
Lessons learned from my failed startup after 2 years, 300 users and 0 revenue - sergioschuler
http://www.sergioschuler.com/startup-lessons-learned-from-my-failed-startup/
======
patio11
This is a fantastic writeup (and like nearly all worthwhile writing on the
subject, I don't necessarily agree with all of it).

Two elaborations:

1) General advice to non-technical founders, not specific to this post: If
sales is one of your primary skill sets, and you cannot sell one developer on
working for you, you may want to have a brief heart-to-heart with yourself on
whether you are sufficiently skilled at selling to build a company which will
live or die based on your sales ability.

2) His advice about starting with 1 anchor client for a SaaS, expanding to 10
via expenditure of shoe leather, and _then_ starting to worry about scalable
approaches to customer acquisition is very, very good. (I don't know if I
definitely would endorse the "An Indian company expressed desire to buy
something from me other than the thing I was building, so I should have built
that instead." That would turn on a lot of things, including how serious that
company was about actually buying the thing. There is a world of difference
between "I would buy a Widget from you" and "I commit to accepting delivery of
a Widget from you, where a Widget broadly does X, my timeframe is Y, and your
payment will be $Z." I'd be looking for a letter of intent or a check as a
filter for seriousness following that Skype call before making a bet-the-
business decision on it, personally, but I obviously don't know the specifics
of what was said.)

~~~
sergioschuler
You are absolutely right on both comments! And additional comments:

1) I am not a developer, but I believe having an idea -> finding a developer
is the wrong flow. It should be like this: 1. Have the idea. 2. Get customers
who give you real money to build this idea. 3. Get a developer by telling "I
already have paying customers".

2) Absolutely agree. When I say "I should build that", in fact what I wanted
to say was something like "I should have looked for more X prospects that
would pay for what they wanted, get their money and then build that".

~~~
enraged_camel
>>I am not a developer, but I believe having an idea -> finding a developer is
the wrong flow. It should be like this: 1. Have the idea. 2. Get customers who
give you real money to build this idea. 3. Get a developer by telling "I
already have paying customers".

Actually, I disagree. Even if you're not a developer, you should still strive
to learn enough development such that you can push out the first version of
the product yourself, even if it's imperfect. Doing so will have several
advantages:

1\. It will make it easier to find a developer (they will respect you a lot
more)

2\. It will make it easier to get customers

3\. It will make you appreciate the technical aspects of the business

Number 1 is the most important. The reason non-technical people have
difficulty convincing developers to work on their ideas is that developers
tend to look down upon non-technical people, especially "sales types." In
addition, most developers have a thousand ideas of their own - you need to
give them a reason to work on your idea instead. And that's a lot easier to do
if you already have a version 1.0 out there that you have developed and have
customers paying for it.

~~~
guilloche
As a developer and solo founder, I just can not finish a serious project in
one year. For example, it took me two years to get version 1 of torapp
guilloche designer (www.torapp.info). We did not get consistent/significant
customers and we need a new product to survive.

To evaluate more ideas and to be familiar with respective areas took me
another year easily (without deep knowledge in the area, how can you beat your
competitors?).

So how can you guys roll out a product in 3 months? How can you quickly pivot?

~~~
akbar501
>So how can you guys roll out a product in 3 months? How can you quickly
pivot?

Tooling. To elaborate, if you're hand writing code to call an API, then you're
doing to much. This is a 15 minute task at most, and that includes production
level validation, security, etc. on both the client and server.

Also, basic code quality checks should be running non-stop in a separate
terminal and automated tests should also be running. Plus the core automated
tests should themselves be automated.

Developing an API is again a 15 minute task.

