Disclaimer: As you can tell I really like tea but my real passion is software technology so don’t be alarmed. I think the two go well together IMHO.
Section 0: Startup Failure Anonymous?
Hi my name is Fred and I failed at a software startup. Is there a Startup Failure Anonymous group I should post this to..?
Section 1: In the Beginning
I currently work for a small company as a software engineer and have been with them for 5 years now. Let’s call them Company X. Company X sells a software product to doctors nationwide and pays me well so I have no complaints about that. My primary role there is development on their main product, a web service, and back-end web apps that help Company X manage everything from accounting to customer information and more.
About a year ago I endeavored to create a piece of software which would help manage Company X’s information (I can’t get into specifics about what the actual product was because of contractual reasons but I can say that it was a business tool aimed at small to medium sized businesses and it was a django/jquery web app with a twist: a feature that used speech recognition so that users could interact with the app using voice commands from a mobile device like an iPhone).
I had looked countless hours on the net looking for an existing solution for Company X’s need and just couldn’t find one that fit the bill. That’s when I got this idea. The idea was I would develop this piece of software, get it working for Company X, make sure it worked well, and then pull a 37signals move and release it under my newly created LLC.
So it began… My new nighttime startup was just me, an independent contractor coder, and of course: several credit cards…!
Section 2: Moving along
It took us roughly 8-10 months of sleepless nights from concept to design to implementation. The plan was to get some buzz going for my web app by first releasing an iPhone app. The goal of the iPhone app was really threefold: getting some of that aforementioned buzz, testing out the server-side speech recognition, and making some cash to alleviate debt.
I guess two out of three ain’t bad. The app met some initial success but we realized quickly it wasn’t going to pay the bills. We were better off giving it away to encourage downloads. That certainly did the trick. Our system was tested to its limits when we set the price to free. We were successfully processing 1000s of daily requests which is more than I had hoped for. So on that note we were good.
Section 3: Rewind just a little – I forgot to mention…
We continued our march onwards. Or did we..? Well that’s when things get a bit foggy. I almost left something out. It didn’t kill my startup directly.. but it definitely hurt it tremendously. You might call it an accomplice in my startup’s murder.
This thing I’m speaking of was a bug in the 2 monster servers I purchased to handle the speech rec for the iPhone app. Speech recognition for the uninitiated is fairly memory/processor intensive even with today’s hardware hence the reason we needed some powerful servers. We thought about renting some Quads with decent memory but it would have been too expensive.. so I purchased 2 servers for a bargain at newegg.com and colocated them for dirt cheap.
At any rate after we had gotten everything set up we started noticing that either server would randomly throw a machine check exception every now and again which brought that entire machine to screeching halt. You can imagine my horror at this. They were brand spankin new..! I was pissed.
For nearly 2 months we pulled our hair out trying to figure out what was causing this behaviour. You can imagine what we tried: operating system version changes, disabling RAID, swapping memory. You name it and we tried it. Checking logs was useless. The kernel was killed before it could even write out something useful. The machine check exception was useless because it was too general to pinpoint any one piece of faulty hardware.
The one thing we had going for us was that it happened on both machines. So finally.. yes finally we figured out that the bug in question was an issue in our blazing fast Harpertowns’ microcode. One quick update to the microcode and 5 minutes later the ghost in the machine was dead and we shot’em good..!
Section 4: Painful realization…
The unfortunate result of this wild goose chase was that my funds had dried up. I didn’t have enough credit or cash left to keep paying my contractor to finish the web app. The iPhone app was subsequently released (now that our servers were fully working) but as I stated above it didn’t generate a significant amount of cash from app sales.
So there I was – an iPhone app released and used by tens of thousands… but not a damned dime to finish the job..!! After all, I initially set out to create a solution, not a feature to that solution. The iPhone app was really just the beginning in my mind or so I thought. In the overall scheme it was going to be a buzz generator and beta test of my “killer” feature that would later be incorporated into the general solution. I couldn’t have been more wrong in my approach. I made a fundamental mistake which I’ll discuss later.
