
Ask HN: My Startup is Going to Die Because I Messed Up - calebhicks
I'm 24. I started a company 7 months ago, planning to bootstrap it with $5,000 borrowed from family.<p>We started working hard at creating our brand. Logos, webdesign, website copy, flyers, and SEO. We divided our time equally between these tasks and selling the product. We were headed to profitability in short order.<p>I quickly learned my cofounder was over his head in personal debt, and could no longer work full time. Some of our borrowed money went to him to try to keep him around for a couple of extra months ($1,200). It didn't work and he had to get a job.<p>We've been floundering back and forth, spent the majority of our money, I invested another $1,000 to help us make one more sales surge to allow us to dedicate more time. We planned to see if this startup would work, setting a sales and spending goal in under 60 days. Success and we continue, failure and we cut our losses.<p>We planned  to make it happen starting next week.<p>Friday afternoon I got a call from a business owner in another state, telling me that our business name infringes on his trademark for his business name. Our name would be mycompanyname to his companyname. We had only checked and seen that companyname.com didn't exist, we did not check the trademark database.<p>At this point, discouraged, unable to afford new marketing materials and a complete redo of everything we've done so far, we're left with little money and a threat of a lawsuit if we don't change everything.<p>Here are the mistakes that I made, and will learn from:<p>1) Learn about the financial position of any cofounder. A cofounder's personal situation will hugely impact his/her ability to grow the business.<p>2) Investigate any trademarks or copyrights on any of your branding or naming. Wasting time in a bootstrapped business will ruin you.<p>3) Have a plan. Not just a mental plan, but an actual written plan. Decide what is required of the cofounders, decide where money will go, decide your failure point.<p>4) Be prepared to drop the project, or go it alone. Putting all of your eggs in a basket carried by your cofounder can lead to disaster if you aren't prepared to run with the project yourself.<p>What other lessons can I learn from this? Where can I improve so that my next project doesn't fail in similar fashion?<p>tldr: My business failed because I made mistakes in timing, my cofounder, and business branding. What else can I learn from my experience?<p>EDIT: After a few comments, and an e-mail, I should clarify that this is not necessarily a web-startup or app. It's a business targeting seniors (hence the flyers, which were placed in senior centers and used at senior health conferences). My cofounder came into the picture as the one with more experience working with the senior market. We had suppliers for our product, so our main focus was to sell, sell, sell. So, to add another lesson:<p>5) Cash in a small bootstrapped company should be spent on client acquisition. Not on whiteboards, office refrigerators, business cards, or flyers.
======
TheSkeptic
Undercapitalization is one of the most common reasons a company fails. Have
successful businesses been started with $5,000 or less? Sure. But don't drink
the Kool Aid. Lesson #1: it usually takes a lot more than $5,000 to get a
business going and to sustain it long enough to reach break-even. In your
case, just think of it this way: any salesman worth his salt is unlikely to
work for less than $5,000/month...

Lesson #2: at the age of 24, if you don't have even $5,000 worth of savings
that you can afford to blow and need to _borrow_ that amount from family, you
should probably take a step back and think long and hard about your financial
priorities. Depending on your location and your education and/or skills, you
can probably _earn_ $5,000/month, if not substantially more, working for
someone else. Yeah, that's not as cool as starting a business, but opportunity
costs are greatest at your age. What's really not cool: wasting away your
twenties and having nothing to show for your efforts once you hit 30. Sure,
everybody in StartupVille is always one venture away from a big exit or a
$100,000/month business, but when you go to conferences and meetups and see
thirty-somethings who have no net worth because they've been swinging for the
fences since they were 20, it isn't pretty. Bottom line: at your age, in the
absence of substantial existing savings or alternate sources of income (a
trust fund, etc.), working on _anything_ that requires you to "work for free"
for any length of time is likely to be really, really harmful to your finances
in the long run.

~~~
TheSkeptic
By the way, I see from your past Ask HN submissions that in the past ~60 days,
you've been thinking aboout "an opportunity in creating an ad network for a
niche market" and looking for ways to accept payments for iPhone apps you've
developed. Since your business here is apparently unrelated to these, I'll add
lesson #3: if you're going to start a business, you must be 100% focused on
that business. When you keep taking your eyes off the road, you're more than
likely going to crash.

~~~
calebhicks
Thanks for your posts.

The ad network idea started when my cofounder here first got his other job.

