Announcing the Inaugural FailChat Event: The Pivot!

Published on February 19th, 2010 by Christian Perry

With the roaring success of FailCon 2009, we’ve decided to start a small series of FailChats throughout 2010, leading up to the main event: FailCon 2010!

Our first chat features entrepreneurs who have guided a company through a pivot: drastically changing business plans, products, marketing angles, and more.  It can be an unnerving process, accepting the beat you don’t know instead of the one you do, but – if executed properly at the right time – can make all the difference in the world.

Seating is EXTREMELY limited, so nab a spot at:
http://thepivot.eventbrite.com

Speakers Include:

MODERATOR: Han Pham; Founder, ResetGo

Ethan Bloch; Founder, Flowtown

Vivek Sodera; Founder, RapLeaf

Wrapping up FailCon2009

Published on November 4th, 2009 by WebWallflower

Well, it’s been just over a week. I’ve been busy prepping for my next events.  I wanted to take a moment and send some FailCon updates as well.

First off, a huge thank you to everyone who came and supported FailCon. Within our 400 registrants, there were a huge variety of titles, representing a wide range of industries.  But a quick count of common titles suggests that over 35% of our audience was founders and C-level executives, 10% were developers or engineers, 20% were in business and marketing, and 5% were angels and/or VCs.  What a great turn out!


Many thanks to our amazing sponsors, as well!  Each of these guys took a big risk, investing in a conference associated with failure.  But they had confidence in us, in you guys, in the topic matter, and in the industry.  So please reach out and take a moment to thank:

• GoGrid, a leading provider of cloud hosting
• Cooley Godward Kronish LLP, a leading startup and small business law firm for the Bay Area
• SuperRewards, one of the top providers of virtual goods monetization
• VerticalMove, an amazing provider of technical contractors to the businesses that need them.

Finally, congratulations to our demo contest winners.  They have each been rewarded with credits toward service at Cooley, GoGrid, and oDesk, as well a 1 minute pitch on NBC Bay Area News.

• FidoFactor is a Yelp! for dogs, letting dog owners know what hotels, cafes, parks, and venues around a city are pet friendly.
• YourVersion is a real-time discovery engine that lets you easily discover, share, and bookmark web content tailored to your interests.

We are currently working on getting slides and audio recordings up on the website, but for now you can see an amazing list of press, blog posts, and notes people took at http://snapsummit.com/press


If you’re interested in next year’s event, please be sure to join our event mailing list (on the side bar) and our Facebook Fan Page!

Customer Relationships can Make or Break Your Business

Published on October 21st, 2009 by Christian Perry

Guest Post by Rodney Carvalho of Internaut Design

In the era of quick and mass communication it is often easy to forget that one-to-one relationships are of paramount importance to your business. I also know that many of us striving entrepreneurs are developers ourselves. And, most of us feel more comfortable being in front of our computer, than out there shaking people’s hands or picking up the phone to chat with one of our customers. I realized how critical this one-to-one interaction is when I read a statistic from the Web 2.0 conference that 40% of business deals are closed during the face-to-face meetings. This statistic really struck me, especially because that number is significantly higher than through other methods of selling like advertising, search results, email marketing campaigns, etc.

For us, our biggest payoff so far has been when we exhibited ScrumNinja at JavaOne back in June. We got to meet people face-to-face and do demos for them. We attracted just those people who were interested in talking and learning more about us. Since then, with the help of our marketing consultant, we’ve called customers on the phone and gotten their feedback. I was again surprised to find passionate customers who were willing to evangelize us and spend over an hour each (without any kind of promise of compensation) on the phone giving us critical feedback.

Through our feedback we learned which customers are our key customers. You’ll find those who really “get” what you are trying to do and align themselves with your goals. When they ask for features, they actually request features that are good for the product, and not just good for what they personally need. One of our closest customers told us that they didn’t want us to add certain features because it was not in alignment with what we were trying to do by keeping our product simple and easy-to-use. I love it when that happens!

I’ve learned to stay in contact and make those personal connections with key customers. Keep those customers happy who want you to succeed, are willing to evangelize, and actually pay for your product. It starts to become a very mutually beneficial partnership where you are making a commitment that you’ll be there for those customers. In return, they are making a commitment to you by buying your product and providing you with candid feedback, testimonials and referrals.

Don’t be afraid to reach out. These relationships are not only incredibly beneficial, but make being in business satisfying and worthwhile.

Justin.tv Founder, Justin Kan, interviewed by FailCon’s Co-Producer, Diane Loviglio

Published on October 19th, 2009 by DianeL

DL: What was Kiko’s biggest failure? And biggest success?
JK: Biggest failure: Focus. My cofounder, Emmett Shear, and I were constantly thinking of ideas for new products that weren’t remotely related to web calendars and building prototypes of them, only to lose focus a few weeks later and try something else. Creativity is important, especially in entrepreneurship, but it would have been better had we focused it on solving one problem. It probably didn’t help that neither of us used or liked to use a calendar at the time.