So anyway, when the funds ran out it obviously hit me that I had to shut it all down and I did. I pulled the app from the store, sold off the servers and continued on with my day job at Company X.
Section 5: Reflections…
I’ve had almost a year to think about where I went wrong.. Here are the main observations I made about my experience:
Section 6: Reflections part II…
After much thought and reflection I finally realized that integrating speech recognition into my solution and scaling it out web 2.0 style was ridiculous. This was a really tough thing to do even for large and well funded companies. How could I have hoped in my wildest dreams to implement something like that on such a large scale..?
I was so enchanted by this magical killer feature and the promise of speech recognition that I fell into a delusion. I made the entire solution about this one feature. Even though I thought it was a killer feature, one that would separate me from the competition. I failed to realize that this feature did not solve the original problem. Sure it was shiny and really freakin cool but people aren’t usually willing to pay for just ‘cool’. People are willing to pay for a solution to their problem. If you’re not solving someone’s problem then what are you doing..?? It wasn’t my original intent to implement this feature. It’s just something I stumbled upon during my research.
Section 7: The number one reason my startup failed…
So the number one reason my startup failed was: I was distracted by a cool and shiny feature that didn’t solve anyone’s problem. The shinier and more tempting features of any software program should be regarded with a high level of suspicion. There may be a reason some things are so shiny and alluring. Traps often have this quality. My advice to anyone creating a solution is to march straight towards your initial goal, as long as the goal really does address a true need then that’s what you should focus on.
Questions for the wise: Is the feature absolutely necessary for the solution to function..? If not will this feature take less than a day or two to implement…? In other words if the shiny feature you want to implement is not absolutely necessary for your solution and it will take more than a day or two to finish then move on.
That’s a wrap.. Love to hear your thoughts.
What software did you use for speech recognition? Just curious…
Hey Casey,
We used Lumenvox at http://www.lumenvox.com. It was used for recognizing short voice commands. It worked well. We would send the voice commands to our servers which were running several lumen processes on several VMs to handle the incoming requests. The voice files were compressed using GSM on the iPhone before sending of course.
The lumen guys were great and I’d recommend them for most speech rec stuff.
Thanks! It’s really nice hearing from failures from time to time. These kinds of stories don’t often get out, but they’re very educational on so many levels.
Especially now when all too many people become so easily enthralled by success stories the likes of Google, Facebook, Youtube, Digg, Twitter, …
It can happen so fast, losing oneself in wishful thinking, losing all reason. I’m speaking from experience, this story really relates to me (although I’m not as far down the line as you yet).
So thanks again!
Thanks. I also thinks it’s important to hear about the failures since it really is all too often we hear about the next digg or facebook..
I just hope this article can be helpful to those who are doing their own startup so they can avoid the same mistakes I made. I wrote it in part to remind myself to never make these same mistakes again and in part to give back to the community.
I know there are plenty more like me out there and I’d love to hear their stories as well…
hehe nice one
same here… did not even think about the problem, just went out and did something i thought was cool, that’s about it.
Excellent post. Very self aware. Are you going to try again?
Thanks Dale.
I’m slowly picking up the pieces and paying off the debt. One thing that helped was the tax refund for my LLC. I was able to write off most of my expenses. So that helped.
And yes I am going to try again. Thank you for asking. This time with my focus on only the web app and its core feature set. I have already made some movement on it and hope to have it ready sometime in the fall.
Any accessibility to my web app from the iPhone will be done through their Safari web browser. I don’t think I could stomach another round of obj-c and xcode.
Needless to say I will not be implementing any speech recognition feature this time around – not unless google opens up some new fangled speech rec API for free.. =)
Hi Fred. This time, the first thing I’d recommend, even before crystallizing the product, is finding that cofounder. My mentor called this person your “soulmate”, and that’s entirely true. I have found that 2 can get done 4x the work of 1. The most important part of having a partner is that one of us is usually there to keep the other motivated when it’s really needed. Good luck.
