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Ask HN: Why did your startup fail and what did you learn?
675 points by lsr_ssri 6 months ago | hide | past | web | favorite | 440 comments



I come from a coal mining region. For over a 100 years there has only been one mine in the area, a big mine. There is plenty of coal in the surrounding areas. This is Africa. An uncle of mine had the idea that we start a mine. He invited about 20 of us, all related. We started putting aside money to register a company, pay a geologist to prospect for the coal and get mining permit to mine the coal. We all contributed money on a monthly basis. All paper work is done in the capital city so we used to send the oldest uncle in the group to go process the paperwork. He had worked in government before and he was older. In my culture you respect old(er) people.

To cut a long story short we successfully registered the company, got a geologist to confirm there was indeed coal and got a mining license from the government. We then signed a contract with a sub contractor to come and mine. When the share certificates came instead of owing 5% I ownwed 0.00086% of the mine. Yes there were 3 zeros before the 86. Our elder the uncle we had sent to do the paperwork basically screwed all of us, including the uncle who originally came up with the idea.

Lessions 1. Never use your cultural beliefs in business. Stick to contracts. 2. Don't just trust family.


A contract is an agreement, not a piece of paper. If you all agreed that he would represent you, than he was bound to do so, no matter what got written down.

That, at least, is the theory. There are of course many, many steps between a theoretical case and successful claim. And it's certainly easier to win a case if you have a written contract as evidence --- though 20 people's testimony is pretty strong evidence, too.

I am not (quite) a lawyer, and certainly not in your country. But it doesn't sound like you did anything wrong: it sounds like fraud.


I get where your questions are coming from but the real problem was that we were first a family then business people. In my culture, there is a alot of respect accorded to the elderly. We brought up not to question people older than us. So much so I struggled at work to call people older than me by their first name.

It is fraud. Some of the family members wanted us to get the others arrested but this isn't so easy when you are family. It literally ends up with you getting your cousin's dad arrested, the same cousin you grew up playing soccer with. We collected money for a lawyer to sort it out but that dragged on and on.

I now have first had experience of the saying that "the love of money is the root of all evil". None of us had quit our jobs so we moved on. I hold no grudge, just took the lessons.


> Some of the family members wanted us to get the others arrested but this isn't so easy when you are family. It literally ends up with you getting your cousin's dad arrested, the same cousin you grew up playing soccer with

I grew up in the Southeastern US. Here, getting your cousin's dad arrested is a Tuesday. ;)

In all seriousness, sorry you had to go through this, and glad you took away good lessons. On the other side of the coin, never feel guilty about getting what's owed to you.

You're the only one you can trust to have your interests at heart.


Thanks for your advice. I will definitely keep that in mind, "never feel guilty about getting what's owed to you."


People inside our tight social circles are held accountable by social pressure. This is why, for instance, Mormons seldom defraud other Mormons -- it would make Sunday mornings unpleasant for a long time to come.

That your uncle would choose very deliberately to alienate his entire family is the astonishing thing. Would be curious to know what his social life is like, now ...


Actually, "According to the FBI, affinity fraud crimes are especially prevalent in Utah." https://fox13now.com/2017/12/20/fbi-warns-lds-church-members...


Probably it's especially prevalant in Utah because it's not common in the US to do business with family members while it's more common in Mormon communities.


Interesting, but the article doesn't give us much sense of how close the victim and perp were in the church hierarchy, My reading is that they probably did not have the same Mormon bishop, who would have felt some pressure to take action.

So, yes, the farther away in the social network, the weaker the social pressure. If the link is mere nominal membership in the same faith, that may be worse than no link at all. Most of Madoff's victims were Jews -- because they were inclined to give him the benefit of any doubts.


>This is why, for instance, Mormons seldom defraud other Mormons

>If the link is mere nominal membership in the same faith, that may be worse than no link at all

So which is it?


Not enough info in the article to form a judgement.


...You're the one who made the initial claim.


You quite right, those are the reasons we trusted him. Clearly, the love for money was bigger than his love for the family.

We still meet at extended family gatherings. Funerals, weddings but no one stops by to visit him and his immediate family. Which I gather is fine with them because they have renovated their house and bought themselves a new set of wheels.


I guess it depends how tight your family is. I would never trust half of mine on such matter, I would definitely trust my parents though.


The opposite is what I noticed though. Family members will screw you over and then if you ask for repair they'll use the excuse that as family you should just all get along.


What I noticed early in life is that when a successful businesswoman in my family lent some cousins money, and they then offered fabulous stories instead of repayment, they were no longer seen at events she hosted ...


> owing 5% I ownwed 0.00086% of the mine

Didn't you sign after reading? I dont know how it works there but generally one has to get all signatures for approval.


So this uncle was elected as the chairperson and given power of attorney to register everything on our behalf. The capital city is a good 800km away and we all had day jobs. As I said in another comment, the true problem was we (I) believed a family member wouldn't screw us like that. So it was literally a handshake agreement.


This reminds me of a takeaway from my failed startup - it's really not realistic to place 100% trust in someone to look after your interests if you are remote.

You need to be there in person to keep an eye on everything, or possibly complain to government relgulators / go to court if need be. If it's all remote and it's not practical to do this stuff in person, you are asking to be taken advantage of.


Totally agree with you. This is the lesson I learned.


If he had power of attorney, in many jurisdictions he would have had certain duties to you which may have significantly restricted his ability to do undermine your interests.


I would speak with a lawyer, given what you have described you may have a case for various beaches -- an oral agreement is a form of contract, power of attorney has certain obligations that are required to be held (the agent has a fiduciary responsibility to act for the benefit of and in the best interest of the principal), and there could perhaps even provable fraud.


A handshake agreement is enforceable.


Attorney here! (Not dispensing legal advice, though.)

Not in the US in many cases. Take the Uniform Commercial Code, for example, which requires a written contract for the sale of goods over $500, or agreements creating a security interest.

See https://www.nolo.com/legal-encyclopedia/when-is-written-cont... for a decent overview.


IANAL

But I believe in the UK it is only transfers of land that require a written contract. However you might want to think about how you would prove a handshake to a court


In some cases, yes.

In the US, I cannot transfer land to you with a handshake. I can't sell you most goods valued over $500 with a handshake. I can't assume your debt to another party with a handshake.

Always ask a lawyer.


Do you know that’s true where OP is (in Africa), or are you just assuming?


While technically correct, realistically unprobable.


In Europe/Norway the agreement have to be beneficial to all parties to be legal. In addition goes any doubt in favor of the one who did not write the agreement. Isn’t there any similar rules in your country?


Do the rest of the shareholders have first option to buy his shares if the uncle were to wander into the jungle and fall into a pit, just a pit, a big pit?


Did it actually work out though? Is the mine making money?


So the contractor did indeed come through and mine for about three years. Contractor opted not to renew his contract. At this point I have to disclose my home country, it is Zimbabwe. We have had trouble convincing anyone to invest in the country. Dictatorship. Money that we made was shared according to the shareholding structure. I made peanuts.

Nothing happening now, I guess we tired from fighting.


tsano, Zim ma1 people just screw each other! i'm from Zim too


Totally agreed. It is hard to explain to someone not from Zim just how things work in Zim. I tend to feel we are unique, not in the best possible way.


>Don't just trust family

Reminder what happened to Joseph in his life [0].

[0] https://quran.com/12


"He invited about 20 of us" then "instead of owing 5% I ownwed 0.00086% of the mine."

Have you made explicit the share you will end up with or you just assumed that all of you would get 100% / 20 people, i.e. equal share? It sounds that your uncle worked a lot more (from the moment he looked for partners and invited them into the venture till the end of the paperwork and beginning of the operations). I concede though that your share was way too small. If the rest of the partners (18, without you and your uncle) received the same share, your uncle gave you all only a little over 0.015% which is just below any justification I can imagine.


Its a really long story. I mean long. No the uncle didn't do all the work. Infact he contributed no money at all. There was a lot of legwork done by other family members hiring equipment to do prospecting, providing transport and wooing potential investors. You have bear in mind that half of the relatives were not educated. There was a lot of trust and good will because were "family". We are still are family.