To be totally clear, proper tooling will take you from prototype to (early)
production. Obviously, tooling does not write your application for you, but
standing up a basic app where you can use the UI and move data to/from the
backend needs to happen with a minimum of effort. Once the core
design/structure is done, you can spend your time on value add activities such
as UI customization, custom business logic, and so on.

~~~
bbwharris
Its relatively easy, but far more than 15 minutes. Think about authentication,
design and testing.

------
Killah911
I don't understand people's (not necessarily the OPs)utter obsession with
philosophies. Especially in the startup world when being adaptive and
surviving is key.

Lean Startup, great book, decent ideas, not the religion that it's become. I'm
sick of hearing, hey do this the lean way and it'll "significantly improve"
how well you do, after all it's the blueprint for success. Personally, I don't
buy into that. Here's my view of success in reality: do whatever works (that's
legal & up to your moral standards), be opportunistic and get lucky (yes, hard
work and measuring metrics alone don't do crap).

MVP and idea validation are great concepts & helpful common language. In
hindsight all "successful" startups seem to have a "pattern", but in all
seriousness, there isn't a friggin algorithm for success in startups,
otherwise algorithms would've replaced entrepreneurs a long time ago.
(Although selling success patterns & software based on such to wantreprenuers
is a great idea)

I'm sorry the Sergio's experience happened. It's easy force cause and effect
onto a narrative. It very well could have been that the developer Sregio met
was at a point in his life where he really just wanted to build something
great and did end up building the awesomest thing. Instead of trying to
dissect the reasons his startup failed, had luck been a little more favorable,
we might be trying to analyze how it became a huge success.

Bottom line, my heartfelt congratulations to Sergio on being successful at
stepping up, despite the risks and having a crack at it. If you had never
stepped up and we all gave in to our negative biases and overanalyzed the crap
out of everything before we started we'd still be polishing stone wheels.

I know how shitty it feels. But remember, hindsight is 20-20 and cause and
effect should really be cause+luck and effect. Hope you're a better
entrepreneur and will be back in the game soon.

------
ry0ohki
"The developer had no intention of being the project’s developer (?) he was
not really a developer, he was a computer science graduate who owned a webdev
shop and was used to managing, not coding."

Heard this story so many times. Amazing how many people join a startup and
don't want to do the actual work. Remember that scene in The Social Network
where Mark Zuckerberg calls his outsource team about progress on that latest
feature? No? Me either.

~~~
sergioschuler
BAM!

------
at-fates-hands
"Since we were 3 business people, we spent all this time into idiot plans,
budget forecasts, BUSINESS CARDS, fancy website… all useless things which in
the end did not contribute to anything."

I've been apart of a lot of startups and this is far and away the best advice.
It was a common theme with two startups I worked for during the boom years.
One CEO's hubris was stunning. 10 million privately funded and he blew most of
it on season tickets and suits at stadiums to "entertain" big prospects
(nevermind we didn't have any "big" prospects at the time!), remodeled the
office to the tune of a few hundred thousand dollars, it goes on, but you get
the idea.

When you're in a startup, it really is about getting your product shipped, and
making sure that's where the focus is.

Great writeup and glad you saw the errors of your ways. Lots of people never
gain the wisdom you have until after two or three failed attempts.

~~~
kylereeve
Did you work at Entertainment 720?

~~~
at-fates-hands
Nope.

One of the startups was a telecom company, the other an educational software
company.

The telecom company was the one that burned through all the millions. They had
an exclusive contract with one of the regional bells and were trying to make
high speed internet accessible to the masses. They were banking on fiber
instead of the existing DSL which ran over copper. Essentially using T1 fiber
to give high speeds at the cost of copper DSL.

They thought they had a home run with a growing base of clients, and were
trying to get acquired more than build the next Frontier Telecommunications.

They had a crazy story, maybe sometime I'll let the details go. That was a
crazy time for sure.

~~~
hanley
I think you missed the reference. They were referring to a company from the TV
show Parks & Recreation. See here
[https://www.youtube.com/watch?v=jX0ZF8f8G0A](https://www.youtube.com/watch?v=jX0ZF8f8G0A)

------
al2o3cr
"Instead of surfing the wave and adapting my idea to what a real prospect
client was telling me they wanted"

FFS don't do this. There are far too many startups beached on the shores of
"well, this one SRS BZNS client wanted us to change what we were doing so we
did. Where'd all the rest of our clients go?"

I'm not saying "don't pivot", but "just making what they wanted" (where
N(they) = 1) turns you into a poorly-paid contract developer who's also paying
to host the result, not an entrepreneur.

~~~
CanSpice
I don't think you have to ask "Where'd all the rest of our clients go?" when
you don't have any clients to begin with.

------
PythonicAlpha
I want to shine some light on one side problem, scratched here:

The problem today is (out of the perspective of a developer): To many
companies rely on just "hire any (cheap) developer" to ramp up the product. I
see it all the time: Quality is not asked for, many companies (specially in
the web business) just want the cheapest developers. They search for a student
(at best), because he is cheap and will just make a small time estimation and
an even smaller fixed price offer for the project. The student will happily
work overtime that is not covered by the initial estimation.

