Round-up: failed startup post-mortems

I have previously blogged about top dot-com flops.  By chance I came accross this great round-up of failed startup post-mortems on ChubbyBrain.  The list includes, among others, the following:

An article (also pointing to the above source) on GigaOm featured information about post-mortem of the infamous StandoutJobs . As for main reasons why statups fail, have a look at Paul Graham’s article and my previous blog post. Finally, here is good set of lessons from Mark Goldenson, founder of PlayCafe (one of failed startups on the above list). I especially like his “Set a dollar value on your time,” which helps prioritize tasks and clarify what is and is not important for your business.

Devver and other thoughts on failures

Till today, I somehow failed to know about the existence of Failure Magazine. Although most of articles I checked are quite long (like this article about “No Logo” of Naomi Klein that goes for 7 pages) there is much to read and learn about.

What I meant to write about was Devver, a maker of cloud-based tools for making Ruby developers more efficient (code testing, QC).

As one of co-founders, Ben Brinckerhoff, points out:

Most of the mistakes we made developing our test accelerator and, later, Caliper boiled down to one thing: we should have focused more on customer development and finding a minimum viable product (MVP).

They assumed they already got their MVP and focused on further developing their products at the expense of loosing touch with existing/potential customer base. He admits that:

Our mistake at that point was to go “heads down” and focus on building the accelerator while minimizing our contact with users and customers (after all, we knew how great it was and time spent talking to customers was time we could be hacking!).

As Devver focused and developed its accelerator product, it became increasingly sophisticated, eventually “resulting” in setup/configuration problems – the main put-off for many users. When this hurdle was found, they came up with a solution, but again failed to keep in touch with users, instead churning out new features.

Result? Two years and $500K later, the three tech-savvy founders had to fold.

As the saying goes, “don’t fall in love with your product; let your customers do so.

As an article in Business Know-How explains, “key factors that — if not avoided — will be certain to weigh down a business and possibly sink it forevermore”:

  1. You start your business for the wrong reasons (making money is the first one on this list)
  2. Poor management (sometimes management is too techy – case with Devver – or too business)
  3. Insufficient capital (lean startups must be able to avoid this trap)
  4. Location, Location, Location (one of factors that contributed to a temporary suspension/failure of my own startup Elegua)
  5. Lack of planning (this depends on a type of business, but many businesses change/evolve so much from their original vision/plan that they become unrecognizable)
  6. Overexpansion (riding on top of seed/series A capital, hiring frenzy)
  7. No Website (this is debatable – my second startup, GPDoors, has no website yet – I do get leads via WoM)
And even if you fail (as I did and surely will do in the future), remember that:
  • Failure is necessary
  • Failure reinforces the need for risk
  • Success can breed complacency
  • Failure means you’re not alone
  • Failure doesn’t necessarily mean something went wrong
  • Failure can emphasize process, not merely people
  • Failure broadens your thinking