On a side note, this made me realise why there is so much conflict in some mineral rich areas in Africa. Honestly if we weren't peaceful people there could have been serious conflict.


> On a side note, this made me realise why there is so much conflict in some mineral rich areas in Africa. Honestly if we weren't peaceful people there could have been serious conflict.

Care to elaborate?


It's my way of saying we were really mad! Mad enough to come to blows which nearly happened at our meetings or to sabotage the whole mining operation. Have a look at this story[1] about a community in diamond rich land in South Africa who are still bitterly divided to this day.

[1]https://mg.co.za/article/2014-01-30-bitter-fight-for-diamond...


It turns out, there's a name for this (which I learned in a HN comment): resource curse.

One theory being that, essentially, legal controls and enforcement are expanded with economic activity. But a sudden surge in resources (e.g. discovery or exploitation) exceeds the existing system's ability to control corruption, and it's very hard to steer a cash-rich system back to good governance after this happens.

https://theconversation.com/citrus-fruits-scurvy-and-the-ori...

https://en.m.wikipedia.org/wiki/Resource_curse


You're right that rent seeking and corruption is a big part of the resource curse but another aspect of it is that having a large amount of natural resources makes your other exports less competitive (because all the skilled people go work in the mining/oil/whatever industry) and so it's hard to develop the educational and other institutions that a successful society has. That's why developed countries (e.g. Norway, Canada, USA) don't suffer from the resource curse. They have other options than exports for economic growth (in addition to better functioning governments).

There is an argument against aid to developing countries for similar reasons.



I chased and successfully won a huge customer for my small and fledgling startup. I chased and successfully won a sole service contract for a key part of their business process. I allowed a credit situation with them to grow over the course of 3 months while I allowed them to have 60 day terms. And then, they went out of business and left me holding the bag with $150,000 in unpaid AR after I spent $90,000 generating that AR with them.

The lesson is never trust the size of a company as sufficient reasoning that they can and will pay their bills.


^ this is real talk. Big companies love to be behind on AP for a variety of reasons, among them:

- Their own 'highly matrixed' organizational structure makes it near impossible to find 'the correct person' to talk to about accounting issues, let alone get a straight answer out of them - so chasing these issues down becomes a huge drag on your time and energy and you may very well just give up after a while

- Past-due invoices are typically penalized with tiny interest percentages [in the <2% range], so even if they do intend to pay eventually, they can gleefully treat you as a bank with really low interest on short-term loans.

- They know full well that you, the small company, probably aren't willing to put up the massive time and dollar resources in order to sue them, the big company, for what is to them small potatoes. They have a bench full of experienced attorneys, you might have a single one, and they know exactly how to extend and complicate a legal process such that the litigation itself costs you far more than the outstanding AR.


A lot of this is probably true, but it's really to your benefit to understand, as a businessperson, that this is generally how large clients expect to conduct business. You can fight it and even establish better payment terms, but it isn't always worth it. It's usually cheaper just to build a business that is resilient to late payments.

Over the last 15 years or so, a lot of my best customers have been super-late payers. You take the good with the bad.


To double down on this it's worth finding out how the customer within the large company pays for things. Sometimes it was easier to get an annual or quarterly contract because that's how a company's accountants dealt with that employee/department's business expenses.


I used to think that offering a 10% discount on invoice to clients for payments within NET30 would motivate them to pay early, but very few clients, specially those complaining about expenses ever made good use of that.

Has this been your experience as well?

... and do you "outsource" your AR for a % of your invoices?


I really don't think we even think about it that much. We have terms in our contract, and we send emails when payment is due, but it's not like we'd ever flip out if someone was late.

You can try setting late payment penalties, but my experience has been that client procurement and legal people get those stripped off routinely.

At Matasano, I remember one of our anchor customers taking something close to a year to pay an invoice.


> You can try setting late payment penalties, but my experience has been that client procurement and legal people get those stripped off routinely.

That at best. others just "forget" about the late payment penalties in my experience.

The sibling comment from @mrhappyunhappy is interesting but when I tried it, clients would rarely pay the premium.


As a consultant I state that I will charge a 10% late fee for every week a payment is late. I’ve never had a late payment. I’d say offering a discount does the exact opposite.


Clients past a certain size just "forget" about the late payment penalties in my experience, which is why I offer a "on time" payment discount.

I tried both methods and clients would rarely pay the premium compared to those who would avail of the "on time" payment discount.

I have less happier clients when I make them pay a fee than when I take away a discount although mathematically they are the same number.


That just gave me a flashback to my college accounting courses. So many examples where a discount was offered for on time payment. Must be a reason that technique has been around long enough to be a fixture in accounting textbooks.


From big co perspective, absolutely true. Tons of other priorities to get out of the door than paying on time. Our invoice process was dreadful. Thinking back, if a vendor made it easy for us, we might always pay on-time!


How big is your average client and how heavily utilized are you? Your experience is very different from mine, but I may be working with larger companies (or you might be working with an idiosyncratic subset --- I don't think I am, though).


I work with companies 1-50mil in revenue typically. I don’t know what the law is when it comes to late fees, the language is mostly there as deterrent. That being said I am VERY picky about who I work with so I’ve never had a late payment or nonpayment, I suspect that’s more due to the screening process than the language in contract. If I ever had to actually charge a 10, 20 or 30% late fee, I would not pursue it and choke it up to a business loss and forget about it, move on. Cost of doing business.


I’m pretty sure that violates most State usury laws.

Note that I’m not referring to charging interest for late payment as being illegal. I’m specifically referring to charging 10% compounded weekly, which comes out about 14200% annualized.


Probably not. Even in states that don't exclude fees unrelated to an actual loan of money, it looks like contracted late fees between businesses are excluded from usury definitions (that's the case in NY, for instance).


I'm curious if there's any examples of this ever happening. Some company keeps ignoring a contractor's requests for a couple of years and ends up owing ~$20 million on a thousand dollar debt.

But like you, I'm pretty skeptical. Probably wouldn't hold up in court.


The outcome would be entirely random - dependent on the inclination of the judges.

A sensible business would settle out of court with a very low offer. A sensible contractor would accept the offer.

But generally this is another example of corporate privilege.

In reality, late payments kill many small businesses. In a political system that was genuinely friendly to the small guy, fines for late payment would be mandatory.


All my contracts that include such an interest clause also include language to the effect of “the lesser of X or the maximum allowed by law”.


We service Fortune 50 customers in a similar business to what Matasano did. This side of the business is definitely harder than the hacking / technical work. It can be tough to deal with and structuring bigger deals is important. Fast payment is not only important to not being at risk, but a short cash conversion cycle is basically more capital available at lower revenue. Kind of like velocity in the Agile dev world, only for money. There are diminishing returns (edit: in attempting to lower CCC) and large customers will throw you into the meet grinder that is their AP.


No doubt about it. An effect of the behavior set I describe above [and I was only describing them -- I've been on both ends of that phone call over the years] is that in these relationships, the established payment terms are kind of irrelevant to the way things actually play out.


You are getting me really curious now.

I have tackled this issue (late payers) in two ways:

1. My cashflow from other investments ensure I did not run out of money. This is a bad design where I am effectively extending a 0% APR loan to the client with a term of their choosing

2. When I have ARs large enough to entice "parties that handle payments", I choose to let them handle the invoices on my behalf for a cut. A pretty large cut but 80% is better than 0%.

I am effectively looking for a way to optimize the later but happy to hear alternative solutions, specially when the ARs are not large enough to outsource.

For a bootstrapped business, this cashflow can be critical.


I mean, if you're careful about who you work with, 0% isn't really a meaningful risk. Bank of America (or, for that matter, Airbnb) isn't going to default on you; the pain the ass you could generate if they did would cost more than the invoice.


Agreed with a caveat. Having actually worked with BofA, the amount of overhead for a contract could have put me out of business if I was not a BIG5 employee.

The big boys are not even going to consider me unless I am a safe choice (they really don't care if I am a kickass programmer who can solve their problems - they want to do business only if I am a known quantity so that they don't get fired if a deal with me go sideways).