You're definitely right though. I appreciate your insight in both of your
posts re: the opportunity cost of running a startup at my age. I have a degree
and could get a decent job. Sometimes it's good to see reminders of that
option, since I've always leaned towards starting my own business.

~~~
lsc
bootstrapping usually means both getting a good job working for someone else
and running your own business. Getting to the point where you can pay your own
rent from your bootstrapped business is a huge milestone; one that will take
serious effort to achieve.

------
mdolon
Look on the positive side - $5,000 isn't a ton of money and people are failing
at business every single day, usually losing a lot more too. If I were you I'd
get a job to pay back the money borrowed from family and then bootstrap
another startup again, building on the lessons you learned from this
experience.

~~~
calebhicks
You're right.

Thank you for the encouragement.

$5,000 is less that the price of tuition, and I've definitely learned more
than I ever did in a semester of college.

~~~
riledhel
Maybe because college is aimed at something different? that's like comparing
pears and apples. You learned a lot, but that doesn't replace college
education/networking/etc (and college doesn't replace what you learned doing
your own business either).

------
martincmartin
You've learned a lot about business, and it cost you a lot less than an MBA.
Given the time and money you've spent, you're in a better position than most
24 year olds.

------
patio11
For future reference: very little of what you spent money on is in the
critical path for B2B sales, which I assume is what you are doing. One might
decide to sell the software to at least one person, then write copy and design
flyers. After you have one sale, $1k is presumably not a lot of money. (I am
hearing high touch sales so presumably you priced at least in mid four
figures, right?)

~~~
patio11
P.S. Anybody can say you infringe on their trademark, but no one you need to
worry about would call you about it. The proper response is "Thank you for
your phone call. We will take such steps as the law requires.", then do
absolutely nothing until a lawyer C&Ds you on paper. That is the minimum for
legal threats to raise above the level of noise.

~~~
calebhicks
Thanks for your thought and responses. I appreciate them.

The other business owner has said they've pursued other trademark suits in the
past. He said they've found that approaching by phone first has been a more
pleasant way for them to solve problems than first sending a C&D (I'm sure, if
for no other reason, than to save on lawyer fees).

So you're saying I should wait for an official C&D? I have little doubt that
he'll send one. But I should wait until I actually receive it.

~~~
SwellJoe
90% of people who say they'll get a lawyer involved never do (the kind of
people who get lawyers involved, _start_ with a letter from their lawyer).

That's not to say you don't need to change your name/logo, if it really is
confusingly similar to someone else in the same industry (if they're not in
the same industry, trademark doesn't apply). If there is a problem there,
you'd want to remedy it. But, trademarks are pretty specific. If the guy is
claiming a trademark on a generic word, you can probably safely ignore him
(i.e. if I claim "Joe's Soda", and someone else makes "Sam's Soda", I don't
have a case against them...but if someone made "Joe's Cola" I probably would).
Also, if you both do business regionally rather than nationally, and he is not
in your region, he probably doesn't have a case (though if he has a USPTO
trademark and has more than one location, he might, anyway).

As you've learned, it's much better to figure this stuff out _before_ you
invest in printing and logos and such.

~~~
nextparadigms
Didn't Facebook trademark "facebook", "book" and I think "face", too?

------
gnok
You sound like you have a good idea of what went wrong. But surely you got a
lot of things right too. What were they?

It would sound like your mistakes point to a lack of research. It sounds like
your co-founder isn't a friend, so you didn't know enough about him to get
started with.

Finally, this isn't legal advice, but don't give up on the trademark situation
yet. Especially if you haven't launched. I'm not so sure the other party would
be willing to pay lawyers for a lawsuit, especially onsidering there isn't
much to get out of small bootstrapped startup. Also, if you haven't launched,
then you dont have very much to lose. You haven't established a brand yet, so
perhaps this might be the best time to tweak with this. And of course, you'd
want to improve on your branding research this time.

------
dpcan
How have you failed if you haven't even launched?

If nobody knows your brand, why can't you re-brand? Did you buy a bunch of
useless merchandise, or can you personally tweak some logos in Photoshop to a
new name.

What is your partner's role? Sounds like he must be the coder / designer.

More than a plan, it sounds like you need a great mentor.

(I assumed this was a web startup, but you made flyers, so now I'm not so
sure.)

~~~
calebhicks
We've launched and have been selling product for about 5 months.

