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Post mortems on two failed startups from their founders July 19, 2008

Posted by jeremyliew in Entrepreneur, failure, management, start-up, startup, startups.
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Monitor110 recently shut down after raising $20m over three rounds. One of the co-founders wrote a portmortem of Monitor110, highlighting 7 mistakes that the company made:

1. The lack of a single, “the buck stops here” leader until too late in the game
2. No separation between the technology organization and the product organization
3. Too much PR, too early
4. Too much money
5. Not close enough to the customer
6. Slow to adapt to market reality
7. Disagreement on strategy both within the Company and with the Board

(found via Brad Feld)

At the other end of the spectrum is a post mortem of a bootstrapped two person startup that shut down last month after building for 1.5 years but not raising any venture capital. This founder’s lessons learned are more tactical, but no less important:

1. If your idea starts with “We’re building a platform to…” and you don’t have a billion dollars in capital, find a new idea. Now.
2. It’s a marathon, but it’s a marathon made of sprints
3. Initial conditions matter. A lot.
4. Developing in a vacuum never works.
5. Beware the chicken and the egg.
6. Prototype any 3rd-party libraries that you’ll be depending upon, before you base your product on them.
7. If you’re doing anything other than building your project and getting users, it’s premature.
8. The product will take longer than you expect. Design for the long-term.
9. People have an incentive not to crush your dreams. Take everything they say with a grain of salt.
10. Know your limitations.

(found via Brian Green)

I would recommend entrepreneurs to read both posts.

“Those who cannot remember the past, are condemned to repeat it.” — George Santayana

Comments»

1. Don Dodge on The Next Big Thing : The 7 deadly sins and 10 lessons of a failed startup - July 19, 2008

[...] More Lessons – But here is the story of GameClay, another startup failure at the other end of the spectrum. They didn’t raise any VC money…and still failed. [Found via Jeremy Liew] [...]

2. Monitor110, Spinn3r, Spam, and Blog Analysis Post Mortem « Kevin Burton’s NEW FeedBlog - July 19, 2008

[...] Jeremy Liew , Brad Feld, Don Dodge, and Fred Wilson have more on this topic from the VC perspective. [...]

3. פוסטמורטם ששווה עיון» נו בחיאתק… - July 20, 2008

[...] רפרנסים לתנועה הקיבוצית ולעידן הקרח, והיום מצאתי דרך ג’רמי ליו, פוסטמורטם של מיזם ווב 2.0 קלאסי, ששווה בהחלט עיון [...]

4. Vaibhav Domkundwar - July 20, 2008

These two stories that surfaced recently are a good example of the argument around raising or not raising (too much) money (too soon) and its effect on the success and failure of a startup. I guess these two companies cover both extremes and the lessons are right on.

However, I think one critical thing that I found missing in the highlights was the “focus on milestones”. If as a startup, you clearly define what your milestones are from a “getting closer to revenue perspective” then it can instill a strong discipline in solving most of the problems in both these cases. Be close to the customer, track your product development to see how soon it can make money for you and most often it will help get everyone working in the right direction, whether or not there is VC money. Ofcourse, this doesn’t guarantee anything either but I think it helps to unite everyone to be constructive and in an objective way.

5. Vaibhav Domkundwar - July 20, 2008

I just read this post on GigaOm http://gigaom.com/2008/07/20/fr-how-to-avoid-the-curse-of-vision-overload/ and the first couple paragraphs brings home the same point I mentioned above.

6. Uh - July 21, 2008

“1. If your idea starts with “We’re building a platform to…” and you don’t have a billion dollars in capital, find a new idea. Now.” Bullshit

7. Ankur Gattani - July 21, 2008

Interesting stuff..

I’ll only refer to the second post mortem here.. guess some lessons only sink in the hard way.. till then you’re happy believing that you know what you’re doing.. and how far are you stretching..

and anyway.. unless you bite more than what you think you can chew.. you really won’t know your limits.. or would you?

and if people stopped stretching themselves.. would it be entrepreneurship really? Lesson is in knowing when to stop!

8. Sathyashankar - July 22, 2008

Its important to have a prototype in hand when you are building your application using 3rd party tools and software. Prototype should at the least should cover the basic features of the product which uses 3rd party tools. Any commitment to external world with respect to features and financial projections should be made only on having the prototype ready in hand.
and there is nothing like “We should have done….” because, you can not change the past.
Yes, some lessons are learnt hard way. Its available to others at low cost in the form of blogs and forums :-)

9. Story of two failed startups - Developing in a vacuum never works. |Technology and Business Startups in India - July 23, 2008

[...] Know your limitations. [More] – via [...]

10. Vanessa Lenssen - July 24, 2008

Another tip – remember the law of Pie, everything takes 3.14 times longer and costs 3.14 times as much as you budgeted for and you’ll be fine…

11. Perspectives on failed startups - interesting points « Tech Hulabuloo - July 25, 2008

[...] Have a read here Blogged with the Flock Browser Explore posts in the same categories: Uncategorized [...]

12. B - July 30, 2008

My advice for start ups… Do you think you can do better? significantly? DO IT!
BELIEVE in it. Put ALL your Passion in it. Be critical. Listen. Invite other passionate people to join in for the love of it.

Once you feel you have momentum start thinking about how you can make real money with it, at this point you should be more sure it will work. This will also make you more convincing for investors.

This has worked for any business start up. No matter if your startup was planning to make cookies or track cookies.


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