Careful… if you have more than 1 founder, make SURE you incorporate with *clear* job definitions for each person. Partnerships turn ugly far too easily.
Agree on that!!
Good point by Reese. Don’t sit around waiting for co-founders. I’ve done it both ways. I liked it better when I did it by myself – the key is to solve a real problem and turn a profit asap.
Your first point “iPhone app development is not trivial.” can be shortened to “development is not trivial.”
A lot of people, including me, have made the mistake of thinking that creating the product is simple but fail to realise how much work debugging, polishing, designing etc. is. The devil is in the details.
Thanks for sharing this!
I enjoyed the candidness of your story. Amen to not being distracted by shiny features.
Fred,
Thank you for your candor and sharing the lessons you’ve learned.
I’m not a software developer. I work in social media for a media agency. We fight the same issue and in fact sometimes call it “shiny object syndrome.” It’s just too darned easy to get distracted by the shiny object in front of you when you should be focusing on core goals and fundamentals like sound strategy.
Thanks again, Fred. Wishing you the best on your next startup.
Cheers!
Michael
That’s a fantastic post. Two things I admire:
First, you talked through the details of your failure. So many people fail to do that at all, due either to false pride or an unwillingness to face the discomfort.
Second, you were brave enough to carry the analysis back to the thing most in your control: you. It would have been so much easier to stop and blame the servers, or Apple, or the users, or the marketplace.
I really appreciate you posting your lessons learned publicly like this. Thanks for taking the time, and for being so forthright about it.
Reflecting on your reflection, attempting to solve a problem even big companies would have a hard time to do; it’s not necessarily a bad thing. It’s best to aim far since most every time, everyone is aiming too short.
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Fred,
Had a similar experience last year. Self funded start-up that I was working on full time. I run out of money in a similar fashion. However I’d say my biggest problem was doing it alone. I got good at dumping features, but it’s so hard to write code, do design, test, manage, promote on your own that you just start can’t do it all, even if you don’t sleep. I think that any successful project usually has at least two founders if not three. This is the case for a reason.
Anyway, I plan to do it again but this time I intend to have a partner, and we’ll get additional funding before building anything more than a rough prototype.
Good luck on your next venture and don’t let it stop you from trying again.
Appreciate that Dale. I will definitely try again.
I was of that same mindset until I realized I basically have a ‘partner’. Yes I pay him but at huge discount and he is one hell of an indie coder.
Needless to say it’s still incredibly difficult to run the business/funding aspect by yourself. So I do see your point about getting a partner.. The unfortunate thing is that it’s so hard to find someone that you work well with and has the skill sets you need.. I know it’s possible.. Just hard.
In my case I found that person but he wants cash up front and I don’t blame him.. He’s got a family.. I don’t.. I can live off of peanut butter for 6 months if I need to..
Fred,
Thanks for sharing the details of your startup.
I am a software developer myself and I couldn’t agree with you more that the thing that works is a solution to a problem.
More often than not, being developers, we (or myself) would think that we can build cool features/functions, and that will be successful.
In the real world, we need more than that.
Other than creating a solution to the problem, there are factors like competitors, marketing, and many more.
All in all, planning and analyzing is crucial and you had a great deal in analyzing what failed.
I wish you the best in your next startup, and I’m sure one day you’ll be at the place where you wanted to be.
Nicely done Fred. For trying in the first place, for learning from it and for trying again.
I’m deep into my latest creation. It too is a solo venture. Not my first and again, it’s not easy. But it is worthwhile.
I couldn’t agree more with your lesson learned. Always make sure you are solving a problem. And always keep it simple.
Best of luck.
Good to hear about other solo flyers out there David.
Though I do have help in the coding department. The contractor I work with is great.
It’s important to find at least one person to help and make sure that one person works well with you. Whether it’s an indie coder, co-founder or otherwise, I don’t think I could do this completely alone.
[...] The number one reason my startup failed | teaBUZZED [...]
Great article, thanks. I learned something, focus on the big picture. I guess if you did have a partner, they might have reminded you of that.
