Tag Archives: startups

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 a Feeling of Ownership, and How it Changes With Size

Through the years, a fair amount of my projects have been with small companies and startups. One thing I notice almost universally, is that members of smaller teams tend to have hunger for success, and a real feeling of ownership over their product. They take personal pride and consider themselves invested in the project.

That tends to change as the team size grows, for better and worse. On one hand, relying on “heroes” can be a dangerous thing, and people need to learn to pace themselves out. So a maturing and growing team can be a step in the right direction. On the other hand, it’s hard to see that desire for success and personal sense of pride in a product die off.

Everyone who has seen a big struggling project knows that feeling. “The wheels of bureaucracy are turning, and all I can do is what the product owner has asked of my piece. Suggesting improvements is just going to cause argument. And besides, why stick my neck out and risk being listed as one of the causes for project failure?” Also, there is a big difference between the amount of responsibility you feel when you are part of a successful team of 10, compared to a successful team of 100 or more. And projects of that size face unrealistic expectations and rarely feel successful.

How do you change this?

Maybe you don’t. I was once part of a startup, the 3rd man in. There was the founder (with a marketing background), a designer / developer, and I joined to help with the the rest of developing. The feeling of pressure and control that we all had on that project is something I’ve almost never felt on larger teams.

However, there’s no need to throw in the proverbial towel. There are techniques to strike a balance. Agile methodologies usually push for smaller teams and more distributed responsibility. And products can be broken into smaller pieces using a module or a SOA approach. (Yes, putting SOA into an agile approach is a challenge, and possibly a contradiction).

In the context of your business and its goals, you have to find the balance. All aspects of the business can be controlled and dictated from the top, but your subordinates aren’t going to innovate and grow organically, and they are only going to work extra hours if you force them. For a mature business with stable returns, that model probably fits. But in industries that face a lot of change and require innovation, you probably need to risk the destabilization of delegating out large amounts of responsibility to small teams. You will have less consistent results, but they will hit some homeruns.

I think Microsoft has seen this in recent years. It’s a common complaint that the teams don’t coordinate and share information there, but they have developed some interesting products. Their having been more surprises than there were under the old centralized management of the Gates’ days. Look at products like ASP.Net MVC, Win Phone 7, Windows 8, WebMatrix and Azure. Not the most integrated products, and some are not commercially successful yet (WP7), but they were more surprising and interesting than a lot of prior products.

The real outlier is Apple. Steve Jobs flew in the face of everything I just described. He notoriously kept the decision making power to himself, yet left Apple workers with a feeling of investment and devotion to the company. Even the customers feel invested. I can’t imagine a Windows sticker on the car of a person whose pay isn’t from or closely related to Microsoft, but I see a lot of cars with apple stickers in the back window.

So as a business grows, you can either try to keep the teams small and empower them to feel invested, or find the next Steve Jobs. Best of luck if you chose the former. Sometimes growth is the mistake. There are industries (like service / partner type models) where growth can risk lowering the profit share per owner / partner / investor. See Managing the Professional Service Firm for more on that risk.

What do you think? What has your experience been? Comment below.