My Startup Generated Almost 2 Million in Revenue, so I Shut It Down

It was 2010, 6 years ago. I had that special moment while driving along the road in the city of Corona, in Southern California, just an hour east of Los Angeles. I concocted the idea. Then came the surges of butterflies, enthusiasm, passion, and excitement. The idea of something massive was planted inside of my mind, and I kept working on it (alone) with endless energy. The idea became larger and larger. It haunted me. I had to ‘create’ to scratch the itch. I sat in stasis, perhaps considering the cost of a new endeavor. Feeding this little creature may turn into a monster. Curiosity gave way, and I groaned and moaned, finally birthing something. Then that something needed a name. So, I named it. What could possibly go wrong?

Never name it until it is ready to get funding. Once you name it, you have to feed it and will never want to kill it.

(Sidebar: If you must name it, give it a name that can be killed. We will talk about being a ‘killer’ later, but your thing needs to be killable. Project #W462 (www.projectW462.com) is a great name; it means absolutely nothing. Your heart will go on if it fails. Founders tend to want to share their ‘named’ ideas, tell their family, friends, etc., who then want to say nice things and encourage you, which makes it harder to walk away.)

So this idea now had a name. I was working on it every night, so it took on a physical dimension (website, database, logo, URL, branding, code, etc). I spent way too much time on the dumbest little details. Don’t judge. You’ve done this too.

The core of the platform was an innovation in the way people get things done in professional services. This market was 2 billion (which apparently is not large enough). The platform was not the first to market in this space, but neither was DropBox, (there were around 10 other file sync/backup services at the time of DropBox’s release). The work I started doing was to create something to impress, solve, and make a dramatic entrance. This was not the right step. I missed something. What did I miss? I didn’t listen to the data. What data? Oh right, I had none. I mean, I thought I had data. But looking back, it was more of a few hours of bookmarked articles and some downloaded data that I never really spent more than 30 minutes looking at. I think I studied my deductions on my tax return more than the business data. So in essence, I didn’t generate or find enough data, and then, I didn’t listen to it. I committed 2 cardinal sins, and then spent 6 years pivoting on the foundation of those mistakes.

You can’t pivot away structural mistakes.

This is primary to the plight of the entrepreneur. You must align a solution with a problem that is experienced by legitimate customers, spending or willing to spend legitimate money, on a solution that works with empirical data. Bonus: find evidence of a customer culture that reinforces your story.

We generated nearly 2 million dollars of revenue by the time it was all over. To the early stage startup founder, it may sound like we were on to something, but it was merely loose change from a leaky bucket. In our case, revenue was a vanity metric.

Every day, somewhere in the world, a new batch of entrepreneurs is born. They will someday innovate on a particular market and feel passionately inspired to create something. Their gut is telling them things. That drives their excitement and the coffee and whiteboard sessions take over. The notion of change is lovely. It’s wrapped into a whirlwind of new dreams and dopamine firing off in the brain. The reality, however, is more about science, data, and analysis, and much less about intuition and enthusiasm. The ‘feeling’ and ‘intuition’ I experienced along the path of launching, iterating, and pivoting, was leading me down the wrong path. I ignored certain data, insisting that my intuition made more sense to me, since I believed I was the target market, so therefore, my intuition is tantamount to data. Apparently I was wrong.

Working Alone

I made the mistake of spending way too much time working alone. This is bad apparently. Won’t do that again.

“Work alone. You’re going to be best able to design revolutionary products and features if you work alone. Not on a committee. Not on a team.” 
— Steve Wozniak