Than the companies go mad, when either the programmer is running away or the
whole project runs into a blind alley (or both at the same time), because the
"totally expensive" programmer had not enough experience e.g. with database
development and the database structure just lets you shiver. Then the shouting
and anger is big: "Damn programmers -- all are liars and lazy!"

What went wrong, stated Uncle Bob correctly in his Blog:
[http://blog.8thlight.com/uncle-
bob/2013/11/19/HoardsOfNovice...](http://blog.8thlight.com/uncle-
bob/2013/11/19/HoardsOfNovices.html)

But the "cheap, cheap!" culture seams to be unstoppable. If you tell people in
advance about "quality" and "professionalism", they don't listen or just laugh
at you. It seams, all the people just have to find out the hard way -- but I
guess, even than most of them will not learn at all.

~~~
sergioschuler
I believe this is a marketing problem (from the developers). See, I am a non-
tech founder, I don't understand why X is cheaper than Y. If I perceive the
same benefit, I will get the cheapest one.

(This is hypothetical, but not so much: I understand a bit of tech and even so
I don't have so much clue on how to judge a developer besides what he shows me
he had done).

~~~
PythonicAlpha
You are right, that developers are most of the time bad marketers. But I must
disagree with the notion "... besides what he shows me had done" (I admit that
might not have been your point, but I still want to loose a word or two about
it).

That's a problem intrinsic with software: What you "see" is not what you get.
You see a perfect polished UI, but you get a sack of bugs! So this criterion
is not usable at all. The intrinsic values of a program are not visible to
non-developers at all. Even software-companies have a hard time, deciding
which criterion to choose as a base for decisions.

I think, when you look at cars or houses, people are more likely to ask a
professional to decide about the condition of the car or house. Also everybody
that loves his car (and life) will bring his car to some person that has read
some books about motors and does repair the brakes "half-prize" in his back-
yard. But in software practice, you just want to see some polished front lids
of cars and decide that the brake repairs will be fine.

------
thu
Do people find it really ok to have video and a website spelling "try it free"
and then have only an email input form ? I know that testing if demand exists
is important, but doesn't it have adverse effect on your reputation to somehow
lie to your prospects ?

~~~
darkxanthos
I think you're saying its a lie because there is no product yet? I can see how
you think that. If he did build the product first though and one person signed
up and he had to pivot to something fairly different, that'd be a lie too then
effectively. Except, now he wasted a lot of time building. My POV is if you're
only taking email addresses for people to know when it's available anything on
the site is just your plan. Plans always change.

~~~
6d0debc071
I wonder how the returns work out for sticking 'Email me to when it's ready to
be tried' or something. I can see you getting fewer numbers, potentially, but
I wonder about the people who are actually interested in the product vs drive
by triers.

At least seems more respectful of people's time than 'try it free' just for
them to have to click through and find out what it's about.

~~~
sergioschuler
To be frank, I think that is exactly what I used. I just didn't judge was
important enough to mention.

------
guynamedloren
Really great writeup, thanks for sharing.

I'm left wondering, though, what you _actually did_ over the two years? You
imply that you were working on it full time. Two years full time is a __lot of
time __. You can do pretty much anything in that time (including, as others
have mentioned, learn to code).

> idiot plans, budget forecasts, BUSINESS CARDS, fancy website [and writing
> articles]

I find it hard to believe you can work on those things for two years, day in
and day out.

~~~
sergioschuler
Hardly, no, one mistake that I didn't mention (because I am still processing
it) is how long we took to have v1 (more than a year). This was a mix of my
incompetence, too many features and also an inexperienced developer (in fact
we changed developers once too).

So, yeah, a looooot of the time was put into building the product, refining
it, getting bugs out of the way, testing it again, finding the same bugs...

Then there was marketing. Finding more clients, because we believed finding
more people meant someone would buy the product.

PS: I was not completely full time, the developer was. In those 2 years, I
have been freelancing (one needs to eat).

~~~
devb0x
1 year? Just ship product regularly brother.

------
Elizer0x0309
A business person trying to start a tech startup.... It's like a business
person looking for musicians to start a band. This is beyond ridiculous.
Either bring some skill to the table or go create a "business startup" and
stop polluting the industry with yet another failed idea and even worse a
"post mortem" of why it failed.

PS: This includes Marketing, Managers as well as the Business peanut gallery.