I am really lucky to have positive cashflow because I can be picky about clients but a lot of friends ask me how to get started and my experience with cashflow is that a fantastic business with client set A can absolutely fail compared to the exact same business with client set B just because of cashflow issues.

Maybe I am too old and jaded but now I always ask people to include and test for cashflow in addition to the efficacy of their business ideas vis. market fit.

Honestly though, this becomes too demanding of entrepreneurs who are already overworked with lead gen, product design and development as is.

You should definitely write a few articles about cashflow. People don't write about it enough.


Entrepreneurs should absolutely be thinking about cash flow because it’s essential for survival. Demanding yes but necessary to become a successful startup.

Too many startups riding high on how much revenue they bring in without controlling the costs. If you spend to get revenue, it really isn’t a business (or at least a solid one anyway)


You can always ask for a retainer, too.


Bingo. One of my favorite gotos. Any more ideas?

I size the prices with the retainers. Bigger the retainer, higher their priority and less the per project prices.


You can get credit specifically to solve for that issue, usually at reasonable rates. Short-term small business loan facilities exist. Another decent option if you're reasonably sure you'll receive payment NET30 are credit cards + an online bill-pay service like Plastiq.


> receive payment NET30 are credit cards + an online bill-pay service like Plastiq

I personally have helped out a few businesses with a 2% CB CC (which helps offset the Plastiq fees) that offers a 6-mo 0% APR term but the CL is the limit of the loan which limits the extent of the loan.

Most CCs don't have such gracious terms in which case you could be paying a hefty fee to gain that cashflow.

Having done this a few times, my conclusion is that this is a very bad practise and exposes a business with cashflow issues if this is a regular occurence.

A healthy AR is better than no AR but you know what's even better?

A healthy cashflow.


Turning off a customer and refusing to turn them back on until the wire hits the account solves all kinds of problems.


Might not work in all cases.

I have excellent clients who could not afford to pay for a consultation because they themselves were waiting on the client they were farming out jobs from.

They still work with me because they know I understand their cashflow issues.


That's a self-created problem. It is possible to remain in business while self-creating problem. It is, however, not recommended.

We once were jerked around by a reasonably well known customer. Their accounting people decided they did not need to perform under the payment terms the customer signed off on. First time they did it, I sent an email to the EVP that signed the order. We got an apology and a payment. The next month the same thing happened again - we redirected all their traffic to "We are unable to process your request - please contact your account coordinator to restore access" message and did not remove it until the wire hit our account ( 5pm-8:02am ). We received a letter with apologies from the customer's CEO, customer was saved and they never missed a payment again. I heard, via the grapevine, that three people at the customer's AP group were shown the door as the result of our message.


I admire you for taking a stand, and even more for being able to climb into a position where you could pull this off. Kudos.


This really irks me. Are you my customer or are you some kind of onerous business partner so that I have to share the consequences of your business decisions? Sorry, get a bank loan and pay me, then solve the rest of your problems with your client and the bank (i.e. without me).


That's been my experience, just the threat of turning it off has a way of unblocking the system. I usually start with the users of the system who are often as frustrated with the system as we are.

Having said that I mostly don't offer credit terms anymore, my average order value is about £500 which means it isn't worth the time spent chasing late payments. In 99% of cases the customer will find a way of paying upfront.


they can gleefully treat you as a bank with really low interest on short-term loans

Exactly. On MBA finance courses (and I guess CPAs too) you're taught about working capital - and one half of that is basically stretching supplier payments as far as you can.


Some of these tricks are laid out in "Das Kapital". I found that book to be very educational.


> They know full well that you, the small company, probably aren't willing to put up the massive time and dollar resources in order to sue them, the big company, for what is to them small potatoes.

If they are well known enough surely a well placed social media post is all that's needed to oil the wheels.


Also large organisations tend to be horribly bureaucratic, with multiple layers of authorizations and people who happily sit on everything for weeks before they even consider lifting a finger or responding to an email.


My previous employer was asking money upfront, the late payment problem was still here and kicked down the road until renewal, but at least the first year was payed in advance which allowed to bootstrap the business.


>Past-due invoices are typically penalized with tiny interest percentages [in the <2% range]

That 2% is usually monthly, so the APR is more like CC debt, not bank loans.


(NB not criticising you here, but pointing out a cultural problem).

This is a classic cash flow problem in business. Any very simple (usually free) “start a business” course from local government in the UK will cover this. I went on such a course and they explicitly talked, in detail, about this issue. They flagged it as a major cause of business failure.

Point being not to criticise the parent but to emphasise that startups are not different from any other businesses when it comes the basics like cash flow. Something that really stands out in the startup world is how little regard is given to the simple everyday business issues that business advisors the world over teach about every day. Anyone starting a tech business should do a simple course on business basics, in this example it could literally have saved the startup for an investment of a few hours.


Can someone in this thread summarize what are the terms? AR, AP, APR, retainer, etc.



AR: Accounts Receivable (money owed to you)

AP: Accounts Payable (money you owe)

APR: Annual percentage rate (usually converted from a different timeframe so you have a consistent timeframe to compare with other metrics)

Retainer: A fee that you pay to get priority from a consultant, which may or may not come with services included.


There's another overarching term that needs put in here:

Cash Flow: the balancing of AP and AR so that you can stay afloat.

Say your startup needs $10k a week to meet payroll. You have $20k in the bank and Accounts Receivable of $100k. "On paper" you have $120k. Cash flow wise you have 2 weeks of money left on hand.

This situation is in constant tension as:

- Large companies stall regularly on paying or require terms like "Net60", aka you complete the work, then send them an invoice, then they can take 60 days to pay that.

- Public companies have to report their financials and will often manipulate their AP schedules to help "massage" their numbers. I was once told bluntly: "our CFO said we aren't paying any more invoices this quarter"

- The reason large companies do this is they are also trying to balance their cash flow (just at a larger scale).

The two general things to do to help with this situation:

1. Keep invoicing tight, bill as often and in as small as increments as possible. Better to ask for $20k every 2 weeks than $40k at the end of the month.

2. Offer discount terms where they pay less if they pay earlier.


Well said. Very common scenario when it comes to retail, grocery stores, import/export businesses.

Great article on this topic by Tomasz Tunguz of Redpoint Capital: http://tomtunguz.com/timing-sales-cashflows/


I’ve been through something very similar, and I know how much that bad to hurt. Hope you’ve had time to rebound and recover, and thanks for sharing your story!


I’ve seen similar situations in the past. My experience has been that small business will get excited about “hitting it big” and allow a massive customer to suck up all their resources to the point where sales and marketing are put on hold or altogether stopped, leaving them totally dependent on that one customer for cash.

I’m curious if your experience in this case was similar.


This is something my IT MSP does that surprised me: if one of our clients doesn't pay their bill, we stop servicing them.

Even more surprising is that it happens pretty frequently.

Companies (small to medium) aren't some machine with automatic parts; it's just people, and sometimes people don't pay their bills.


Had the same situation and thankfully had a lawyer that was able to get back 90% of what was owed in about 90 days. Big companies dont recognize that there are people at the end of their invoices sometimes. Sucks.


A single company I had a long term business relationship had a similar issue with me. Thankfully I had moved to a developing country and was able to bring costs way down as a result. If I had stayed put, back to work in a cubicle for a time I guess...


I'm curious, how much would you have paid to be protected from this kind of risk and make sure you'd get your money?


Isn't that what factoring does? That's a well established line of business for a very long time.

And because you sell your invoices, the factor now takes the payment default risk.

Does cost a penny though.


On my first startup right after university, we were doing an IoT device (hardware + software), our MVP was good enough to make a couple of sales amounting to 550 consumers. At that point the board decided the best way to grow was to bring in “adult supervision” aka a seasoned CEO to run the company.

Even though I did all the software, I had only around an 8% stake in the company at the time.

The person in question decided we needed to “perfect” our product before taking it to market. She had us working 12 additional months and since we did not have “enough tests over the new features yet” she cancelled the 550 orders and gave the contracts to one of our competitors. At that moment I and the 2 electrical engineers in the team left the company and they ran out of money and close 6 month later.

