

Why Startups Fail and Why Gigamon Should've Too - drm237
http://www.lovemytool.com/blog/2007/09/why-startups-fa.html
By all measures, Gigamon is a spectacular success which is all that more remarkable consider that they have taken no VC money. Like so many entrepreneurs before them, the six co-Founders of Gigamon built their company the old fashion way.
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thomasptacek
Denny says Gigamon "contradicted Gartner", and "Gartner was dead wrong". This
is my space, too. All due respect, Denny, but, not so sure of your policework
there.

Gartner predicted the demise of the standalone "intrusion detection system".
Denny's product is enabling infrastructure for network monitoring and network
security tools. It's not an intrusion detection system; it's lower on the
value chain than that.

The market for intrusion detection systems, which are sold almost entirely to
enterprises, evaporated in the 3 years following that Gartner report. There
were several hundred million addressable dollars of it in 2003. Now there may
be 50.

You probably don't care about this. But what you might care about is, there's
a difference between bootstrapping a company into a 15MM/yr niche and funding
a company to go after a billion dollar market. The former has an outcome like
nCircle's, where you limp for the next 5-10 years of your life. If you do
well, you get a "lifestyle company". The latter has an outcome like
SourceFire, which involves private jets.

Lifestyle companies are great. But they don't have promising exits. The "Paul
Graham Way" involves exits; murder yourself for 2 years, never work again.
This is more the "Joel Spolsky Way"; end up with private offices, a 4 day work
week, and an Aeron chair.

We've been bootstrapping for a couple years now. It's definitely cost us time,
and we have the constant hazard of falling into a lifestyle company. I'm not
saying one approach is better/worse than the other. But if you're selling to
enterprises, ignore the analysts at your own mortal peril.

~~~
bharath
Well written. As someone who works for a major IPS vendor - I can point out
one more area in which Gartner was way off. Namely, the market sizing for the
IPS industry. We are #1/#2 in the industry in terms of market share and by
extrapolating from sales graphs and such it seems that IPS is nowhere close to
the billion dollar market that Gartner said it would be. Another distinction
that is obvious to an engineer but not to an analyst/VC type is that IPS is
just a marketing buzzword. IPS = IDS with the option to drop packets and block
flows. As for your comments on ncircle, I agree that they are limping. But I
am not so sure they're addressing a niche any longer. The vulnerability
assessment people (worked for one of those as well) are busy going after the
compliance market -- which doesnt seem like so much of a niche given the kind
of $$ enterprises are spending on SOX.

~~~
thomasptacek
I kind of said the opposite: Gartner was right, and people stopping buying
IDS. By your market share assertion, you either work for McAfee or
TippingPoint; the combined IPS rev for McAfee, TippingPoint, IBM, and
SourceFire is over $500MM.

I'm an engineer too, and I get that IDS and IPS are basically the same thing
in different form factor, but product packaging, deal structure, and go-to-
market are just as important as whether your pcap_loop hooks up to a switch
fabric shared memory buffer or the BPF driver.

Sheer unstoppable excellence will always be valuable, but controlling for
that, an IDS company (or a company tied to the fortunes of the IDS market) is
a bad bet.

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gigamon
Thanks for the comment.

That was the whole point of the article. Success has so much to do with luck.
I worked just as hard as I always do but what I did in the past just didn't
work out. But I trusted my gut and just keep going.

Everyone is an expert. But expert gets to go home at night and being a lonely
entrepreneur is 24/7.

Thanks.

Denny K Miu

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nickb
Sometimes, people confuse luck for skill. For every 1 of Gigamon's there's
1000 failures. As much as any rational person hates to admit it, luck is #1
thing successful startups have.

~~~
brlewis
Except Gigamon is yet another example of a company that made something people
want, and succeeded despite other factors because they understood their
customer. This doesn't look like an example of luck dominating.

Luck's role here was to keep them from doing something something the news.yc
community would consider dumb, i.e. setting aside what they knew about their
customers in favor of what they thought an analyst group was saying.

~~~
rtm
this is a test. I think you have already honed in on the basics: "You have to
actually do it". If it seems like there are too many things to try and they
all look appealing, you just need to understand yourself better and self
observation will help you there.

You are wrong to suggest that we grow to like anything life forces us to do.
If you have an analytical mind, a job flipping burgers or pressing buttons as
a tester is never going to satisfy you. You might be able to change the job to
something you like more (e.g. write test scripts) but that's a whole other
topic.

Some additional things I have learnt that may be useful for you are: (1) There
is no one thing predestined to be your calling in life, there are several
things you may like. (2) If you really want something, you'll usually get it
eventually or find something that you like better.

It is useful to set a long term goal based on what you know you like so far
and at least initially, while you are still in college, it is useful to state
it broadly but don't tie yourself to a specific way of getting to that goal.

For example, I know I enjoy coding, technology, business and teaching. There
are several combinations of these that could end up being my calling. The
specific image I may have in mind is to work as an engineer / technical
entrepreneur now and become a I think you have already honed in on the basics:
"You have to actually do it". If it seems like there are too many things to
try and they all look appealing, you just need to understand yourself better
and self observation will help you there.

You are wrong to suggest that we grow to like anything life forces us to do.
If you have an analytical mind, a job flipping burgers or pressing buttons as
a tester is never going to satisfy you. You might be able to change the job to
something you like more (e.g. write test scripts) but that's a whole other
topic.

Some additional things I have learnt that may be useful for you are: (1) There
is no one thing predestined to be your calling in life, there are several
things you may like. (2) If you really want something, you'll usually get it
eventually or find something that you like better.

It is useful to set a long term goal based on what you know you like so far
and at least initially, while you are still in college, it is useful to state
it broadly but don't tie yourself to a specific way of getting to that goal.
NEW END.

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gigamon
" ... yet another example of a company that made something people want, and
succeeded despite other factors because they understood their customer. " ---
from briewis

Thanks for that comment. That's the point ... provide a service or a product
that your customer wants and is willing to pay MORE than what it takes for you
to provide, then you have a business. Once your business is profitable, then
you are in control of your own distiny and that's why we do STARTUP.

Luck is a funny word and everyone can disagree on what it means and whether or
not it should be called something else.

The bottomline is that when you do startup, there are a lot of things that are
really outside of your control. And if you are hoping that they will come
together just right without enduring the hardship and disappointment in
between, and it works, then it is just dumb luck and power to you.

But if you work many years and things don't work out, but you persevere
regardless and then one way, pieces magically fall in place and success is
within sight, then you can call it what you want.

I call it luck even though I know better.

Thanks again for reading my article and for commenting.

\--Denny--

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gigamon
Thanks again for everyone's comments (especially from thomasptacek and
bharath).

I am really not trying to take any positions here and make any comments that
apply to situations. I am also not trying to disparage Gartner (we subscribe
to their service now because they provide values).

Again my point is that success in a startup has a __whole __lot to do with
market timing and no one has a crystal ball (not even for the experts). The
best that we can do as entrepreneurs is to keep our nose to the grindstone and
do someting that generates revenues sooner rather than later.

If in fact someone builds a "lifestyle" business, it is not the worst that
could happen to our family.

Good luck, everyone.

\--Denny--

Denny K Miu

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cstejerean
Very interesting lessons to be learned from this. Most importantly that
analyst firms like Gartner can be dead wrong with their "predictions" of the
future. If you have experience in your industry trust your own gut feelings
over those of some outside analyst (but do take their opinion into
consideration)