^Sorry Woz, but working alone for long periods of time may allow someone to get code banged out, or think clearly without interruption, but beyond that, it’s not conducive to the long term success of the entrepreneur. Without Steve Jobs to reshape and sell the vision, Steve Wozniak would have remained a talented man working in obscurity. Sure, you need some long nights and even long weeks in obscurity, as the science of innovation would prescribe. But there’s more to a ‘business’ than just the product or service. You can make the thing, but then you have to sell the thing, or the thing will never be a real thing. As such, you who make things should work with those who sell things to make the thing a real thing. If you want to stick with making things and not working with others who sell things, you should have been a theoretical physicist. You could reinvent time, pontificate the stars, and create energy sources from rocks and dirt. For the rest of us, we must partner up and work together. Now I realize there’s a healthy discussion around the #1 cause of startups crashing and burning is arguably founders disagreeing, conflicting on direction/roles/etc, or simply not working well together. This is unfortunate, but must be overcome, as the statistics against the solo entrepreneur are deafening. Paul Graham agrees, and has his well referenced “18 mistakes that kill startups” post about this, and #1 on his list is being a single founder. The core point he makes is that startups are so hard that as a founder, you need people. You need buddies, and the lowest moments don’t seem so low. Walter Isaacson wrote in his book about Einstein, that even arguably the greatest thinker of all time, Even Albert Einstein, had his wife (another theoretical physicist), his good friend Marcel Grossman, and another buddy named Leo Szilard to double check all his ideas and work with him to take ideas to the next level. They were constantly grinding through the issues with him. And yet, so many founders shy away from that same grind. Friction of others in your little world is both necessary and healthy.

After working alone for a bit, I was introduced to a brilliant designer, Jeff, who turned my sloppy first draft idea incarnate into an amazing UX. He jumped in as a co-founder and we iterated on the idea. Our first rollout was to provide configurable services for anything digital that was possible, and a way for customers to further configure those services on their own. Below shows the first version.

the first draft of the thing.

The thing was raw, but still, a start. We tried playing around with clever branding. Time wasted there. But in the business model, there was some intrigue generated. We believed customers could be that people take the platform to a whole new place, so we believed it had teeth. The issue, however, with this first iteration, was that we had severely insufficient capitalization for fully implementing, supporting, and most importantly growing our customer base and gaining exposure. We also didn’t have enough developers to help, and our time available was slim, working a normal day job and working on this in the evenings and weekends. A sad, sick love story of living for the dream ensued. I paid for things with my own, hard-earned money. Not ideal, but now I view it as a tuition expense. Learning happens through trying. As an old Hebew saying goes, Asah Shamah, which means, “by doing, we will understand.” I had to ‘do’ the work to understand how to win. I had to engage with the tools to learn the skill.

I pitched the business, a lot. I went 6 months pitching, nothing. Once, at a Los Angeles Venture Capital conference, I touted a business plan in paper (embarrassed, but this is true). I walked the conference, pitching to literally any VC-looking dude I could meet. As an introvert, this was like therapy of the worst kind. It was terrifying. A lowpoint was when I was literally, physically shoved aside by a young venture capital associate. I drove home dejected that day. But I got back up. I decided to pivot the business into a word, excel, and powerpoint focused tool for digital work outsourcing. We focused on a mobile app and simplified version of the original platform. A customer could simply drag and drop the word doc, excel spreadsheet, or powerpoint into the platform, then within a minute or 2, someone in the cloud takes a look, (some secret-sauce in there we believed), the customer gets a quote, approves the quote, and the work starts. Once it’s done, we charge the card, and the customer iterates from there on another round of work and fees.

I kept pitching with perseverance (and ignorance) and eventually landed a seed angel investor named Stan, and he invested $150,000 and then jumped in as another co-founder to personally help. We hired interns, ordered pizza, and worked way too hard. Those guys were awesome.

they early developer interns

We kept pushing, and thanks to Stan, we got into an accelerator, TechStars, (who invested $113,000), and met some amazing folks there. We decided early in the accelerator process to pivot the business (our 2nd pivot), and spent 3 months building that out. Here’s a shot of some of us at TechStars.

Techstars photo, Shawn, Stan, and Matt.

Pitching every day for months makes you battle-hardened. The demo day event was tons of fun, and relieving to be done, but it produced zero dollars of investment. Here’s our pitch photo shot…

And for fun, the whole TechStars batch that year…

We had a great time. But we got out of TechStars, not able to raise any funds, and I drove back to the house. We had to walk away from the office (advice: never sign personal guarantees on leases of underfunded seed stage startups), and had to work from home. This became the crucible of torture, and proved my dedication to solving the abominable problem we were after. This was a grueling process. Alone, at home, with no money. Serious problems.

So I pivoted the business again, this time, by myself. I found a legitimate alternative way for this platform to shift and make money in the target market, and it generated $600,000 of revenue over the course of the next 10 months or so… this was crazy. Felt good. But still, not enough. The model was imperfect, broken, but I tried to make it work. Not a good idea. The math should work, without equivocation. But it was messy insistence of a messy existence.