My partner's role is that he was the one with the experience in the market. He
had the connections to suppliers, resellers, etc.

I edited the post above to explain a bit more of the business, and the
reasoning behind flyers and some other merchandise. Beyond that, I could tweak
some logos and start over. I've replied with a couple of concerns I have with
that in other posts.

Thanks for your feedback, I do appreciate it.

------
zeemonkee
There's two options at this point. Keep the business going or give up.

There's no way anyone can make that choice but yourself. Many people will say
"don't give up" but there is little to be gained if the business is going
under and you start throwing more money - or other people's money - down the
drain.

On the other hand the business shows promise but needs more time and funds,
none of which you have right now.

There is another option - suspend business operations, if possible, and
rebuild your funds through a "normal" job or consulting. If the business is
viable you should be able to relaunch at a later date in a stronger position,
perhaps with better partners. If it isn't, you can try again with a new idea.

Knowing when you stand and fight and when to retreat to fight again another
day is essential.

~~~
calebhicks
Very helpful. You're right, there are two options.

I've considered suspending the business as you mentioned. Which would be quite
easy to do, our burn rate is negligible (could be near free). While earning
funds to continue operations, I could spend personal time rebuilding the brand
materials.

My concern is not knowing how to approach a business cofounder who would be
entirely uninvolved in such effort. Can I make a clean break and take over
that portion? Or, essentially, start a new company on my own? Our partnership
agreement is very basic, and does not cover this situation.

So I would be unaware of what would be right both ethically and legally.
Thoughts?

~~~
troymc
Ethically I think the right thing to do is talk it over with your business
cofounder, and to come to a mutually-agreed decision.

Is your business a company with two owners or a partnership? If it's the
former, I think you'll have to buy out your cofounder's shares. To determine
their valuation, I think you'll have to talk to an accountant. If it's a
partnership, I think you'll either have to get a new partner, or start a new
business.

And I might be wrong, as always.

~~~
calebhicks
LLC filing as a corporation.

If I decide to pick up and run the project solo, I'll definitely work with him
to a mutually-agreed decision. Thanks for your comment.

~~~
gregpilling
Have your ex-partner sign a release of his interest in the LLC. He basically
gives up all his rights to you for the business. You can convince him to do
this by telling him that you will take on the trademark suit yourself.

Then I would wait for the C&D too, like patio11 said. Most people that have
been in business have sent and received both, and many are in a position like
me where I can just have my lawyer buddy change the name from the last notice
he sent for me, and he does it for nothing (or a beer). So a C&D is really not
that expensive either - and if he won't do that he probably doesn't think he
has much of a case.

You can do a quick search at USPTO.gov for federal trademarks, but don't
forget to do it at the state level too. This guy may only have a trademark at
that level and thus have no case against you. If he has a non-ambiguous
federal trademark for your industry, then you should bail out of the name
immediately. I once spent $3000 on lawyers fees because I bought an $8 domain
name with somebody's trademark on it. I had to give it to them of course, in
forgiveness for them not suing me for damage. Oops. If you have to give the
domain over, you may find middle ground by convincing him to let you redirect
it to your site for a while so your print advertising doesn't go to waste.

One more solution comes to mind if the other company is in the exact same
business as you. Team up. Figure out how you can mutually benefit from each
other. It might help your business get going better, and may handle business
he can't reach because of distance.

------
wombat
I think you only go under when you stop refusing to die.

Our company went completely under (Chapter 11 stuff), we lost all staff and
had legal threats from all sides.

After a few weeks of misery we decided that we don't feel like dying. We went
all-in and turned it around on a shoe-string budget in a matter of months.

Keep refusing to die, and you'll be fine - it just won't be easy!

------
barisme
Product and sales first. It sounds like you spent your marketing money way too
soon. Later you might have found out that your offering was not even what
customers really wanted. Then you're back in the same position where you've
spent everything on marketing, and have no money to make more appropriate
materials.

Here's your next written business plan:

1\. Build something you can show off - a product, a demonstration of your
service, whatever. 2\. Show it to anyone who will sit still. 3\. If 2 out of
10 people are not trying to buy your stuff or hire you by the end of the demo,
pick one from a,b,c below:

a) show it to different kinds of people b) revise it and show it to more
people c) take whatever you've learned and can recycle (code, art) and go back
to #1 above.

~~~
gfodor
Yes, a thousand times yes. On a $5k budget, marketing was the _last_ thing you
should have been spending money on.

