Ask HN: What was your biggest business mistake?
Team, Investors, Marketing, Risk Management, Technology - whatever it is. What have you learned from it? What could you have done to prevent making the mistake in the first place?
We spent months and months just building and building. We had a small team of developers working with us as well. It took us about 10 months to get our first prototype out only to find that no one wanted it -- not consumers nor retailers. By that point, morale had already started to drop, because everyone on the team thought we were just spinning our wheels and couldn't see any traction. Instead of spending another few months building in the dark, at that point, I mocked up something quickly in Photoshop and started pitching different ideas to retailers to see what people were interested in. I was amazed that retailers could understand what kind of product I was talking about just by seeing a mock and without actually having a demo or a prototype. After going back and forth on different design iterations, (I'm not a designer, so it was even more remarkable that potential customers could understand my mocks) we finally hit upon one that was of interest to many retailers.
Although we piloted and signed with retailers, unfortunately, it was already too late. The sales cycle with retailers is quite slow, and many of the larger firms plan for their website a year in advance. So we would not have even gotten the data needed to prove out the success of our idea for at least another year.
Speed to find product/market fit was something I completely did not understand then. I should have started circulating mocks on day 1.
In the early/mid 90s I built a compressor called Quantum that outperformed PKZip by an average of 20% to 30%. For a few years it was the best-performing general-purpose compressor available.
Microsoft, Borland, Novell and a handful of other companies licensed it. Cumulatively it saved them hundreds of millions of dollars in cost-of-goods for disks.
My smaller mistake was to not apply for a patent. Quantum was the first compressor with a workable implementation of optimal parsing and about half of the improvement over PKZip was due to it. I was then (and still am) philosophically opposed to software patents but purely from a business standpoint possessing a patent on optimal parsing would have made it difficult for competitors. That said, I don't view the decision to not apply for a patent as being a mistake as much as a deliberate choice.
My bigger mistake was to ignore the retail market. I felt that PKZip owned that and going up against them would be foolish. Instead, I took the low-hanging fruit of selling to software publishers. It was a handful of boutique sales (which one man could do) instead of attempting to penetrate the retail market against a strong, established competitor (which seemed intimidating.)
Except... I was completely wrong. PKZip never made a concerted effort to build a usable Windows version of their product. Phil Katz didn't like Windows and so PKWare was slow to evolve the product from a shell wrapped around the DOS tool into a first-class Windows app.
The world needed an easy-to-use compressor for Windows. An improved UI and support for additional compression formats extended beyond the scope of my original product but I could have done it without difficulty and I rejected the idea for the wrong reasons.
The market was ripe for the taking yet I cleverly convinced myself it wasn't worth trying and settled for less. Fortunately for WinZip they didn't make the same mistake and they quickly rose to a dominant position.
Another is that I got into the iPhone Store beta program in March of 2008 due to this product, and purchased a MacBook Pro to learn Objective-C. I felt it would be correct for me to quit my job right then that March and spend the next few months creating an app to release to millions of iPhone 1G and 2G users while app expectations and competition was very low. I didn't want to deal with the stress and negativity from my dad of quitting my job just six months after starting it, having dealt with that negativity for years. I was also doing some dental work and the job had a $2,000 dental insurance. Instead, I created mockups for the company I worked for that were shown to the COO/CIO, thinking I could maybe get a bonus money. Instead, my manager was promoted. I applied to UMass that same March in case I wanted to go back to school in September, which is what ended up happening; the idea being that college was a good place to find a co-founder. Although I ended up winning one of the two entrepreneurship competitions here, the overall feel of a state school is to get a job, not do something entrepreneurial.
I'm about to make a third business mistake: trying to get into the grad school so I can continue working on the front-end of a rails app I'm already doing undergrad research with right now.
The problem with being a single founder is that there are so many people trying to tell you you're wrong, and with increasing intensity, that even if the signs are all positive it can eventually get to you. My customers love my product, and that's actually all that matters according to entrepreneurship logic. But when your parents or others don't see your customers, as well as pretend not to care in order to demotivate you from it, to them, it was like I was just home all the time.
If I could do it again, I would try to book specific advertisers from day one. Slap a guarantee on there if necessary, but only use Adsense to fill in the gaps.
Also, handshakes don't cut it as much as we may want them to. I'd love to be able to trust people, but in matters where money is involved no one can be trusted.
I learned this the hard way. Please, use my mistakes to your advantage.
Also, never trust anyone who asks for a little bit of work at a discounted rate in return for the promise of more work later. Even if they're a government department. They may mean well, but they're almost certainly not in a position to back that promise up.
The decision to do this was the direct result of an ego that was out of check. I made a significant hourly rate for many years consulting (to one client - another mistake, btw) - when that contract ended, I didn't want to accept the lower rates and rejection found when trying to find high paying consulting jobs via the web. So, instead of adapting to the situation or finding creative solutions to it, I avoided it by doing something entirely different. VERY, VERY poor decision. I've been humbled greatly - which I actually think is a benefit of this experience.
I did learn a tremendous amount about people and business during this process, but it isn't one I would likely repeat with the benefit of hindsight.
For other stuff, to be honest I'm just as guilty of holding on too long or overinvesting time in something that won't work at the expense of something that does as much as anyone.
I just try to recognise my mistakes, learn from them, how to spot them happening again and how to avoid/evade them. I think that's all I can really do. I try to suck a little less each day, with varying degrees of success/failure :)
This does depends greatly on your client mix and financial situation.
(Even here in Australia, small businesses were hit - and all our clients were small businesses or primary industry and simply stopped paying invoices or returning calls.)
That is, even though there've been situations where I'm (still) pretty darn sure it was ultimately "their" fault things weren't working out too well, there are still things I could have theoretically done to guide things to a smoother transition -- by waiting a day or two to have time to travel to the next city, for example -- and thus, perchance not see a relationship that took years to cultivate suddenly go down the crapper, apropos of almost nothing, or so it would seem.
Again, theoretically. And all in retrospect.
In the moment, it's so easy to be (justifiably) consumed by the sheer obtuseness of what the person is doing, that it's hard to see the benefits of simply waiting things out... or perchance, simply not "leveling" with the other person, simply because it feels like the right thing to do, at the moment.
But the bottom line is, even if you do feel you have to "level", or unwind a business relationship with someone you at least once, theoretically, considered to be a friend -- email and chat are just really awful channels to have to do that in.
In retrospect, I learned a great deal from it and am doubly motivated to become a good programmer and have a stab at the software business. It was a costly way to learn, though.
Trying to "pay my dues" as expected and/or manipulated by an older generation particularly of middle-management. That may have been the way things worked for them, but more and more of the U.S. employment space doesn't work that way anymore and hasn't for well over a decade.
Employment in the U.S. is becoming de facto class based, and if you permit yourself a) to become over "classified", and b) to let such a role mis-direct your energy in inefficient directions, you can seriously screw yourself.
Neither am I a fan of the know nothing hotshots that e.g. were being parachuted in as excessively paid management consultants. But that resentment doesn't negate the above fact.
Look for the exceptional person who really is competent, and cooperative, and build your relationships that way rather than through whatever formal hierarchy. And keep yourself prepared to jump ship; don't paint yourself into a corner, especially financially.