Lesson learned: Big-corp CEOs don’t make for good startup CEOs 99% of the time.


Interestingly, I wonder what the effect of you and the 2 EEs leaving was. If you had written any reasonable amount of software, that must have added an addition 6-8 months onto the 12 that they already estimated.

Possible lesson: Don't piss off the staff in an early stage startup.

Edit: spelling


It doesn't sound like she was working for your company, really.

Reminds me of kozmo.com at the end, when they started hiring "experienced" executives from traditional logistics companies.

Best way to take out a competitor is from within?


I trust that the product wasn't a health and safety critical device where having too few tests could have resulted in charges of criminal negligence.


It was a consumer hardware device, not a safety critical device or related to health. Totally understandable in those cases.


Also probably don't give up a controlling share of equity too soon?


"Lesson learned: Big-corp CEOs don’t make for good startup CEOs 99% of the time."

While this may be true, I don't believe it is fair to reach this conclusion on the basis of a single experience.


Anecdotal, but I tend to agree with it.

Large companies are optimized for a different set of outcomes - usually including extreme concern about quality and public image. That doesn't fly in a startup.


I suspect a search would discover other supporting data.


Fair point. As other comment pointed out, it would be interesting to see if there is data around this.


The point of this thread is for people to share their anecdotes.


Getting to 550 consumers sounds impressive. How did you achieve that? Any resources that in retrospect helped you most?


In our case we approached construction companies. After a lot of one on one talks, we convince a couple with upcoming projects to sell the new houses they were planning on building with our devices pre-installed and use that fact as a selling point when pitching to prospective home owners. Prospective owners then, could decide to opt-out from having our product pre-installed and save that cost, but the majority wanted it and that’s how we got those 550.

From my experience hardware is hard all around and finding partners, even no traditional ones like we did on that occasion can help a lot.


It's these little ideas that make this place so great. Most of the time I would think 'I want to sell to X so I will try to sell to X'. This extra step of almost pre-selling and then making it an opt-out is such a brilliant idea.


That’s poor oversight by any CEO, big corp or not. In my view, the biggest asset is you guys, the engineers. Without you, there’s no product - should’ve focused more on landing prospects and contracts and getting them to define features rather than blindly come up with a go-to-market strategy.


99% of the time? Sounds like 100% of the time since we're only talking about a sample size of one company. Serious generalization. More like "a bird in hand".


>99% of the time... Serious generalization. More like "a bird in hand".

id·i·om

ˈidēəm/Submit

noun

a group of words established by usage as having a meaning not deducible from those of the individual words (e.g., rain cats and dogs, see the light ).

------------

"99% of the time" almost never literally means 99% of the time. C'mon, don't be that guy.


Actually, I AM going to be that guy. I have zero tolerance for people who claim to be experts. You had one experience and used an idiom (incorrectly) to sound smart. So tired of smug upstarts like you.


>So tired of smug upstarts like you.

Yes, no one likes smugness... I'm not the GP if you hadn't noticed, but honestly; don't be that guy.


Same to you.


How can you only have 8% equity if you did all the software? Did you take a seed round and give up a bunch of equity or something?


I started a consumer robotics company with no more than a software and hobbyist robotics background. The grand plan was to sell furry robot pets and we got as far as the prototype stage and a demo at Maker Faire. After that we hit a huge wall. There is essentially no path from hobbyist, off the shelf components to a real product.

After that company died I joined a real robotics startup with some seriously talented founders. They had already built out several robots and had the core skills (mechanical engineering, software engineering, electrical eng, and controls) to design and build a working robot. More importantly though they knew the process to make a robot real which involves personal contacts at custom component suppliers, the right outfit to do engineering review, how to raise enough money to get the kind of runway hardware needs. And on and on.

Moral of the story, you can't fake hardware. Get experienced people on board from day one or your going to flounder and most likely die.


I worked at a small robotics company in the Netherlands, technical university spinoff. We did tests in care homes for elderly and disabled people and we actually had clients that wanted to use our robots and were very positive about them.

But we were just too early. The robot didn't even need to be very autonomous, shared autonomy was part of the plan (fake it till you make it and honest about it :-) ). I controlled the robot from the other side of the (small) country to give people their teddy bears and TV remotes etc.

Problem was that we tried to do our hardware completely by ourselves, whereas nowadays there are several options for mobile manipulator robots that look good enough to put in a home. We spent more time getting the robot to work than on useful applications (we had dozens of activities of daily live a robot could support). And even the getting our robot to work could be done more efficiency (in hindsight). We should have used e.g. an EtherCAT motor controller instead of writing of doing it all ourselves on a micro-controller.

We didn't progress enough quickly enough for our investors and subsidizers and ran out of money.

A another great lesson was this though: when you hear talk about robots in care, the complaint I get a lot is that that is sad for the clients, because they don't get someone to talk to (but a robot) and they will get lonely. That turns out not entirely the case. A lot of disabled clients told me they don't want to talk to the care-givers all that much, they just want their drink/toilet break/pen they dropped etc. They have friends and family and don't feel lonely. The complaint about loneliness is coming from the care-givers. For elderly people, it may be different though, but I found that very interesting.


Reading your story from an outsiders’ perspective, did you guys have a commercial person figure who was going to pay for the robots?

From my experience, healthcare usually comes down to figuring out who is willing to pay for it (insurer, user, govt, etc.) and less so about the tech. You are right that the tech doesn’t need to be fancy but funding model is usually the bit needed to be fixed.

A buddy of mine is successfully taking took a smart baby mat to market (so far anyway)


We did have a business case worked out, even had a Dutch care insurance company as investor. Those insurers would pay for the largest bit.


A lot hardware startup that started from zero made a first product that can barely called a MVP (Gopro first product was a camera shell, DJI first product was flight controller) do you think such ultra minimalist product(yet very meaningful to understand customer) could have been done looking back now?


The problem with a lot of robots in care is that if you pick 1 task, the MVP to solve that problem doesn't even have to be a robot. To automate 2 tasks, you will need 2 MVPs and this doesn't really scale. A single robot can do a lot of different things, all with the same hardware that gets used a lot, where as 1-funtion MVPs only get very infrequent use.

But it does require to build a robot that can do a lot of things, which is not a minimal thing to do.

Things get expensive and complex when robot arms get involved, which do give you lots of capabilities in return. Arms and mobility make the difference between a smart speaker like Alexa and a robot.


Robovalley right?

Is there still animo for this? I would love to invest in elderly care technology, especially AI for Alzheimers.

Would this still be possible, or is it a big company (Philips?) thing now?


We were a spinoff of TU Eindhoven. Robovalley went up into Holland Robotics recently, AFAIK, but Netherlands is small of course. Our company just stopped. I actually interviewed at https://www.robotcaresystems.com/ that now have an autonomous rollator on the market and I recently found out about https://mojin-robotics.de/ which seems to continue where we left off. So, yes, there is still animo for robotics in care.

I don't know any companies that focus on Alzheimers, but there is a bunch of medical robot tech companies around here, eg. http://microsure.nl/ that do micro-surgery and http://www.preceyes.nl/ that make eye-surgery robots. A

There's Health Valley (https://www.healthvalley.nl/welcome-to-health-valley), that may know some companies that do focus on Alzheimers more.


Just a note on this: Prototypes can be enough to get a company going. Engineers/Makers think that the product is the most important part of starting a company. It's not. Selling your vision to investors and customers is. Once you have a business plan that's funded, you can refine your product by hiring consultants that will help you with production. Once you have a product then you can get customers to refine the product further.

Why is bottled water a billion dollar business in the U.S. when the U.S. has the safest drinking water in the world? I am very sure it's not the product.

If you can't sell, define your vision and prototype and find someone to sell them for you. Salespeople are viewed as BS'ers by engineers but without them, companies can never succeed.


what makes you think the US has the safest drinking water in the world?

Can't see it in any of the top 10 (or 20) via google....


The population of the U.S. is over 300 mil. How many people die or get sick every year because of our drinking water? It's got to be very small if any, otherwise, we would hear about it constantly until it was fixed.