~~~
13rules
The number one thing that you have to do as a startup is sell, sell, SELL!!
(<http://www.youtube.com/watch?v=S8H2FIf1oH4>)

------
lsc
I'm also bootstrapped. I am not sure if I'm really a 'success' yet, but I'm
beyond where you are. I've been running businesses all my life and it's kinda
hard to pinpoint where this one started, but I started selling my current
product in 2005. At this point, my company has around $200K/year in revenue,
which is about double what we had the previous year. I have one full time
employee, and I can pay myself $30-$40K/year while buying the equipment
required for growth without debt; so we're ramen profitable, but not yet
opportunity cost profitable.

I am not sure why you are giving up at this point, but I can point out some
mistakes you made that I don't think you see:

It's fine to bootstrap on five grand; but if you only have five grand? you
will almost certainly need to keep your dayjob. I have been running side
businesses for most of my life, but for nearly all of that time (until 2009
when prgmr.com really took off) I also had a dayjob.

Dayjobs are great. Someone else gives you enough money to pay your rent and
keep yourself in personal computers, chairs, food, etc... and more
importantly, someone else pays for your training. I've always worked as a
SysAdmin, and I've learned a whole lot operating other people's fleets that I
could turn around and apply to my own operations.

Most companies are okay with your side projects. be up front, most places have
a form where you write down your own 'inventions' or whatever before they hire
you... but again, if we are bootstrapping and not swinging for the fences,
there's little chance of your employer becoming interested. To most companies,
another couple hundred thousand a year is not enough to bother the lawyers
about.

Note, the company will be bothered if it looks like you are spending effort on
your project at the expense of spending effort on the stuff they hired you to
do. Once I was asked to choose between my own business and my dayjob. (I chose
the business... worked on my business for a few months then got a full-time
contracting gig)

I've always cycled between a full time dayjob with benefits (get one every
time COBRA expires.) corp to corp contracting gigs (for venture capital; I am
in a capital intensive industry; corp to corp gigs allow you to spend pre-tax
dollars on business equipment... but be /very careful/ with this- tax debt is
not discharged through bankruptcy. Once you have enough revenue that paying
taxes on all of it would be a big deal, get an accountant. Note I said
revenue; this counts the money you are getting from the corp-to-corp
contracting gig.) with the occasional month or two full time on the business
mixed in.

Next, avoid loans as much as possible. you /will/ fuck it up. Over and over.
It happens. Without a loan, you really only return to zero, and eh, you still
have that dayjob, right? it's not that big of a deal to be at zero when you
get massive checks every month. I mean, you can also return to zero with
bankruptcy, but to make that worth the lawyer time, you need to get fairly
large loans, which isn't as easy as it sounds. Getting $10-$20K in debit is
irritating, can kill your business, and usually isn't worth the lawyer time
and hassle of bankruptcy. And a loan doesn't always look like a loan; at one
point I signed a contract for a year of bandwidth at $1500/month; this was
back when I needed between 1/10th and 1/100th the amount of bandwidth that the
$1500/month got me. I mean, I was launching a product that could have used it,
if it really took off, but the product didn't take off, and I was full time on
the business barely clearing rent, so I ended up with rather a large amount of
debt. (I ended up paying it all off as a contractor... honestly, it may have
been best to just fold the company at that point and declare corporate
bankruptcy; maybe they wouldn't have come after me personally? I don't know.
but my point is that leases should be looked at as debt.)

Spend dayjob money on rent at the place where you sleep. Spend the five grand
on flyers and other business expenses. (though, five grand is a whole goddamn
lot of flyers and business cards. $50 worth of businesscards gets me and my
employee through a year, usually.)

If you only have five grand with zero income, the office fridge wasn't your
big mistake, the office was. You can get an office once you have business
income. Until then, use your garage or front room or what have you.

Anyhow, if the other business owner called you rather than sending a lawyer
letter, he's willing to talk. Call him back and explain the situation. Be open
about your numbers (this isn't always a good idea, but in your case, you have
nothing to lose by letting him know you are not worth suing.) Ask him if you
can work something out. This is the advantage of not having any money; Sure,
just about anyone could sue you and put you out of business, but there'd be no
profit in it; lawyers only work for a percentage of the winnings if they think
the winnings will be large enough to give them a better total expected return
on their time than working hourly. The guy isn't going to sue you unless he's
mad enough to pay a few hundred dollars an hour just to put you out of
business.

