

How My Start-Up Failed - mijustin
http://alumni.stanford.edu/get/page/magazine/article/?article_id=41260

======
edw519
_Like Edison and the lightbulb, like Gates and the pc operating system...I was
about to become the first person in America to sell condom key chains._

That was probably your first mistake. Neither of your heroes succeeded by
being first with a great new product. They won through ruthless competition
(some may even say cheating), unfair advantages, endless promotion, and
competing in the courtroom and legislature as much as in the marketplace.

Perhaps Googling things like "Nikola Tesla" or "CP/M" or reading
<http://theoatmeal.com/comics/tesla> may have changed your business plan.

~~~
swapnilt
Interesting to know about Tesla and Edison. I've always seen somewhat similar
parallel between Jobs and Wozniak. For all his greatness, I always see Jobs as
an overrated CEO and Wozniak as underrated geek.

~~~
wildranter
Just tell me one more thing. Who consistently shipped more?

~~~
unimpressive
Tesla vs. Edison? From what I know, Tesla.

Jobs vs. Wozniak? Jobs. Easily.

~~~
kamaal
Saying that Steve Jobs shipped frequently than Wozniak is like saying the
manager of a software team ships more frequently than the programmers who
wrote it, since he is the one who sends out the 'release notification email'.

~~~
jonmrodriguez
Actually what he's referring to is that Woz basically made the Apple 1, made
the Apple 2, and then, having produced two once-in-a-lifetime masterworks,
essentially retired.

Jobs, though less technically useful on any one hands-on task, never retired
even after getting rich. He just kept shipping, ultimately an order of
magnitude more projects and a way more grandiose total portfolio.

~~~
rooshdi
And who helped him keep shipping? Or did you forget the thousands of other
workers at Apple? Let's get real.

~~~
jodrellblank
Where by "real" you mean what, exactly?

"Out of Jobs and Wozniak who shipped more?" "thousands of other apple workers
because I don't like Jobs" ?

~~~
rooshdi
No. Apple and its products are the result of countless hours of work from
thousands of employees. Step out the damn reality distortion field already.

~~~
wildranter
_Step out the damn reality distortion field already._

Likewise.

Who do you think built and rebuilt the aforementioned company?

The thousands of people who worked on Apple producs acknowledge that Jobs was
fundamental because of is hyper focus and vision.

If you stop hating the man you might learn a thing or two.

~~~
rooshdi
I don't hate anyone. In fact, I respect Steve a whole lot for pursuing his
passion and vision for technology. I just hate the lies people believe.
Shipping involves more than any one individual. It's an ongoing collaborative
process. Read up:

[http://news.cnet.com/8301-13579_3-20124720-37/jonathan-
ive-s...](http://news.cnet.com/8301-13579_3-20124720-37/jonathan-ive-steve-
jobs-stole-my-ideas/)

~~~
mmariani
Well, I shouldn't. But I'm gonna bite this one anyway. Who recognized Jonny
Ive's talent and gave him a promotion?

Anyway, I think the reality distortion field you previously referred is in
fact a hyperbole machine created by the media outlets. I don't like it too as
it only serves to increases the distance between us and real facts just for
the sake of getting some viewers.

The real reality distortion field [0][1] was born as a complement and caution,
referring to Steve's epic focus, indomitable will, and eagerness to get things
done. When well applied, it can be an incredible tool to shift paradigms.

[0] <http://en.wikipedia.org/wiki/Reality_distortion_field>

[1] Steve Jobs biography, Chapter 11

~~~
danabramov
I like how Miguel de Icaza put it[0]:

>"Reality Distortion Field" is a modern day cop out. A tool used by men that
lack the intellectual curiosity to explain the world, and can deploy at will
to explain excitement or success in the market place. Invoking this magical
super power saves the writer from doing actual work and research. It is a con
perpetuated against the readers.

>...

>The biography has some interesting anecdotes, but fails to answer any of
these questions. The biographer was not really interested in understanding or
explaining Steve Jobs. He collected a bunch of anecdotes, stringed them
together in chronological order, had the text edited and cashed out.

>Whenever the story gets close to an interesting historical event, or starts
exploring a big unknown of Steve's work, we are condescendingly told that
"Steve Activated the Reality Distortion Field".

>Every. Single. Time.

>Not once did the biographer try to uncover what made people listen to Steve.
Not once did he try to understand the world in which Steve operated. The
breakthroughs of his work are described with the same passion as a Reuters
news feed: an enumeration of his achievements glued with anecdotes to glue the
thing together.

>...

