

Lessons from a failed startup - jasonlbaptiste
http://venturebeat.com/2009/04/29/10-lessons-from-a-failed-startup/

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vivekamn
One of the best startup retrospectives I have read. Especially the points
about marketing and user acquisition are very relevant to what I what I am
doing currently.

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wensing
_"The main failure of PlayCafe was marketing."_

Sort of buried at #5, so felt it worth repeating (and conversation here).

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coglethorpe
Well worth repeating. Most of us here can code a site up, some are exceptional
at it. But even getting that initial press to get those first customers can be
daunting.

That's one advantage I can see with something like YCombinator -- that initial
traffic. It might not be much, but it's a few links from reputale blogs, some
visitors and maybe even those first conversions. It's certainly no guarantee,
but it is more than my first startup had.

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JesseAldridge
" _2\. Content businesses suck..."_

This seems like a pretty strong argument in favor of _some_ form of DRM. If
content creators can't make money, we're not going to have good content.

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chris11
I don't really see DRM as a good answer. It is usually pretty ineffective, and
it can cause problems for your customers.

I'm not really aware of truly effective DRM. DRM just needs to be cracked once
for it to be pirated. And there are people who actually enjoy cracking DRM.

I guess server side authentication would work, but that is only if you
convinced people to connect to your servers. This is actually pretty hard.
Spore seemed like it added value when it connected to the internet. But I am
sure authenticity could have easily been verified with less restrictive DRM.
And cracked copies were out before retail copies were out, so DRM was a total
bust in that case.

WOW is one of the few companies that I don't think has huge problem with
piracy. But that is only because you can't pirate the experience of playing
with tens of thousands of other people. And even with WOW I was able to easily
find torrents of the game and lists of private servers. So even MMORPG's get
pirated.

Big companies have thrown millions of dollars at this problem already, and
haven't come up with a good solution. So this isn't an easy problem. And I am
under the impression that DRM is currently very expensive for companies.

Sure, DRM could be made better. But I think it is kind of pointless. If the
authentication relies only on hardware that is under the users control, like a
pc, it will get cracked. And you will almost certainly end up annoying your
paying customers.

That said, I am interested in seeing how GOO turns out. A DRM solution that
lets you legally sell your game sounds promising. And since Stardock built it,
it might actually be customer friendly.

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JesseAldridge
Crackable DRM isn't the problem. Casual piracy is the problem. Pretty much any
security system can be circumvented; the point of DRM is just to make getting
it for free sufficiently more of a pain in the ass than paying for it.

GOO does indeed look interesting:
[http://www.maximumpc.com/article/news/stardock%E2%80%99s_%E2...](http://www.maximumpc.com/article/news/stardock%E2%80%99s_%E2%80%9Cgoo%E2%80%9D_drm_makes_steamworks_obsolete)

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DarkShikari
But the reason why DRM will never work is because your average user _is not
the one that cracks the DRM_. The pirates crack the DRM, and the average user
downloads it over Bittorrent.

The only way to reduce casual piracy is to convince people that they should
pay for your product.

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JesseAldridge
Ok, maybe I'm using the wrong term, but what I mean by "DRM" is anything that
inhibits piracy. This can include stuff like when the music industry put those
mangled mp3s on Kazaa. Anything that makes piracy less convenient will lead to
more people paying for the product.

Even if piracy can't be completely prevented, it can still be significantly
mitigated, it's just a question of engineering.

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zackattack
Anyone else think he was valuing his time too highly?

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jacobscott
If you think you can add 1mm to the value of your startup by working 12 hours
a day 7 days a week for a year, then your time is "worth" $230/hour.

Also, considering what someone with a similar background could earn working
full time for an established company (especially factoring in benefits),
$50/hr is fairly conservative in terms of opportunity cost.

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zackattack
Opportunity cost != time valuation

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Tichy
Why not?

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zackattack
Because the VC is not paying you at a market rate for what your time could be.
They are funding you because they think you will be successful. If you are
successful, your ultimate outcome will be a multiple of your "market rate"
over three years. Therefore, your hourly rate should be reduced.

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Tichy
I can not follow your logic. I never had VC investment, but I did not even
think the VCs pay you. Even if they did, wouldn't you access your value by the
expected outcome P(failure) _0+P(success)_ 10 billions?

It also doesn't matter, because I still think the opportunity cost equation
holds. If you decide now to become a waiter instead of an IT consultant, it
costs you 70$ an hour to be a waiter (assuming waiters earn 10$/h and
consultants 80$/h). I don't think there is a way around that.