Before you code a single line, sell a client. This will avoid the no market validation syndrome.
Then, design specifically for that client. Treat your idea as a technology, and embody that technology in the client’s visualization, not yours. This will avoid the shiny feature syndrome.
Use free as a way to seed your technical enthusiasts/geeks. Provide some viral participation around your technology. Inspire a third-party developer and possibly content provider ecology, as per technical evangelism. Limit the extent of free to that viral and later beta testers. Geeks don’t pay, so free is the way to go, but non-geeks do pay, so get paid. This avoids the free syndrome.
Warning developing for clients requires specific negotiation on IP ownership. Further, you need that client’s participation in your marketing, re: business case. These negotiations provide exclusivity for client, and give you business consulting time to develop processes. This avoids the “can’t go to market” later syndrome.
Stage gate on the client’s vertical and tier in that vertical. This avoids the lack of market syndrome and the lack of market validation syndrome.
Enjoy. Do try again. Repeat, repeat, repeat!
Will definitely try again David. Good advice there.
I did clear it all with Company X before starting on it so on that note I’m legally ok but definitely better to be safe than sorry.
Indeed. Making it free to speed up adoption in the ‘innovators’ market is well-advised. I will take that into careful consideration when I finally do release this thing.
Thanks
Hey, great story. It feels very real. I was in the management team for three startups (Kazaa, Zapr, Tangler) and it wasn’t until I worked with 10+ other startups at Pollenizer that I realised that lack of focus and inability to stay focused was the biggest killer of new businesses.
It’s hard. You have to have a big vision, but you must start small. How do you have the guts to pick the first micro-segment to nail when it’s a new product/service and research can only give half the answer?
How do you stay focused when it’s so easy to chase new segments, launch new features, listen to 100 people about what they want?
Tough. Welcome to the challenge.
Thanks again for the post.
Great Article!! cover the real time faults and loop holes which one can easily neglect while startup..
Why did you buy your own servers ?
why not using some cloud service like amazon ec2 ? there would be no hardware problems and you would be able to get your startup win
what do you think ?
A fantastic post. It’s so good to read and be reminded of the focus needed to make a started a success.
Hello!
Thanks for the write-up =)
Very informative.
Fullspeed ahead!!
Random questions;
- could you pitch this to ONE client?
Screw the downloaders from iStore.
Could you approach ONE big client?
Get him to sign a 10,000$ contract for your system? What you have so far of it?
You say it was for the doctors field…
I know little about what your creation was, yet, can you get one huge doctors’ office? Hospital maybe?
Something similar to what the solar panel companies do:
Get big contracts with big clients… cater to the individuals later.
Just my 0.02! =)
— AJ
.
Very, very good post.
“Questions for the wise: is the feature absolutely necessary for the solution to function..? If not will this feature take less than a day or two to implement…? In other words if the shiny feature you want to implement is not absolutely necessary for your solution and it will take more than a day or two to finish then move on.”
I love these words. I could etch them in gold and read them every day. I have made the mistake countless times and paid the price.
Good article, very relevant to me at the moment. It must have taken some tough soul searching to identify the err in the idea you devoted so much time to.
Thanks for sharing your story, it is realy good and informative!
Well written post. I absolutely loved the last paragraph.
Next time, skip out on the voice system. I worked for a company that did medical surveys, assessments, and much more via interactive phone systems. One of our projects we pushed a full speech detection engine. It was a huge amount of work. And what happened? The vast majority of our customers immediately opted out of the voice system and went with key presses only. After the program completed we only had like 5% usage of the voice system.
Thanks for sharing. And you’re right — there should be a compendium of failures which, I believe, are at least as valuable as the success stories.