But let's say it is the worst in the world. Bottled water is not the best way to fix the problem. A water filter would be much better in terms of cost per gallon and quality.

Just by you asking the question, highlights how well sales and marketing have worked when it comes to bottled water.


> The population of the U.S. is over 300 mil. How many people die or get sick every year because of our drinking water? It's got to be very small if any

All that means is “it’s very safe”. To call it “the safest in the world” is just blind patriotism. There might be long-term health effects caused by but difficult to attribute to water that are more prevalent in the US than other countries, for all we know.

> Just by you asking the question, highlights how well sales and marketing have worked when it comes to bottled water.

I’m not the person who asked, but no it doesn’t! All it highlights is how hyperbolic your statement was. It wasn’t an argument for or against bottled water at all.


I am not sure how the people at Hinckley, or more recently at Flint would take that assertion. Just because tracking causality of morbidity to drinking water can be a difficult task does not mean it has no contribution to health issues.


I totally agree with this, but you're missing selling the vision to employees in addition to investors and customers. Phase 1: sell the promise. Phase 2: fulfill the promise.


Very true...


>Why is bottled water a billion dollar business in the U.S. when the U.S. has the safest drinking water in the world? I am very sure it's not the product.

The product of bottled water is availability - being able to purchase anywhere and to bring it with you.


I agree with you that hands-on experience with manufacturing is crucial for getting your fist batch out. However,what stopped you from joining one of those hardware accelerators in shenzhen?


I kind of went through the same path as you and I am hooked. Are you building what you wanted to at this robot company? Can you describe the product vaguely?


The basic gist is that I was arrogant and negligent.

I started a company to leverage an order taking and customer management system I’d built for a friend’s b2b outside sales company. Before, they were managing everything with excel spreadsheets on a shared drive and it was a mess. After, everything was in a php application that could set up a recurring credit card transaction within a few clicks. It used AJAX (in 2004, before responsive forms took off) to take different form inputs.

I rode that one client pony for too long. Managed to get a second client, but I hadn’t worked out a good pricing strategy. I needed to offer the program publicly, but we were too busy doing feature development for our two clients to develop features for multi tenant. I was bad at the administrative aspects of running the company, so I inadvertently ran up a bunch of bills. I wasn’t keeping my sales funnel full or dedicating much time to finding new clients and calling on them. The whole thing went crashing down when my clients decided that they didn’t want to have 100% dependence on my company anymore and per our contract paid a one time lump sum for a copy of the software. Still wasn’t enough to fill the holes the bills had left.

I could have been SalesForce if I hadn’t been an arrogant 24 year old who couldn’t learn from other people, but instead I ended up in about $50k of personal debt.


> I could have been SalesForce if I hadn't been arrogant.

Did you overcome that and learn from the mistakes? No offence, but to be honest you saying "I could have been SalesForce" makes it seem like you're still working on the arrogance part.


My point in saying that was not to express arrogance, but was to point out that ideas are worth nothing and execution is everything. I executed poorly. If I had executed well and a bunch of other variables had aligned, I might have grown that company successfully.

I’m still a bit arrogant and aggressive in my approach to solving problems, but it’s tempered somewhat by experience.


To be fair, he said he “could” have been SalesForce, not that he “would”, necessarily, have been SalesForce.


IMO you didn’t lose out here.

1. You got to work closely with 2 highly engaged customers. The value of the product development research you did with them is probably worth more than your debt, if you ever decide to build something similar again.

2. You actually built something they wanted and were willing to pay a huge lump sum for. Many startups never get to this point. You now know you have the ability to create something highly valuable. Don’t take the confidence that comes from that for granted. It’s worth more than $50k in the startup world, in my opinion.

I’m curious, knowing you’d created something valuable at the time, did you continue to try to sell it in the years after the 2 original companies left you?


They didn’t need any support of the product at all after buying it outright?

I can see how you’d be temporarily without money, but not sure how they’d take away all income.


They took development in house. It’s not like PHP (despite some obfuscators being available) can’t be edited by anyone who barely knows the language.


Did you have subscription plan or was it only pay for development?


That’s one of the places I messed up. The original agreement was that they’d fund development of the features they needed, but I retained rights to the software and they got a license as long as they were funding development, but they could license a copy in perpetuity for a flat fee. We never updated the amount of that flat fee as the feature set grew.

I had thought I needed to develop a multitenant feature set in order to sell to more people with a subscription, but I was probably incorrect on that (in hindsight).

The bigger issue was that I didn’t know how to plan for anything like that. I was essentially in reactive mode and got way behind.


I wrote a great software library for specific web development problems back in the dotcom boom.

I learned a few things, much of you hear already but is worth repeating :

* The MVP thing is real. I had a competitor that regularly released simple things that barely worked - while I continued to polished my project. By the time I'd finished the competitors stuff was all over the internet few a year or two and no one was really interested in my product. Plus by then the dotcom boom was pretty much starting to bust - I was way too late.

* Developing software is the easy part. I figured when I was done people would be lining up which is of course naive. Selling and support is harder and takes more time and effort than writing code.

* Writing software for developers sucks. No one wants to pay for anything as there is usually a cheaper way of doing it. The exceptions being big firms that really don't like small independents. Its better to write software to solve real problems - not software problems.


It’s better to write software to solve real problems - not software problems.

Quoteworthy.


It's true, but it's also why all our software is so terrible.


"Selling and support is harder and takes more time and effort than writing code."

So is this.


I was an early engineer at a startup that failed for a somewhat unique reason with an important overarching learning.

We built a software platform that intended to automate the job of market researchers. Those researchers we hoped to replace ended up finding the tool itself useful. Since the platform didn't replace the employees, our pricing model fell short. In the end, we found success by hiring our own market researchers and effectively pivoting into a software-driven consultancy. Profitability came slow and steady.

After months of profitable growth, things changed on a dime. Our lead investor effectively unseated the CEO one day, and made the statement that we were doubling down on the original SaaS vision. Within a month our 100 person company had been reduced to around 60. The now-unneeded consulting staff were recipients of strategic layoffs. Revenue dropped overnight.

The morale of the company also fell off a cliff. The C's lost their ability to cheer up the team and the senior staff saw the holes in the boat and promptly abandoned ship. The company folded about 1.5 years later for a fraction of the initial investment.

My learning in all of this: the tales you hear about the "bad VC"s are occasionally very real. Make sure when bringing on investors that they align philosophically with your founders' vision. Make sure that philosophy is deeper than "we want to make that cash". Great investors i've worked with since can be an immeasurable resource in so many ways. It is absolutely critical that founders be excellent in their courting of valued investors. Similarly, they must be ruthless in their rejection of the bad ones, however sweet the check may appear.


VCs run funds and need a decent return consulting biz generally does not fit the ticket for them. If you intend to run a consulting shop you def. do not want VC money. (Unless you can spin and market like Palantir than you can easily position a consulting outfit as high grow tech company)


What was the name of the product/service if you don't mind me asking?


Originally Qualvu, they rebranded sometime after i left to 24tru, i believe.


CEO would disappear for months at a time, with the promise of returning with capital. We never really knew where he went, and he wouldn’t let anyone else talk to investors (including me, who was CTO). Eventually he stopped paying us, but promised that the money was just tied up in the parent company set up in the caymans.

After 2 months of not paying myself or any other employees, the COO and I drainked the remainder of the US account and paid out as much of what was owed as we could to the employees before helping them find jobs elsewhere. I didn’t get any of the money I was owed and was facing pretty bad debt, but the experience was enough of a resume boost that I didn’t have a problem making it up in my signing bonus.

What I learned is that a title doesn’t grant you any control, and that if someone can’t be transparent with their inner circle of friends and colleagues (in this case cofounders), then they have no business leading a company.

Also leaned to not fuck with the cartels.


Why shouldn't a startup fuck with the cartels?


Because if you don’t move fast enough they’ll break your things.


That's not just a simple comment, it's art, kind sir! LOL


Fucking with cartels is expensive and stressful.

Armored cars and armed security are nice and all, but being in a situation that necessitates riding in an armored car and armed security detail is not really fun.


Legal marijuana business?


