Startup funeral — Why startups fail?
#StartupFuneral has been conceived in 2014 in London, UK by the TechHub. Now brought to Poland by #TechHubWarsaw, who have just recently set themselves up on a first and second floor at Google Campus Warsaw. The event aims to scope the reason why startups fail. 3 speakers, the ex-founders of unsuccessful startups, talked about their experience with their business fiascos. After each talk, there was a time for the Q&A for the gathered audience to learn from their mistakes.
The event was opened and run by a member of TechHub UK, that was wearing a Death Costume, and holding a scythe with which he was gently touching the trembling backs of startup founders sitting at the audience, and asking them a question: ‘’Is your startup doing OK?’’. Pretty scary, he started with pulling out some quite deterministic statistics that say: 90% of startups will fail. He emphasized however that the failure is not the end, it is the beginning of something new and, in fact, makes you more experienced in doing business. Even the famous ‘startup bible’, the book titled ‘’The Lean Startup’’ by Eric Ries starts off with a chapter that talks about failure, that was read out aloud at the beginning of the event.
After this spectacular and formidable intro, we had a chance to listen to the guest speakers. We especially liked the first presentation of Kamil Stanuch, who fiercely and without embarrassment, shared with everyone a miserable story of what he called ‘the crap’ he created with his team.
Kamil Stanuch, is a former CEO of Nearbox, a startup that wanted to create a ‘’Twitter for location’’ (whatever that means). The Nearbox was supposed to… exactly, nobody knew what the app was supposed to do really, and even though they got to the finals of T-Mobile Startup Challenge, after a year they had only over a thousand of signed-up users, that were not using the app… Kamil explained that Nearbox failed because of several reasons: first of all, the product was too generic, and they just kept on adding features, which only confused the users. With blurred focus, no market research done beforehand and no marketing strategy set up in place, they built the product first, and later they started looking for the use case, which, now they know, is supposed to be done the other way around. He explained that they used 90% of their funds on development and 10% on marketing — which also now they are sure should be the opposite. Kamil shared an interesting opinion of the famous investor Dave McClure, who once said that the app to sell needs to meet one of these three conditions: ‘’get paid, get made or get laid.’’ That means that the app to sell needs to either save users money (i.e. AirBnB, Uber), make them visible/famous (i.e. Twitter, Instagram) or promises some other excitements (i.e. Tinder). Nearbox did not fall into none of these categories, and after a year the noble founders decided to entomb it.
The story of the second speaker, Adam Przymusiala and Petpetum was slightly different, however the mistakes they made were quite similar. Adam wanted to create an online vendor of the dog food. As he himself is a happy owner of a fluffy quadruped called Fokus, he was his own first client. Petpetum failed due to the lack of strong marketing strategies, uncompetitive pricing and the team that consisted of people having their full time jobs and doing ‘this startup thing’ in their free time. Adam also emphasized that in 2013, when Petpetum was set up, the customers in Poland were not yet keen on paying by card online… Anyway, Adam has learned from his mistakes and he is now a successful CEO of BinnarApps.com.
Finally, we heard the story of Pawel Godlewski, who is a founder of neembe — smart homes hardware startup. As Pawel explained, the team consisted of three geeks in their 30s, 40s, and 50s. Not only there was a generation gap, there was no strong team-building, but also them three knew nothing about marketing. They were experienced engineers, therefore they totally focused on product development and thus it has been a never-ending process. Pawel have realized that they have been creating the product for investors and not for the customers. They actually attracted some big investors and buyers, but in the end, they themselves were not enough passionate about their startup, they did not have a vision, goal or a mission, that’s why their energy blurred and at the moment neembe is ‘’in a coma’’, waiting for its resurrection.
In a nutshell, the unsuccessful startups failed mainly due to underestimating marketing, not performing any market research, no team-building or no coherent answer to ‘’why are we even doing this?’’ Nevertheless, all three of them testified that their business failures were great business lessons and now they have experience to do things properly.
#StartupFuneral has been a very insightful and useful event, the conference room was packed and everyone had a good laugh and learned something new from others’ mistakes. The event finished up with a guided tour through TechHubWarsaw co-working space and offices for startups during which one could find out about their different pricing offers and amenities. Afterwords there was some time for networking over a beer and pizza. TechHubWarsaw invites for another funeral in about 6 months, so do not miss the next one! We’ll also try to be there!
