
Postmortem of Venture-Backed Startup, Sonar - joshfraser
https://medium.com/@brett1211/postmortem-of-a-venture-backed-startup-72c6f8bec7df
======
willholloway
I've been watching Ken Burns documentaries on American presidents while
building and calibrating a Prusa i3v RepRap 3D printer so I can build a
functional prototype for a hardware product I'm building. I find a lot of
wisdom and courage in the biographies of people who have done great things.

Teddy Roosevelt and his father suffered from bouts of depression, and the
remedy they found was constant movement. They had a saying they would repeat,
"Get action, be sane". Keep moving. It's the striving that counts more than
the results.

You've probably heard this one before but its fitting upon the death of a
dream:

"It is not the critic who counts; not the man who points out how the strong
man stumbles, or where the doer of deeds could have done them better. The
credit belongs to the man who is actually in the arena, whose face is marred
by dust and sweat and blood; who strives valiantly; who errs, who comes short
again and again, because there is no effort without error and shortcoming; but
who does actually strive to do the deeds; who knows great enthusiasms, the
great devotions; who spends himself in a worthy cause; who at the best knows
in the end the triumph of high achievement, and who at the worst, if he fails,
at least fails while daring greatly, so that his place shall never be with
those cold and timid souls who neither know victory nor defeat"

\- Teddy Roosevelt

So I raise a glass to Sonar, and all the (wo)men in the arena, whether they
find victory or defeat.

And in the final counting it's not a defeat, it's a strategic retreat. They
will fall back, consolidate their position and go once more into the breach.

~~~
kzhahou
I don't know man, I'm not a fan of inspiration by once-in-a-generation
leaders. Not everyone's a Roosevelt waiting to emerge, and that's ok. I feel
that HN tries to be very supportive, but inadvertently sets expectations too
high, and then we see the depressed founders who keep banging their heads
against a wall.

Kudos to the team for trying and to the author for writing it up.

~~~
nosuchthing

      Is it okay to say cynicism kills?
    

No one is claiming everyone can do anything they want.

Kudos to anyone who exerts effort in their great attempts and ambitions,
rather than sit off to the side and make nonconstructive remarks about the
failures of others.

~~~
kzhahou
I edited to clarify my position, which is not based on cynicism but rather
concern for the mental well-being of the community.

------
gyardley
_" Companies don’t get sold, they get bought."_

I'm sorry that the author's company did something screwy with a daily deals
company and it didn't work out, but this is extremely bad advice.

For all but the most dramatic successes, companies are _absolutely_ sold and
not bought. Small strategic acquisition? Talent acquisition? Technology
acquisition? Asset sale? None of those will happen if you don't know the
potential acquirers and take the appropriate actions - usually backchannel
mentions with a simultaneous PR push. If your startup's failing, and you don't
have a plan to sell, you'll run it into the ground and you get nothing. With a
plan to sell, sometimes you still get nothing, but sometimes you'll get a
cushy landing, and sometimes you'll get rich.

The author's company didn't go wrong by trying to sell, it went wrong by
getting wedded to a single company who wasn't really interested (nine months?
come on) and by dramatically changing what they were doing instead of focusing
on building a shiny happy narrative that could attract other acquirers.

~~~
danmaz74
Very interesting reply - have you got any more in-depth references/suggestions
about this kind of situation?

~~~
gyardley
This SXSW presentation by Geoff Lewis is spot-on:

[http://www.slideshare.net/justGlew/the-terminal-plan-how-
to-...](http://www.slideshare.net/justGlew/the-terminal-plan-how-to-sell-a-
startup-geoff-lewis-presentation-sxsw-2013)

I'm also a fan of Basil Peters' Early Exits book. I don't agree that you need
an 'exit coach' or an 'M&A advisor' to do this stuff, though, which is what
he's been emphasizing on his website.

[http://www.early-exits.com/](http://www.early-exits.com/)

~~~
danmaz74
Thanks a lot Greg - unfortunately, this could come in handy real soon for my
hashtagify.me project!

------
idlewords
It's ridiculous to give positive business advice in a post-mortem. If you
think you've learned valuable lessons on how to succeed, demonstrate that by
succeeding. Otherwise just tell the detailed story of what happened without
the inspirational drivel.

~~~
allendoerfer
Everybody on Hackernews knows how Google or Facebook were started. But when
their stories are told, they are often focused on the one deal that succeeded,
ignoring the 100 cases were the company almost died.

It is inspirational and helpful to know what to do. It is even more helpful to
know what not to do and which mistakes to avoid. You gain time to figure out
other problems on your own.

------
themoonbus
I don't know much about the product itself, but this was one of the better
postmortems I've read. Well organized.

------
mgkimsal
"The decoupling of responsibility from control created ambiguity and
confusion, tension and frustration for all parties."

Blindingly obvious to some, and will never been seen by others. Being
responsible for something you have no control over is probably the worst
position to be in in any aspect of work/life.

------
bontoJR
One of the best posts I ever read about Startups and failures. I personally
have an history about it, I never found interesting to share what I have faced
in the last 3-4 years trying to bootstrap an Hi-Tech business in Switzerland.

With your post, you gave me the inspiration to write about it, I will
definitely share what I passed so, maybe, I can avoid the same thing to
someone else.

I am not ashamed about failures, I failed so much time in my life, but on the
other hand I succeeded in some other case when it was completely unexpected.
Only people that try can fail, who doesn't try can only live in the world full
"what if I had try...".

I hope you can find a new, successful project and apply what you learned!

Edit: Typo

------
pea
That was one of the best and most honest things I've read re realities of
startups. Props and gl

------
jmspring
Sonar, for me, is an example of a feature rather than a product to base a
company off of. Certainly set ideas in motion as to what one could do with
location, etc., but I suspect this particular story will be told a few times
over the next few years.