The legal guys are more gangster than the cowboys who made up the industry just a few years ago.


In Romania we ain't Estebans but Michails and we don't do weed but forests. Nevertheless you don't wanna face a Michail alone in one of our forests.


> What I learned is that a title doesn’t grant you any control

Is this just for anything other than CEO? Or are they always held to the board/investors.


In general it's true for all positions. A CEO should be fire-able for the board to keep them accountable. We never got to the size where we had a board tho, so we didn't have anyone to appeal to apart from the investors directly, and as I mentioned, the CEO kept us isolated from them.

The bigger problem I had with lack of control was when things started to go south. The CEO was never around, so I was the "boss" in the office every day, being the technical and cultural leader of the dev team, who came to be close friends. Once the money stopped coming in, it was really hard emotionally to be the person who needed to convey that to the rest of the company, but without having any real control needed to get them money or real answers.

The CEO came from a very wealthy family, and never had to worry about money. Myself, and most of the employees weren't so lucky, and were pretty new out of college, so didn't have a pile of savings to fall back on. I am not even that upset about never seeing that pay I was owed, it was more just emotionally draining to be seen as an authority figure, but to have absolutely no ability to exact change or get answers when they mattered most.


Also leaned to not fuck with the cartels.

Oh come on, you can’t leave us hanging like that! This is the beginning of the best story in the thread. How did the cartel connection form? Was your contact named Estefan? Did he have a mild accent and project an aura of power?

“Bad decisions make good stories!”


Luckily, nothing too exciting happened. We were operating in the financial tech space in Mexico, trying to make lending less comically predatory (a standard small business loan in Mexico can have close to the same interest rate as a payday loan in the US).

With that goal in mind, we were targeting areas in Mexico that needed the most help. Cities with a decent small business sector, looking to grow, and having difficulty doing so. Juarez was a perfect fit, especially given that a lot of citizens have been across the border and can see how much better things can be. My parents were not amused. Then the movie Sicario came out soon after, and they were somehow less amused. But I got to ride around in armored vehicles with a security detail, so that was fun.

Really my "learned not to fuck with the cartels" lesson came from our market research. This may surprise you, but the banks in Mexico are... sketchy. Well, not all of them, but definitely a few. In particular, we were in a competing market as Banco Azteca. It appears to have since been removed, but at the time, the Banco Azteca wikipedia page described it as having "a uniquely effective debt collection system" or something like that.

Yeah, what they actually have is a motorcycle gang. They give you a loan with massive, often times impossible to pay off interest rates, and if you don't pay them back, motorcycle dudes with bats show up to collect, or take enough of your property to make up the difference.


Shouldn't that be a common knowledge in the area and work out as their competitive disadvantage? Provided that there are at least some competitors that are better for the customer?


The bigger issue with lending in Mexico is a bit deeper than the sketchiness of some of the big banks. In particular, there is no reliable credit score system, so determining credit worthiness is a crap shoot. There is actually a credit reporting agency, but nobody reports to it, so nobody is really sure why they're there.

A lot of citizens also (understandably) don't trust the banks and keep most of their money at home. As a result, there's very little data available to make credit determinations on, since you can't even use most people's record of good standing with their bank accounts, so the process for getting a loan is generally sit in a room with a group of bankers and try to convince them you're a swell guy/gal and won't lose their money. This results in extremely high default rates, because people are good at misrepresenting themselves and lying about their intentions [citation needed].

With such high default rates you only really have two options; improve your credit worthiness determination process somehow, or increase interest rates and have an effective (if unethical) collections process. With some data protection laws making the creditworthiness determination route a legal minefield, most banks in Mexico opted for the latter. Our entire business strategy was to take the other route.


I myself live in a country with a not so effective rule of law and whatnot. That's why I find it odd that banks are so concerned with possibly doing an illegal data collection, while employing unquestionably criminal techniques of extortion...


This is Juarez we are talking about. Maybe this motorcycle gang was scary enough for the competitors, maybe they have cops/politicians in their pockets... There could be any number of reasons for the gang to flourish, starting with violence


It's not a simple disadvantage when the act of choosing another option invites the same violence against a customer.


"Also learned not to fuck with the cartels" you seriously had to learn this


I don't get why this comment is so down voted. Do you guys all find the idea that collaborating with the mafia may be a bad idea so hard to figure out?


It's dismissive and added nothing to the conversation. (Not a down-voter FWIW.)


I've had two startups "fail" for unusually clear reasons:

Startup #1: too hard to believe it could be big. Widely loved consumer website we tried to fund with angel/VC money, and it was too implausible it could ever be a $1b+ company. We needed a non-VC strategy to fund that business but didn't realize that - ran out of gas.

Startup #2: found PMF, business-model fit, high-growth, and had an amazing team. Blown up by a nightmare original founder (I was part of re-founding an existing business) and poor corporate governance. The original founder blew up a Series A and re-cap after the team new team made the company actually work.

What I learned from both is how finicky startups are and why conventional wisdom exists. The more you try to re-invent things that aren't core to the business or fit a square peg into a round hole, the more chances to fail you create.

Don't try to get 1000 things right. Try to get 1 thing right and rely on the wisdom of others to get the other things "close enough" to right to attract talent, capital, time, and attention to the 1 thing you did get right.


Could you elaborate on this in some detail?

I'm in the position of believing I have "1 thing right." I worked in an industry (banking) with a serious software problem and one particular vertical that I'm confident I could build a good product for. I was in a position to evaluate all of the major vendors that would be my competitors, and I'm confident that I could get one particular thing very right. Ths problem is that I have pretty much no idea where to go from there. I've never started a company, I didn't even study business in school. In my career so far I've pretty much done two things: I got very good at that particular aspect of banking, and I taught myself to code and now do it professionally. But I'm so aware of the gap between my own knowledge and the skills required to run a business that I wouldn't really feel confident trying to go get investment money (and wouldn't know how to begin even if I thought I could use it responsibly). I guess what I'm trying to get at is: once you have the one thing, where do you go for help with the thousand?


You generally don't get investment money day 1. If you are able to pull that, it's because you've had success being a founder before (or have rich friends/family). But as a first-time founder? I think you'd be wasting your time without having something real to show. Generally, that's an MVP with some degree of traction.

To get to that point, you have to do a lot of the things bigger companies have to do. Those things just tend to be less complex and you have fewer people to do them. Accounting, sales, engineering, marketing, etc., etc. all exist, to some degree, in a two-person company. At first, you learn to do them yourself. You'll probably suck at them. It's okay. They all have some degree of a feedback loop. If you're open, you'll figure it out. Eventually, with success, you'll hire other people to do them.

From there, you can get access to a great network by doing an incubator as someone else mentioned, or by just getting out there and talking to users (do this day 1). But you're worried about years 2-4 when you haven't even started year 1 yet.

If you want to discuss in more detail, I'm a founder with a product in banking that's been moderately successful. Email's in my profile. Feel free to reach out.


I’m the CEO of alloy.co and know banking software about as well as anyone, I’d be happy to help assuming youre not trying to solve identity verification for the industry. tommy @ domain

The main thing is you have to start, get a team to follow you somehow, and get a reference client live and on the record using your software to solve a huge problem. Consider YC or techstars for your first $$$ investors. Some may tell you the negative of working w them but they’re deeply wrong


Have you considered an accelerator: https://www.ycombinator.com


What is YCombinator's take for their 100k investment? Also, it seems like YCombinator sells businesses as a product, not product as a business. Like their marketing on the website is all geared to investing in a business, not investing in a product that leads to a business. That seems to be the 21st century trend. Can you explain this dichotomy in today's market? It seems kinda fake.


They get 7%.

I don't know what you're asking with the rest of your question.


Take care that your current employer has no claim on your idea -- avoid any business formation steps that could be dated as prior to your exit.


Fine to do this but unlikely to matter and don’t let not being sure about this stop you for even a second


Pmf?


Product Market Fit


Product market fit


I built an app for kids that created a family currency where kids would pick the chores they wanted to do each day, earn points based upon the difficulty of the chores, and then those points could be redeemed for real-life rewards that they also chose - hosting friends for a sleep-over, a fishing trip with Dad, learn a new card game with Mom, screen time, etc.