I took the best chart I had and cold-emailed the local investors there in Los Angeles, who met with me and put in $200,000 to see if this thing had wings. I had shown them this amazing and true gross revenue traction chart that made me cry a few tears of joy at the time.

the chart that i thought changed life itself. wrong.

I pivoted the business again, trying to fix the areas that we knew were broken. (Advice: don’t try to fix when you need to kill. Fixing and killing aren’t the same.)

Don’t try to ‘fix’ when you need to ‘kill’.

This money took us to another $500,000 in revenue, and yet the business had problems. So we pivoted again, from the ground up, raising another $200,000 from a few local investors and one from France. Crazy. This thing never dies. Perhaps it should have. I could have let it die so easily so many times. But I wasn’t yet a killer. I was a fixer. I felt something was still there. I was wrong. It should have died. I won’t get those years back, but it’s ok. I learned so much. Analysis trumps intuition. Data destroys feeling.

The next iteration was about instantly accessing freelance software developers through recorded video chats, text chats, phone calls, and mobile apps. The movement towards the enterprise customer was obvious, and their needs were different.

So this worked decently well. We ended up generating close to 2 million dollars in total revenue, raising $650,000 in total seed funding across 4 funding events. But the business model and it’s Aim is more important than perceivable progress. So many lessons learned. Many are below; impossible to communicate it all in one blog post.

Feeling-Founders Beware

Feeler-Founder: an Entrepreneur that relies on their gut over their research, if they bothered to do any.

Many entrepreneurs believe in their gut-intuition, albeit, at their own demise. The personality types of those ‘gut’ entrepreneurs probably rests under the ‘Feeler’ types on the Myers-Briggs. Below shows those types specifically:

Feeler types in the middle of the myers-briggs

I think I am an INFP, a classic intuition, feeling, perceiving type. Myers Briggs tells me that I am an ‘Idealist’. (Although, TechStars director labelled me as “a ‘Dreamer’, in the worst way”… lol. I still take that as a compliment.) To quote the Myers Briggs profile for an INFP, “As an INFP, your primary mode of living is focused internally, where you deal with things according to how you feel about them, or how they fit into your personal value system. Your secondary mode is external, where you take things in primarily via your intuition.” This explains a lot. I digress… so anyway, ‘Feelers’ (and especially anyone with an “NF” in the middle of their personality type… INFP, ENFP, or ENFJ), are more likely to go on their feelings and intuition. They believe something because in their minds, it makes perfect sense, and to deny the belief would mean denying or dismissing their own value. I know that ideas are special, but for them this gets too personal. This personalization of the startup business model is diametrically opposed to the ever-proliferated lean startup model, which insists on a throw-away approach to the business until you reach the first of the 3 levels: Problem-Solution Fit. Throw away means short life spans of ideas. Some ideas rarely last the time it takes to blurt them out before they are invalidated. But the feeler-founder and intuition-driven-founder resist the throwing away of anything. It takes a move of congress to reboot the business. Beware of the feeler-founder. Hitler was a feeler (INFJ, so say the experts). So was Osama bin Laden. But Thomas Edison worked in an analytical way, being labelled as an ENTP, a ‘Thinker’. It makes sense when he’s testing out again and again over 1,000 types of filament for the light bulb, the very epitome of the lean startup model, pounding away at the problem solution fit until it gave way.

Sunk Cost

The primary culprit for not calling it quits after TechStars was the idea of sunk cost. Jason Seats, managing director at our TechStars accelerator session graciously called me out on it but I was simply not ready to accept it. Ah yes, sunk cost…

A sunk cost is an expense that has already been incurred and cannot be recovered.

For newbies, here are 3 examples of sunk cost:

  1. A building was painted, costing $10,000, then the building burned down. The cost of painting it is gone forever.
  2. A non-refundable airline ticket was purchased but the traveller missed the flight. That ticket value was lost and is not recoverable.
  3. Time was spent on a startup that ran out of money and wasn’t able to raise more money or gain traction. That time is gone forever.**

** Note: the only difference in this 3rd one is that the founders gained experience, knowledge, and hopefully performed many experiments within this problem domain. It truly has value that can be derived, but never as much as the founders would hope for, because it can’t be liquidated and extracted… yet.

