What was your biggest startup fail?

We tried to compete on price in a market that really wasn't as price sensitive as it claimed to be. Yes some people wanted to "pay less" but in reality the big players were happy to pay the "industry standard" rate. Many of those big players we would later find were happy to pay far more even. For every player who wanted to "pay less" there were easily 10 that would pay more to get the opportunities their competition wasn't willing to pay for.

Looking back I feel totally stupid about it.

Two stories:

1. Shortly after I started working on Tarsnap, I was introduced to a "serial entrepreneur" who expressed an interest in getting patents on Tarsnap's technology and licensing it out to other companies. I wasn't interested in doing this myself -- I wanted to provide the world's best secure backups, not sell patent licenses -- but I agreed that if he covered all the costs and paid me an up front fee plus a share of royalties then he could resell the "spinoff" IP. Distracted me for about a year before he backed out. And then he asked me to pay for the money he had spent on lawyers (I laughed).

2. About five years after Tarsnap launched, I got a phone call from a YC company saying they were interested in "working together with me". The conversation went around in circles for half an hour before I figured out that was a euphemism for them being interested in acquiring Tarsnap.

Hiring from the network sounds like a fast way to get qualified employees, but it backfired when we ended up with groups of employees who were too tight (some even shared apartments)

The work place was transformed into a reality show where you had groups of people trying to maneuver "up" in the system, by convincing the management that their way was better. No matter the discussion, they would back each other and support their own guys. As a group they would always win a discussion.

The company stagnated, but they were able to get new jobs and left before the long term impact was (finally) realized by the management

This is from work over 30 years ago on our garden simulator by my wife and me. Being too ambitious (and perfectionist) at the start with product plans for software. Building a Minimum Viable Product (MVP) instead which prioritized essential needs would have engaged customers years sooner in our case and provided valuable feedback for deciding on future directions for new features or changes. A couple of people early on warned us to simplify and prioritize, but we ignored that. Learned lots of other lessons from that project and others, but that was the biggest and most costly lesson overall.

I can't give details over why I learned these lessons without dox'ing myself, even speaking in broadstrokes is hard and the actors are litigious.

- Don't make your product hard to buy.

- Don't take investments from a potential customer.

Long story short, the key innovation was fiscal (looking to draw revenue from the real meat of the industry and not where it was traditionally placed in the supply chain), the tech was compelling enough to get investment from a large player, we built the product, then tried to sell the product to the investor, they dragged their feet, and eventually offered to buy the company instead of license the technology. But only after we ran out of runway and everyone lost their jobs.

The founder said "no" and the company is gone.

---

When I say "don't make it hard to buy," in B2B sales think about how much money you want to make off a single customer, given that number, what level of the organization is there someone that has that purchasing power, how hard is it to get them in a room, and can you walk out with a sales contract finalized or do they need to kick it back to their team for a final approval. And if that timeline exceeds your runway and you need the sale to close you're fucked.

In less crass terms, as an early stage startup you want your enterprise sales to scale horizontally through an organization. If your ideal user is at that company, you can only make so much money by selling it to them, because they have a limited budget. So you can instead sell to their manager, by getting the user to convince them to get more money to buy your product. But if you get greedy and then try to sell to that manager's manager, all of the sudden your advocate is two levels removed from the person making the decision and that's much more difficult to close. What you want is lots of deals closed fast, and that manager to tell another manager at the same level their team is using your product, or people to talk about you at the water cooler and get their managers to buy.

And once you scale up, then you can offer discounts for expanding to all teams under an org instead of each team buying individually, and now you have an enterprise contract that's a signal to get another enterprise contract with a competitor.

amazon.com

it was supposed to be a folksy, communal, whole-earth inspired bookstore that would interact synergistically with actual book stores and the rest of the world.

instead, we built a fucking monster that is awesome for consumers and a nightmare for almost everybody else.

sorry.

I have shared my startup story here, and it was a full-on cargo cult. I am now convinced that Cargo Cult thinking is a far bigger killer of startups than we presume.

https://healthio.notion.site/How-Cargo-Cult-Thinking-Nearly-...

I once developed an app and a site before i really knew people would actually want to pay for it!

rookie mistake! lesson learnt:

don't make before you sell

I used a nosql database (Cosmosdb) when I should have used a relational database. The Azure cost plus the lost time in transitioning to SQL plus the cost involved in the implementation ran into embarrasingly debilitating six figures.

Forming a partnership with a salesman who couldn't sell and who worse kept me from selling work I could have sold myself. Boy did we get a lot of calls and we learned a lot about the industry we selling into, competitors, etc.

Taking 7 months to figure out the build problem in Python when we only had 6 months.

I was in 2nd Year of my engineering. as many engineers before going to the college i used to make computer games on C++. Games caught my interest really early, because thats what is really fun and challenging in programming. One day while making a ping pong game, i thought what would happen if both the sides computers will play? who will win? from that i developed a programming game, in which you need to write algorithm for your battleships to destroy other battleships. You could try really good algorithms to test them for eg. min-max, monte-carlo tree search, RL, Deep learning etc.

Since i was in India, people here do programming for the sake of coursework or to get jobs. Really passionate people are difficult to find.

I tried to launch the product in my college, but sadly no one would want to play it. The game was really challenging to grasp at the beginning, I also pitched it to my professors to include it in the course curicullum of AI, they liked the idea, but refused it by saying it will be an overhead for the students to learn first about the algorithm and then about the Game API.

for an year i dejectedly saw that not everyone is as passionate as you are. I found no market for my programming game. If it would have launched somewhere in US, it could have been better, since MIT has such a kind of competition in which students needs to make the bots. it is not that programming games have no market, there are games like : Battlensakes, coderOne etc. but their market share is very less.

I learnt the lesson the easy way i guess, because i had a safety net since i was still in college, and had a job from the following year.

But then i really understood about product market fit, which i used to ignore while they taught in entrepreneurship classes. If anyone wants to see how the game looked : https:\\aiplaygrounds.in . I have revamped by business idea and working on something else.

Hiring people to do a startup for me from the beginning.

Luckily it didn't get far - co-founding with a fantasist...

This one: https://www.dsebastien.net/2021-01-04-20-months-in-2k-hours-...

Built for two years, failed to go to market, failed to raise funding, and ran out of time. What followed was even worse.

Its https://automatio.co. We built initial version back in 2019 (actually the first MVP was in 2017).

And after 3-4 years, we paused development to explore the world of blockchain.

We are all in and back fully on Automatio. Gonna catch up with lost time.

Worked with a bunch of ex Google employees who expected to write code and money pour in. This did not happen. A sales guy we hired warned us that at big companies you usually start developing sales materials and approaches years before launch.

Didn’t sell to a potential acquirer because it was an all stock deal. Acquirer itself got acquired a year later for a lot of money.

To focus on short-term speed instead of long-term speed.

Competed against the broader trend.