~~~
themoonbus
I think the problem with these sorts of "connect with people near you" apps is
they do a poor job of providing you with a context within which to connect.

If you meet someone at a networking event, or at a bar, there is inherently
some common ground or common expectation.

Something like Sonar is context-agnostic: I could be running late to
something, hanging out with people I already know, at work, etc. It might be a
nice idea in theory to think you are bringing people together, but the real
question is do those people want to be brought together at that time in the
way you are bringing them together?

~~~
jmspring
The Facebook feature "friends nearby" is still around. I know a couple of
people that used it for all of about a month then stopped.

You are right in that context is key.

------
boomshucka
It is too easy to assume this didn't work because of these mistakes. I'd guess
it didn't work because it's a stupid idea in the first place. So, it's hard to
really see if these are "lessons" or just noise.

~~~
tjradcliffe
Everything is a stupid idea unless it works. No one can tell the stupid ideas
from the smart ones until after the fact.

Facebook and Twitter: both stupid ideas that now have dominant market
positions. The iPhone was "too late, too expensive, too lame" to take off when
it was first released, at least in the opinion of some professional pundits.

These lessons or observations are all OK, although I'd say that figuring out
what people are willing to use or pay for is and always will be a huge
unsolved problem. Sometimes you build something for a market that turns out
not to be there.

There are two types of technology: ones that everyone wants and no one knows
how to do (think SpaceX) and ones that everyone knows how to do but nobody
knows anyone wants (think Facebook).

Everything in the social media/mobile space is a lot more like the second
kind. There's not rocket science. It's all HTML and CSS and .js and nosql and
whatnot. But knowing what people are willing to buy into, out of all the
infinite things we could do with those parts, is a mystery.

~~~
derefr
> Facebook and Twitter: both stupid ideas that now have dominant market
> positions.

No, they weren't. They were _tasteless_ ideas. Pundits hate tasteless ideas
(because their job is predicated on [being perceived as] having better taste
than you), but regular people don't mind them.

Some of the best ideas are tasteless. The entirety of the casual games
industry (a $3bn market) is built on tasteless ideas. McDonalds' food is (both
literally and figuratively) tasteless. Walmart's curation is tasteless. Summer
Hollywood blockbusters are tasteless. Casinos are the most tasteless places on
earth.

But none of them are _stupid_ —they all make complete sense, economically.
They align with people's incentives; it's clear exactly why they make money,
and it would be easy to imagine their business models working out if they were
pitched to you.

A _stupid_ idea, on the other hand, is the opposite of something like a
McDonalds or a Walmart: something that might be tasteful, might sound great in
some abstract/idealistic sense, but is very obviously not aligned with _anyone
's_ incentives, and so has no valid route to adoption.

Pets.com was a _stupid_ idea. People didn't want to put in the effort to order
household consumables over the internet in 1999. Ordering something over the
internet in 1999 entailed an amount of effort about equal to buying it from a
mail-order catalogue—and nobody was selling pet food that way, either. The
logistics didn't, and couldn't, work out, without a whole lot of supply-chain
scale borrowed from other lines of business, ala Amazon. And remember, pet
food is perishable.

If the only things you can think to say about an idea are reasons it won't
work—and you can't think of even one cynical/self-serving reason people might
use it anyway—then it's a stupid idea.

If it would be great, if not for [some huge list of flaws], _but_ there's at
least one person out there in the world that none of those flaws will matter
to? Then it's not stupid; it's a _disruptive_ idea, and the next version will
probably iron a lot of those flaws out and become a pretty great idea.

~~~
TheOtherHobbes
>might sound great in some abstract/idealistic sense, but is very obviously
not aligned with anyone's incentives

You're confusing economic viability - which relies on lowest-common-
denominator customer pandering - with broader social value.

The idea that price = social value is a very cynical one, and marginalises and
discounts minority interests.

One big problem with the argument is that real innovation often comes from
people who live in those fringes, and not from those who live in the middle of
the bell curve.

So eliminating that "stupidity" will kill off a lot of sources of future
investment and innovation.