My advice for next time: select a handful of key beta customers first, validate and prioritize what really need as a spec, prototype and test with your key beta customers first and only then release. Another way of describing your situation is that you tried to “cross the chasm too soon and unprepared” (see “Crossing the Chasm” by Geoffrey Moore).
http://en.wikipedia.org/wiki/Crossing_the_Chasm
Also have a revenue model planned ahead of time – if you give it for free, figure out how you will limit the free version or position explicitly the transition from free to non-free with customers ahead of time (set expectations). Make sure the revenue model can pay the bills in the best, likely and worst cases. If not covering expenses, determine what your burn rate will be and make sure you can survive the worst-case.
Also have several alternate business models at least partially thought through or modeled financially and technically.
Fred, I really appreciate you telling this. Most people do not disclose their failures, but personally I am proud of my failures as much as I am proud of my successes – for one reason: you learn from both.
And I am happy that you do your homework, analyze what went wrong and what could be done to make it a success. This means that you’ll (guaranteed) do much better next time. This is a normal learning process, and you need to go through at least couple of failures before being successful…
I do not agree with the author saying that you should focus on solving a problem or need. The reality is if a company has an existing pain point, they are more than happy to continue living with this pain point. The true goal is to find something that the people with the check signing abilities can get excited about. Usually this is not solving a pain point, but improving efficiency or decreasing costs.
Great post!
Thanks for sharing your observations, I always think that the truly great lessons we go though are rather price, no matter how we end up paying for them.
It almost read like a NTSB accident report
The fortunate thing is you shared it with everyone, so many thanks! True progress usually comes at the price of trial and errors, busts and crashes.
One wonders, for every Google to flourish, how many dreams and ideas go into the compost? I thinks it takes real guts to step over the pain inflicted upon the psyche and to share the story. Thanks and good luck when you go at it again.
The road to success is paved with failure. Better luck on your next venture.
Wow, excellent points dude! Well done!
RT
http://www.web-tools.us.tc
Why did not you outsource the servers to the cloud – Amazon, Google App Engine etc.
Thank you for sharing this with everybody, Fred. Well I’ve had one bad experience with a well-funded, geographically-distributed startup. The story was pretty much like your “number one reason why….” but only at a well-funded organization’s level where all the Marketing monkeys forcibly made the management get enticed into the flashy-feature thingie (because they could use it to get potential buyers to the meeting table), much to the Engineering’s dislike.I agree that startups have to flexible and practical in order to be successful. But being too flexible will make you lose your original shape/form or whatever the startup was meant to be.
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[...] and a wise man is one who learns from the mistakes of others. I read, then, with some interest this story of a failed startup, and wanted to share. Survivor bias creeps in all too often and prevents us from learning lessons [...]
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Sounds like you independently discovered the E-Myth!
See http://www.amazon.com/E-Myth-Revisited-Small-Businesses-About/dp/0887307280 before you try again, your eyes will be opened.
Excellent. I have to travel tomorrow and I was looking for something else to read on the way.
Thanks..!
[...] Jabre has a great post about the reason his startup failed. Kudos for writing it, and I’m certain Fred will take another kick at the startup can in the [...]
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Your story really emphasises the key marketing concept: deliver what the customers want.
Sure, nice and shiny gets your foot in the door, but does it provide a benefit to the user, in allowing them to do things better, easier?
Thanks for sharing your story, i’m sure it was not easy.
Wishing you the best of luck in your future endeavours!
Fred,
So disheartening to know that your startup came to an halt. But, I got to learn a great deal from your mistakes. Thanks for sharing.
My two cents, in case if you haven’t come across, is Guy kawasaki’s: The Art of the Start.
Regards,
Chetty
Thanks for a great insight. Starting my own business this stuff is invaluable. Keep away from shiny objects my precious
Hi Fred. Thanks for spinning your misfortune into an enlightening post. I’m engaged in my own start-up at the moment, and iPhone apps are definitely on the roadmap, but I’m starting with Android and others which I can develop on a PC with free software. Keeping focus on a project with no set delivery dates beyond “when I finish this bit” is incredibly hard. Since I began, the scale of the app has expanded to silly levels (“Look Ma! I’m building the next Twitter!!!”) and then been boiled back down to basics as I realised that the important thing was to launch something usable on at least one platform.