This sunk cost thing was a huge deal for me. It was not going to let up. Again and again, I kept trying to make the last 12 months not be wasted, by investing another 12 months,… then I had to keep going to make the last 24 months not be wasted, so another year. “So let’s not give up, let’s pivot!” I said. 4 times. This is the lean startup model, yet, not exactly. The issue was that It took a year or more between pivots, and some of those pivots were for the wrong reason. I was trying to raise the heavy boat from the sea floor instead of calling it what it was. Sunk.

Sidebar: Many people believe that 4–6 months of part time/spare time is a great anecdotal time period to create and test your ideas into a workable test-bed for potential customers to come in contact with and measure results. Of course this is anecdotal, and timelines will vary, but it sound right to me personally for most web / mobile products with little backend infrastructure required to test your theories. Killing your 4 months of work experiment is a lot easier than killing 40 months of work.

Analysis vs. Intuition

But back to intuition. Abandoning intuition is not the goal. We need our gut. It’s a great tool and must be leveraged. But not yet. First, your job is to put on the scientist outfit and goggles. Get all nerdy. Experimentation needs data and brainpower, not soul or spirit. It’s science, not poetry. Doctors are infamously accursed as having this sort of ‘God Complex’, where they feel like they can point out things based on their gut, rather than the data, or even revisiting the data.

God complex of doctors

We are not doctors, but we suffer from the tech entrepreneur’s edition of the God Complex. We know how to write code! We can program things into computers that look like this:

complex code makes programmers feel like gods

This ability to code makes one feel powerful. I know, it’s lame. Really lame.. But in our defense, we literally are creating something from nothing. Danger. This superpower strokes an ego. It swells into pride. This then can be accredited as “talent” or “genius”, and can become a real problem. How do you kill something that you, as a genius according to friends and family, have constructed? Answer: you don’t. Genius is 99.9% a fallacy. More on that below.

Hands-On Analysis and Personalized Work

There are 2 key verbs I would point to as key to prevent the experience I went through. I don’t claim any genius around this.

The first one is ‘Hands-On Analysis’: you, personally, doing work. Work is hard. Forget about the overnight successes forever. Those are lies. Get your hands on the data, and slow your mind to a crawl.

The second verb is ‘Personalized Work’: hunkering down intensely (passion) on the problem, creating tests, manhandling them, extracting data, and then performing the next test without feeling anything more than a flutter of an eyebrow. The intuition of the inventor, err… experimenter, was replaced by simple personalizing the experimentation. Making it ‘yours’. This allows one to feel good about their work, without fully owning it. If you own it, name it, feel it, believe it, think about it all the time, kiss it, hug it, etc… you will never be willing to drop-kick it in the face and completely destroy it because it sucks. This unwillingness can be the core detriment to your company. That is, if your startup even becomes a company… It may get stuck in a love-boat circling out in the bay. 
Case study: the wright brothers spent 2 years working on a kite before realizing that the data of their experiments was really worthless. They threw their data aside, along with the available published data at the time, and relied on their personal hand-to-tool tests and explorative work to lead them. Their experimentation led to realize that all of the available data was actually wrong in the area of wing-size and lift. There was a certain number called the Smeaton Coefficient, which determined the wing size ratio. This number was the great realization. It was in the data, in the experimentation, and in the personal analysis, hands-on work that brought the wright brothers to a point where they could purchase materials and cut the cloth to lay out on the wings.

Smeaton Coefficient — reinvented by the wright brothers

Armed with this hand-drawn data, and supported by their own experiment results, they found renewed energy for the task (several years invested at this point), and started building the right type of wings. The rest of the story is well known. But it took 2 more years of experimentation using that data to get to the Wright Flyer in 1903. This was not an overnight play. This was ‘Personalized Work’. It meant something to them, but it wasn’t a result of intuition. It was methodical and scientific work.