~~~
d0m
Disagree.. tech startups needs a very good seller.. to hire employees, raise
money, sell to customers. And developers are notoriously bad at selling!

~~~
Elizer0x0309
Don't generalize. If anything sellers have drowned big tech companies with
unwanted contracts, long term support of legacy products. You are driven by
"making money" which is ultimate greed. Thanks but no thanks. I'm more than
happy making one customer at a time happy then having you guys whore engineers
out.

Sellers as the peanut gallery, should be kept in check.

------
wrath
Good article but I would look at this "failure" from a glass half full
perspective. You "won" because you've learned valuable lessons you can take to
your next idea. I've had many products that have not gained many users in
their respective marketplaces but I learned from each and everyone of them.
All these experiences has brought me where I am today (CTO of a 45+ employee
company). No failures in my past as far as i'm concerned; just lots of self
teaching (that you can't get in school).

>> ""An Indian company expressed desire to buy something from me other than
the thing I was building, so I should have built that instead.""

I may be the minority but I agree with him but on one condition. If this
Indian company wanted to pay a small monthly subscription fee for your product
I would never have agreed developing "their" ideas. I would have taken their
feedback and put in the big pile with all the other feedback I gathered up.
But I would have pitched this Indian company a different story, I would have
pitched them a professional services contract instead of a product. I did
something similar in the past and it worked out very well because in a
business money is king. With no money you can't do the things you need to do,
like attend conferences to sell your idea, buying adwords, hiring solid
developers, paying yourself a salary so you can devote your time to the idea.

In my case the customer was willing to pay ~$10k a month to get what he
wanted. We built it for him while building our own product. Once we got big
enough and could sustain ourselves without our original customer, I gave the
customer away. The developer who maintained the project was interest in taking
on the project himself. We came up with a 6 month transition plan, including
lots of product/project management help, office space, etc. It was a win/win
situation at the end.

Doing this is not for everyone though. There are many days I cursed this
customers for taking up the majority of our resources. We had to be very good
at differentiating between their requirements and the markets requirements. We
weren't perfect at it but it worked out in the end.

------
DanielBMarkham
There are a lot of things I'm interested in but would not pay for online, but
good failed startup stories like this is not one of them.

Seriously, if somebody could cull 2 or 3 of these a day and deliver in a
weekly or monthly format? It'd be worth a subscription.

Thanks for the article!

~~~
dennisgorelik
Why do you need so many failure stories?

One failure story per week should be sufficient to be constantly aware of
typical problems.

------
snorkel
_... one of the prospects was an HR person from a huge Indian manufacturer.
They wanted the system NOW and wanted to speak to me. [...] I just needed to
build what they wanted._

I know startups that charged down the other path, being hyper responsive to
their big customers, and they suffered for it because their biggest customer
steered the product vision straight to crazy town. Such startups essentially
become the contract development shop of a few big customers, living and dying
by the whims of those big customers. Yes, you can pay the bills, but you're
essentially working full-time for a few customers rather than building your
own enterprise.

------
aaronbasssett
I wonder how much their conversion was impacted by internationalisation
problems. It looks like they were attempting to target the US, but their
pricing page wasn't localised for that market. Unless they really were
charging one thousand nine hundred and ninety dollars per team. Price is shown
as £19,90 instead of $19.90