>The "Reality Distortion Field" is not really a Steve Jobs super-power, it is
a special super power that the technical press uses every time they are too
lazy to do research.

[0]: <http://tirania.org/blog/archive/2012/Nov-07.html>

~~~
mmariani
Let's give a chance to Andy Hertzfeld, so he can explain in his own words [0]
why, how, and where the term was born.

[0]
[http://folklore.org/StoryView.py?project=Macintosh&story...](http://folklore.org/StoryView.py?project=Macintosh&story=Reality_Distortion_Field.txt)

------
digitalengineer
I quit my business january the first. I sold people. Actual people including
kids, grandma's, six-pack's and what not as models for agency's and
photographers. My company was different: You could select people like you can
cars: Size, color, tattoos and a location. I sold people including all the
royalties, like a Shutterstock for people with a fixed price (no matter how
well known the client is). I had everything worked out: a simple signup
process, legal protection for models (no nudity) and a legal framework for
clients and my own company.

I upset the expensive agencies (boy were some mad at me), but ultimately
failed because I underestimated how far people will go to get something for
"free". People would rather spend 8 of their own hours finding friends,
neighbors, relatives to use as a model, than select a perfect local model and
pay him or her a few bucks. I work for a design agency for the biggest names
you can think of but even those PR-people would rather throw away 8 of their
own hours and work with shitty contracts if it could save them a few dimes.

Of course becoming blind didn't help. Thank God the doctors got my vision
back, but if you're a one-person-company shit like that can certainly kill
your company. But that's not why I failed. I failed because I thought I could
use _greed_ and let people save a lot of money. Turns out people were even
more greedy (or dumber?) than I thought.

A few screenshots (as the site is offline): <http://imgur.com/4JMDS>
<http://i.imgur.com/63e4Z.png>

~~~
Avalaxy
Yup, even the smallest price creates a huge barriere for most people.
Personally I'd rather throw some money at problems than waste my precious
time, but everyone is different.

P.s. groetjes uit holland! ;)

~~~
digitalengineer
Yup even though they would be spending some money in order to save a lot of
time and money. Did great with finding models but not good enough with the
agency's. OT: Just read your blog and like to know if you've got something up
and running already?

~~~
Avalaxy
Not yet! I haven't been able to work on my project lately because I'm too busy
with my graduation and freelancing, but I stopped freelancing now to work on
my project full-time. I hope to release it around March :-)

It will be a platform (non-SaaS) targeted at the US, and I've got Microsoft
sponsoring my cloud hosting, doing my marketing, etc.

Oh, I did create a few Windows 8 apps in the meanwhile, that also stole quite
some time from my main project. I created the first and only wordfeud solver
for example: [http://apps.microsoft.com/windows/en-us/app/scrabble-
solver/...](http://apps.microsoft.com/windows/en-us/app/scrabble-
solver/f45ddd05-dcf4-4419-8dda-19bdfd1d8c60) (I earned only €13 with it so it
isn't a great business idea, but I was fun to build).

~~~
digitalengineer
Good to see you're sharpening your skills and knowledge "in the real word" and
you'e not just studying.

I can really identify with 2nd/3rd projects 'stealing' time from the main
project. I'm like that as well. It's a bit of a trap but when you're always
full of ideas it feels good to check them out as well. (And it's easy to
become bored when you've worked on project for a long time).

I did a extensive personality test once and it showed I _need_ the challenge.
If I don't get it I will deliberately make projects more difficult by delaying
work or trying to find new and exciting ways to accomplish something. Anything
but boring, repetitive work!

------
seanlinehan
This grind feels very familiar. I joined a product company when it was at this
stage and can say that this guy's story resembles our own quite a bit. The
difference, though, was that we did not shut down shop because we had a little
bit of debt. We kept going, are still going, and after more than two years in
business are finally beginning to see some traction. The truth is, building a
consumer product is just not easy. It takes time to build channels! The
struggles that the author had were completely to be expected... every business
has its quirks that you can't know until you're waist deep.

~~~
jacquesm
Contrary to the 'fail fast' mantra: the definition of a successful business is
that it is one whose backers didn't give up before it gained traction.

Underestimating the time it takes to get off the ground is a very frequent
cause of business death.

~~~
seanlinehan
I look at the guys over at Weebly as prime examples of this. David spoke at
Startup School this year and said that for something like 4 or 5 years they
didn't really experience much success. They kept at it and now they power
something like 2% of all sites on the internet!

------
paulmolluzzo
"Though I had a Stanford MBA and regularly consulted on multimillion-dollar
projects, I didn't know the first thing about starting a business."