Confirmation Bias

I felt that our platform had truly differentiated itself. I validated a business model, even several backup business models. None of which were sufficiently modeled out in excel formulas, and none of which were submitted into sufficient analysis processes to dissect them objectively. Apparently we had not differentiated ourselves sufficiently, and our business models were not including the true size of the market and the cost of customer acquisition. I had a condition called ‘Confirmation Bias’. It’s a term I heard in episode 299 of a podcast called ‘Startups for the Rest of Us’. At the 21:25 mark, they talk about entrepreneurial blindspots, one of which is: “being able to maintain your objectivity”. Entrepreneurs commonly fall in love with their own ideas, and bend their research, leaning one direction. This causes them to preemptively ‘confirm’ a business model as being valid, prior to due process. This is easy to understand, as most people in general will easily embrace their own ideas. It’s so dangerous because the innovator will do the work but then pollute the results with their love for a specific end result they have in mind. This pollution reveals itself with the red flag of a defensive mindset, which deters feedback and insists on certain assertions that are not as clear to others. This can totally ruin you. You spend way too much time on your incorrect assumption about a market or problem domain because you believe something and won’t stop until the universe alters to reflect the view you have in mind. This won’t happen. You will fail. Objectivity must be maintained. Nokia, the cell phone company as most of us know it, all started as a paper mill in 1865. They maintained an objective mindset over hundreds of years and incorporated that into their culture. They solid rubber boots, rubber tires, paper, and then later, electronic telecommunications equipment, and then finally, cell phones. Their ability to pivot and expand and change were based on an unmatched level of objectivity. Furthering this point, the control over what works and doesn’t work is not in the hands of the startup founder. When you invent something, or build on the inventions of others, you are not in control of how it may develop and change in the hands of users. SMS text messaging was originally intended for hearing impaired users, around 1% approximately of the total user group. The utility of texting however, exploded to 100% of the market instead of just 1%. Now everyone of every age uses text messaging, and it’s a part of our very culture as internet / phone connected humans. Remaining objective and pulling back to watch what happens is to your own credit and to your own personal benefit. It could take that ‘amazing’ idea or concoction you came up with and turn it into something exponentially larger.

Iterate, Iterate, Iterate, Kill. Iterate, Iterate, Iterate, Kill.

The iteration, however, should be short thought and experiment cycles. Not year-long development cycles. The faster your can explore, experiment, test, change, and iterate, the more likely you are to get a hit. Once you have iterated sufficiently, (which can be 10 times or 100 times or 500 times), you need to give yourself permission to just kill the thing. There’s nothing wrong with stepping back from all of the attempts and experimentation and conclude “that dog won’t hunt”. It’s ok. Move on. Spend a few minutes accepting the time spent, and rejoice in the wisdom of the ancients in the fact that you’re about to kill the thing, and this may in fact lead to the greatest next thing you’ve ever touched. The killing is worth it. You will grow wiser and stronger each time.

Shoulders of Giants

It’s so relieving to accept this: there is no such thing as creativity, and no supreme genius master-mind. Creativity, if it exists, is certainly not a result of caffeine or post-workout euphoria. It’s not the firing of dopamine within your brain after you conjure together a possible business idea or innovation. It is, if anything, just sustained work in one direction, with velocity and, optionally, some inspiration involved. It’s flavor is science. To find solutions to problems, the start and end of your creative process would be littered with data. Your pockets would be full of experiments, results, statistics, graphs, case studies, charts, working models, government studies, competitor research, and anecdotes galore. In the wonderful book, “How to Fly a Horse”, by Kevin Ashton, the concept of creativity is debunked, and the idea of someone being a ‘genius’ is holistically obliterated. He calls the genius ‘common’. (Not denying the existence of truly high-intelligent-born individuals like Einstein, but even Einstein worked intensely for a lifetime on his theories and iterated on them). Ashton is brilliant in systematically deconstructing all known ‘geniuses’ and turning them into simple case studies of time-lapse photos. Layer upon layer, they are exposed as normal people, not geniuses. They built on the work of others who went before them. Every startup is compiled and launched because of layers of work and effort from those who have gone before. Ashton writes, “Every creator inherits concepts, context, tools, methods, data, laws, principles, and models from thousands of other people, dead and alive. No creator deserves too much credit, because every creator is in so much debt.”

Isaac Newton coined this concept in 1676:

“If I have seen further, it is by standing on the shoulders of giants.”
-Isaac Newton

Ironically, this comment itself was copied from George Herbert in 1651.

… and Herbert yanked it from Robert Burton in 1621..

… and Burton stole it from a Spanish Theologian, Diego de Estella…

… and de Estella ripped it from John of Salisbury in 1159…

… and Salisbury stole it from Bernard of Shaft in 1130.