Biggest success: While I think it was pretty nifty that the first version of Kiko was one of the first AJAX enabled web applications, I think our biggest success was how much Emmett and I learned over the 14 months we were working on it. Specifically, how to raise money, hire first employees and recruit talent, operate a web site, and other basic skills that most tech entrepreneurs probably take for granted. When we started Kiko, we were just out of undergrad, and really didn’t know anything about the industry or startups at all. Perhaps it’s a bit telling how green we were that our biggest success was essentially learning about failing so that we could go on to Justin.tv.

DL: How did you avoid making those same mistakes at Justin.tv?
JK: With Justin.tv we focus on our mission of making live video part of the every day web experience. Fortunately, that covers a lot of different products and ideas, and that keeps working on one thing interesting. It has actually been quite a long road to get our focus, and it wasn’t a mistake we entirely avoided repeating. I’d love to say we set out to be the world’s largest live video site, but the truth is that we began Justin.tv with an entirely different idea (trying to entertain the starving masses with our own reality show), and stumbled upon what people have demonstrated they really want (a site for users to broadcast and interact around live video content). However, we are now happily organized around creating live video products that serve tens of millions of users every month.

DL: What has been your biggest success to date? And why was it a success?
JK: I think our biggest success thus far was recruiting the original founding team. Michael Seibel (our CEO) and Emmett Shear (our CTO) were friends from college, and Kylve Vogt (our VP Engineering) dropped out of school at MIT to join JTV. We’ve all grown into our roles over the three years we’ve been at it, and starting the company with three technical founders went a long ways in informing out company culture to be analytical and experiment with lots of different things. We’ve also recruited great talent thus far, and I think a lot of our success to date is due to getting really great initial hires.

DL: What has been your biggest failure to date? And why was it a failure?
JK: Not giving our employees enough independence. Being entrepreneurs we’ve definitely got an urge to just do things ourselves when we see something that needs to be done. Unfortunately, that process doesn’t scale, and eventually you have to rely on other people. The advantage of this, however, is that you can hire people who are smarter than you and better at doing the job than you are. About six months ago we had meetings with the founders and small groups of employees and asked “What would make you able to be more productive at Justin.tv? What do you like and dislike?” We were surprised to learn that team members mostly wanted more responsibility, even if it came at the cost of them having to be on call when the systems broke or work longer hours. After those meetings, we went back to the table and tried to incorporate the feedback we’d gotten in order to shift more responsibility away from the founders. We didn’t get it perfect the first time, and we are constantly trying to iterate ourselves organizationally. Overall, we’ve found out that smart people want independence in their jobs, the ability to make their own decisions and decide what is important, and after some hard lessons I think we’ve created a place that can deliver that to our talent.

DL: Do you have any advice for other entrepreneurs in the social web space?
JK: If you are just starting a new business, my advice is to solve a problem that provides a lot of utility to a specific group of people. If you’re in the social space, like Justin.tv, and trying to get massive adoption, I think it’s very important to consider how your product provides utility to a large base of people. This may seem very obvious, but I think a lot of companies (and we’ve made this mistake ourselves at times) will find something that provides some utility to a narrow group of people and mistakenly expect that the product universally applies and will go mainstream. Even if you’re growing really well today, you should always consider whether the product is positioned to grow to the milestone after next.

DL: Is there a question you wished I asked? If so, what is it? And what is your answer?
JK: No. You asked all the questions I was wishing for

Its the Complexity, Stupid

Published on October 15th, 2009 by Christian Perry

Photojojo Founder, Amit Gupta interviewed by FailCon’s Co-Producer, Diane Loviglio

Published on October 13th, 2009 by DianeL

DL: What has been Photojojo’s biggest failure? Biggest success to date?
AG: Mother’s day 2007, we screwed up. Big time.

We had these brand new customizable photo bags we were gonna put up for sale. They looked beautiful, and you could upload any photo to have it baked into the fabric with heat. High quality finish, for $100+. It was perfect for moms, so we scrambled to get it up fast so our customers could order them for Mother’s day delivery (the bags take a couple weeks to create.)

We stayed up all night, but we got it done. And aside from a few early glitches, it worked! The orders came in, and people started writing in to tell us how excited they were to be getting a custom bag. It went on like this for a couple weeks before we found out. Almost a third of our orders had never gone into manufacturing. A technical glitch had prevented us from seeing them, and with a week left until M-Day, it was impossible to get to deliver on our customers’ promises. We were about to have a bunch of very angry customers (and moms!) on our hands. I didn’t know what to do.