Of course, if he's a competitor, it probably won't work out. but otherwise,
maybe it will. worth a shot.

------
bugsy
There are state trademarks and national ones from the USPTO. If his is a state
trademark and he is in another state, it shouldn't affect you at all and him
harassing you would be malicious interference with a business.

If it is national, you should just change your business name.

As far as the other guy needing to work, that should have been figured out
before. I take it you must be independently wealthy to be able to self fund
for a long time? You are fortunate, but it's not realistic to assume this is
true of everyone. Obviously his debt is related to not getting much if any
income after 7 months of working on this venture.

I think your advice is very premature to say the least. You have not
successfully executed yet. So you don't have working advice to give. It's
strange when this happens, but seems kind of common. So many business books
written by guys who don't have experience creating or running successful
businesses. A lot of wild eyed speculation presented as fact.

Here is some advice. I see in your explanation you have a list of blaming
other people. It's the cofounder's fault for not working more and wanting to
earn an income after 7 months. It's the other guys fault for having a
trademark. But if the cofounder worked with no salary longer you'd still have
run into this trademark issue. The thing is, if you suspected your product had
any chance of working at this point you'd not be giving up on the trademark.
You know that the business is failing for other reasons, yet you come up with
this other stuff. It's a denial of reality. Figure out why the company really
failed. It wasn't the cofounder or the trademark that did it.

Now I know you are reading this and getting ready to press reply and type,
"Bugsy you big dummy, didn't you see that I accepted blame? The title of this
article is 'How I messed up'." Right, about that. Let's look at your numbered
list of the four ways ways you are taking responsibility. #1 says your
cofounder is to blame. #2 says the trademark is to blame. #2 says your
cofounder situation is to blame. #4 says your cofounder situation is to blame.
So you don't actually admit to doing anything wrong. Saying "I made a mistake
depending on all these other morons!" is not taking responsibility. It's
blaming others, while not even taking responsibility for blaming others.

Was there a product? Were there customers? Was there growth? None of these
questions are addressed at all in this essay, and these are the real questions
to have been asking. If the company has a viable product, a customer base, and
is making sales after 7 months, the co founder wouldn't be walking away due to
becoming destitute after 7 months of no income, and the other cofounder
wouldn't be abandoning the business over a extremely minor branding issue.

~~~
calebhicks
You're right. I wrote my post in one sitting, and didn't realize that I was
hiding my own faults and shortcomings in getting to the position the business
is in today.

My list was not one of reasons I failed, but one of lessons I felt I should
learn from the situation. It is not a complete list of my failures by any
means.

I'm sorry if it came off that I'm trying to give expert startup advice. I do
not pretend to be a success story, or one worthy of providing advice to
startups. But I sure wish someone had told me 8 months ago that I should look
into any possible trademark issues with my name, and thought I'd pass that
along.

I certainly don't blame the cofounder for our predicament. I was there for
each step we took. I was merely pointing out that it's important to figure out
the responsibilities of each cofounder, and that it may be wise to understand
the life circumstances of your cofounder before diving in. Also, it should be
noted that he got a job 4 months ago, not just this week. But you're right,
not everyone has the luxury of being able to work with no pay for an extended
period of time.

If you read the comments in the thread, you'd know that there is a product,
we've been making sales (although not as quickly as we'd hoped), and are at a
near break-even point. Yes, I would be abandoning the project too early to
tell if we could have been successful. Yes, I was undercapitalized, and don't
have the money or passion (gasp!) to redo a lot of the work that we've been
doing. There's an opportunity cost in redoing the work that I'm not sure I
want to take on alone.

For the record, here are some key areas in which I failed:

1) Undercapitalizing the business. I knew we should have more cash, and I
didn't make it happen. I felt nervous and unqualified to approach investors,
particularly because we weren't doing something new and exciting, and our goal
wasn't to become the market leader, but take a piece of the overall pie.

I wanted to work full time for myself, more as an ideal to feel like I was a
true entrepreneur than to do what was best for the business. As others have
mentioned, I should have been working and doing this as a side project until
it could provide a livable income for me and my cofounder.

2) I often created and even sought out distractions from pure customer
acquisition. I spent too much time tweaking this-or-that on our website and
other things not directly tied to gaining customers.

3) I failed to motivate myself to get stuff done when my cofounder was out of
the office. I could have moved forward with the project without him there. I
didn't. This was a huge failure point, for which I accept 100% responsibility.

4) I misallocated some of the little money we did have. Unnecessary expenses
that did not contribute to building the business. I wanted business cards, I
wanted a nice whiteboard, I wanted an office, I wanted a vanity 800 number. I
wanted to feel more official than the business was ready or could afford to
make me. And I allowed that to distract me from selling.

5) I began working on the project because I saw the dollar signs, not because
I was truly interested in the product or service I was developing and
offering. Now some would say that the money is all that matters, but for me,
working on a project I was more interested in would better motivate me.

There are plenty of other mistakes I made. But, those are the 5 that come to
mind first.

I appreciate the time you took to write a thought out response, and to make me
look at more lessons that I can learn, or more of my faults I can work on.