Also due to what I perceived as a thousand separator, not a decimal mark, I
initially read the price as nineteen thousand and nine hundred dollars!

~~~
sergioschuler
I forgot that one! I have even a saying for this learning "be local before
being global".

------
advertising
A mistake I made early on was trying to provide a product as cheap as
possible. Constantly worried that no one would pay what we asked for.

Basically being afraid to ask for the value it was really worth.

I think there was a comma/period swap, but if I'm reading correctly it looked
like the product was positioned at $30 / mo?

Assuming that's correct - it's really not a meaningful amount to any company
that has enough employees and management to actually be a user of the product.

I think a $30 / mo with a free 30 day trial period (once product launches and
they can actually try it ;) ) that requires a credit card for the trail could
have worked.

Would still need a product to actually try, but that's not much different than
saying get a free trial and just taking in email addresses.

If anyone remembers the Minimalytics / Small HQ folks - I thought they did a
good job with their signups. The only thing for me was I disappointed by how
minimal their product was in beta. It was so basic I didn't have any use for
it, and running our own startup, didn't have time to wait. We ended up
building it internally.

I probably would have converted to a paying user if it was more developed at
beta. Not their fault though, they did a good job I thought(if you're reading
Small HQ).

------
atmosx
Firstly, the Indian corporation which contacted him, apparently was asking for
something totally different. If they were asking about 3 or 4 features that
could be added, I don't think that it would be a problem. But the author
didn't do anything wrong there. They were looking for a developer probably not
a product or not _his_ product whatsoever.

If you accept his argument as true, that he should _switch_ and follow the
tide, then you might as well start looking for freelancer developer job.

< J/K> Awesome quote:

> The result of this was that in the end we had to hire a full-time (and paid)
> developer. So we had zero revenue, 4 co-founders and a paid employee (which
> was effectively the only one doing real work).

I laughed really hard reading this line. My girlfriend came from next room to
make sure I was okay!!! That's awesome, like 4 guys watching a movie, say the
'Social Network', and deciding to do a startup!!! </ J/K>

Jokes apart, I think the author has got it all wrong. There are ten million
reasons why a small startup failed. Most of the time is hard to tell _exactly_
why.

But seriously, only people who have proved time and again their ability to
deliver a product to the market and are famous for turning ideas into money,
are able to struck deals before having a product. And we probably all know
them (Jobs, Musk, etc). For the rest of us that's not how things work, I'm
sorry to say that he is still getting it all wrong.

In the real world, you can't sell something that doesn't exist, these things
happen only on Wall Street.

------
tim333
Thanks for the write up - It's always better to learn from other people
mistakes. I think however you and the most of the other posters miss the most
basic problem because they mostly seem not to have tried the site and that is
that, to me at any rate, it seems the product is not very good. It seems to be
basically a 40 question form with questions like "People in the team know the
weaknesses and strengths of other team members." that you mark from 1-10 and
is not customizable. Personally I hate that stuff - you spend ages filling the
thing out and then when you find the average response is say 7 what do you do
then? There's not obvious action. If you had a form with a question saying say
"what do you thinks the biggest problem with your team?" and people were able
to say anonymously that say "there were four founders without the right
experience and only one dev really working" then that would at least be
useful. I think before worrying about the market etc you should have tested
your system on real teams to see if it actually helped them much. This could
have been done with zero or little tech - say either a paper questionnaire or
just write your questions in an email and have people email their answers back
to you. The fact that 200 people tried the product and none bought does imply
a product problem but it if you define your product as trying something to fix
team management problems then I think the issue is not that there is no demand
for that but that your product does not work in that regard. If it was me and
I could code a bit, rather than scrap the thing I think I might try changing
it to see if it could be made to work at the team improving level. You could
say cut it to say five 0-10 type questions and five "what's the biggest
problem?" type questions and then try that with a couple of real teams and see
if they found it helpful.

~~~
sergioschuler
Your evaluation certainly have merits and a lot of it we confirmed when
speaking to clients later. Just one thing to make clear: I have 5+ years of
team management/leadership development and I used a similar tool I created and
evolved (in paper form) to improve a loooot of teams. So the tool works - BUT
you are correct, it is a pain to apply and you probably need consultancy to
get out of the team management hole if you are not a skilled manager.

------
karterk
I think for first time bootstrappers, investing some time in a quality blog on
a particular field you would like to build products for is really really
useful. Apart from having a good audience to launch your first product, it
helps you interact with people _before_ you have something to sell to them.
You learn more about their problems, the existing market, competition and so
on.

------
subbu
__If there is just one thing you should learn, it is: Just speak to prospects
and extract their pain, then sell the painkiller (before building the
product). If they are willing to buy, do take their money and invest that
money into building the product.__

This advice always seemed like a stretch to me. Does anybody pay for a product
that's not ready yet?

~~~
brickcap
"Does anybody pay for a product that's not ready yet?"

Isn't kick starter build around that concept? If people think something is
looking good and might help them considerably they might be open to pay for
developmental costs.

~~~
AndrewKemendo
Kickstarter isn't designed for business, but rather it is designed for art in
the general sense (which sometimes has business applications), so I don't
think Kickstarter is a good example.

