Lessons Learned from a Costly Failure: Reflections on Three Years of Work and $500,000 in Personal Savings

Embarking on a blockchain wallet project during the cryptocurrency hype in 2017, we were armed with a super team and an unwavering drive. However, despite our efforts and $1m in total, we found ourselves veering off course. In the aftermath of this failure, I have distilled valuable lessons that have reshaped my perspective on entrepreneurship and project management. Join me as we delve into each of these insights, reflecting on the importance of idea testing, resource optimization, user-centricity, profitability, deliberate beginnings, swift decision-making, ownership, feature development, resource constraints, and the pivotal role of a cohesive team.

1. Free Idea Testing: A Crucial First Step
To establish a solid foundation, it is imperative to subject your idea to rigorous scrutiny. Conducting a thorough market analysis, CusDev, testing landing page without product, assessing competitors, and understanding the potential of your product are essential steps in testing the viability of your concept.

2. Working with Minimal Resources until Product/Market Fit
The early stages of a venture require resourcefulness. Instead of hiring an army of employees and assuming the roles of a grandiose entrepreneur and manager, focus on key revenue indicators and retention strategies. Prioritizing profitability over expansion will ensure sustainable growth.

3. User-Centricity: Listening Beyond the Steve Jobs Persona
Avoid falling into the trap of assuming you know exactly what your users need. Embrace humility and actively engage with your target audience to uncover their true pain points, aspirations, and preferences. Emphasize understanding over presumption.

4. Profitability as the North Star at the Start
A business that fails to generate revenue is anything but a business. Maintain a laser focus on profitability from the outset, as sustained financial success is fundamental to long-term sustainability and growth.

5. Deliberate Beginnings: Patience and Testing
Avoid the temptation to rush into implementation. Taking the time to thoroughly test and analyze your ideas for a minimum of one month will save you from potential missteps down the road. Strive to secure your first sales within a few days, as early validation is critical.

6. Swift Decision-Making: Embracing the Power of Saying No
Recognize the importance of making quick decisions and swiftly abandoning projects or strategies that fail to deliver results. Remember that every moment spent on a project with diminishing returns is a missed opportunity to pursue alternative avenues.

7. Ownership: The Power of Being the True Owner
Break free from the shackles of being a hired manager and become a genuine owner of your project and product. Engage directly with users, thoroughly study their needs, and shape features accordingly. Do not wait for others to outperform you or make decisions on your behalf.

8. Swift Employee Departures: Choosing Excellence
If an employee is not the right fit for your team, part ways swiftly. Recognize that even the best efforts cannot change a person’s inherent traits or abilities. A valuable employee is one whose absence would significantly impact the project’s success.

9. Prudent Feature Development: Quality Over Quantity
Avoid adding features simply to occupy your team or due to the perception of their importance. A single feature, no matter how impressive, cannot solve underlying product problems without achieving Product/Market Fit (PMF). Prioritize PMF before expanding feature sets.

10. Resource Constraints: The Catalyst for Creativity
Scarcity of financial resources and time can serve as powerful drivers for creativity and innovation. Embrace resource limitations as opportunities to think outside the box and explore unconventional solutions.

11. The Power of a Cohesive Team
Finally, remember that the success of any project hinges on the quality and cohesion of the team. While it may not have been an explicit mistake in this endeavor, the significance of assembling a talented and compatible team cannot be overstated. Appreciate the role of luck in finding the right individuals.

In the early stages of product development, you’re not building a product per se. Instead, you are testing the key assumptions that underlie your future product, aiming to understand if it has the potential to be the foundation of a successful business.

1. Proving the Value Hypothesis: To build a business around your product, you must demonstrate its value. This entails identifying a market segment where your product creates tangible value for its users. Understand the pain points, needs, and desires of this segment, and position your product as a solution that addresses their specific challenges.
2. Validating the Market Hypothesis: The market segment you target should be sufficiently large or rapidly growing to support a sustainable business. If the market segment is small and stagnant, it may not provide the necessary user base for business growth. Thoroughly research the market dynamics, identify its size, growth potential, and competitive landscape to ensure its viability.
3. Confirming the Growth Hypothesis: Achieving product/market fit is crucial for sustainable growth. Find a manageable and efficient way to attract users from the identified market segment where product/market fit has been achieved. Explore marketing strategies, user acquisition channels, and retention mechanisms that facilitate scalable growth while aligning with the needs and preferences of your target audience.