~~~
ytadesse
Ironic that the number 4 story on HN right now is: "All I learned in college
was how to work for someone else"

------
kokey
He probably learned more about business from this venture than $10,000 of
business education would have given him. I've also lost that much on a venture
once, and the irony is that like his business it was also a potentially
profitable and viable business and may have succeeded if we had the experience
to approach it differently.

~~~
onlyup
Seems like everything he learnt should have been common sense.

\- Do better market research

\- Do the maths before proceeding

\- Know all the ins and outs with shipping your product

\- Don't give your product away

~~~
kokey
Some of it is not really common sense, because people make these mistakes all
the time. I suspect the main mistake he has made, and this happens very often,
is that in order to get a decent margin on his product he had to order a
fairly large quantity. This broke two things, one not being able to test out
the product to determine if that is what the market wants, the other is not to
get the hang of all the things that can go wrong with importing goods. I think
he was particularly lucky to get it through customs so quickly.

------
mijustin
Here's a photo of a condom keychain:
<http://d24w6bsrhbeh9d.cloudfront.net/photo/51576_700b.jpg>

~~~
tferris
Looks nice. How hard was it to break the glass?

~~~
prostoalex
This is slashdot^H^H^H^H^H^H^H^H Hacker News, the issue never came up.

------
delinquentme
"My love affair with my product soon began to fade. The key chains would not
come clean. No matter how much I scrubbed, they still felt as though a posse
of banana slugs had just oozed over them."

Not a stanford chemist I take it?

------
dmor
Like so many startup ideas, this could probably be a great idea for somebody
who can actually execute it. I feel like a jerk saying this, but this seems
like a recurring theme lately - people saying "the market was too small" when
the reality that they needed a huge target because their execution was near
non-existent.

------
robbiea
Amazing story and the ending was great. I'm also not sure many of the
commenters are aware that this happened in 1999

~~~
onlyup
In the end he lost 10k. How is that great?

And thanks for pointing the date out, I had missed that!

~~~
robbiea
by ending was great, I meant that the last sentence was a great editorial
ending to the story. The fact that he lost 10k is not great, but overall a
great piece on his startup.

------
orangethirty
I'll tell you the story of how one of my startups died.

Some years ago, I was looking for the next business the start. Being one of
those serial entrepreneurs, I was used to searching for products that could be
easily marketed by me. I'm one of those weirdos who enjoys to program and
enjoys marketing. Anyhow, I found my next product on a magazine article. There
it was, all shiny and plasticky. Why? Because it was actual plastic. Or better
yet, shrink wrapping plastic. The one used to cover botas during winter.

The magazine article talked about a business in Arizona who was shrink repo'd
houses, cars, boats, equipment, etc. They were doing a fine job with all the
people going bankrupt, and all the banks needing a way to keep their
properties in good shape for re-sell. I did some market research and it was a
viable business to do locally. There were plenty of things to shrink wrap.

The shrink wrap was sourced from a distributor in Michigan. It was dirt cheap,
and would allow me to mark it up without fear. Each sq. foot cost me around
fifteen cents, and I would sell it for three dollars. Problem was the
shipping. I reside in the Caribbean. The plastic had to travel all the way
down from Michigan, get on a plane, and to my doorstep. The costs tripled, but
the nice margin kept things at bay.

I went off to market it the product and made a huge first sale. It was for
about $2k worth of shrink wrap. It was to wrap industrial machinery that was
being shipped overseas to Zeus knows where. I got so excited by the "sale"
that I ordered a roll of shrink wrap _without_ taking a deposit or a purchase
order number (the sale was for a local construction company). The client was
actually pressuring me to get the material so they could ship it out. It was a
safe bet, or so I thought.

The plastic arrives a couple days later, and its a heavy sumbitch. I pushed
and pushed until it was resting in my garage. I call the client and let him
know that everything is ready to. He replies by stating that everything will
be setup for me to go and do the shrink wrapping. Awesome!

But wait. He asks for my proof of insurance. Yes. I had forgotten to check
with the local insurance company to see if they would insure me. So I told him
that I would process the insurance, but to go ahead and schedule, because I
was sure someone would step forward and insure me. After contacting every
insurance agency, pawn shop, church, and barber shop on the island, my dreams
of being the shrink wrap king were fading away.

I call the client and let him know that no one would insure it. Surprisingly,
he told me that they were so needy of the product (I was the only person
offering the service locally), that they would take the risk. At the end of
that phone call he said "I'll call you back when it setup."

