Here’s something that I never wanted to write. I was partner in startup which failed. The product idea was and still is rock solid. So what went wrong? Why it failed? It took me some time to finally admit that the company will not succeed. I was breathing air into it until the last moment. Then came the moment of clarity (or sanity) and I finally admitted the failure. So, if the product idea was and still is rock solid, then what caused the failure? This blog entry contains retrospective analysis of the issues that went wrong; issues that caused (in my opinion) our failure. Intention is not to blame or put a bad reputation on anyone, but share the experience with others. I am to blame if anyone; I was the father of our main product and there was lots of chances to blow the whistle; there were opportunities that I never used.
Background
I co-founded a company with multiple other persons. Initially I had the idea for the product, then a few other people got interested about it and they became partners. I accepted them without thinking with whom I am dealing now. My mistake number one. Always check out peoples background before starting any real discussions about partnership. The company aimed at doing business in 3D printing (not only by providing 3D printing services, but also system/management solutions and education/consulting). Some (if not all) of the lessons-learned can/could be applied to any project including open source driven. As I am now looking at the business after giving up, I have no hard feelings. I have no debt. At least we were wise enough not to bury us in debts too early. I learned a lot. I learned at least some of my lessons. My background is in system and application development, open source community building and hacker culture. This was my first (but not last) attempt to enter business world. Hopefully some other startup entrepreneurs will learn from our mistakes and avoid some of the (common) pitfalls. Some of the lessons learned are rather obvious, but they were hard to identify and admit when I was pushing the company forward. My first gentle advice for new startups is that take an outsiders viewpoint to what you are doing once in a while. Try to see your activities and motivations from outside. The following paragraphs will discuss our failure reasons in a little more details.
Marketing
Don’t start your business without having your marketing resources in place!
I am terrible at marketing. Otherwise I would have done it my self. In fact, I have no desire to sell; I don’t get kicks out of selling and making deals; I don’t like to push other people to decisions. I knew this right from the start and I recruited (actually he came to me) a marketing oriented person in the team (as partner). After him a few others came along. After a few months, the sales-capable person decided to switch back to employee of another company and we had no marketing power in our team after that. We had some rather feeble attempts to get us a new marketing person. We tried with one. We thought that he could be our marketing guy, but h proved to be not what we wanted or needed. We sort of gave up and forgot about marketing. Big mistake! You need to have people out there looking for the customers; trying to sell. Even if you don’t have your product ready, start actively marketing it! Eventually we had no sales or marketing personnel at all.
My advice: get some marketing gurus in your team. Better yet, get eager and hungry marketing people in your team.
Commitment
Make sure that all involved are also committed to the company and goals!
Commitment is about doing all that one can towards a shared goal! If the people involved are doing other stuff, starting other businesses or something else, it’s a big alarm-bell! That might easily result to situation in which one does actual work with the product(s) and others are contributing efforts to other stuff and businesses. Lonely developer will most likely fail. In my case, I was the developer and was left alone. I expressed the need to have a pair, but nothing actually happened. At that point I should have seen that we have some bureaucrats in our company. I don’t doubt that there are developers who can and want to do everything from scratch without any help, but in this case we are talking about a complete and complex system. It would have been possible to do it alone, I know that because I started implementing it after I realized that help is not going to be available. But I got tired of being alone, implementing features and discussing with possible customers about the most needed features. Company needs also marketing and sales people. Perhaps I would have continued development even alone if the other could have helped in some way. But they did not. Some of them were not at all committed to the company.
My advice: require and validate commitment to company from all. Get rid off hang-arounds! If needed, buy them out or they will destroy company.
Clear & shared goals
Keep all personnel updated about the company aims, products under development and goals.
In our company it became clear to me that other partners did not have clear picture of the main product. Big part of this issue was my fault. I was the CTO and I knew what we were doing. However, I did not push the information about plans to others in the amount that I probably should have done. After our CEO was replaced, the new CEO did not know what we were after until the last days before making the decision to shutdown company. However, he could have asked for more information from me. I had documented plans and system descriptions to shared document base and some of the plan were on the office walls. That was not enough.
My advice: make sure that every key person in the company knows what you are doing and aiming at; hold meetings in which you as CTO update their knowledge and information.
Belief & enthusiasm
Get rid off 9-to-5 thinking!
If you have shared goals and you keep your personnel updated about them, they either believe in the vision or not. If they have doubts, ask what could be done differently. If they don’t have any ideas, get rid of them. Belief is what is needed. Your staff needs to believe in the products that you do or develop. Otherwise you might end up in situations known as Ratner Effect; your staff might describe your products in public with sentences like ”because its total crap.” Needless to say that sentences like that can very easily do major damage to your company. But if your staff has belief, they will bring up ideas how to make products better and meet more customer needs. In addition, they will most likely have enthusiastic attitude towards all efforts. They will not moan about long days or occasional extra stress.
My advice: the combination of belief, enthusiasm and shared goal will take you closer to success.
Communication
Make sure that you have one channel for all important information and everyone knows how to use it efficiently.
In our startup some of the key personnel preferred to use Dropbox for all documents. They also preferred to use phone more than other communication methods. In my understanding they wanted to use Dropbox because they had become accustomed to it. It works pretty well, if there’s two persons sharing information and co-authoring documents. If there are more people involved, it (mostly) just sucks. Of course Dropbox is ideal for storing ready-made documents, but that’s it. It’s not a tool for co-authoring and shared development.
Some of the personnel did not like Dropbox, because it’s too easy to misplace documents so that it’s hard to find anything. Furthermore, shared folders are bad, since there is no knowledge of new documents. Of course there’s popups on screen but that’s hardly enough, it’s easy to miss those announcements. These who were not fond of Dropbox, started to use Yammer. The decision was made that Yammer is the official channel for all discussions and documents. Decision was informed to all personnel, but still some of the key personnel insisted on staying with Dropbox (and not use Yammer). That situation lead to loosing information; loosing discussion and valuable information.
We had weekly meetings right from the start. That worked pretty well in transferring information from one person to another. At some point we just kept these weekly meetings every now and then. Eventually weekly meetings just stopped. All information exchange stopped as well. Bang! Big mistake! As it is said in the movie Dune; “Spice must flow”, in business information must flow.
My advice: Select tools to use to enable fluent information flow and enforce the usage. Don’t allow mixed practices.
Moving forward
The above are the issues that came to my mind in just minutes after I started to think why we failed. There was probably more reasons, but if I can remember these in the next business that I start, I’m one step closer of getting a bit further. It was not just failure though. I learned my first lessons about business world, I learned a lot about 3D printing, I became familiar with several tools in manipulating digital 3D models and much more. The 9 months in this startup gave me a lot. I haven’t given up on the main product either. There might be a chance that I get to do it, but with other people. In the mean while, I have started cooking another business idea.