I made calls to find out if there was any way we could get the bags done faster. There wasn’t. I went back through our systems to see if we were reading them wrong. We weren’t.

Finally, one-by-one, I started writing emails to our customers. I explained what had happened. I apologized and said this was completely our fault, and that there was no excuse. We’d let them down and I felt terrible. That we would make a complete refund if they didn’t want it anymore, or express ship the bag at no cost (though it still wouldn’t arrive in time) or do anything else that they deemed appropriate.

I gave them my cell phone number in case they wanted to talk to me personally, and I offered to call their moms and apologize and take the blame. I couldn’t sleep that night. Images of massive customer revolt replayed in my head. All the time we’d spent building goodwill for naught. I imagined all the angry phone calls I’d be fielding the next day, the demands to send free bags, or canceled orders… all the Moms I’d be calling to sheepishly apologize for our folly.

It never happened.

Nobody canceled their order. A handful asked for a shipping upgrade … most just wanted their bag. People were upset, understandably, but the emails I got back weren’t spiteful—they were surprised. Surprised that we’d been so honest and owned up to the mistake and offered to make good. Only one person called… to say he’d never gotten an email from a company like that, and to tell us we had his business for life.

I can point to a lot of different things we’ve done that have been big successes. our Photo Safaris, our new Book, our Store, press, appearances on TV… but I kind of think the biggest success has been making a happy place for our readers and our customers and treating them right.

DL: What are common mistakes you’ve made in the past and how did you correct them?
AG: Saying yes to far too many things and then overwhelming myself chasing down every opportunity is a mistake I’ve made more times than any reasonable person should have. I’m still learning to force myself to focus on fewer projects, but I’ve improved.

DL: What has been your biggest success to date? And why was it successful?
AG: I love Photojojo. It’s the first business I’ve started with no outside funding, building it slowly and responsibly with our audience. I love the folks I get to work with, and the community that we’ve gathered around us and serve. It’s been successful largely because of the enthusiasm and support of our friends, readers, and our customers. They’ve told their friends, written about us, subscribed to our newsletter, purchased from our store, attended our events, and trusted us with their time. We work hard to earn and keep that trust.

DL: What has been your biggest failure to date? And why was it a failure?
AG: NOT FAILING ENOUGH!! (Not because I’m good, but because I’m not taking enough risks.)

DL: Do you have any advice for other entrepreneurs in the social web space?
AG: Think about how creaky old-world businesses work and adapt that to work online. There’s a lot of great models for making money that traditional businesses have been using for generations.

10 Years. 10 lessons

Published on October 12th, 2009 by Christian Perry

Guest Post By Rich Prest from www.richworklife.com
————————————————————

At the tail end of the dot com gold rush, on October 1st 1999, my wife, two dogs, and I arrived in Silicon Valley from Australia. Since then, I’ve been lucky enough to work in marketing and strategy roles for software startups, and while I’ve never found a pot of gold, I’ve enjoyed the journey, and believe there are a few nuggets I can share.

In the fine tradition of popular non-fiction, I’ve come up with 10 lessons, one from each year, in roughly chronological order. For those in a hurry, there are key takeaways and sign posts to identify these conditions at the end of each section. Have you had similar experiences, and what did you learn?

Year 1: The Smell of Success is Intoxicating

Greater mission vs. enlightened self interest

There is nothing more fun than working in a startup where everyone believes. The energy is palpable and infectious. People work joyfully around the clock and you jump out of bed every day, busting to get started. Perksatwork.com was like this, my best ever year of work life, a veritable the-journey-is-the-reward, pot-of-gold experience (I’ve been trying to recreate this ever since).

I’m a great believer in a mission that people can believe in, but in this case, we had a nice idea (help people balance their life and work) and believed we could do anything, but either the team just got along really well, or Adam Smith was right and the prospects of success were driving the dedication.

Key Takeaway: Teams that believe (for whatever the reason) are a lot more productive and fun than those that don’t.

Sign Posts: Consistency of explanations about the overarching objective, and unshakeable confidence.

Caveat: The smell of success can be so blinding, you miss what’s going on in the market. At my second startup we ignored the structural changes going on in the market for too long (see You Don’t Know What Customers Want).

Sign Posts: What are you worried about? (Nothing = blind spot – there’s always something to worry about)

Year 2: Raise As Little Money As Possible

Pros and cons of all-or-nothing moon shots

This is controversial. Most ventures need some money before the revenue comes in. But it comes at a price.

First example: We raised over $60M, on a valuation in excess of $200M. We had great momentum, lots of customers and registered users, but virtually no revenue (in 2000, it was only us early adopters that actually had broadband and shopped online). When you get funded like this, you’re on a boom-or-bust rocket ship. Either you enter Geoffrey Moore’s tornado and emerge victorious, or you crash to earth in a ball of flames. We blew most of it in one year on a big name CEO, hiring like crazy, and a new name (would you pay $1M to re-brand as Abilizer Solutions?) Guess what happened to us?

