
My startup story - dirtyaura
http://co-der.com/my-startup-story
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il
The lesson here is that the worst time to raise money is when you need it.
Your answer to "What will happen if this round doesn't close?" should be
"we'll keep growing at 20% a month instead of 50% a month if we got funding"
rather than "we need this round to come through to keep the company alive".

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mrkurt
> Then in the fall of 2011 we failed to close a major financing round from the
> US. We basically had a deal with a top-tier San Francisco based VC. Our guys
> flew over to meet them at least two times. We (as a company) spent a lot of
> time on that financing round. We thought we would be able to close the deal,
> but something totally different happened. They stopped all communication
> with us. Suddenly. No explanations. No apologies. Nothing. We were in
> trouble.

Stuff like this is why I'm thankful for YC. Understanding the mechanics of
raising a round has been _incredibly_ helpful when evaluating what's actually
going on. 2009 me would have thought two meetings with a VC was basically "a
deal", 2012 me is much more capable of realistically evaluating progress
towards a term sheet.

~~~
soneill
I think that's the kind of lesson one should learn fairly quickly if you talk
to experienced entrepreneurs. I was at a panel fairly recently where literally
every single panel member (including a VC guy) mentioned you should never make
the mistake of thinking that talks, no matter how advanced, with a VC mean a
deal is forthcoming, and that you should always be continuing to look for
other options until the pen hits the paper. You don't really need something
like YC for that lesson; just talk to experienced entrepreneurs or other VCs
(assuming you have some contacts with either camp).

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jyu
First thing, awesome job going out and launching, and trying things. It's not
easy, so congrats on getting the experience under your belt :)

So a few other things. You keep on stating the reason for the service closing
down was lack of funding / designer / focus / marketing money / etc. The real
reason your service went down was lack of product / market fit.

Your products and pivots got stuck in a zombieland. You didn't hit some crazy
traction that shows that you're onto something big. But you also didn't fail
so hard that it is obvious that you need to kill it immediately.

You also got some misleading signals from business partners/advisors, and some
early interest from investors. Funding events, getting partnerships with the
NBA and soccer teams, advisors are all multipliers that help you if you have
solid user engagement. So when you have a viral coefficient greater than 1.0,
you'll actually get huge bumps by having all these user acquisition channels
available to you when you have partners like the NBA etc. Inherently your
product is social, and I'm surprised to hear that lack of marketing money is a
reason you list for shutting down.

Measuring product / market fit used to seem arbitrary to me. One of the most
helpful things I've heard is the "very disappointed" framework that Sean Ellis
uses. The idea is that if 20% of some user group would be very disappointed if
they couldn't use your service any more, then you've nailed it. You're onto
the next phase of scaling out and reaching out to more people like that core
user group. If you're not at 20%, then keep tweaking different pitches and
user groups and refining your product until you do.

~~~
wensing
_One of the most helpful things I've heard is the "very disappointed"
framework that Sean Ellis uses. The idea is that if 20% of some user group
would be very disappointed if they couldn't use your service any more, then
you've nailed it._

I disagree. The biggest flaw with that survey is that it doesn't include
pricing. Just because someone says they'd be "very disappointed" if your
product disappeared does NOT allow you to conclude that they'd be willing to
pay for it, let alone at a profitable price point.

~~~
jyu
Their product is social video. Their biggest problem was getting people to use
the product and getting them to come back, not profitability. If they had
users, then they could deal with monetization in the same way youtube and
vimeo and other consumer video properties monetize.

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billirvine
I ban the word "pivot" from my startup. Seriously. It costs $10 to say that
word.

Next, you and many others interpret "Lean Startup" wrong. It's not a race to
launch _something_ , it's a race to a GREAT PRODUCT. And "lean" certainly has
nothing to do with how much money you don't have.

As has been mentioned here, your product failed, and your management failed
the product. It had nothing to do with finding money. Sorry to be harsh
(seriously), but these are important distinctions.

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evolve2k
Is it common in the valley for VC discussions to just go stone cold of they
for some reason they decide they no longer are interested? What sort of
courtesy do most large VC's have at the we're no longer into you point?

~~~
tworats
Really depends on the VC - some of them are very courteous, others downright
psychopathic - but radio silence is not unusual. As much practice as most VCs
have had saying no it can still be hard, particularly after lengthy
discussions, so sometimes they don't say anything.

~~~
pbiggar
If you say "no", it's hard to come back and say "yes" if the company turns out
to be hot.

~~~
blindman2k
I agree pbiggar. This rule applies to any business transaction. "No" is
terminal, "silence" is not. Why say "no" and terminate a discussion when they
can drag it on for as long as they want by saying nothing? I see it all the
time in normal everyday business.

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kateho
It's a real shame to hear this story. I met Toni back in 2010 at a mobile
event called MEX and thought the concept was super exciting. It's a shame this
happened... I hope the team go on to do bigger and better things.

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stevewilhelm
"The idea was to connect all sports fans by creating a group video chat
service where the fans could be together while watching football at home."

I am curious: how many of the team were football fans, and did they actually
use the service on a regular basis?

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lnanek2
Interesting, just saw another startup with the app version of this,
AppTheGame, demo'ed recently. Will be interesting to see if SV & mobile first
can do a better job than Europe & web first.

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alexro
It always saddens me to think that our world isn't capable of keeping up many
great but small products.

~~~
agilord
Why do you think so?

I think the capacity is there, but we might need to change our media-
consumption / media-creation habits to see the small players too. In other
words: it is a discovery problem.

~~~
alexro
I think that herd mentality is what needs to be changed, but day-after-day we
go in the other direction.

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djt
Why did Tuomas leave? That seems like a pretty big problem just 12 months in.

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goggles99
You could not live up to your "hottest startup" (often a curse) hype. You were
over-rated... end of story.

