

Why my VC funded startup failed - fogus
http://www.codemonkeyism.com/archives/2008/10/27/6-reasons-why-my-vc-funded-startup-did-fail/

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sdesol
This resonated with me way too much, which is kind of scary. My startup hasn't
failed yet, as I haven't launched yet, but I truly understand the technical
mindset issue.

I've been getting better at this as I have started to focus more on the
marketing/business aspect of things. As much as I have learned in the past
couple of months, with regards to the business side of things, I can't seem to
shake the mentality of "it's just not good enough yet".

I may have a point though, as I will be competing against in house solutions,
so I really have to come at them with a compelling reason to use my solution.

I guess the good news is in the next couple of months, I'll have the
opportunity to be more formally educated on the business side of things.

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rjurney
There is salvation. It is called Customer Development. It is a methodology
described in this book: <http://www.cafepress.com/kandsranch>

It will save your startup. And no, I don't get a dime from your click but yes,
I am going to buy 10 copies right now so I can have 3 in my bag to sell at
cost to anyone that asks, wherever I go.

~~~
mahmud
Can you describe what's unique to this "Customer Development" method that
isn't discussed and taught in the rest of the business literature?

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hwijaya
So far, i only read about 35% of the content. I think what makes it unique is
the language that it used is quite casual and it gives a lot of example per
cases. It emphasized a lot about validating your assumptions. All in all, i
highly recommended it too.

~~~
enra
I highly recommend it too. The advice and method concrete enough but not too
specific. It tells you a bit what to do, why and how. Since it's iterate
process its gets better by time and goes well with agile development.

At first your goal is to define your assumptions, test them with potential
customers and gather facts. Next integrate the facts into your product
development. Continue verifying your product and business with customers,
start your sales and go-to-market activities. Last, if you're successful,
scale your company.

I read a lot business literature and Steve Blank's book is exceptional in way
that it makes sense and offers you a path to walk on. For quick reference see
[http://www.slideshare.net/venturehacks/customer-
development-...](http://www.slideshare.net/venturehacks/customer-development-
methodology-presentation) and <http://steveblank.com/>

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joshu
The number of people who come out of the woodwork to say that they invented
delicious before delicious is ridiculous.

He says "essentially the same" and then indicates it was actually a great deal
more complicated.

The hard part is not deciding what to do. It's deciding what NOT to do.

I can't seem to find any image or screenshots of the actual site (it appears
to have been prodata.de) so I can decide if "no product clue" should be added
to the list.

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gojomo
Indeed! Many, many failed startups have hidden within them a much smaller and
more simple idea that could have succeeded, if they'd had the insight and guts
to strip away the excess.

Another example is that the earlier generations of bookmarking sites (which
included Backflip and HotLinks among others) overlooked the massive-potential
of delicious-style tagging and public link-sharing-flows. They were hung up
in, among other things, a model of categories/folders/outlines, and
explicitly-created interest groups.

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1gor
There may not be any specific reason for a startup failure. It is quite normal
that only a small percentage of startups find a unique spot on the 'fitness
landscape' that would allow them to grow and prosper. The rest may be just as
well equipped and funded as the lucky ones, but still they will perish.
Randomness among reasons for success dwarfs most of other factors.

The rational strategy is not to try to discover some 'success recipe' (there
is none), but to do a lot of tinkering, be prepared for many false starts, and
make sure that the unavoidable failures will not kill you as an entrepreneur.

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jbarciauskas
The sixth point may or may not be true, but surely plenty of software
companies in the last 10 years have started on the VC model of spending a ton
of money on upfront development and then reaping the economies of scale
afterwards. He doesn't mention anything in his specific situation that would
lead us to believe that model couldn't possibly have worked. It sounds like
his consulting idea would have been a valid risk mitigation strategy, but
ideally in software you always want to get to the point where you are selling
zero marginal cost bits, rather than only charging customers for person-hours.

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fauigerzigerk
My somewhat limited experience with selling to enterprises leads me to this
conclusion:

Sell either to the people at the very top for a high price, or sell to the
actual users inside the enterprise for a price (and using a deployment model)
they don't need approval for.

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jacquesm
I'm all for reason #4, the rest of them can be fixed, especially if you are
funded to some extent.

But timing really is everything and if your timing is off the rest does not
matter.

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cool-RR
I think the "VC funded" title is misleading: In the article he says "We’ve got
quite some money as a _seed_ investment from a VC."

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Technophilis
Indeed, after I read the title I thought that one of the reasons the startup
failed is the fact that it was "VC funded".

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quizbiz
I'm not sure how I feel about the post implying that every startup needs a
salesperson in order to succeed.

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mediaman
I agree completely with ghshepard. Presuming it's not some sort of consumer
play, if one of the founders is not good at sales, you'd sure as hell better
(1) learn to sell and/or (2) bring in sales talent. Preferably #1 before #2.
The absolute worst mistake you can make is focusing on a fancy technology
without bringing in dollars.

Look at the way a typical company runs. They spend huge sums of money on
third-rate products, many of which have a superior alternative available. Why
didn't they buy the better product? Why do vendors with clearly inferior
products get the sales dollars that a vendor with a better product doesn't?
It's because the vendor with a good sales team gets the product to the
customer, and the fact is that a mind-blowing offering will not get bought
unless there's some guy getting that customer to buy that product. If you can
combine a fantastic product with a great sales team, watch out. But if you've
got a great product but aren't selling early, don't look for a technical
solution out of a business problem.

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datums
Very relevant to today's bubble. Are we calling it a bubble ? A better bubble?

~~~
SwellJoe
Building a quality bubble is like building quality software. Iteration is key,
and sometimes you have to throw the first one away.

~~~
jacquesm
I think bubbles are bad news all around.

Lots of money gets thrown at projects that are doomed to fail. They give the
industry a bad name.

They are a typical example of the pendulum in action, it never stops in the
middle, it always swings through to one side or the other. Either everybody
and their dog seems to be able to get funding or nobody. There is never a long
time when investors seem to have a cool head and a steady hand.

~~~
SwellJoe
I forgot to wave my "I'm Joking!" flag. Sorry about that.

~~~
jacquesm
hehe... oops. So much for me being able to spot humour, apologies.

In written text I find it a lot harder than in spoken word.

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msort
Maybe it is because they failed to make something people want badly enough.