------
thehme
This is a great article full of truth. My respects to the author because it
takes courage to accept one's mistakes, but it's critical for getting up and
moving forward in a better direction. How many ideas are sitting in my brain,
but all I can think of is how to exactly am I supposed to validate that any of
them are worth my life?! I mean, really, a startup will mean I will have no
life. With my loved one in a startup already, I don't know if I could really
start something without the support. Looking back, were any of the big
companies that started as a small STARTUP founded by poor people? I think not.
I haven't heard a single story of an actually poor person, who founded a
startup and is now rich.

------
antidaily
You want to know how to validate your idea faster? Don't have a free plan.
Will people give you their credit card... that's what you want to know. And
those are the people you want feedback from.

~~~
bfreeman
exactly. that's what he says in the article, no? :)

~~~
Ravengenocide
Yes. He says that instead of having a "Try it for free" button he should have
posted the price and seen how many are interested in the product then.

------
red_anorak
>> "SEO and social media bullshit"

This stuff does seem like bullshit when you're working on it, but it's
unfortunately crucial these days. It takes so long to build up the brand and
visibility that I don't believe you have the option to just do it once you've
got the product right. Unless you've got the investment, firepower or
notoriety to get chins wagging then you've got a long road ahead of you. Good
SEO actually sounds like one of the things you got right to me. But maybe you
spent too long on it

~~~
sergioschuler
I understand where you are coming from. I agree it is essential for any
business that uses the web. But if you have the wrong product, no matter the
amount of SEO, you will get nothing out of it.

What I want to say is that SEO is important, but not more important than
finding the pain and the product.

------
guilloche
Questions for peer founders:

As a developer and solo founder, I just can not finish a serious project in
one year. For example, it took me two years to get version 1 of torapp
guilloche designer (www.torapp.info). We did not get consistent/significant
customers and need a new product to survive.

To evaluate more ideas and to be familiar with respective areas took me
another year easily (without deep knowledge in the area, how can you beat your
competitors?).

So how can you guys roll out a product in 3 months? How can you quickly pivot?
(pick up ideas and evaluate them quickly)

~~~
koide
It certainly will depend on the actual product A LOT.

A vector editor is very complex compared to the typical CRUD-based with a
little business logic that lots of SaaS products are in the end.

~~~
tgflynn
"typical CRUD-based with a little business logic that lots of SaaS products
are in the end"

Isn't the market for that sort of thing getting crowded by now ?

~~~
koide
Not quite. I think that most startups where technology is not their raison
d'etre still fit that bill.

------
etfb
Lesson N+1: Hacker News can break your blog's webserver. That's one you only
learn through experience.

[ETA: which is sad, because I want to read it!]

~~~
sergioschuler
Damn Bluehost, hehe. I wish I knew how to fix it, but a few refreshes seems to
go through.

~~~
drewmclellan
I wouldn't blame your host, actually. It's WordPress. It's a shame it's so
often given a free pass on these issues when it really isn't good at handling
peaks in traffic.

~~~
sergioschuler
Any alternatives?

~~~
danso
Using the popular caching plugins...W3 Total Cache
([http://wordpress.org/plugins/w3-total-
cache/](http://wordpress.org/plugins/w3-total-cache/)) or Super Cache
([http://wordpress.org/plugins/wp-super-
cache/](http://wordpress.org/plugins/wp-super-cache/)) seem to be well liked
and I've used both of them without too many issues (I have some weirdness in
my WP upgrade path). My blog has been on HN and reddit a few times and has
never crashed, even though I'm on the cheapest Dreamhost hosting plan with
what seems like 5 to 10 second response times for non-cached pages.

~~~
sergioschuler
Will try, thanks!

------
usablebytes
The last para - If there is just one thing you should learn, it is: Just speak
to prospects and extract their pain, then sell the painkiller (before building
the product). If they are willing to buy, do take their money and invest that
money into building the product.

Is that really possible? Making someone pay for a product that doesn't yet
exist? How can you do that?

~~~
monkeyspaw
This concept really is the holy grail of people who like to talk about
startups.

I think there are some mis-perceptions about the idea. Here is how I how found
the concept useful, in my company.

Startups who focus on revenue rather than growth can use this technique as a
success metric (duh). Rather than using active users, etc., as proxy metrics
for success, this method is a very direct one to measure how marketable your
idea is. Get one success banked, then you can start to optimize -- pretty
neat!