The downside of too much money can be reduced opportunities for focus and fewer exit options. If your valuation becomes too high, you will turn down otherwise reasonable offers, and you may be driven out of your original niche market. If perksatwork.com had raised $25M on a $75M valuation, an $85M offer would have worked for everyone after the crash. Instead, when the dot com market imploded, we left the HR segment we dominated (because it was “unattractive”) and vanished into obscurity in the hotly contested portal software market with about 500 other dot coms. (See Year 4: Focus! for more on this topic)

Edge Dynamics also suffered from too much funding. We used our market momentum to raise more than we needed, forgot our frugal 10-guys-in-a-three-bedroom-condo beginnings, hired ahead of revenues, and found ourselves burning too much cash, with too complex a product to change easily when the market turned on us (see Change or Die).

In a small marketplace, the burn-up on re-entry of the previously dominant player can be a windfall for a smaller, nimble, and less heavily funded competitor. I’ve seen this happen both in channel management for Edge Dynamics main competitor, and in the pedigree space following the demise of SupplyScape.

The new abundances of processing power, storage, and network capacity, and increased ability to outsource everything mean that many startups no longer need to raise significant venture money and take on the expectations that come with it.

The current challenges of raising significant capital have been a blessing in disguise for the most recent venture I’m advising. Over the last year, we’ve refined the plan stripping out complexity, outsourcing elements, and consequently increasing deal attractiveness while reducing funding requirements.

Key Takeaways: If you raise money, you might end up giving up a pint of blood. Raise money from a position of strength (momentum). Unless you want an all-or-nothing moon shot, find a way to get by with less. And don’t spend it like you’ve already made it.

Sign Posts: How much money do you need to raise to be successful? How has spending changed since you’ve raised money?

Year 3: Cut Early, Cut Deep

Emotional roller coasters and kindness from cruelty

When you devote every waking hour to a venture, and you’ve contributed to its birth and growth, it’s hard not to become emotionally involved. Success brings the highest highs, failure the lowest lows. Much like a relationship, or an addiction, it can take as long to get over it as you were in it.

Most startups die a long, slow death (so do most businesses). As described above, they build for success and wake up one day on the wrong trajectory, burning up all available funds. If you trim a little here and there, in 12 months time, you’ll still be around, but lacking any power of will, or dollars, to do anything to save yourselves. You have one chance to spot the change, cut to the absolute bone, regroup, redirect and re-launch. Take it.

Abilizer did this, and took a real run at a second life. Edge Dynamics dithered, and even an acquisition failed to save the business.

Key Takeaways: If you know it’s over, do yourself a favor, and get out. If you’re running the show, act fast, decisively and humanely. The longer you drag it on, the more it’s going to hurt everyone.

Sign Posts: Have you had any reductions in force? Why, when, and how many?

Year 4: Focus!

Geoffrey Moore was right about beachheads

To appeal to everyone is to appeal to no one. Keen to win early deals, startups will jump at everyone who shows interest. Engineers will want to build every possible feature. Opportunism dilutes your message and your solution.

1. Perksatwork.com dominated its HR market. As soon as we entered the general portal market we were done.
2. At Edge Dynamics we religiously followed a Crossing the Chasm beachhead strategy with a single application in a single vertical. We killed it until the market changed (see Change or Die)
3. I watch a mobile social networking startup flounder because of a lack of focus. Was it for college kids or everyone, a dating site or a provider of blinded phone numbers for classified ad postings? Users were confused too, and growth never materialized.

I’ve heard it said: once means you got lucky, twice is a coincidence, and three times is a lock. I’ll call these three examples my proof.

The benefits of focus are huge. Every subsequent sale in a vertical market is easier (you have references, you speak their language, you know their business, why they bought, the value, the price, you have a contract template, services template, etc). Your messaging and marketing materials can be tailored to their specific situation. And your product will work. You know the likely systems landscape, data and integration points. Change the target audience and this all goes out the window.

Key Takeaway: Dominate your niche market before being distracted with other places you could sell.

Sign Posts: Which markets do you serve? What is your expansion strategy?

Year 5: If You Can’t Find the Right Person, Don’t Hire

Bad choices are worse than no choice

In a startup, the team is the biggest determinant of output and day-to-day happiness. Choose wisely. You’re going to be effectively married to these people around the clock for years on end. If something bothers you during the interviews, or the salary negotiations, don’t hire! Any issues will be magnified a thousand-fold, and getting people out is painful and risky. I hired someone who performed brilliantly in interviews, but became unnecessarily high maintenance during the negotiations. Big mistake.