The problem came with the marketing. When I did my due diligence before building the app, it seemed cost per click for ads was around 20 cents per click. 20 cents * 2% conversion rate = $10 cost to acquire customer. My lowball avg. lifetime value of a customer was $18 if customers stayed for 3 months on average. $10 / $18 seemed like a decent ratio, and if I could get the conversion rate up or the churn rate down, it could be a good ratio.

So I set out to build the app, which took about a year and half. But, when I finished the app and went to launch my marketing campaign, I was shocked when I saw the cost per click had skyrocketed to $2 per click, meaning my cost to acquire a customer was $100 with an average lifetime value of $18. My backup marketing plans were content marketing based, with a networking campaign with Mommy bloggers, but this takes a lot more time to scale your customer base than blasting out an ad campaign. This caused me run out of runway with my cash timeline, and so the startup failed.

I learned that its important to not get too heads-down coding your product - its important to review your growth strategy every few months while you build your product, because things can come up that can dramatically affect the speed at which you can grow, and that can jeopardize the whole operation. In my case, if I had noticed the ad costs climbing, I could have started networking with more people earlier, doing more content marketing pre-launch, and slowly increasing the size of my waiting list, or evaluating alternative marketing plans before my runway got so small at the end.


I don't think you can guess in advance which marketing channel is going to work for you, you need to experiment and see what brings results. There's a book Traction that goes deeper into this, if you haven't given up yet. Good luck, both in business and marriage! :)


I see a few startup related books titled "Traction" on Amazon. Can you link / clarify which author? Thanks!


Sure - Traction, a startup guide, by Weinberg. Excellent book.


Hey that looks like a good book, thanks for the recommendation and well wishes! :)


Sounds interesting enough that you might get users by blogging about it / pr etc rather than paid advertising?


Yeah, maybe so, I just haven't had the time to invest in that. My wife took a high stress / high pay job to support us temporarily while I built the app, and she was nearing burnout and it just was taking me too long to scale my customer base after the paid ads failure, so I had to put it down and go back to a 9-5 to protect our marriage. ;-)


ha ha, looks like the single biggest reason for failure (or success) of startups are marriage :-)..


haha yeah you might be right. Startups typically put a huge strain on the founders and their families. I wouldn't advise anyone attempt a startup unless they are in good condition mentally, physically, and relationally.

In my case, I wouldn't have been able to quit my job and attempt this startup in the first place if it wasn't for my wife taking that hard job for a couple years - so I felt like it would have been a bad idea to respond to her good deed by taking advantage of her and burning her out so I could have my dream.


My anecdotal evidence says, yes, it can be very stressful on the marriage. :)


Great product idea. Sounds like something I would use. Have you heard of the lean startup?


Thanks. Yeah that's a great book, appreciate the recommendation.


Does this product still exist?


Yeah, it still exists, I just paused development on it.

https://www.chorosaur.com/.


Pretty cool idea, I can see the incentive for kids and parents using this. It's not a failure, hope it works out for you!


Thanks - at the very least, our family can use it for our kids and scratch our own itch! ;-)


That sounds like a fairly decent app! I would probably try it out.


Cool. I'm not working on it actively, but if you try it out and have any suggestions, I'd love to hear them!

https://www.chorosaur.com/.


10 years ago I built an almost amazing business that schools, universities, teachers and students could use to build elearning and web apps. Think Square Space + Moodle + Udemy.

Heres a demo if you're interested https://vimeo.com/2221065 The demo doesn't show much of the learning management features but they were also complete.

But the app had memory leaks and I didn't have the cash to pay expensive engineers to fix them. For months and months I tried to fix the problems myself until finally I was given the choice of giving up my business or my wife.

I don't regret choosing my family because we had another daughter before the marriage ended and she wouldn't be alive if I chose to continue with my business instead.

I learned ...

1. I should never have given up. If you don't give up you can't fail. 2. I shouldn't have believed my mentor who said there wasn't a market for my product. A company entered the same market and now they are worth over $1bn. Listen to other people but have faith in yourself. 3. Be careful to choose the right technology. I chose Plone/Zope/Python the same stack that was used by CIA. I thought I was very smart about that but I didn't realise that specialists in this tech would be so difficult and expensive to hire. 4. Don't blame anybody. In the end it was my choice to give up. 5. Everything is as it is meant to be.


When you say the CIA do you mean the Central Intelligence Agency ?


They probably mean: https://en.wikipedia.org/wiki/The_Culinary_Institute_of_Amer...

I fell for that once. I'm embarrassed to admit that I thought she was a spy for a couple of minutes until I picked up more context. I'm sure I looked super disappointed for the rest of that conversation.


Yes. And the FBI use the same tech https://plone.com/secure


Interesting, at the time you were dissuaded from going into that market could the actual TAM support your business idea or would it have been more viable later?


My mentors were based in Ireland, one was Managing Director of the European Software Centre for a huge computer hardware company and another was president of the university in my city. In Ireland education is mostly financed by the government and I suppose they couldn't see the market. I live in Thailand where the only good schools are private so I saw things from another perspective. Yes, the management and support fees could have supported the business if I focused on private schools who were willing to pay a few hundred dollars a month.


So what happened to the app, you sold it to somebody or just let it die?


I spent hours and hours, months and months, up all night trying to fix memory problems, that I wasn't qualified to fix. It was one of the darkest times in my life. Everyone I loved wouldn't speak to me because I wouldn't give up. Then one night when I couldn't take the loneliness anymore I deleted the server, local copies and backups and went to bed.


Memory leaks in a python web server? Did you try just accepting the leaks and restarting the web server every x hours? That is what my old team did with our python web server.


I used to have to restart it all the time but I never thought to just set it to automatically reboot. I should have known that most computer problems can be fixed if you switch them off and on again.


Hello I'm in the same situation. I'm now very lonely and depressed because I've been working on my startup alone for 2 years with no support. I'm also stuck on a problem which is very hard to solve. You said in the parent comment that you wouldn't give up. How do you keep going when you feel so lonely and miserable and you have anxiety attacks because you fear that you will get nowhere in life?


> 1. I should never have given up. If you don't give up you can't fail.

I think if you expand the scope of 'failure' to mean your life, as opposed to just the business, then you didn't fail. You were pursuing a strategy that would have led to the failure of your marriage, which is much worse than a failed business. I think you succeeded.


The marriage ended ... but I can hold my head high knowing I tried my best. I grew and learned so much after the marriage ended that I never would have if we broke up back then so I suppose everything worked out for the best.


I think the marriage did end.


Yeah, it ended about 6 years after that.


I worked on two that failed, one because of Napster-Induced Hysteria ("nobody will ever make money with online music!") and the other because we were myopic enough to think Orkut might bury us. Those were days, right?

From the first one I learned two things that are probably still applicable today, and from the second I learned one big thing. In order:

1. If people from outside the tech world end up controlling your software startup, that indicates you are doomed. Pretending otherwise will just make it worse.

2. Great teams are incredibly rare, and if you have the good fortune to be part of one you should really try to keep it together for the next challenge. (We dissipated so hard it was ridiculous... one went into motorcycles, one got a PhD, two floated back to Europe, one became a bartender...)

3. If the founders can not convincingly dogfood their own product, you are doubly doomed. I remember sitting at a table with founders while they tried to think of things they could maybe do with The Product we'd just spent months building, and feeling the rats of doom nibbling at my toes. It had not occurred to me that this was a possibility. Engineers: vet your founders!


My first startup failed because I had no idea what I was doing. I started an online vacation rental site, similar to vacationrentals.com vrbo, homeaway etc... I was getting traction and had people list their rentals on my site but I failed to collect any revenue. The thought was, build it, offer it for free to grow it and then charge. Well, I built it (wasting way too much money on an original solution when existing solutions could have done just fine), people came (after I bent over backwards trying to onboard them), but time sucked me dry and I was not able to sustain the "business" any longer. Looking back, I did just about everything wrong.


>The thought was, build it, offer it for free to grow it and then charge.