One week passes. Two weeks. On the third week I call him. He says they were
having trouble scheduling access to the equipment, but to not fear, because
they need it to do it. I wait another week and he calls. Finally!

That was not a good phone call. They had sold the equipment to a local, and
would not be needing my product. I did not have an agreement, deposit or
anything. There was no way to get them to pay, and it was a waste of time.

From that experience, I created my party-pooper business checklist. It has all
sorts of questions that I must answer before even thinking about investing my
time or money into anything. It has saved me countless headaches, and
resources. It keeps my serial entrepreneur in check, and forces me to think
about every little bit before doing anything. Sadly, it cannot predict when
people will scam me. I've had people in the valley scam me out of work, just
like every freelancer out there. It sucks, but each time it happens I get to
learn from it. One thing you get to learn after doing business for as long as
I've been doing it, is that bad shit is going to happen no matter what. You
are going to get scammed by people who sell you their close association to YC-
funded company (which I thought made their project more legit, but it
doesn't), and you will make costly mistakes. Being really good at marketing
doesn't save me from those things. But anyhow, realize that you will make
mistakes. Those mistakes do not define you, but teach you. Failure is all but
guaranteed. So have fun, learn, and don't take it personal. After all, like
the founder of a startup that scammed me not long ago, its business and not
personal.

~~~
trvlngwlbry
Out of curiosity, where does all the used shrink wrap go when winter is over?
I'm picturing a whole house's worth of plastic wrap ending up in a landfill or
floating its way out to trash island in the middle of the Pacific Ocean, and
it makes me throw up a little bit in my mouth.

Anyway, thanks for sharing the story -- a good case study to learn from -- but
I hope for the sake of humanity that this business of shrink-wrapping boats
and houses is a thing of the past.

~~~
kaliblack
An important part of any business model is how to deal with by-products (aka
waste).

~~~
Tloewald
I wish this were true, but it doesn't seem to have adversely affected roughly
all startups in the history of business.

~~~
kaliblack
Apart from all the industries, services and products that exist because of by-
products and waste, you are correct. Businesses don't have to worry about
waste and can still be successful. However, I'd argue that eating healthy and
exercising is an important part of any life. You can still have a good life if
you don't, but the benefits are well documented and very clear.

------
Sami_Lehtinen
I really hate these badly designed web sites: "Sorry, we are unable to supply
content for this web page, either because the Internet security on your
browser is set to high, or because you have disabled Javascript. For
information on how to change these settings in your browser, please see the
Help page"

~~~
CamperBob2
Life is short, the art long. Enable Javascript and live dangerously.

------
amikazmi
You should call the article "How My _Business_ Failed", because that what it
was.

If I opened a restaurant, even if on a new set of dishes, no one will call it
a start-up, and it can be a huge business.

PG: "A startup is a company designed to grow fast. Being newly founded does
not in itself make a company a startup. Nor is it necessary for a startup to
work on technology, or take venture funding, or have some sort of "exit." The
only essential thing is growth. Everything else we associate with startups
follows from growth."

------
bparsons
"Though I had a Stanford MBA and regularly consulted on multimillion-dollar
projects, I didn't know the first thing about starting a business."

This guy was awarded a Stanford MBA and didn't know that you had to have
paperwork to import goods from Thailand? Am I missing something?

~~~
netrus
Case studies are more about management, less about paperwork.

------
perlpimp
I wonder if fellow news readers can chime in as to what are the boundary
conditions to let go and shut down a service. Some services have survived
through waves of investment cycles - ie flickr etc, others vanished and are
not remembered by but a few.

There are couple of scenarios I am currently involved in. One is sort of
bootstrapping traveler assistance service - this one is bootstrapped but with
fairly large - 10 people editorial staff. The other is my small project that I
am interested in using myself. The third one is a job style project that is
suppose to break open a new market in the internet retail and has been running
for already a month...

Qualitatively there are different reason for closing a startup - boreddom,
disinterest, lack of funds, the growth curve is too slow. From my
understanding startup is not a company but a place to invest money in - that
has a vertical market and near future potential for geometric function style
growth and if it isn't happening startup isn't a startup anymore... but there
are so many stories out there of people sticking it out for 2 years and others
giving up in 3-6 months...

It would be nice to have some sort of coherent picture when to give up and
when to soldier on evolving product, adding users - trying new things...

links to resources are welcome! TIA!

~~~
sdrinf
There are quite a few quantitative indicators for businesses on exit
conditions; for web businesses in particular, see eg:
[http://viniciusvacanti.com/2011/12/12/when-do-you-throw-
in-t...](http://viniciusvacanti.com/2011/12/12/when-do-you-throw-in-the-towel-
on-your-struggling-project/)

~~~
perlpimp
much appreciated thanks!