Who knows where Bernard of Shaft got it from. But certainly Newton didn’t create it… it wasn’t him ‘being creative’, nor was it him being a genius. He was simply recalling something he had read. His ability to retain and express the words of others is equivalent to genius apparently. He is called a genius because by the age of 26 he figured out gravity, elliptical orbits, coined the 3 laws of motion, and mapped out the color spectrum. Certainly he was gifted with remarkable intelligence. Maybe he was a genius… But in that moment, he was just remembering something he read. In that moment, he wasn’t a genius. Certainly Orville and Wilber Wright were not geniuses, nor exceptionally creative. They were just relentless experimenters and found pay-dirt after years of iterations on a particular thing, bouncing their thoughts off of each other, again and again, day after day, year after year. Their intuition came in various spurts, but was never the cause of the success. It just led them to their next experimental tweak. It’s true that many programmers are also great musicians, writing songs, ‘creating’ music, etc, but even then, the song writing process is iterative and requires work. Their inspiration led them to consider doing the work, and then they applied effort to it to perform the work. One song may require 50 iterations. This is not genius either.

It’s worthy of unpacking this further. The inventor of the X-Ray was truly credited with changing modern medicine in 1895, and impacting the entire world, seemingly overnight. But the real story is a little more interesting than a genius in his workshop. 241 years earlier, in 1654, a man named Otto von Guericke invented the vacuum pump. Robert Boyle (1627–1691) build on that vacuum pump discovery, and furthered it with his Boyle’s Law, which was to discover an inverse relationship between the pressure and the volume of a gas. Heinrich Geissler had built upon Boyles lifetime of work, and invented the vacuum tube, which later became the basis of televisions and computers. English physicist William Crookes built on Geissler’s work in 1869 and came up with the Crookes tube, where electrons were discovered. Then 1895, a Wilhelm Conrad Röntgen a German physicist built on the work of William Crookes, and spent 6 weeks straight, eating and sleeping in his lab before inventing X-rays. So in essence, X-Rays took 241 years to develop. Was Wilhelm Conrad Röntgen an overnight success? Nope. But he gets the credit. He learned well. He built on the layers from others, and he furthered the progress of many. It was progressive. One thing led to another.

Still on this topic of creativity and genius… just because it is so paramount.

My favorite author, Malcom Gladwell, in his recent podcast, “Revisionist History”, from July 28, 2016, asking how genius emerges. The first 13 minutes of the episode talk about the song, ‘Deportee’, written by Elvis Costello. The song was originally produced by others, and guided to a place that Costello was not satisfied with. In fact, it was loathed by his fans and he himself. But over time, after iterating on it alone, Costello brought ‘Deportee’ to a much better rendition years later, whereas the producer of the original bad version finally got a chance to hear the new and recreated version, stating to the host of the show, “He seemed to have *found* the song”. Right there. That was the moment. He ‘found’ the song. The song was there, but due to producers influencing him, pushing him left and right, and driving a commercial mass-appeal experience, they missed the artistry within the artist. That may or may not always translate to the entrepreneur who feels like an artist, but certainly it’s a helpful anecdote. Gladwell makes the best summation, stating, “It was genius… but just wasn’t genius yet.” Perhaps many songs (and startups) should have been incubated further before hitting the ears and web browsers of a picky planet Earth. They are working and world-changing innovations and changes, but they just don’t exist yet. The artist needs his forest, ocean, or desert. He needs time. His sound requires iteration. It may take years. Decades. Lifetimes. The entrepreneur who ‘feels’ things can go to their happy place for rest and inspiration, but when it comes to getting back to work, they have to put on their scientist goggles (their big-boy pants) and assume the position of a relentless experimentation junky. Artist becomes scientist, and a song is found after experiment #1038, or #472 or #192.

It’s not that I am so smart, it’s just that I stay with problems longer.
-Albert Einstein

Goal: experimentation on a single problem in rapid succession.