It has been said that you get ahead with A players, tread water with B’s and go backwards with Cs. My output and that of my team and our reputation definitely suffered due to this mistake at a critical time in the company’s development. While it can be very hard to find the right person, it is always worth the wait. Don’t be suckered into settling for less, especially in today’s market.

Key Takeaways: Get the right people on the bus. If you make a mistake, act quickly to resolve it.

Sign Posts: Has it been easy to find the right people? How do you find and evaluate them?

Year 6: You Don’t Know What Customers Want

Talk to your customers

It’s one of the toughest problems in enterprise software. It is really hard to find time to meet with customers and get quality feedback. You have no choice.

Just because you spent time with the first few customers getting to know their needs and building Release 1, doesn’t mean you now know their business better than they do from that point forward.

Every customer is different, and their business and their needs will keep changing. So you have to keep making the time to get the feedback. It’s also the only way you will hear about new problems that may provide opportunities for differentiation. While new web tools offer ways to facilitate interactive discussions without costly face time to improve and refine existing offerings, you will need to be on site, watching them work to spot the bigger opportunities.

At Edge Dynamics, we assumed we knew our customers after we had spent time on site with them through the first three implementations. Around that time the market changed structurally. We didn’t create a dialogue with our customers (once a year user group meetings are not a dialogue). As we stayed in the ivory tower designing and pumping out ever more complex features, customers became overwhelmed with the feature set and started looking for something simpler.

Key Takeaways: Make time for customer interaction. Keep your eyes open for structural changes, and opportunities for new products and differentiation.

Sign Posts: How do determine what customers need? How do you involve the customer in the product design process?

Year 7: Change or Die

It’s not them, it’s you

Often startups can’t understand why they have a group of customers they didn’t expect or who want to use the product in a way they didn’t anticipate. Don’t fight the power – change. Particularly when you are creating a new category, it is essential to get it out there early and get user feedback. If you build a perfect solution because you think you know who the customer is and what they want, you will find it is difficult to change when you learn your initial assumptions were wrong. Founders At Work (as Guy Kawasaki suggested, it really should have been called Flounders At Work) is full of examples of startups launching a product, stumbling, realizing what the market really wanted and revising their offering to suit and then enjoying market success.

A shout out is due to Eric Ries of Startup Lessons Learned for his concept of The Pivot – that critical point when you must change the business to match what the market needs. I’ve experienced this first hand with Edge Dynamics. When the market changed structurally, and we finally realized it, our product was way too complex to be easily changed. We needed to either stay in a shrinking high end market, or change our entire organization for the new reality (to change from mission critical enterprise software to nice-to-have SaaS application). We dithered and died (see On the Way Down, The First Offer is The Best Offer). Abilizer did this better, cutting to the bone and re-launching (in this case from SaaS application to enterprise software). In both cases, we proved that SaaS and enterprise software are two completely different businesses. You can’t be both and to change from one to the other is very, very difficult.

Key Takeaways: Get the simplest, cheapest, bare bones product in front of customers as fast as possible and learn what they want. Then build the product they really want. You’re either SaaS or software – don’t try to be both.

Sign Posts: How do you decide what features your customers need? Who makes the decision on what to include in the next release, and using what criteria? Do you offer on-premise and on-demand software?

Year 8: Enterprise Software Is Dead

User experience is a necessary organizational capability

Obviously, companies will keep buying software. But the opportunities for a new Oracle or Seibel are few and far between. The consumer software market has lifted the bar for expectations for enterprise software: it should be easy to use, offer fast screen response times, constantly improve and be much, much cheaper.

Customers don’t want:

• To be sold software by the equivalent of a car salesman that can’t even remember their name after the ink has dried on the contract.
• Implementation services that focus on the plumbing rather than adoption
• Training that doesn’t teach them how to fish
• Non-intuitive user experience
• To hear that they’ll have to wait a year for the next release to get that desired feature
• To hear that their infrastructure that is causing poor performance.
• To hear that they have to upgrade their windows platform, or upgrade to an enterprise version of Oracle to use the software
• Support that requires them to run a server log to diagnose the problem.
• Support staff that don’t understand their business.
• Upgrades that are “free” as part of maintenance but end up costing cost nearly as much as purchase “because” of their customizations and deliver no tangible business value.

Mission critical applications can probably still get away with a poor user experience. Everywhere else the consumer revolution is chipping away at the enterprise software kingdom. Edge Dynamics won when we had a mission critical application.

Key Takeaways: Enterprise software vendors need to stand in their customers shoes and design a “whole product” experience, and total cost of ownership that is significantly better than the alternatives.

Sign Posts: What improvements would customers like to see to your sales process, implementation, training, and support services and to your product? What are the alternatives to your solution?