E.g. what keeps the music or fashion or web technology markets running: those
people who recycle the same ideas over and over, or the "stupid" people who
invent new ideas that have no obvious economic value - until they do.

~~~
derefr
Nope. Note that I didn't say "makes money." Economics isn't about money; it's
about utility. Facebook didn't make anyone any money for a very long time—but
it served a social need for people that they were willing to invest their
_time and mindshare_ into.

A _stupid_ idea is one that serves nobody's needs; it has no monetary value,
no social value, no value of any kind. Again, Pets.com: it sounds like
something that could work on paper, but there's nobody (in 1999) that would be
better-served by doing business with it than by ignoring it and doing what
they were already doing.

To make this clearer, some "social good" examples might help:

\- Food stamps are a smart idea. People in the targeted group are willing to
go through the trouble of getting them, for what they get from them; people
who can afford food aren't, so they don't. Since they can't be used to buy
much other than food, they also aren't a common target for exploiters trying
to make a public-handout money pump. The incentives work out.

\- Ambulances (under their current model) are a horrendously stupid idea—they
bill people extreme amounts for taking them to a hospital, such that the
people most in need (the poorest people usually wait the longest before going
to a hospital, and are therefore in the worst/most critical condition) are the
ones most strongly _dis_ incentivized from taking them. The incentives don't
work out at all.

------
varunjuice
Thanks for writing this. I'm no veteran of startups but I did have the
privilege in a previous role of seeing near failure up close, working very
hard to ensure we grazed the graveyard, and are now (my former team that is)
growing steadily.

The items you highlight are common across almost all startups, so the lessons
I draw are meaningful across the board.

1/ Design startups for speed. There is no way in hell you will get rid of
false positives. You need to make sure you survive enough till you hit a true
positive. This does NOT mean writing more code faster. In fact, this means do
NOT write any code if you can avoid it. Learn though extremely cheap means
even if the means only return 10% of the signal of a working product. If
people don't absolutely fall in love with the prototype, it's not going to
work.

2/ Don't be blinded by big names. Big name customers love to stay in the know
about what is going on. They also have inflated self worth. Go after the small
guys, and start using that to beat the drum around the big guys. In a past
role when I was selling, I was walked out of the building by a VP who called
in to get rid of me. 2 years later they called me because smaller competitors
had better products than they did.

3/ Engagement with a small feature matters a LOT - I agree with your take that
deepening engagement for almost all companies prior to growth is a bad idea.
It is relatively easier to find a "feature" 1 user likes, and then scale it
out to other users, than deepen engagement with that user.

------
allworknoplay
This is a great writeup that tracks pretty much everything I know about
successful startups. I started my career doing M&A for mid-sized tech
companies (and saw a lot of varied outcomes), then got technical and have now
been a software engineer for several startups, two of my own.

You've got to manage your time exceedingly carefully when all that matters to
95% of people is your growth trajectory. Most potential customers and partners
are nothing more than leeches; always identify and go after the low-hanging
fruit; never listen to people that want you to burn like crazy to accomplish
something crazy.

He's right that companies are bought, not sold -- my old boss used to say "run
your company like you're going to own it forever, or else you will."

Above all, be honest with yourself about all aspects of your business,
product, and team.

------
petersouth
Something I didn't understand is that if Sonar had millions of downloads is
that just due to hype and marketing or did the users just plateau? Did they
have a thing that nobody really wanted with alot of churn or dedicated users
with slow growth at end?

~~~
shawnreilly
My own personal opinion; The concept of Ambient Social Discovery should have
been approached with more sensitivity towards the Users privacy. Lots of
people were kind of creeped out by the concept; it was just too personal.
Because of this, people were less likely to give it a try. I believe this
placed the Ambient Social Discovery space into somewhat of a fringe Service,
where technologists and early adopters were willing to give it a try because
it's cool from a Technology standpoint, but your average Users wouldn't try it
out unless their Friends had used it (aka it had caught real Traction, chicken
and the egg). So this kind of put Sonar (and others) in a bad position because
not only do they have the regular challenges that every Startup faces, they
also had to deal with a negative perception of the concept in general (which
was forward thinking at the time). I believe this greatly influenced the
growth rate and adoption of many Ambient Social Discovery Apps/Services.

Disclaimer: I bootstapped a competitor to Sonar, Highlight, and Glancee during
this time period, but we never made it to Launch (problems with execution). My
opinions above are based on all the (exhaustive) customer validation work that
was performed.

------
ChuckMcM
Excellent writeup.

My favorite part is the suggestion to get your top three priorities and then
throw out two and three. No startup can survive trying to be three things at
once.

------
wehadfun
They could have pivoted this into a way for companies to send instant coupons
to people that happened to be close.

~~~
joshrotenberg
I was thinking a 180 pivot: tell me when people I _dont 't_ want to see are
nearby so I can bail.

------
lordnacho
What did the investors think about the possibility of a juggernaut entering
the space? If FB decided to let people know when their friends (or FoFs, or
group members) were near, that could easily eat the whole space.

------
diziet
FYI, this is from 2013: [http://techcrunch.com/2013/09/17/rip-
sonar/](http://techcrunch.com/2013/09/17/rip-sonar/)

------
icedchai
So what was the plan for actually making money? Was there any revenue at all?

~~~
kra34
You can't ask that kind of question here anymore

------
trhway
"ambient social networking"... was Color doing it too?

------
coldcode
Been there. Screwed up like that. Lessons for next time are usually the best
thing to come out of failure.

------
searine
What a cluster fuck of a product.

