FailCon: Startup Reality

November 3, 2011

I didn’t know what to expect going into FailCon, but it turned out to be the best conference I’ve been to. Why? Because it’s a startup event grounded in reality. It completely challenges the fantasy of overnight success. It turns out most startups take years to build, and that most successful founders have had multiple startups fail on the path to success.

Highlights Included:

  • Joe Gebbia of Airbnb talking about their years-long trough of sorrow. Rather than “fail fast”, they stuck with their vision for years before finding product-market fit.
  • Travis Kalanick of Uber talking about his previous startup, which dragged on for something like 9 years – with no pay until exit.
  • Vinod Khosla of Khosla Ventures talking about failure. Favorite quote: “My willingness to fail gives me the ability to succeed”.

Having recently launched a startup and entered the trough of sorrow, this event’s timing couldn’t be any better. Entrepreneurs need to know that the trough of sorrow is normal, and that it typically takes years to get to product-market fit. Ideally, entrepreneurs should know this before they get started. I worry that it’s not clear to many people getting started that, even in today’s market, their startup is likely to take 3-7 years to succeed, and is even more likely to fail.


One Life

May 3, 2011


On Saturday, I proposed on a sailboat on Bainbridge Island. When I started searching for a boat, the task seemed daunting, but a quick search on airbnb didn’t just locate a boat – it yielded a sailboat bed & breakfast. How romantic is that? I found the perfect restaurant for the night using yelp, and emailed with the chef to arrange a special desert. A simple update to my Facebook relationship status saved me hours of phone calls, allowing me to turn off my phone and enjoy quality time with my new fiancé. The internet didn’t just help me with my proposal: I met my fiancé on match.com.

The experience made me think about who I’d be without the internet. In college, almost all of my plans were made by instant message – I’ve never liked using the phone, and I was lucky enough to live in the first generation that could get away without it. I found my first job out of college, at a startup in New York City, through craigslist (along with a sublet, an apartment, furniture and a mover).   I even found my job at Microsoft through craigslist. The job was in internet advertising.

The internet has shaped my life as far back as I remember. As a shy teenager trying to figure out life, I realized I probably wasn’t the only one, so I started a website called Teen World where I gave others advice. Over time, it grew into an interactive community for young adults called CheekFreak. Around 1,000 users visited each week to escape the real world and be themselves, and it was a huge part of my identity. I only made a few hundred dollars before I went to college and shut it down, but I don’t regret all the work. I still smile when I read emails from visitors, including several who said they were considering suicide before visiting.

When you get knee deep in your startup, you get lost in topics like fundraising, usability and dashboards. But let’s not forget why we’re really here: to shape lives. While many think task management is a boring subject, I’m excited by how it directly ties to people’s quality of life. What if I can increase your free time? What if I can help you feel better at the end of the day? The spark that gives birth to most startups is a selfless realization that you can help others. Making it sustainable is secondary, and it’s only here that most fail.

When you read that 90% of startups fail, remember that the definition is strictly financial. Don’t forget that you originally set out to help people. You’re only a true failure if you don’t improve 1 user’s life. Of the 90% of “failed” startups, I wonder how many founders consider themselves failures. I wonder how many have a letter from a user that still makes them smile. I wonder how many are proud of the lives they shaped. And I wonder how many wouldn’t say their startup shaped them.


Start With The Bread

March 22, 2011

I’m a foodie. If you want to know what I miss the most about my Microsoft salary, it’s my restaurant budget. Which is probably why I’m eating a lot of sandwiches lately.

Every time I bite into a great sandwich, I notice the bread. When you order a gourmet sandwich, the bread is the last thing on your mind. Yet any great chef knows a great sandwich cannot exist without the perfect bread. A great sandwich can exist without the perfect ingredients; some bread is so good it doesn’t matter what you pair it with (if anything).

If you’ve ever been to Paseo in Fremont or Ballard for a Cuban sandwich, you know what I’m talking about. You can’t go wrong ordering any sandwich on their menu. Not to undermine the perfection of what goes on inside their sandwiches, they just wouldn’t succeed without the Macrina bread. And they know it: the bread is so important, they stop selling sandwiches when they run out instead of sending a runner to another bakery. If you think the meat is the most important thing, order the onion sandwich and thank me later. Likewise, bread is (part of) the reason so many people eat the mystery meat at Subway.

In contrast, I was very disappointed when I went to Salumi, Mario Batali’s father’s restaurant famous for its artisan cured meats. While I’m a fan of their meats, I would never order a sandwich from them again. The bread is so thick and dry that you can’t taste the meat. Great ingredients do not a great sandwich make. Sandwiches fail when the focus is on what’s inside, and the bread is an after-thought.