Year 9: On the Way Down, The First Offer is The Best Offer

Just take it!

When you’re on the way down (you can smell death in the hallways) the first offer you get will always be the highest. In a failing startup, you lose value quicker than a laptop. Market sentiment writes off the brand and talent leaves. It can take months to complete due diligence, and months can be significant if cash burn is eroding equity, so take the first reasonable offer. I know of at least one start up that sold 12 months later for a third of the first offer.

Key Takeaways: When you’re on the way down, sell to the first real bidder.

Sign Posts: How would you characterize the momentum of the company? Is the company for sale?

Year 10: You Reap What You Sow

The No Asshole Rule and why you should smell the roses

The valley is small. Your target market is probably smaller. The internet doesn’t forget, and nor will your network. More than ever before, people don’t have time to find the perfect candidate. In this Reputation Economy, inter-personal bridges you have burned will come back to haunt you, and relationships you’ve nurtured will keep bearing fruit. So, be nice (and helpful). Please.

I don’t know if it’s a function of my age, but I’ve had plenty of reminders recently that life can change at any moment. This is surely the best reason for enjoying it to the fullest. Don’t take yourself or your work too seriously.

Key Takeaways: Carpe diem and nurture your network.

Sign Posts: Has anyone left because of a difficult co-worker or boss? What is the company doing to help the greater community?

Rich is adding to this post and his other experiences for improving work and life at www.richworklife.com

More Lessons Learned

Published on October 7th, 2009 by Christian Perry

I was recently talking with Mark Goldenson, recent founder of TC50 company BreakThrough about FailCon and his past experiences. He pointed me toward a great article on the 10 things he learned from having a failed startup – PlayCafe.

Definitely worth a read – great writing and even better advice – but my favorites (and the advice I give SO many people now)

“Content businesses suck (or: do it for love and expect to lose money). Producing quality content every day is a herculean task, especially live.”

“Time is arguably more valuable than money because you can’t raise more time.”

“Marketing requires constant expertise. The main failure of PlayCafe was marketing.”  I hear too many developers and founders say to me “Well, I’ve got a great product, and some viral things stuck in there, so it’s bound to take off.”  Wrong!  Learn from Mark, please!

“Control and calculate your user acquisition costs. We initially conceived of marketing as a wildly creative exercise…That’s partly true, but the best marketing is controlled and calculated.”  I’ve heard this from a lot of the pros, too.  But I’ve rarely heard a young/new founder accurately answer the question “what does each user cost you?”

Definitely take the time to read through the article!  There are 8 more points to go! 

-=Cass=-

Open web advocate, Chris Messina interviewed by FailCon’s Co-Producer, Diane Loviglio

Published on September 27th, 2009 by DianeL

DL: What companies come to mind when you think of failure?

CM: I worked for a company called Vidoop (which you might remember). To me they represent the epitome of failure, and of failing badly. I think Bear Sterns and Lehman Brothers are also up there.

More locally, a community-support agriculture startup called MyFarmSF just pulled the plug… after taking subscriptions from a bunch of people and then being unable to pay them!

DL: What are common mistakes you’ve seen at companies?  And how could they have corrected those mistakes?

CM: I think failure to focus is a big one. I wrote about Vidoops’ failure to focus here:

http://factoryjoe.com/blog/2009/06/05/the-fall-of-vidoop/

I also think that trying to grow too quickly or focusing on “shallow growth” can be killer… Of course you need to get momentum, but it’s kind of like those schemes that offer you 10,000 Twitter followers… it’s like, if those 10K Twitter followers are all bots, does that help you succeed? Probably not! So, I think building what Umair Haque calls “thick value” is important because it requires you to connect with your customer base.

I also think that you need to have external validation of what you’re doing — I see a lot of engineers who have a specific problem and therefore believe that everyone has the same problem and that’s it’s as salient to the next guy as it is to them. This is often NOT the case (to be fair, I fall into this trap sometimes). On top of this, timing is also very important — many technologies are simply too early and fail because the market isn’t ready yet. Knowing how to time your solution is probably about as important as location if you have a physical business like a coffee shop.

DL: What has been your biggest success to date?  And why was it successful?

CM: I don’t think that I’ve achieved everything that I’m capable of achieving yet, but I would point to the creation of three things that didn’t “exist” before me…

1. BarCamp.

BarCamp is easily my greatest success, but what’s successful about it is how it required other people to succeed in order for it to be a successful. I guess that’s what’s critical about creating culture and movements — the idea and the initiative have to reach beyond the originator of the idea.

Certainly BarCamp wasn’t like my idea or anything — it’d been under the radar for a long time, first as Open Space, and then as Tim O’Reilly’s invite-only FOO Camp. But our innovation was in documenting the event, sharing it, and passing it along to other people to make it their own.

