7 Lessons From a Failed Tech Startup
Like many Googlers, I had the entrepreneurial itch. Working for Google was prestigious, and the benefits were great, but it didn’t have that “it” factor.
Many of us want to be “That Person” who accomplished “That Amazing Thing”, and we’ll never be that person working for a large, established tech company.
Who knows where that drive comes from, but I know many people have it, just like I do. Founding a company was something I had to do to satisfy that desire.
I was appalled reading about how little equity most employees own in startups, so I decided to found my own. My co-founder and I began by quitting our jobs around February of 2012. We didn’t have much of a plan. We had a loose idea of what we were going to work on, but all the details of execution were still fuzzy.
Below are some of the lessons I learned.
Lesson 1: You Under-appreciate the Other Roles from your Old Company
Sales is important, and so is marketing. They’re 2 of the most important functions in your company. If you have an okay product but great marketing and distribution, you’re going to be fine. If you have a great product but no marketing and distribution, then you’re probably screwed.
It’s easy to overlook other job functions after you’ve spent your entire career (however short) as a software developer. This was especially true as an engineer at Google, since Google is such an engineering driven company.
I took for granted the massive sales team that paid my salary.
Years later, I read The E-Myth Revisisted, and I realized this is an incredibly common mistake. The “technician” always thinks she can run the business better than the people she used to work for. Usually she’s wrong, unless she adapts and hires to compensate for her weaknesses.
The technician thinks she can quit and spend all day doing the technical work, and not be bothered by the overhead she used to have at her old job. In my case, I thought I could just quit and write code I was passionate about all day long. But this is far from the truth.
When you go out on your own, you should be spending 50+ percent of your time on sales and marketing, raising money, cutting deals, cold calling, whatever. That’s what most successful entrepreneurs do. They’re aggressive, and they go after opportunities.
The Googles and the Facebooks of the world are the rare exceptions. As far as I can tell, those founders were able to sit around coding, and their websites happened to take off with minimal marketing. I believe both Larry Page and Mark Zuckerberg both only started with a mailing list. They mailed the list with a link to their site, and the rest is history.
You can’t count on that happening for you. Odds are your product is not as good as Google or Facebook.
Anyway, I learned very quickly that Sales is hard. Our first product was an e-reader that we placed on the wall in restaurants and coffee shops. We connected it to the WIFI and used it as a dynamic billboard. The product worked great, but we still had to convince restaurant owners to allow us to install our devices on their walls.
This was easier said than done, and the rejections were tough. Any sales person will tell you this is just part of the job, but as an engineer I couldn’t help but think “This isn’t what I signed up for.”
Lesson 2: Money Is Important
When I worked for Google, I took my salary for granted. It was the first job I had out of school, so money meant nothing to me. I was living the single life with few expenses, and my salary was just a number associated with my name. My checking account balance was just another number.
But once I existed for 2.5 years with no salary and living off savings, I began to appreciate how important having money is. Every time I’d eat out, buy clothes, do something fun, or go on a trip, I’d think about the dwindling balance in my checking account. It’s only a small thought that lasts a split second, but it’s always there, and those thoughts compound over time.
At least I didn’t go into debt. I can’t imagine the stress of founders who start by living off credit cards. I further can’t imagine the stress of people trying to support a family while starting a company.
Lesson 3: If You Build It They Will Not Come
Copyblogger had a phenomenal post titled: How To Keep Kevin Costner From Ruining Your Blog and Business.
Most people think they can “build it and they will come.”
This is closely related to Lesson 1. Almost everyone takes Sales and Marketing for granted, and most products don’t magically get discovered through word of mouth. Facebook, Google, and Twitter are huge, glaring exceptions, and unfortunately they get 98% of the media attention, so we believe their model is the correct one to follow for entrepreneurship.
Most successful software products take years to obtain a critical mass of users. If you’re going to focus on attracting users instead of making money, you better have a hell of a lot of venture funding to give yourself a long runway.
In our second iteration, my cofounder and I built an email product that we thought was “better than Gmail.” Unfortunately, we took this lesson for granted when it came to driving user adoption.
Lesson 4: Team Composition is Important
YCombinator and TechStars harp on this, and I always used to think they were wrong. I thought that you could definitely be successful as a solo founder.
But here’s the problem: Because of Lesson 3 above, you’re going to need someone who’s focusing on business stuff. One of you gets to code all day and worry about the product. The other needs to worry about driving users to that product. Marketing and Sales should be a full time job, so you need someone who has passion and experience in that area.
In our case, both of us were engineers, and neither of us wanted to switch into the “business person.” We both preferred coding.
Lesson 5: You Should Probably Do Less
Our first product was a digital billboard, but when we discovered how challenging sales could be, we abandoned that for a pure software product in the form of a Gmail replacement.
We called it Boxuno. Some of the features we included were:
- A new UX with a dual pane view.
- Drag to Select Mails
- Fully offline capable in the browser using IndexedDB and Application Cache
- Integration with Facebook messaging
- Integration with Twitter
- Integration with GChat
- A fully functional TODO list in your inbox.
Email and IMAP are really hard alone, so the first bullet would have been enough for a new product. Instead, we tried to take 5 new products and combine them into 1.
Do you see how ridiculous this was? We were two people trying to build one of the most complicated products the world has ever seen. We just tried to do too much.
Amazingly, we got all of that working in about a year, but we never got all the bugs out. It was just too complicated, and the offline IMAP sync turned out to be a nightmare.
So my advice is: if you’re working on a new product, try to do less. More and more features aren’t going to drive user adoption. It’s better to focus on a niche, and give those users exactly what they want.
In our case, we could have focused only on the users who were tired of the Gmail UI. That might only be 1% of Gmail users, but that’s plenty to support a new product.
Many of those users probably would have used us without chat or anything else, so we didn’t need to focus on all those additional features.
Lesson 6: Try to Solve Someone’s Pain
This is closely related to number 5. Try not to focus on what you think would make a “cool product.” Instead, concentrate on solving someone’s real problem, ideally that they will pay you for. This serves several purposes:
- You get to build less. You only build the core features that your users want. You don’t waste time adding stuff that you think is cool but that your niche won’t care about.
- You get positive feedback. Positive feedback is one of the most encouraging emotions when you’re building a company.
- You make money. Making money is the most extreme form of positive feedback.
Lesson 7: Letting Your Startup Rule Your Self Esteem Is Dangerous
I had a much more detailed post about entrepreneurship and emotional health here. The summary is that successful people typically gain a lot of their identity and self esteem from what they do. I was no exception. I was proud of working for Google right after college.
But when you move from a big company into entrepreneurship, you’re going to encounter many situations and problems that are just plain difficult. If you don’t discover how to divorce your self image from the trials and tribulations of starting a company, you’ll be miserable.
Tim Ferris talked about personality diversification as part of an interview.
Your job description becomes your self description. You spend so much time in that one job, that one project, that all of your eggs are in that basket from a self worth standpoint. So if something goes wrong with your company, something goes wrong with your business, you end up being depressed and demoralized, and that can be a fatal problem.
I whole heartedly agree with him. Make sure you have other things in your life that make you happy and define who you are.
Don’t let a failed company ruin your emotional health.