When you build your product, start with the bread. It’s easy to get caught up in the ingredients – the wonderful features – and overlook the importance of the structural platform that ties it all together. Yes, that BBQ brisket may be delicious, but if you put it in-between wonderbread you’ve failed.

At LazyMeter, we’ve already logged 100 features for task management, but we also know that those features are useless without a workflow that actually helps people get things done. There are countless task manager products with every feature from SMS alerts to collaboration, but there’s a reason most people don’t use one – none offer a workflow requiring less time and providing more satisfaction than pen and paper. They’ve ignored the bread.

My advice: start with the bread.


Can Part-Time Jobs Boost Startups?

February 28, 2011

Startups everywhere struggle to find good talent, which has recently become very apparent in Seattle. In February, SEOmoz announced $12,000 for employee referrals, and EnergySavvy offered $10,000. Despite so many engineers at large corporations in Seattle – many interested in joining a startup – hiring is very difficult.

Based on conversations I’ve had with local engineers, I’d like to suggest a new hiring strategy: part-time jobs. Rather than pay for referrals, startups could create part-time contracts. Engineers often want to explore a startup of their own, and stick with the corporation to maximize their salary until they take the plunge.  An alternative is to offer them a way to transition to a startup.  They can continue to make a good income, with the opportunity to pursue their own ideas and experience startup life. It’s likely many part-time employees would find that they enjoy working for a startup and stay on full-time.  Part-time jobs provide a way to lure highly qualified employees from their comfortable jobs and salaries, but unfortunately these opportunities are currently very rare.

Since leaving Microsoft, I’ve been surprised that it’s so difficult to find part-time work. Especially in this economy, I’d expect more businesses to be open to part-time employees. It’s understandable that companies want to invest in employees they know will stick around, but with a shortage of talent, part-time employees get the work done and are likely to grow into full-time employees, either directly or indirectly.  This alternative is also a great opportunity to move away from 40-hour weeks; some employees will be just as effective in half the time.

Part-time jobs are at best an effective recruiting mechanism, and at worst a way to support the local startup scene, whose progress benefits everyone.  It allows startups to test employees, and employees to test startups.  If startup and employee get along, it’s likely they will find an opportunity to work together gain; at the very least, they will provide referrals – for free.

I’m eager to know what you think. Would you be willing to work part-time while pursuing your idea? Does your startup have a reason for not offering part-time jobs?

Aaron Franklin is co-founder of LazyMeter, an application designed to end procrastination and forgetting. He works as a part-time consultant to support his startup.


The Private Entrepreneur

February 7, 2011

An advisor to several startups recently told me most founders he meets are unconfident in private. The more founders I meet, the more I find this to be true. There’s a big difference between a founder selling their idea on stage and how they carry themselves daily. While founders are alike in that they are completely confident in their product, the details are not so simple, and they question themselves constantly.

The reason for this disparity is simple: founders need to project 100% confidence as they woo investors, employees and customers. The side effect of this disparity is that many founders go through tough times in isolation. They don’t realize others go through the same challenges, and so they hesitate to bring them up. And it takes time to realize when you raise a concern with another founder in private, a wall is torn down and they usually say they went through the same thing (or something like it).

We’re all aware that there’s a bias towards success stories in the startup world. I started blogging a year ago when I left Microsoft to capture both the ups and downs of my journey. But I don’t write about the downs, in part because I’m waiting to see how my story ends, but also because I don’t want to do anything to take away from my total confidence in what I’m doing overall. I expect to see stories from founders with successful exits the most, but at that point they seem to either forget the challenges, not want to relive them, or be too distracted by their yacht.

Until there’s more coverage of startup challenges, we can at least seek to be more candid in our private conversations. The right network is critical to your success, but you also need to be upfront about what’s keeping you up at night and ask for help. Don’t suffer alone. I’m currently enrolled in a python class at the University of Washington. The first course was an introduction to Python by following a textbook. The second course is internet programming, and suddenly there’s no textbook. After a few late nights trying to figure things out on my own, I learned how important it is to ask for help from classmates. Going from a large company to a startup is similar – there’s no textbook, and you can save yourself a lot of trouble by simply raising your hand.

 


Should you sell your viral app?

January 24, 2011

Congratulations! Your app went viral. Your traffic is growing exponentially. All the tech blogs are writing about you. Now what?