~~~
bugsy
Wow, awesome list. Those are some incredible insights.

You did extremely well with my giving you a hard time, this means that you are
definitely going to be successful, just keep at it. (Whether 'it' is to
continue with this one or to start completely new ventures.)

------
cincinnatus
Dude, you are just getting started. Someone threatening to sue you is the
first sign of success. If you have cash flow fight on. Figure out your
partnership issues and go for it.

------
trevelyan
Caleb,

You only planned to do this for another 60 days. So the only question that
matters is whether you can get customers in that timeframe.

I'd continue to work on your business with whatever materials you have on
hand. Maybe you can sell your domain and LLC to this guy to cut some of the
losses, but even if not just tell him it will take two months to take care of
the paperwork.

If he is a total dick and still sues, just shut down your company like you
were planning on anyway. In exchange for being unreasonable, this guy will
have paid a bunch of money to sue a company that no longer exists, and
alienated the holder of the exact-match domain for his business in the
process.

------
spencerfry
I think the best thing you can take away from this is that you got a good
little business education for merely $5,000. I think you mishandeld some of
the ways you allocated your money, however, and think you probably could have
gotten away with spending far less for the same education.

The legal nonsense aside, I'd have started your company while you both still
had jobs and worked on it during your off hours. If things began to pick up
and you got some user traction, I would have then spent the $5,000 where it
was needed. For one thing, if you had done it this way you'd have come across
your co-founder's money problems earlier.

------
ookblah
I don't think you should be quite ready to throw in the towel.

Have u launched yet? You said you were headed to profitability. What about the
original idea as others have mentioned here?

Here's another one:

Plan to dedicate more than 7 months to said startup.

~~~
calebhicks
Great point.

I haven't decided to throw in the towel, but I've nearly run out of cash and
my cofounder is not around to help.

You're right though, I should continue fighting to make it happen. Spend a few
weeks to change our name, forget about the printed materials, and keep working
to see if there are legs.

If I were to succeed, how would you (or other HNers) approach the issue with a
cofounder, given that he will have not been involved in the additional push?

~~~
nakkiel
One thing I've learnt is that there is always room for negotiation. Call the
other business owner and come up with a time-frame to rebrand your company.
Get him to agree with that time-frame and move on.

That way you could use the remaining cash for a customer push and replenish
your cash reserve at the same time. Prepare your rebranding peacefully and if
you actually run out of cash, you won't have to rebrand (in some countries,
this is costly).

Another thing: contact the domain squatter of the other brand. Ask him how
much he wants for the domain. If you run out of Cash, consider selling your
domain to the other business owner for half the price. Heck, you could even
sell your website and design.

~~~
mst
Also, making a polite agreement with the other business owner doesn't cost him
anything. Potentially having to sue you does. This means that provided you can
convince him of your good faith, giving you long enough to rebrand is probably
in his best interests.

And, hell, it requires ... a phone call. No harm trying.

------
chmike
What is most important is if your business works (gets traction/clients). The
name and branding is only secondary.

Explain to the other company that you agree and will change your name shortly.
Start thinking of a new name and get some more clients to get some cash. If
you have a good business, than it can also work without a name.

It is sad to have wasted so much money just because of the name. But look for
marketing solutions where you don't need to pay anything. If you already had
some clients, propose some advantages if they get you more clients. etc.

------
antirez
6) It is hard to bootstrap a company with so little money. I'm all against big
funding, VCs and so forth, but $5000 to start? At least you should have enough
money for all the founders to live in a decent way for the time needed to get
other funds or to get customers.

As was suggested some day ago here, and as I did when I created my social web
company (that had a successful exit), a good thing to do is to create an
adsense based site, SEO optimized, in order to live out of adsense.