From the perspective that I wanted to create an event that had ripples beyond Silicon Valley, I think it was successful. And that it provided a vehicle for people to say to themselves “Well, why CAN’T I organize my own event? Those people over there did it!”, I think it freed people from the assumption that they have to rely on someone else to put on events and get people together.

2. Coworking.

Coworking followed BarCamp and took much longer to get off the ground, but I think has positive staying power. I mean, the idea, again, is not all that new, but the community around it IS new — and that’s significant.

Once again, the idea was to model a behavior — the creation of *open* spaces that anyone could stop in to work out of — that would provide a vehicle for a more open, collaborative community to gel around.

The stories that’re told about coworking today are consistent with the way we described it a few years ago — but now the story is being played forward by a whole new group of people! I’m barely involved anymore, and yet this community has grown and scaled and now you can find coworking spaces all over the world.

Considering that that was what I wanted to see happen, I’d consider that a resounding success.

3. Hashtags.

Finally, hashtags gives me a sense of pride that it probably shouldn’t. With BarCamp and coworking, we just gave a name to behavior that seemed to resonate first with geeks and then spread outwards.

Hashtags was similar, except that I took a lot of flack in the beginning for proposing them: http://tr.im/fj_hashtags

But, I knew that there was a need and a desire to “group” together that Twitter wasn’t interested in meeting, and so I put this idea out there, hoping that someone else might come along a build something with it… or at the very least, enough people might adopt the convention so that Twitter would also support it.

In the beginning Ev and Biz and Blaine from Twitter all said that hashtags were too geeky (indeed, that they are!) and that instead they’d do some kind of “sentiment analysis” to figure out what a tweet was about. Well, maybe that’ll still happen some day, but when they turned on hashtag detection on Twitter, I think it validated my initial idea.

That people all across Twitter use this simple convention is something that I’m rather proud of — especially considering the use of the #iranelection hashtag not too long ago.

DL: What has been your biggest failure to date? And why was it a failure?

CM: I don’t know that I could point to any single failure… maybe I’m too conservative to take risks that would add up like that.

I do think that I fail a little bit everyday though — whether it’s in time management, or prioritization, or in how I communicate — and all those add up to a quite a lot of failing… but I can’t — off the top of my head — think of a huge failure — at least one that’s, say, kept me from moving forward.

DL: Do you have any advice for other entrepreneurs in the social web space?

CM: Well, I’ve been on a tear lately talking about the “people-centric” web. What I mean by this is that websites have heretofore largely been designed around a document-centric model, rather than a people-centric one. And that has huge implications for design, for features, for how relationships are created, managed, and destroyed.

If anything, I’d start from the position of the individual and think about how you can make their life a little bit better, operating at their scale. Of course you can consider the individual and a few close friends, but I guess I’m suggesting avoiding the typical pitfall of imagining the collection of “millions of users” on a single site. I mean, sure, you can do that and there’s still value to be had from such efforts — but I feel like we need to radically shift our approach and really think about what makes for a “social” experience.

It’s not just adding friends and poking people — there’s something deeper that needs to happen — online or off — with the social web. And it won’t come from taking a document-centric approach, I don’t think.

Twitter is actually a good example a more people-centric approach — after all, using their website is mostly optional. You can interact with your friends via SMS, via apps, via third party tools and websites… Twitter literally goes wherever the people are — and I think that’s key.

So, I would start there — and take a good look at what people are *already* doing — how they’re improvising to cope with a web that wasn’t designed with their identities as first class citizens — and make that easier, simpler, and more robust.

7 Things I Learned From My Startup Failing

Published on September 22nd, 2009 by Christian Perry

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We had a killer advisory board. We tested our site with user after user. We listened to feedback and iterated quickly. We launched our public beta in less than three months. We built relationships with investors, and applied to YCombinator, getting as far as a final-round interview.

Six months later, we walked away $50,000 poorer, and no closer to success than when we started. What went wrong?

For the first time, I’m sharing my startup lessons — and my story — with the public.

1) Pick a problem, and solve it.

In January, 2009, I set out with Cassie Phillipps and Raphael Lee to start a new company called Trogger.

We envisioned Trogger as a new kind of communication platform, combining the conversational depth of forums with the virality and flexibility of the social web.

We suffered from the “no problem problem.” Cool as our technology was, and as compelling the concept, we never picked a single, specific problem to solve. Our vision kept changing, and our proverbial audience never showed up.

2) Know your audience. Better yet, BE your audience.

Joshua Schachter started del.icio.us to manage his personal bookmarks. Reed Hastings launched NetFlix to avoid late fees. My old roommate, Chris Smoak, got frustrated with the options for monetizing his Facebook apps, so he launched Gambit, now a fast-growing ad network.