I feel like this is an incredibly common software developer turned entrepreneur mistake. Lack of confidence in asking for money leads to a reluctance to put a price tag on the thing you have built.


With vacation rentals, you have to have people who actually rent stuff and that's the part of the chicken/egg problem I haven't solved yet. While I was able to bootstrap the site, the traffic to it was non-existent thus I felt guilty if I charged people to list. The premise was that they would list for free first, their listings would attract traffic, then I would charge people to list. Meanwhile people are booking and more are listing - that was the idea.


The simple way out of that conundrum is to make it free to list (perhaps with an option to upgrade to a "premium" listing for a recurring fee), and charge for the actual bookings made through your site (you'd need to experiment to figure out whether flat fees or a percentage worked better for you).


How long ago was this? Was it a specific region or all over? Did you try to raise funding or it was all bootstrapped?


This was about 7 years ago. It was bootstrapped. The site targeted US / US-based vacation destinations (Caribbean, Jamaica etc, not entire world).


Lack of leadership, we had a general idea of what we wanted but it was never defined. We wanted Shopify, years before they came along, 2001. But we never defined the product because no one took leadership of the product and business.

Bad programming, (me) had just finished college and thought I could lead a team of programmers because I had done an ok prototype that was actually working at a small scale. Given that specs were being defined on the fly then the programming was a mess. To scale it, we brought in programmers hoping it would help but they mostly sat around because we didn't know what we were building. Also, we got subpar programmers because they were cheap. One guy managed to BS his way into a paycheck for 5 months without ever programming a line of code. After he was fired, I found out that that was his specialty, getting hired and getting fired a few months later.

We could not meet deadlines, we could not meet self-defined deadlines so the investor's money stopped.

A lot of useless infighting due to egos, we could not figure out the business but we sure found ways to fight and argue.

I wish we would have been more willing to learn as opposed to being so arrogant by thinking we knew everything. I use it as a warning every time I think I know everything and it brings me back to reality. We lasted 2.5 years. We should have closed shop at 3 months.


We wanted to create a routing app for bikes, which would take in consideration cliffs, dangerous streets and the likes.

With our internal team, we’ve managed to create a killer backend that would do all the hard routing stuff without issues. It was better than Google Maps in most cases!

Now, we just needed the app. We used all our money to pay a third party contractor to make the app, and they failed miserably. We never received a working prototype. We ran out of gas.

The backend still exists, in case anyone wants to give the app a shot. I might release the backend as open source. Ping me if this interests you.


I didn't quite understand this. Presumably, you're developers and just created a I assume fairly complex backend product (better than Google Maps). What stopped even just one of you from picking up a book on react-native/electron/whatever and knocking out a workable front-end? Did you exceed your runway, run out of time etc? edit: to clarify, I meant after the third-party didn't work out. Also not critiquing just genuinely curious


I simplified the story a little bit, but two factors contributed to the sad outcome:

1. making a _live routing_ app is tougher than it looks

2. our team was really emotionally exhausted after this (the whole process consumed around 2 years) and some key team members needed some time off

But yeah, it could have been possible to make the app ourselves.


I hear you, and appreciate your honesty. Not many founders talk a lot about the technical challenges of building the app itself. A lot of startup stories I read take this as a given, whereas I'm sure it's one of the biggest factors if not the biggest that causes many startups to fail.


Uber advanced technologies, routing tech lead here. This sounds interesting. Lets chat?

You can email me: michaelv at uber


> We used all our money to pay a third party contractor to make the app, and they failed miserably

Where did you hire/find the third party contractor?

Friends of mine, in two separate startups, got burnt badly by those outfits that offer the "native apps for iOS and Android" package for $10K or so.

I talked to some of those "developers" once, when I helped my friend troubleshoot an issue. It was horrible. They were so inept, they couldn't solve a problem if you provided a solution to them (literally -- they failed at copy-pasting).


We found them in Google. They were from the same country as us. They were really bad. One of the versions of their _navigation_ app would not navigate - the GPS simply wouldn't track the user in the app's map. It was a really frustrating experience.


And then they want you to sign a document or email saying that they did all they would say and just rip people off when they think, "oh an iOS app with backend for $5000".


Hey, we're working in the space of navigation by bike as well, though not in the exact same way as your startup from what I understand. It would be awesome if you could share your backend with us (email: rohan.pandey at gmail). Thanks!


Yeah, frontend work is routinely under estimated. You are not the first.


Yeah. It's not just frontend, you need to figure out the UX too. Backend is usually easy compared to this.


The backend was damn hard. But so was the app! Routing and navigation is a tough domain.


I've been working recently on something semi-similar for runners - calculating elevation gain, difficulty, route generation, etc. First time around I was using Mapbox API but ran into some difficulties and have since switch to Google Maps which still isn't exactly what I'm looking for. Would be interested in learning more about your backend if you don't mind sharing - kguebert93 @ gmail.com


You should write up a Medium article with some test results showing off the backend. You may be able to get someone to buy it before going open source.


I would love to see the backend open sourced as well, as I think this is something that could be quite unique to each country. I'm in Melbourne, Australia and biking safety is a big deal here - i ride everywhere. The uniqueness of each area would lend itself well to localisation via open source. I'm at zubin.pratap at gmail - do let me know!


I’m trying to squeeze in some time to do that. Will make sure to ping you if it happens.


That sounds really impressive. Definitely interested in seeing what you've got (and an open source release would be cool)!


This sounds interesting to me (the releasing as open source bit, in particular).

What's the backend tech stack?


A combination of PostgreSQL + PostGIS + pgRouting, Java + GraphHopper and my personal favorite: PostgREST!


Hey haolez, glad to hear you like PostgREST :)(I'm the current maintainer).

If you manage to open source your project please stop by our docs repo, would be great to have a real world PostGIS project in our ecosystem list.


Will do! Congratulations, btw. PostgREST is incredibly stable :)


Sounds like the folks at https://osgeo.org might be interested...


Please release this, the OpenStreet Maps community could really benefit from a better routing system


My own startup about five years ago (I've worked at several others, all different types of failures):

Running out of money. We were bootstrapped, and the style of work we were doing had some decent capital costs. We failed for a "bargain" (less than 7K), but we had cut to the bone and deeper while trying that. Side jobs to make rent just increased stress and distracted from the business.

Why did we run out of money?

Focused on engineering instead of sales and marketing. Manually spinning up servers would've been the right thing to do--since we instead were both technical we solved technical problems and kinda missed the people side of things. It was real and hard work, but it was not work that was relevant to making sales.

After we ran out of money, why didn't we keep at it?

Stress blocked further work. Too much stress led to neither founder being able to even think about the company and its business without severe anxiety. Times were dark and bad.

~

I learned that you want to prioritize the money funnel over literally every other thing that you as an engineer think matters. Coffee is for closers.

I learned to try out only with other people's money. Don't put your rent and basic living on the line for an idea if you aren't comfortable with what that can entail.

Probably most importantly, I learned that the glorification of the startup lifestyle is a lie perpetuated by people seeking to make money from it at all levels. Nowadays, even the glorification of failure and celebration of mental health seems to be by people looking to advertise their businesses, cure-alls, or just get internet famous.

It's rotten to its bloody core, and unlike finance doesn't even pay well.


"Probably most importantly, I learned that the glorification of the startup lifestyle is a lie perpetuated by people seeking to make money from it at all levels."

This I would say is my main learning point. My first startup failed because of inexperience and team implosion following incapability of generating revenue fast enough on one side, and attract favorable investment on the other. Failure could have been lighter on both me and the other members of the team, was it not for a self-immolation mindset probably driven by glorification of "startup lifestyle". Things fail. Most of the time. Assume failure. Optimize for resiliency. Never expect success as the natural outcome, but rather consider it will come collaterally to continuous reaction to ugly realities, and damn slowly. You can stumble upon a rocket ship, but it is not how businesses usually get to come to life.


This very much. Also Kickstarter: there's a whole ecosystem built around parasites trying to make money off of other people's broken dreams.


"Assume failure. Optimize for resiliency."

Printed and stuck on my desk. Thank you very much for this well-said wisdom.


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