However, it's also incredibly difficult to do. So the second purpose becomes
this: a proxy to evaluate the importance (in your customers' eyes) of the
problem you solve. If you're solving a problem that everyone in the banking
industry desperately needs solved, they will be more willing to try something
that isn't feature-complete (or in existence).

So while few people will actually buy your product before it exists, using
that as the goal can help you in your business development. You can figure out
the problem's importance (and, believe me, it's better to solve a hair on fire
problem than to solve a minor inconvenience). You can get feedback from people
who are actually willing to pay -- this signals they are probably your
customer! (So it helps you prioritize feedback, and sort people you talk to
into actual / window-shopper type customers).

What the gurus don't tell you is this is very difficult to actually
accomplish, at first. But after several iterations, you can get valuable
feedback from people who are closer to having skin in the game.

And, of course, there is the chance that someone will have such a big problem
that they want to pay you to solve it right now. If you can find that big
fish, and their problem is similar enough (or uses core technology
sufficiently similar to your "productized" version), then you can partially
pay to make the product. (This comes with the caveats about how you don't want
to be a slave to a single customer, etc. But we're having luck developing our
core technology in the process for the big customer, and will re-use it for
our product.)

------
davemel37
I think a more important lesson to learn here is to have the uncomfortable
conversations ASAP. The sooner you communicate clearly, the fewer
opportunities there are for misunderstandings.

If I had to give founders one piece of advice it would be, "Just Ask"... Ask
for the sale, ask what youll get in exchange for equity, ask, ask, ask...

------
narrator
I would like to thank everyone who posts these failure stories. We get too
many effortless success stories here and often forget that failure is the norm
and not the exception. It's a bit like how those books on software anti-
patterns are so helpful. Sometimes it's more helpful to focus on what not to
do.

------
pmcpinto
Great write up, I think this point is crucial: Founder roles and expectations.

Even if the goal/role is to be the non tech founder, it's important to learn
the basis of html, CSS and Javascript. It will give you another perspective
when you think about how to implement an idea.

~~~
advertising
I learned this one the hard way. Started as two founders, one techincal, one
biz dev (I'm the biz dev).

We brought on a third (largely my doing), as more of the operations / finance
side. Didn't set roles, and my biggest gaff of all was to not make him vest.

After a year, the third founder turned into a maniacal control freak and
almost sank us. Finally departed, but took his equity with him.

My biggest lesson so far is be very careful who you partner with and ALWAYS
vest. Or another way to put it, you don't need to worry about the good times,
it's the bad times you need to consider and pre-negotiating the divorce is
critical.

------
devb0x
Damn that's well written. Of course I can also show some business cards and
some bull. But when push came to shove, my target market were not prepared to
pay.

As always, I am always keen to connect with bright people and good ideas.

------
owenversteeg
The website was down for me at first but after 27 refreshes I managed to get
it. Here's a mirror:
[http://pastebin.com/avMpRwrU](http://pastebin.com/avMpRwrU)

------
kyberias
I just love the brutal honesty expressed compactly. Full of useful information
for all startup-founders. I'm sure many are currently making the exact same
mistakes.

------
sebastianconcpt
Thanks for sharing your experience and insights Sergio.

It takes balls to do that shrinking ego experience in public.

I'm sure something good will come out of it.

------
malditojavi
Great insights, thanks for sharing, Sergio.

------
nmbdesign
This is such a great article, thanks

------
Kiro
Four business guys? That's four too many. Just learn how to code and build
your own stuff.

------
ymn_ayk
Priceless lessons from the real world for the people who want to build a
product. Thank you.

------
mzarate06
Such a great write up, thank you for sharing.

Question: what are you going to do with the product now?

~~~
sergioschuler
Nothing. It is just sitting there.

------
luisivan
I made all of those mistakes, and also learnt the hard way. Great post.

------
readme
OP, your biggest mistake is not taking the time out to learn how to code
yourself. You said it went on for 2 years, that was plenty of time.

~~~
sergioschuler
INDEED! In fact I started. Did One Month Rails (a couple of months ago). My
github (please don't laugh, but do give out advice):
[https://github.com/sergioschuler/](https://github.com/sergioschuler/)

~~~
Fede_V
Excellent attitude, and good luck. Honestly, when the ratio of 'business
people' to technical people in a start up is that high, that raises all sorts
of red flags to me.

------
christopop
Thanks for sharing this man!

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testrun
Very nice article Sergio.

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pcharles
good stuff man