~~~
barisme
Yeah the other founder probably needed to contribute $5000 too. If he could
not, that would have been your first clue that it wouldn't work.

------
diego
I was expecting your question to be: what can I do to make my company survive?
From what you describe it sounds like you're giving up, the situation itself
doesn't necessarily sound terminal. Other startups have survived worse
situations and succeeded in the long run.

Not saying that you should or should not give up, that's your call. Only that
it sounds like a challenge that's no different from the one many other
startups faced.

------
rmason
I'd visit a lawyer who specializes in trademark law. Most lawyers will give
you an initial hour at no charge. At bare minimum you will learn your options.

I faced the same problem as you ten years ago. I received a cease and desist
letter from a large multinational. I handed over the domain name, rebranded
the business and I'm still here. So it doesn't have to mean the end of your
business.

~~~
dctoedt
> _Most lawyers will give you an initial hour at no charge._

An hour might be a bit much to ask, but 5 or 10 minutes, definitely.

------
turbojerry
You haven't messed up yet. You now have an excellent opportunity, research
everything you can about companyname and the owner you talked to. Then get
yourself on a plane to their offices with everything you have about your
company, turn up and ask if you can take the owner to lunch / dinner and pitch
him your company. Explain in simple terms that you don't have the cash to
change at this late stage, that either you can find an accommodation between
both your companies or your company fails. Make an offer of say 5% equity and
a link to companyname on your homepage for an agreement not to sue for
trademark infringement, I would expect him to make counteroffer, you counter
that with something a bit less plus a capital investment of X, negotiate until
you have a deal that works for both of you and if you can't, be prepared to
walk away, if companyname and your mycompanyname are in the same line of
business then you could always pitch yourself as an employee of companyname to
the owner.

------
citricsquid
Do you have your product built? You're already giving up, the worst that can
happen is failure which is the _same_ as giving up. Scrap marketing, find a
new name and launch. If it fails because of no marketing, oh well that's a
shame, if it succeeds then woo! If you give up you're just skipping the launch
part and going straight to guaranteed failure.

------
patrickyeon
Terry Matthews is a successful businessman who also does a lot of investing in
Ottawa, Canada's startup scene. He's a well-known name in early-stage
businesses and the telecom industry up here. I can't source this off-hand, but
one time someone asked him what to do about needing to lay off a number of his
staff. Terry told him "if you've got a good team, don't lay them off and lose
them. Keep them together and start another company with that team."

Admittedly, that's easy to say for someone who's got the money to start
companies left and right. What I'm trying to say though, is that while your
company didn't work out, and it's quite possible that it looks like there's
nothing to salvage, you have a team (or maybe only the two of you, but you
keep on referring to 'we') and you'll have another opportunity soon if you
keep your eyes open.

------
astrec
Have you talked to someone about the trademark? Do you know if you are
actually likely to be infringing?

There are tests that are applied. Also, simply having a similar domain name
may not be a problem unless you're directly competing with the guy or you're
passing off. There are many limitations to trademark.

~~~
calebhicks
Actually, they do not even own the companyname.com. A domain squatter does.
Presumably, they can't use it because this company has targeted them before
with their trademark lawyers.

One lawyer has said that we are definitely infringing, while another said that
there may be some leeway. However, the trademark holder is in the exact same
market as us. So many of the limitations you mentioned don't affect his
ability to defend against us.

~~~
rosenjon
I'm not a lawyer, but I have done a lot of trademark research for my own
business, and I can tell you that you're definitely infringing.

The bright line standard for trademark lawsuits is essentially "would a
reasonable person mistake your brand for your competitors?". In this case,
based on what you have said here, you have taken your competitors name, and
added "my" in front of it. So most reasonable people would conclude that it is
highly likely someone will mistake your competitors brand for yours.

If you were in a completely different industry than the similarly named
company, then there would be some wiggle room, because you could argue that
even if someone was initially confused about the two companies, there is no
possibility for them to buy your product thinking it was the competitors.
However, you are in the exact same industry, so the likely conclusion is that
the customer will be confused and likely to buy your product thinking its your
competitors.

Unfortunately, the domain name issue is irrelevant in the face of trademark
law. In fact, as has happened with many other infringement suits, it is likely
that if you lost the lawsuit, you would be forced to transfer the domain to
your competitor.