By contrast, none of us at Trogger were avid online communicators. We shied away from blogs and forums, and weren’t exactly rabid Twitterers. We built a product outside the scope of our experiences, which is a bit like a cattle rancher opening a vegan bakery.

3) Match the strength of the company to the strength of your team

Cassie and I started off as business partners at Room Full of People. We complemented each other well, drawing on our skills, enthusiasm, and natural talents.

With Trogger, however, we faltered, focusing on areas far outside our passions and expertise. At first, I liked learning new skills — UI and front-end coding — but I ended up frustrated. I spent whole days poring over style sheets when I really wanted to be out striking deals.

Before Jeff Bezos started Amazon, he attended a six-week intensive workshop for booksellers. By contrast, many founding teams fail to match their vision with their skills, and falter as a result. Don’t make this mistake.

4) Talk to people and listen to them closely

I talked about Trogger and got reactions like:
- “I don’t get it.”
- “I’m not sure I’d use it.”
- “I don’t think it will succeed.”

I dismissed such naysaying as hogwash, vowing to push forward at all costs. Turns out, the naysayers were right all along.

When you’re met with confusion, doubt, and dismissal, it’s time to reevaluate. The world, collectively, is smarter than you are — pay attention to it.

On a related note, “stealth mode” needs to die. Your secrecy can — and will — deprive you of valuable feedback and insight. Get out of stealth mode as soon as you can; better yet, avoid it in the first place.

5) The fewer heads, the better

I’ve seen brilliant, motivated, entrepreneurial people come up with great ideas, yet abandon them for lack of a co-founder.

Companies succeed with single founders all the time. Just look at Digg, Craigslist, eBay, Netflix, Wordpress, Wikipedia, Amazon, TechMeme, PBWiki, TechCrunch, TechMeme, and Etsy. They all started with single founders, and they’re far from the only ones.

Like many entrepreneurs, I tend to be independent, idiosyncratic, and self-motivated. I like to do things my way, without much regard for the status quo. I was the kid in school who hated group projects, yet thrived on independent studies.

With Trogger, we had a team of three. We reached consensus on ideas, rather than moving forward unilaterally. On many occasions, I’d come up with a new, inspiring idea, only to get a knot in my stomach before pitching it to my team.

A single founder lacks the camaraderie and shared purpose that come from a team effort. These are important feelings, and difficult to give up. However, the solo path offers its own rewards: freedom, flexibility, and creative expression. These are some of the very qualities that brought me to entrepreneurship in the first place.

I cast no aspersions on team-based startups, which are proven, successful, and time-honoured. At the same time, a great company needs co-founders no more than a great painting needs multiple artists.

6) Narrow it down

Complexity creeps into startups like weeds into a garden. Good ideas often die the Death of a Thousand Features. A company often aims for a bullseye and misses the dartboard altogether.

To counteract these tendencies, narrow your company down until you can describe it in three words. Successful companies thrive by following a simple, easy-to-understand mission, especially in their early days.

Pick a three-word monicker and stick to it. While your execution may change, your premise should stay consistent.

7) Know when to let it go

Like communism, New Coke, and a sensible American health care policy, some ideas just don’t work, even when they should.

What’s the biggest cost of a startup? Time. Building an app, regardless of platform, often takes a couple months — sometimes more. The opportunity cost for spending time on a startup is, therefore, the time you could be spending on any other startup.

Time is your scarcest asset. Don’t waste it on an idea that isn’t going anywhere. When it’s time to walk away, bite the bullet and leave. Better yet, set up quarterly milestones that recognize conditions for failure (ex: “Under 1000 users with less than 5% monthly growth”), giving you a firm reason to cut your losses and move on.

Retrospect

After five months, Trogger ran out of money. Seeing no traction, and feeling stressed and frustrated, I decided to move on. My team shortly followed.

On the one hand, letting go of Trogger was easy — it was the obvious choice. On the other hand, it took a psychic toll. For a couple months, I doubted my aptitude, questioned my abilities, and second-guessed my choice to become an entrepreneur in the first place.

Sure, I’m stronger for it all, and grateful for the experience. But let’s be honest: failing is about as much fun as getting hit by a sack of bricks.

That said, it’s part of the entrepreneurial journey. If it happens to you — which it probably will — my advice is simple: confront it, accept it, and move on.

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Taking place Tuesday, October 27, SNAP Summit: FailCon brings together well-known founders and VCs to share personal stories on failure — how they’ve overcome it, and what they’ve learned in the process.

Learn more about FailCon | Tickets & Registration

Christian is (now) the founder of Brickroll, an iPhone game review site. He took his lessons to heart, and built the company in a week, for a total cost of $287. You can reach him at csp@rfop.biz.