We live in amazing time when an application built by one or two people can quickly reach hundreds of thousands of users with no marketing budget. The applications achieving viral growth tend to be very simple and launch without a monetization plan, in most cases a side project gone horribly right. On the other side of the spectrum are highly monetizable products that don’t go viral. The question that remains to be answered is whether you can have both a monetizable product and viral growth.  Can a viral app become a business, or is it best to cash out early?

The most notorious viral app was ChatRoulette, which quickly reached 400,000 unique users, but traffic levels are now below ¼ the peak and dropping. Andrey Ternovskiy, the 18-year-old founder, turned down several million dollar offers for investments and buyouts. Last week, he admitted some regrets to FastCompany:

“After I declined the offers, I realized it was very difficult to execute something myself. I think I would accept the offers now, because I’m much more educated about it.”

So it was interesting to see threewords.me, a more recent viral sensation, go up for sale last week. The site’s for sale page boasted 259,000 users, 5.1 million visits and 1.5 million entries. It was sold for an undisclosed amount less than a month after it’s first coverage on TechCrunch. Mark Bao, also 18-years-old, claimed he didn’t have time to focus on the site, but it’s likely he saw a fad and knew when to cash out.

Those in Seattle are well aware of Cubeduel, an app launched January 12th which lets you vote on who you’d rather work with. 50,000 votes were placed the first day. They had so much traffic that they were temporarily offline due to LinkedIn API limits. Regardless of downtime, Co-Founder Tony Wright claimed “hundreds of thousands” of ranked users only 3 days after launch. I’m eager to see what happens to Cubeduel. Will it be another fad? Will they monetize? Or will they choose to cash in?

It’s almost like we choose an app to go viral every week.  While writing this, an article is published on TechCrunch about what will probably be the next viral app.  Donothingfor2minutes.com received 20,000 unique visitors in 8 hours.  Alex Tew previously created the infamous milliondollarhomepage, an example of a viral product that made money; it took a whopping 4 months to generate over $1 million.  He has some good insights into how the speed of viral growth has improved due to social media.“Ideas spread even faster because of social media,” said Tew, “Whereas before, the distribution power lay more with the news media and blogs back in 2005. If I had done MDH today, I might have made $1m in 4 weeks rather than 4 months.”

Should viral apps be sold? Did threewords.me make the right decision? What do you think Cubeduel should do?

 


On Failure and Minimum Addictive Product

October 1, 2010

In the startup world, it’s easy to read the success stories.  I’ve been eager to learn more about the many failures.  And maybe there’s something in the air, because this week I have read three honest accounts of failures.

On Monday, XMarks announced they were shutting down.  On Wednesday, Alyssa Royse wrote about making the decision to pull the plug on JUST CAUSE.  And this morning, Marc Hedlund documented Why Wesabe Lost to Mint.

First of all, kudos to these entrepreneurs.  Their honesty shows real courage, and their openness will prove valuable to many others.  It’s not enough to only study the success stories – looking at those who don’t succeed broadens thinking and gives a more complete view from which to make decisions.

For example, I’ve been thinking a lot about the common advice to quickly release the minimum viable product and then quickly iterate.  Over the past few months, we have been pressured to release our product more quickly.  We have pushed back because our minimum viable product is not our minimum addictive product.  We won’t release a product that we won’t use ourselves, and we won’t release a product that’s like others already in existence.  We understand the feedback loop, but can get this from followers without releasing broadly.  Marc Hedlund provided the first evidence I’ve seen against the minimum viable product and being the first to market.

Wesabe launched about 10 months before Mint… There’s a lot to be said for not rushing to market, and learning from the mistakes the first entrants make. Shipping a “minimum viable product” immediately and learning from the market directly makes good sense to me, but engaging with and supporting users is anything but free. Observation can be cheaper. Mint (and some others) did well by seeing where we screwed up, and waiting to launch until they had a better approach.

The moral of the story: consider all advice, get the whole story, question everything, and follow your gut.  There’s a lot of advice in the startup world, but there isn’t a recipe for success.  I keep randomly returning to these lyrics from Wear Sunscreen by Baz Luhrmann:

Be careful whose advice you buy, but, be patient with those who supply it. Advice is a form of nostalgia, dispensing it is a way of fishing the past from the disposal, wiping it off, painting over the ugly parts and recycling it for more than it’s worth.

Update: See this great list of the 25 Best Startup Failure Post-Mortems of All Time.

Update: Andrew Chen talks about the Minimum Desirable Product.  A much more in-depth explanation of concerns with minimum viable product, and a need for what I called the minimum addictive product.