
Lessons From a Failed Startup — From and For First Time Founders - jey
https://medium.com/swlh/4-lessons-from-a-failed-startup-from-and-for-first-time-founders-c61913df3bb5
======
epberry
In my experience "do both" on any big decision is a recipe for disaster. Very
hard to avoid tho. I've known this and still pushed for it just because
choosing one of two hard options is itself so hard.

~~~
seizethecheese
Famously, this is what Justin.tv did. They split the company into three parts:

1) Justin.tv 2) Twitch 3) SocialCam

I suspect if they had to choose one, they would have done SocialCam, and they
would have missed the billion dollar opportunity that was Twitch.

Like most things, it depends.

~~~
mwseibel
We did both for a relatively short period of time (about 1 year) when we were
a profitable company. So... very special circumstance. Btw - its kinda cool
that people even know the backstory to Twitch.

~~~
anoncoward111
HackerNews proving once again that you can get incredible insight in real-time
from names big and small :)

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cyberferret
I am intrigued by the fact that they managed to get funding _before_ finding
product market fit. I was always of the belief that most VC's would only
invest in companies that had traction and an initial revenue stream, i.e. that
they already have PM fit to a certain extent that they have customers and a
plan to get more of them.

Is it a case that some VC's are willing to take the extra risk to fund
companies that are still in the stage of finding proper product market fit?
With the associated possibility that this might never actually happen?

~~~
Matticus_Rex
Depends on the product, depends on the potential market size, depends on the
founders, etc.

And you can definitely have traction and an initial revenue stream without
having product-market fit in a meaningful way. You can survive for years on a
large-enough group of savvy early adopters (and get funding based on that
initial enthusiasm), but if you don't cross the chasm, your revenue stays
flat.

------
notyourday
To be honest, this is highly amusing to me because nowhere in the musings on
the failure did I see the writer(s) acknowledge that they have not a foggiest
idea of the apparel (i.e. fashion) business. I bet no one in the entire
company was a subject matter expert.

No one here would be surprised if Bob, a literature professor, who played
tetris five times in his life would fail at building a video game startup.
This is Bob, a literature professor, who gets his clothes at Macy's on sale (
still at ~400% markup ) building a fashion startup and failing.

That is why they failed. The founders are all men. The biggest consumers of
apparel are women. Those that run successful boutiques are women and they
largely service... women. Those that decide to do their own knock offs of the
on trend are owners of the successful boutiques. Surprise surprise they are
also women. What do they all have in common? They _know_ that the market is in
the throw away clothes that are supposed to last just one season ( trends move
), be cheap ( trends move ), and look kind of like what has been walking down
the runway during the Milan FW, Hong Kong FW, New York FW and London FW. Turn
around on this stuff in design is about 1 week, manufacturing is another 1
week and mass production is in 3-4 weeks. Designers of the knockoffs ( ok,
call them inspirations ) can be talked with in NYC fashion district and in NYC
Chinatown (I'm sure it can also be done in LA and during MAGIC in Las Vegas
but they are in NYC weekly). Those that want to tweak designs can request it
right there and in 3 weeks time i.e. a month after Willow Hand walked down the
catwalk in Pineapple pants and well before D&G supplies their stores all those
boutiques would have $40-$100 pants inspired by that.

I bet they did not hear what their potential customers were telling them.

And that's not even talking about the likes of Zara and H&M.

There was no market for this kind of a company.

~~~
ajiang
That's a lot of assumptions you've made without any backing.

1) Building a startup requires the ability to build a tech product and knowing
how to solve a problem and sell it. Bob the literature professor is not a good
example, as he would not know either - but these guys could clearly build the
product at the very least.

If you looked at their backgrounds, at least the CEO (OP) had previously
started a fairly successful apparel company.
[https://www.linkedin.com/in/kentmori](https://www.linkedin.com/in/kentmori)

So to correct your analogy, this is like if Bob the video game software
engineer was starting a video game startup.

2) Many top fashion companies are built by men. In fact, H&M - your example -
was founded by a man.

[https://en.m.wikipedia.org/wiki/Erling_Persson](https://en.m.wikipedia.org/wiki/Erling_Persson)

I'm all for diversity, but your comment is overly harsh in tone and not back
by substance.

~~~
notyourday
> If you looked at their backgrounds, at least the CEO (OP) had previously
> started a fairly successful apparel company.

It was not successful. It was an unknown flop.

> So to correct your analogy, this is like if Bob the video game software
> engineer was starting a video game startup.

It was Bob, a professor of literature, who tried writing a tetris clone in
college got to drawing pieces, who tried starting a video game company

> 2) Many top fashion companies are built by men. In fact, H&M - your example
> - was founded by a man.

In _nineteen fourty seven_.

> I'm all for diversity, but your comment is overly harsh in tone and not back
> by substance.

This is not about diversity. It is about a vegan starting a butcher shop and
getting accolades for waxing about reasons for a failure.

------
analyst74
I like the lessons here.

But just to provide a contrarian perspective on #4, one of my previous jobs
was at a company that did both, where we have dev department that built the
software, and a growing and profitable consulting arm that helped customers
customize and use our system.