~~~
calebhicks
You're absolutely right. I don't contest that we are infringing.

For the record, we didn't know anything about his business when we chose our
name. We merely saw that 'companyname.com' was taken but not used. We assumed
(you know what they say about assumptions) that meant we could go with
'mycompanyname.com' and be fine. Had we known about his trademarked business
beforehand, we wouldn't have done so.

Thank you for shedding more light on the trademark situation.

~~~
innernette
_I don't contest that we are infringing._

This is not legal advice, just common sense: be careful what you admit online!
In some cases, willful use of someone's trademark may entitle them to punitive
damages or lost profits.

~~~
calebhicks
I didn't know that I was infringing until he notified me. But after doing the
research, I am quite certain that I am. I definitely plan on making the
necessary adjustments.

------
rjett
FWIW: This appears to be his startup: <http://www.myliferesponse.com/> and
from his resume, it appears he's the business/marketing partner in this
relationship.

~~~
troymc
I did a quick search for "Life Response" at the USPTO website and the only
trademark I found was this one:

[http://tess2.uspto.gov/bin/showfield?f=doc&state=4010:8n...](http://tess2.uspto.gov/bin/showfield?f=doc&state=4010:8n2b4b.2.2)

for "Life Response" owned by Midwest Medical Alert Systems, Inc. CORPORATION
ILLINOIS 269 Winding Creek Drive Naperville ILLINOIS 60565.

The weird thing is, the business using the <http://www.liferesponseusa.com>
domain is "Life Response USA" and they're a division of CTR Alarm Systems Inc.
--- a Pennsylvania Corporation. So that's odd: not the same company as the
trademark holder?

More research is needed.

~~~
calebhicks
That's the one.

I would make the guess that liferesponseusa.com is not the same business,
based on the different addresses you brought up. I wonder if they're looking
at a similar situation with the trademark holder.

~~~
bugsy
Check out "Health Sentry". There's a 1999 application that was cancelled in
2007, so maybe you could file for it and it's a good term.

~~~
calebhicks
Thanks again bugsy. I'll look into this.

------
joelhaasnoot
I hear you talk a lot about the branding, marketing and your cofounder, but
what about the idea? Is it original or still worth marketing? A name change
and a cofounder might not be the best reasons to call it quits.

~~~
calebhicks
The idea is not original. But the market is lucrative and growing daily. We
were completely satisfied with the idea of taking a very small slice of the
pie.

~~~
jjm
I have some questions, email?

~~~
calebhicks
In my profile.

~~~
jjm
Hm i think email has to be in about to show public. I think...

~~~
Vivtek
It does.

------
jccodez
Sorry to hear of your trouble. Bootstrapping is very difficult and you should
not expect 1 or 2 months is enough time to gain traction and be profitable. I
would not say you have "failed". Your product may be the best thing no one has
heard of. Keep your day job and keep working on your bootstrap. I started out
writing code on a thinkpad I bought used on ebay for 200 usd. Talent without
endurance is likely to lead to little. Good luck.

~~~
spencerfry
1 or 2 years is a more likely timeframe.

------
crag
"...that is similar to your mark and used on related products or for related
services."

That is directly from the USPTO. In other words, if you have a company named
"A" that writes software and I have a company name "A" that makes shoes.. I
can't sue you for trademark infringement.

A website doesn't matter.. it's the type of business that matters.

------
damoncali
The trademark thing happened to the last company I worked at. We just told
them that we disagreed with their opinion and carried on. Never heard from
them again.

------
herval
None of these reasons you mentioned is a reason to quit/stop/lose. It doesn't
seem you failed for any of those reasons - you failed because you simply gave
up!

------
jjm
I've experience with being hit by a trademark dispute and your best bet is to
cut off the existing name now. It costs more than you have atm to defend it.

------
mise
Weren't your flyers used for client acquisition?

------
PaulHoule
business cards are cheap, and for many businesses they are a key tool for
client acquisition.

------
known
Have a Plan B

------
rorrr
That's not the money you want to start with. It gives you zero cushioning if
something goes wrong, or if you need to buy something expensive urgently (e.g.
lawyer's time).

I have no idea how people begin startups with $10K. I seriously don't
understand it. It's nothing. A good developer's time will cost you more than
that for just one month.