In the podcast, Gladwell portrays the artist in motion, in progress, on a continuum, where he’s ‘on to something’, but has yet to arrive. This wet concrete is primary and necessary. Going back to Kevin Ashton’s book, he points to the iterative development of many works we cite as being revolutionary or genius. Leonardo da Vinci took literally 12 years to paint just the lips on the Mona Lisa. He iterated, brush stroke over brush stroke. Layer upon layer. Then he was called a genius. ‘Pokemon Go’ creator, Mark Hanke, was called an overnight success, but then the world learned it was a 20-year collection of experiences and progress and partnering and positioning. Good fortune came for Mark as well, when Nintendo also had decided to strategically partner with Google, and they funded the Pokemon Go concept with 30 million dollars… So there’s that. But Mark was there, in position, learning, iterating, and his work brought ample reward. A Biblical proverb states, “All hard work leads to profit, but talk leads only to poverty”. Talk: a lack of experimentation. Rephrased, ‘All experimentation leads to profit’.

Enthusiastic Skepticism

So how does a budding entrepreneur take on his fellow co-founders with the mentality of experimentation and ‘throw-away’, when they may be digging in their heels, focused on it for the long haul, entrenching themselves for better or worse on a singular vision? My advice (if its worth anything) is to pick co-founders well, and also, to share with them this great TED podcast episode on failure and killing your own projects. It goes through the details of how Google X works and how they literally aim to kill their own projects. Google X is a ‘moonshot factory’ that prides itself in failing as fast as humanly possible. They created GoogleGlass and are working aggressively on self-driving cars and balloons that bring the internet to Africa. Engineering teams are rewarded with cash bonuses and extra vacations for exposing the cold, hard, evidential proof that the project will fail. They literally are trying hard to kill their own projects, and they get standing ovations and high-fives for it amongst their peers. Why? Not because they love burning cash. There are 2 core reasons:

  1. Financial cost. It saves Google X tons of money, avoiding years of development on ideas that are bound to fail.
  2. Opportunity cost. It allows those teams to work on other projects that, (if not killed), could grow into massively impactful ventures.

The managing director is the primary project killing master-mind, stating, ”Enthusiastic skepticism is not the enemy of boundless optimism. It’s optimism’s perfect partner. It unlocks the potential in every idea.”

Are they feeling the pain of failure? No. Are they shifting perspective and creating a culture of experimentation and curiosity? Yes. And dopamine is firing off in their brains, yanking them out of bed every morning with hunger for more. Sure, they have hundreds of millions of dollars to play with. You probably don’t. And they have all the time in the world. You are probably working on the dream only nights and weekends, fighting traffic every day to your normal job like the rest of us. But still, the approach is pure wisdom.

The bad news: experimentation and failure are absolutely necessary.

The good news: it’s never been easier, cheaper, or faster, to achieve that failure.

Each experiment, each attempt, each day spent trying, they add up. It’s not a zero-sum-game. You learn more and more each time you kill your work. Kill. Kill. Kill. This is how to Win Win Win. Killing however, is not enough. You have to kill those inadequate or inept or leaky projects FAST. Killing projects slowly is torture. Killing projects fast is intelligent. The faster you kill 216 iterations, the faster you get to the #217, which becomes a winning combination. Fail Fast… yes. I am not sure who originally came up with this, but it was well framed in the ‘Fail Fast’ mantra of TechStars and many other accelerators.

I have not failed. I’ve just found 10,000 ways that won’t work.
-Thomas Edison

Entrepreneurs become effective when they deliberately un-tether themselves completely from their original hypothesis. They don’t insist on ‘ideas’ taking the same shape and form for which they may have originally imagined them. They are open-minded, knowing that one thing will lead to another, and they will pound away at this market, this general problem domain, or tangential ones, until their data leads them to a solid understanding of all possible solutions, and one of those solutions may have some untapped opportunity.

Work the Equation

Software is eating the world, and startup tech wanderers are filling up every empty space in every market. The incubators and accelerators have hatched every conceivable concoction, creating a surplus of providers for any new service. As soon as the product-market fit is achieved, (lean startup), it turns into a rat race of competitors to lock in that expansive and fresh new customer base. ‘First to market!’,… ‘Early adopters!’… these are the voyages of the starship “delusional”, as those factors are simply not enough to solve the equation. More math is needed. Arm yourself with an indisputable level of ammunition, advantage, data, tests, and an all-star team to exploit the opportunity to its inevitable endpoint. You have to be willing to kill your own ideas perpetually, and abandon any and all passion that you originally felt. Disown your ‘feeler’ self, (if that is your personality type), and adopt a methodical, analytical mentality. You must get off the long-game-train, and get on the start-and-stop, hop-on hop-off municipal bus, where you can change your mind, change the plan, change the target, change, change, change, all day, every day, until you extract the demon. This is not easy. But it’s the path of progress. I implore you to not embrace the infamous ‘triumph of hope over experience’, and get your arms around a 95% scientific approach to your entrepreneurial efforts.