Fred,
Thanks for your story! I’m bootstrapping at the other end of the line as well.
Big question: once you had a large volume of users, why did you opt not to pursue some angel funding or early-stage VC at that point? The “prevailing wisdom”, for what it’s worth, SEEMS to be “bootstrap, prove there’s a demand, THEN try to raise money”. Seems like you were 2/3 of the way through that cycle.
Any reason you chose not to go out for some kind of funding?
-Strappy
http://bootstrapchronicles.com
Great post on “Less is more”. Getting Real book from 37 signals has a lot to say on this topic
BTW, don’t jump into a partnership just because it’s easier to do it with somebody. It’s true that 1+1 can equal 4, but it can also equal 1/2 (if you have to run after somebody and fix problems instead of focusing on the business). So, be careful who you partner with in case you decide to take that route.
Mixed feelings about this post. I cannot fault you for taking a really bold move to try your idea out. Successful people usually experience many failures before the successful and you gotta shot for the stars even if you are only trying to hit the moon.
It seems like you learned a lot of lessons that you can apply to your next attempt…
Excellent post, thanks for taking the time to share the lessons learned. I imagine quite a few people reading this are working on/thinking of or executing a startup of their own and a fair share are dazzled by shiny features.
It’s a hard thing to decide if something is shiny and should be ignored for the time being or if it’s the crux of your entire app. I think your story illustrated the point well though, in your case it wasn’t the crux of the app.
I hope this hasn’t discouraged you from trying a startup again the future, sounds like a very capable person.
Great article. It seems to me that being successful on the web is as much a crap shoot as an innovative process. Twitter is built on horrible code (sorry Rails programmers), Facebook is a disaster area of software bugs and privacy rights issues, and don’t even get me started on MySpace.
More important even than knowing what the problem you’re trying to solve is, and whether or not your solution is going to work, is to know how many people actually have that problem. If you can account for fewer than enough to pay your expenses, you need to consider whether it’s possible to develop it for free as a hobby or a personal solution. If you can’t do that, you’re wasting your time – even if your idea is novel. That philosophy has led me to spending lots of off time developing novel things as a hobby while I do work at my “real” job as a freelance developer. If one of my ideas gets finished and takes off, that’s wonderful – but I’m not going to break the bank on it, the odds are just not in my favor.
This is an interesting contrast to another project that was saved by one shiny feature.
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Sometimes you just have to get burned to learn. Too bad it cost you $$$ to learn, but you can look at it as a frugal man’s MBA. I was in the same boat at one point in my career. It is the right of passage.
Unfortunately, vast majority of 1st time entrepreneurs simply don’t know what they don’t know (that is why I wrote an article about why they need mentors and not consultants: http://leanstartups.com/why-early-stage-startups-dont-need-business-consultants.html). It is what it is.
Too bad Steve Blank was unknown outside of Silicone Valley when I started out in Chicago. He has absolutely fantastic book called Four Steps to Epiphany. Absolutely fantastic bible to developing a product, validating it with customers, and getting paid for all that work. You can get that book from his site (http://steveblank.com) $10 cheaper than from Amazon. Definitely a must read for every entrepreneur.
[...] assets. To my surprise, months after publishing my piece I found this entertaining post called The Number One Reason My Startup Failed. In it web developer Fred Jabre describes going through some of the very experiences that [...]
Great article. I’ll remember these things when starting mine.
Thanks…
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[...] Max Tobiasen Your first point iPhone app development is not trivial can be shortened to development is not trivial. [...]
Hi Fred.
Thank you for sharing. This was a cheap resource for an important lesson.
I’m reading The Business Model Generation atm. I think you should give a try. It really helps you understand what you’re doing and probably keep the focus. Also inspiring in new ways of designing a business model.
Perhaps check the free version at http://www.businessmodelgeneration.com
Thanks,
Jonas Bruun Nielsen
Hey Fred – great candid post. I wish there were more such posts out there, it would really be helpful for fellow entrepreneurs. Wish you best of luck in your future projects!