------
porter
"Though I had a Stanford MBA and regularly consulted on multimillion-dollar
projects, I didn't know the first thing about starting a business. "

Truth. The only way to learn how to start a business is to start one, mess up,
and keep going.

------
akg_67
Whenever someone comes to me with a physical consumer product idea, I tell
them to go read MouseDriver Chronicles first. The authors went through similar
experience with golf driver head shaped mouse. It is an interesting read.

[http://www.amazon.com/The-MouseDriver-Chronicles-
Adventures-...](http://www.amazon.com/The-MouseDriver-Chronicles-Adventures-
Entrepreneurs/dp/0738208019)

------
louischatriot
Reading suggestion for him: Lean Startup.

He went with an idea that needs to be validated (I don't find obvious that
condom key chains are a sure kill ...) and instead tries to produce 10,000 of
them the first time. Wow.

~~~
wtracy
Lean Startup is really hard to apply to this kind of business. Even when he
had them made 10k at a time, he was only able to eke out 75 cents of profit on
each one. If he tried a smaller batch, the production costs would have eaten
him alive.

That said, I could see making a first batch knowing it will sell at a loss
just to test the market.

------
dexter313
Condoms near any sharp object like keys seems a very bad idea to me, great
story though.

~~~
mikeryan
_Condoms near any sharp object like keys seems a very bad idea to me_

There goes carrying a condom around in my pockets... (no wait marriage took
care of that one)

These were encased in hard plastic, I'm pretty sure they were safer then most
condom transportation mechanisms.

~~~
gcheong
Probably a little too safe.

~~~
wiradikusuma
But is the manufacturing process safe for the condom? I.e. won't damage it.

------
tferris
Nice story, a little too long though and I'd have liked bigger and sharper
pics of the actual products.

What seems very obvious to me or maybe I didn't get the point: Carrying a key
chain with a condom is more than just a key chain, it's a statement. It
somehow says in a very obtrusive way that you want to f$%#, that you are
anytime ready to f$%#, yeah it just says that you are so desperate and
unf$%#$% that any f$%# is welcome. And that's definitely not the way to get
laid (for men at least).

Sorry, but who should buy this? 12yr old kids?

However, I think that the OP learned a lot, so it should have been a good
entrepreneurial experience in any case.

~~~
GuiA
>Sorry, but who should buy this?? Maybe 12yr old kids?

I take it you've never seen college boys (or even some young professionals in
certain areas) wearing shirts with slogans such as this one
(<http://i.imgur.com/4vt3m.jpg>).

Somewhat related, these (<http://en.wikipedia.org/wiki/Truck_nuts>) are also
quite popular in Texas.

(in case you're located outside the US- American culture, despite its puritan
roots and persistent culture, is quite open about crass jokes in that spirit)

~~~
RegEx
I see those on quite a few trucks in East Texas. I can't believe people
actually do that.

~~~
GuiA
I had to tell my dad (non american, first saw them when he helped me move
across the country) what they were. It is now his favorite anecdote to tell
about Texas :)

------
meisterbrendan
I think this underscores the need to have smart advisors. I could see myself
making similar mistakes; to avoid them, consult people who have done stuff
similar to what you're trying to do. It seems most of these issues could have
been prevented if the author had consulted folks in his MBA network and gotten
their advice on what he should do in his business, on pricing, on setting
expectations for how hard it is to launch a successful product like this, on
importing, and on general advice. Who knows--he might even have gotten a smart
business partner to help him sort through these tough issues.

------
stesch
Because you can't even display a fail story without requiring JavaScript? :-(

------
amalag
Now all he needs to do is get on Shark Tank.

~~~
brianbreslin
i think this venture took place 20+ years ago. His MBA was from 1984, and in
the story he says he was a freshly minted MBA.

~~~
mijustin
Yup. This was originally published in Summer of 1999.

------
blacksqr
Or as his resume states: his shrink-wrap app business was wrecked by an
incursion of trojans.

------
rossjudson
They forgot to say "Are the condoms any good? Our condoms are f __*ing great!"

------
bw00d
Great story. Very good idea. I'm sure it was a good learning experience.

------
ky3
Winners don't quit. Quitters don't win.

~~~
onlyup
What if you gamble some money and then quit gambling. You're a winner that
quit!

------
harrypotter
My whole internet business was failing until I learned SEO.

~~~
onlyup
Story?

------
mymoint
Lesson: Shoulda joined YC. Then it would have succeeded.