A better example is Microsoft, many of its enterprise solutions,
like..cough..SharePoint, is supported by an army of consultants hand-holding
their customers on non-trivial use cases.

The larger clients tend to be less willing to adapt their internal processes
to a new solution, and in many cases it'll require special customization or
hand-holding/training to make a sale. On the plus side, they also tend to be
able to afford those kind of things, you just have to charge them at a
profitable price point.

~~~
ticmasta
You need to look beyond just profitability as product vs. consulting
businesses grow in very different ways. Do you have a pipeline of quality
potential hires? consulting headcount grows more in line with workload than
product, which tends to stair-step. Can you handle the boom/bust of
consulting? demand tends to be infinite or zero. Can you manage a long sales
cycle? product (especially enterprise) sales can easily take 6-12 months.
These are the clients that will also likely demand the most customization with
software purchase.

I like looking at the motivations for consulting, of which revenue is just
one. You also get great ideas for new features, solve existing pain points and
leverage relationships for new sales leads.

You can do both but should have a very clear picture of _why_ you do both.

------
charmides
Regarding Point 4: One recurring point in a lot those post-mortem articles is
how hard it is to sell software, but how (relatively) easy it is to sell
service (incl. consulting). Why is that?

~~~
sergiosgc
Customers want problems solved. Tech people (me included) assume that once the
hard part is done (the product/software), the rest is a minimal effort.

This is usually false. Customers are not familiar with the software, they may
have a tech knowledge gap, its usage may entail organizational change. There
are many possible reasons for adoption to be a very relevant factor.

Consulting means you are responsible for the whole process, not just providing
software.

~~~
paulie_a
This is also why every developer should be required to do a bit of technical
support and some sales calls.

~~~
stanleydrew
Yes! This is an underappreciated reason why Twilio was such a success early
on. Every employee (including software engineers) had to work 10 or 20 support
tickets in the first two weeks on the job.

------
lynnetye
I really appreciate #3 about founder-led sales.

Even if you _don 't_ make the mistake of bringing in a VP of Sales too early,
it's easy for founders to get lost during this stage of the company.

When founders struggle to get those first paying customers, I wonder how many
conclude that they haven't yet found product/market fit when really, they're
just terrible at doing sales. It's especially difficult for technical founders
(who tend to be bad/new at doing sales), and particularly challenging when
selling B2B software.

------
eastendguy
"Founders are the only ones willing to get excited about a constantly changing
product."... so true!

------
hef19898
So, without knowing the company any more than what was hinted at in the
article, the goal was to build some kind of digital version of Zara (short
lead-times, short to-market cycles) for all the individual designers out
there.

And that basically makes this company less of an apparel or even a tech
comapny and more like a dedicated supply chain service company for the apparel
industry. Which requires solid SCM skills and the corresponding solid
organisation and network. And maybe it's just me, but I have the impression
that they focused almost exclusively on the tech-part. It's nice offer a
service to manage "logistics" through an app. But what happens in the
background of said logistics? That customer seemed to complain about long
lead-times whatever happened wasn't that great. Considering vertical
integration, the micro-factory in China, is not a solution if you don't have
the experience running apparel manufacturing, in China of all places. And if
you do have that experience you don't need an own factory, just use local
partners like everybody else. Or don't in order to avoid all the ethics issues
that come with it. Thing is, lead-times are reduced by cutting waste out of
the process, and I didn't read anything regarding how they wanted to use
technology, which is great in doing just that when used right, in order to
achieve that.

------
pmiri
Really great distinction made regarding raising.

It's not about having the time to think up and try a bunch of different ideas,
but executing a list of prepared hypotheses. This would pitch way better to
VCs, too.

------
ehead
I agree with the idea that startups should generate clear hypothesis and do
well-documented experiments.

VCs should be more vigorous about grilling founders on their hypotheses, imo.
The experiment logs also make for content-marketing and investor
documentation.

------
captain_perl
Mori sounds like a lost MBA.

LA Koreatown has an entire and modern apparel industry.

They could have validated anything they wanted from SoCal.

------
mi100hael
Point #1 seems completely over-thought to me.

 _> At the beginning, startups are simply a belief that a problem out in the
world needs solving and that someone is willing to pay for the solution. This
can be based on intuition or experiences, but they’re still assumptions and
hypotheses that must be verified._

You don't need 7 different steps to find excuses to pat yourself on the back.
Either someone pays you, or they don't.

~~~
wgerard
I mean it's true that either someone pays you or they don't, but there's still
plenty of grey area:

1\. Some people might pay you but it's not enough revenue to sustain a
business

2\. People may not pay you now but are willing to pay you later

3\. Sales cycles can be quite long esp. for B2B, and can cease at any point
for quite a few reasons (e.g. legal)

4\. People will definitely pay you $0.99 for $1.00, but that's not a
sustainable business. It's super easy to fall into this trap especially when
you consider the monetary value of time

5\. It's usually a good idea to figure out if people will pay you _before_ you
spend a bunch of time and money building something

Having a process for determining whether you're falling into one of those
traps seems valuable.

~~~
qaq
"People will definitely pay you $0.99 for $1.00, but that's not a sustainable
business." Looking at founders of Uber and many other "Unicorns" selling $1.00
for $0.7 is pretty popular strategy for becoming a billionaire.

