Tag Archives: Innovation

Lessons of a Failed Startup(s)

A couple of months ago, I finished reading Eric Ries’ The Lean Startup. It got me to thinking about startups and small projects I’ve been a part of in the past.

In particular, I think of a social site for readers that I was apart of that failed. I think of the the end, where I was trying to make the case to launch something and let users drive the feature list. What I find really frustrating is that I did such a poor job of communicating that at the time. Reading the book, I hear a much better way of emphasizing the point of customer feedback loops. The minimum viable product with hypothesis and user testing driving the next steps; it has so much value. Additionally, that movement has a number of successful followers to their name, so they have credibility with their message. Timing and other market factors may have doomed us anyway, but I can’t help but thinking of what could have been different armed with some of that information at the time.

The other part of the book that really resonates with me is how hard successful startups are. People are so afraid of there idea being stolen. In the book, Eric Ries suggests that you try to have someone steal your idea (it’s hard to do). He’s right. If someone actually wants to steal your idea, at least it validates that other people think it’s a good idea.

I get approached by people with startup ideas a lot, looking for programmers who want to work for equity. For young developers with the time, I think they should get involved, it’s a great way to learn the realities of business and to get some extra experience. But beware of how much of a longshot it is to get the product successfully to market. It has to be a good idea, successfully built, successfully marketed, and fill a timely need. Miss any of those categories, and you probably won’t do much.

I’m not suggesting people avoid startups. They are a great learning experience and some of them work out. But go in with your eyes open to the amount of work you have in front of you. And be discriminatory about where you choose to invest your time. Are the others involved willing to put in the same effort you are? Will this new organization be capable of all of the things needed to be done to launch a product?

My advice for evaluating an idea: run a set of books for the project (meaning keep accounting). If you’re working for equity, keep track of time anyway and what you could have been paid at your regular rate to do that work. How long will it take for the project to pay that back? That question opens a lot of eyes. Say what you will about money as a measuring tool, but it’s the standard for all projects and companies. It’s relatively objective, and very compatible with math. The same can’t be said of a subjective goal like “let’s take over the XYZ market.” Presumably, you have your day job because you make someone more money than you cost them. If you can’t say the same of your startup project within the first year, then your project doesn’t even have the ROI of your “boring old day job” (you may love your job, my point here is that people thing of startups as high risk / high ROI and that may not be the case). Every time you sit down to put more into the project, you’re saying that you will get that back in cash on the other end. Is that true, or are you kidding yourself?

There can be other reasons to do a startup. I’ll use a personal recent example. I built VicinityBuzz, and iOS application around Social geo-search (also coming soon to Android and WP7). It’s been slow out of the gate so far, but I’m hopeful that some of the new features coming in the next update and some marketing ideas I have will help. Regardless, I’m certainly a long way from paying myself back for the time I put in. But I have been working in cutting edge technologies more and mobile is a real focus. I knew even if the project never paid for itself that it was valuable time learning and to put the project into my portfolio of work. I went in with those realistic expectations, but try really hard to exceed them.

If there is intended to be a single message of this post, it is to apply measurable goals to your projects, and evaluate and pivot your direction as often as reasonbale. If I had to boil down the message of the book to one sentence, that would be it.

On Outsourcing, Protectionism and Education

Things are often more complicated than they seem. Certainly in the worlds of economics and nationalism. It’s no wonder that as the largest economy in the world, America wants to protect that place and Americans are sensitive to any efforts to move jobs elsewhere. Certainly that is true today, with unemployment currently at 9.1%.

In my own field of software development, the concern is that jobs will go to markets in Asia, like China and India. Chad Fowler’s first edition of The Passionate Programmer was even titled My Job Went to India: 52 Ways to Save Your Job. And at first, it seemed strange that this would happen in software. After all, when all the manufacturing jobs started leaving the country, the prevailing argument behind those who accepted this, was that the labor force would be retrained for higher tech jobs, and ultimately a higher potential wage. So how could it happen that the new jobs start getting outsourced?

I’ve followed Dr. Michio Kaku since I read his book Physics of the Impossible, and he has some interesting ideas around this:

Well, is he right? Based on what I observe, I would say he is. When jobs were leaving the auto industry, there was already downward pressure on the wages (signalling low demand). But software developers make a lot of money. It’s not unheard of for developers without a college degree to make 6 figure salaries, even in Midwestern states. By the way, I’m not equating a college degree with skill, but it’s a fact that when demand and supply are near an equilibrium in mature fields, a degree is usually expected. For example, accounting work was not always done by those with a college degree or certifications, but now that is a normal expectation. So I would say that when there are software developers with little to no formal education past the age of 18 making more than some attorneys and doctors with 8+ years of school (and associated student loans), that software development is a field in high demand, and it sounds like Dr. Kaku is right.

There are areas of development that are more prone to offshoring than others. Consulting style services for large corporations have a higher communication threshold and so cultural barriers and communications barriers can be an issue. So these jobs are not typically easy to outsource. However, small projects, and product creation and maintenance (ISV work) is a little easier to move.

So what does all this mean? What if we did try to protect those jobs? Short term, Software Developers would be happy. Supply would plummet and the demand for the best talent would help salaries skyrocket. But Dr. Kaku is right, it would do severe damage economically. Take the regular IT work of companies, and software / web startups, and double the cost. So much work would not be done, because the ROI would no longer justify the increased cost.

To me, the real way to help keep Americans employed is the fix education. If technology is a high demand industry with a lot of promise, why not supply as many educated Americans as we can do fill those jobs. Dr. Kaku seems to be suggesting that. And if you think that’s a soft sounding idealistic answer to the question, consider who else is making the same point to Congress. Not too many people accuse Bill Gates of being a hippie.

I recently watched Waiting for Superman. It’s full of opinion and outright bias, but there are some really clear points that are hard to argue with. In particular, I thought it made an excellent point about schools being designed in an era when the bottom 50% of students went into manufacturing & agriculture, with the next 30% or so headed into non-degree jobs (office administration, clerical, low-level business, sales), and the top 10-20% going to college for professional jobs (law, medicine). According to those requirements, schools aren’t doing that bad, but that reality isn’t true anymore. College is necessary for many more career paths. Producing those same ratios without manufacturing and agriculture simply floods the service sector. It’s why pay is so low in restaurants and call centers.

To support a higher standard of living, our education system has to support technology and innovation. Technology can be taught, but innovation is harder. I think innovation takes 2 parts technology, 1 part business-savy, 1 part liberal arts, and some God-given natural talent (think Steve Jobs). What do you think?