became competitors. How many ways do you depend on your customers? Is it just sales, or is it marketing too? Will your new customers really be able to replace your old ones? What is the transition plan?

* We always delivered what we promised and sometimes more, but late. Our competitors under-delivered but always on time. How sensitive are your customers to features vs timelines? Have you separated your features so you can deliver _something_ on time? Or is it all-or-nothing?

* The parent company/major investor had a bad year and shut down our funding. They were so big, that had been unthinkable. How diverse are your funding sources?

* After shutting down, we stayed together trying to resell what we had developed. We found an apparently interested large company and really tried to get them to fund our continuation. They were just playing us along, trying to learn what we knew about the market, then they released a competitive product that was inferior to what we had in development before the shutdown. How much do you know that your investors don't? Are you sure you want to tell them?

* The parent company/major investor decided our project was actually really cool and decided to move management back to the mothership, where they were pretty clueless about our market. That killed morale in our office (because it wasn't our project anymore) and slowed down decision making immensely (mothership was overseas). How much do you know that your investors don't? Do they appreciate that?

* We gave away too much for free. The freetards complained the most and required the most customer support and education. Very few of them converted to paying customers. When will a customer be forced to decide if your product is right for them? Why will they leave your free plan? Is your free plan free for you?

* Those that did convert only stayed with us through the middle part of their growth cycle. Once they got big enough, they also had enough money to hire an internal team to perform our service for them, believing that this would cost no more and lead to more control. Are your customers going to grow with you and are you going to grow with them? How? Why won't they leave when they get big enough?

* We spent our balance sheet on lawsuits instead of marketing or product development, defending a feature customers liked but was not core to our business. Why are you in court instead of on shelves?

* We saw the coming trend to run application software in a browser, 20 years too early. We based our product on unproven technology which we had no ability to improve ourselves (included hardware and software), and our prices were not competitive with the current technology. Despite this, we did have positive press and some sales. What, exactly are you selling, and why would anyone buy it? Can you find a practical compromise between your big vision and what people want to buy now?

* We were one company with two orthogonal products. One product was easy to understand and visually attractive -- it got all the press. The other was invisible, extremely powerful, but hard to explain to a broad audience. This made the company feel unbalanced, with razzle-dazzle that didn't lead to sales of the more valuable product. How do your products support each other?

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bozoUser
A lot of it is luck and executing on the roadmap and pivot if the feature
fails.

My question to the startup experience HN crowd is: What would be the right
questions to ask before joining a startup to gauge the success and failure
possibilities in the future?

~~~
azhu
> executing on the roadmap and pivot if the feature fails

You answered your own question. Are they smart enough to make a solid plan and
execute it? Are they smart enough to not miss a beat when their solid plan
inevitably goes off the rails? Is the leadership humble enough to behave like
this? Are they confident enough to be transparent about it? These are my
personal metrics. There is no predicting the future, so I assess how the
leadership handles making mistakes. The rest is just market statistics.

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zuckburger
We couldn't raise money on time and our CEO was not the best at sales and
hiring.

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tomjuggler
Made the mistake of doing hardware. Support issues convinced me to fold early
on. Stick to software, all it costs is time to fix.

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fpoling
Instead of hiring two developers to pursue our ideas we should have hired one
developer and one sale/marketing person.

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bobosha
To quote PG: "startups don't fail, founders give up"

~~~
Hydraulix989
If something's not working, then it isn't "giving up" if there's opportunity
cost.

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rosencrantz
Because 60 % of the people were managers?

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netborn
Whereas this may be a common reason for failure, we failed because we were all
engineers. Nobody with management/sales experience on the team!

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bdcravens
I'd love to hear what an ideal ratio is? Somewhere between 10-25%?

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unforeseen9991
Depends on if you have team leads, that generally "manage and steer" with
general autonomy of a larger manager or director. I'd say 10-15%, past that
it's cruft.

The strength of the leadership and managers is really a key component of how
much % is required.

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sent00001
No product market fit. Poor cashflow management which caused us to run out of
money before finding PMF.

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gshdg
Undervaluing marketing.

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serbiruss
Welp, we raised too much money and didn't live up to expectations. When I say
didn't "live up" I mean we realllllyyyy didn't hit those numbers. It was a
downwards spiral from there...

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entelia09
We were butchered by a patent troll in the 90s. Back then they weren't so
known or hated.