Synopsis of my opinions, after 6 years, 4 pivots, 650k seed money in 4 seed funding events, 2 cars, moving 4 times, generating almost 2 million dollars of revenue, and writing around 1.4 million lines of code:

  1. Know your personality type first, by taking the myers briggs test.
  2. Know your strengths by taking the strengthsfinders 2.0 test.
  3. Give up (most of) your hobbies. The tech-preneur lifestyle is a time-sucker.
  4. Create a master list of interest areas you have, keep editing it on a regular basis. The areas you find fascinating are where your energy sources exist. You will want to engage in and out of topics and research to remain fresh mentally, whether its your ideas or others’, most of your time should stay in the areas you actually care about. Problems that you feel should be solved. This helps keep your mental energy in tune.
  5. Surround yourself with talented tech co-founders and entrepreneurs that you really like, as real-world friends. Become immersed with those friends and find the time to develop those relationships intentionally and openly. Bounce ideas, work on things, help each other move, buddy-up at all potential moments.
  6. If someone within your party of talented friends presents ideas, work on them as if they were your own. Think about them, process them, do research, spend hours and hours on the interactive banter back and forth till the ideas are well-developed and actual experiments can be performed.
  7. Create an experiment matrix in Microsoft Excel or Google Sheets, showcasing the various theoretical possibilities, multiple hypotheses, market data, customer data, and open ended outcomes. This matrix services the organizational structure of any work performed, and communicates the backbone of the story. Eventually this can help form the narrative of the company, and would properly address the inquisitions of your seed investor pool. This is a mind-map of every possible connotation of the problem domain and should be continuously updated.
  8. Formulate a mindset of throw-away work like GoogleX does. Reward each other as if proving why a particular idea or innovation would not work is a goal or sport. This is where a powerful culture can be formed: between the co-founders informally, on a couch at your apartment. Not later in the HR department. Right there on the couch over a pizza.
  9. Become a great researcher. Your research and investigative talents are more valuable than your programming skills. You will find answers in research that shave off months, if not years, of wasted time in experiments.
  10. Become a great experimenter. Your experiments will shave off months or years of time wasted on actual programming code.
  11. Team up with the right founders who can cover the following categories (in the order of importance): leadership, sales, branding, fun, design, technical architecture, and finally, software code.
  12. Embrace a methodical lifestyle. Set a Google calendar event for working on experiment #293 on Wednesday between 6 and 7:45 pm. Then go work out. Spend appropriate time on yourself and maintain your mental health. Get into a rhythm that generates healthy habits. If you are working a full time job and doing the startup thing in the nights and weekends, be sure to schedule it carefully and spend more time with the cofounder buddies than working on the solution, because interaction and time spent in those relationships and dialogue then them will likely produce much more fruit and much more momentum than a late night coding your brains out on one particular iteration of one particular experiment.
  13. Sleep.
  14. Water.
  15. Patience.
  16. Enjoy life.
  17. Audiobooks are great, but don’t overdo it. Allow the brain to rest.
  18. Failure is a great option. Failing today may lead you to succeeding tomorrow. Quite literally sometimes, giving up on an idea based on the true data received out of an experiment is the most impressive work you can ever perform.
  19. Learn to frame your conversations around the efforts around a problem domain instead of the results. Telling your friends and family all about your big idea is the worst possible thing you can do to yourself. They don’t need to know. They already like you. It’s completely acceptable to be in research-mode for a season. There’s nobody you need to impress.
  20. Be very selective in what general problem domains you start experimentation with. Some level of interest and intrigue should be there. You don’t always fall in love with your startup but you should at least be interested in the problem domain or market. Better to focus on the problem than focus on the solution, as the solution may be killed 259 times before it evolves into a more final and palatable solution.
  21. Most importantly, give your intuition a nice little compartment in your mind. Don’t let your gut drive your work.

That’s it from me. I am off to work on killing my latest experiment: #Whistle539.