Shutting down a failing startup

Whoof. Thought I’d walk through a few lessons that are (painfully) fresh in my mind as I am shutting down the project of the last few years.

A little background — I’ve been relatively lucky over the years, having started a few lines of business while I was in the corporate world, including a few cutting edge new technologies. The result was acquisition of my parent company for the business and technology that we created. I left that, and did a startup with my old college buddy, we killed it there and were acquired in an all-cash deal a short 18 months later.

Current situation — we went after an old/stale technology, building an enterprise communication (email/chat/to-do) tool that had the ability to prioritize actions based on what mattered to the individual. That’s right, we went after the email problem that plagues every individual who works in a large company. We got a few patents, built a great tool (better than anything on market) and did it on a shoestring. Two competitors emerged, spending 10X what we spent to build technology that was less capable, less secure and less enterprise focused.

So here’s the deal — we did NOT get acquired while the other guys did. And now, cuz I don’t want to throw good money after bad, we are shutting down the company and merging technology with a few other firms. It SUCKS!

So, what did our competitors do that we did not do?

1. They Moved FAST. They took the extra money, moved fast and got their products out in market. Even though products were inferior, they were available. Be FAST!
2. The spending they did helped in market awareness, driving awareness. Having a larger war-chest is always a good thing. SPEND Money on marketing. Better does NOT equal adoption.
3. We deliberately tried to ensure we did not kill our engineers. In past lives, we have always, always worked harder and longer than any of our staff, this forced the pace, and kept staff working (see #1). This time we actually tried to have some life balance. Balance does NOT work in a startup.
4. We believed that security was more important than speed (so we developed code to run on end device, not in cloud servers). Our competitors developed a less secure product in the cloud. Security does NOT sell over functionality and speed of delivery. I could write a book here, but suffice it to say “do it in the cloud”.
5. We talked to the WRONG people in an acquisition scenario. Two factions of a company were evaluating technology, we misread who was making technical and business evaluation decisions. This meant we did not get close to the other team. This ultimately hurt us (and the buyer who has often said they wish they had known more).
6. We did not get LUCKY. Every startup is a combination of skill and luck, and this time we did not get lucky. This includes some health scares for founders, drop-out of a founder to deal with some life-issues. These things happen, when they do, its much harder to be lucky in the outcome.
7. Viral adoption did NOT occur. We never found a “hook” that would drive wide-spread knowledge and adoption of our tool. Our competitors did not succeed here either, but I wish we had found that hook.

What did we do right?

1. We built something we believed in. It was and is a huge problem space that requires new ways of thinking. Always BELIEVE.
2. We built our products with a single source base, allowing multiple product support with single source code. This meant MORE with less $.
3. Our team were (and are) some of the best software engineers that I have ever seen. They are also kick-ass people and I will gladly work with any one of them time and time again. People MATTER.
4. We built our products without wasting investor dollars. This meant that we got very FAR on very LITTLE. If we had been lucky, this would have provided the springboard for the right investment amount and success.
5. User’s LOVED the product. We just never got the groundswell of user adoption.

So now what? Well, there are several folks that are likely to use our technology to help their own efforts. While this may not be a home-run for us, we still have made significant improvements in how communications can and should be done for teams. I’ve had to call around and help all my team end up with good jobs. I’m slowly wrapping up all of the business elements, with the hope of returning something to the investors. I’m reviewing my lessons so I can be a better leader on the next startup.

On a personal level, this has been a kick in the teeth. I hate, absolutely hate not winning. That said, every time I look at what we did, and our outcome, I have not seen steps that we would have made differently (at the time we made those decisions). I’ve learned far more than I wanted to about this aspect of startup life.

A good friend of mine (and another serial startup dude) said it best. “Every startup has failed from the minute you conceptualize it. If you are lucky, extremely lucky, and you are skilled, extremely skilled you may, just may turn it around, but do not be surprised if the failure you started fails.”