The creators of no-longer-with-us products explain what went wrong
37signals.com
37signals.com
Interesting side note: The first failed company, Verifiable, links to the sixth failed company, swivel, as an alternative. Apparently charting is a tough space.
It appears to me that nobody truly knows what makes or breaks a company. There are some prerequistes (hard work, focus on customers, etc.) that you have to have, but these aren't enough.
My guess is that it's like the weather and financial markets: Chaos (as in chaos theory) reigns, and it's just not possible to know who the winnere or losers are.
I don't think it's chaos or luck. I've argued it before, but there are traits that make successful founders successful. The one that always stands out to me is an absolute laser focus on analytics. These founders are 'obsessively analytical' which allows them to make decisions much faster than others.
Starting a company is a race. Your trying to reach profitability (or at least viability) before your current funding dries up. For boot-strapped companies that can be a matter of weeks. For VC companies that can be years. In each of the cases in the article they lost that race.
So starting a company is largely about managing that runway. Some people get lucky and just get it right. For the rest of us tracking everything and truly being obsessed with that data allows you to see patterns, opportunities, and problems much faster. I suppose that you could say that data-obsession allows you to achieve hindsight much faster.
I have one failed startup (out of three goes). In that one I failed to keep an eye on my data. In particular, I didn't realize just how slowly our development was progressing relative to the amount of runway we had. In the end we released a product that never found a market fit and simply didn't have an opportunity to pivot. We ran out of money, and with it the business went belly-up.
My most recent venture is about 3.5 years old. In that time we've had one massive pivot (think entirely new business that utilized about 20% of the code we developed). We managed that by keeping close tabs on our development schedule and releasing as early as possible. It became clear that our initial idea would work, but the cost of acquiring customers was far too high. We felt like we couldn't optimize that cost down to something reasonable in the time-frame that we had left. We did, however, find a new business model along the way and we've aggressively pursued that all the way to profitability.
Now we're looking at different data. Conversion rates, traffic, and ad-spend rule my world now. We track everything we can think of. We've found patterns for our business that have allowed us to optimize our spend while increasing traffic. We've moved our conversion rates significantly. We still have a long ways to go, but at this point we have a nice war-chest in the bank and are at the point that we can aggressively scale. Along the way we've pivoted, just less drastically. The product has changed significantly as we've come to understand our market. We're pursuing a couple of opportunities that we never even thought about during initial development.
I feel really good about our business. I think we're going to make it. We've done that not through chaos or luck, but measurement and optimization.
But there's a flaw to the argument. You can spend all of your time measuring success factors and acting on the data. But there are limits both to how much you data you can make sense of, how much effort you can allow yourself to spend gathering that data, and how you interpret that data.
finding a cofounder, for example, is a critical component of success, but how will you pick a good cofounder based on data? Can you even do that? Notwithstanding that the hardest part about finding a cofounder is actually locating potential candidates to pick from.
In chaos theory you can actually predict the weather if you have data that's exact enough. But you don't. There's just noway you can measure everything exact enough. I think the same applies here.
Not too keen (as a customer) on putting my time and effort into a SAAS hobby project that doesn't scale.
Of course unlike SaS you can always continue to use an old version indefinitely in a VM if it really matters.
But I find the longevity of the vendor is still critical for supporting new environments and API requirements, and in practice I don't end up discounting the going-out-of-business risk much for desktop apps vs. SaS apps.
It's continued to run for 30 years, and they wouldn't dream of replacing it. I don't think they're an exception (although I suspect this is less true when you get out of the enterprise environment).
Doesn't it run under emulation, like virtualbox, or even in WINE98 or such?
I've seen projects where this kind of environmental coupling led to the developer not even bothering to open source their work, since they knew it would take too much for others to use the code.
Deprec + Capistrano makes this very close to a reality for Rails. It has some niggles -- like installing virtually everything from tarballs when I would strongly prefer it apt-get everything so that I could get updates and so paths and configuration files jelled well with what Ubuntu expects -- but it has been, and continues, to be a lifesaver for me in getting new projects up to speed.
You can also do one step deploys and automate a lot of cruftiness. (I can do upwards of forty deploys to my staging server in a day when in development mode on Twilio integration -- which is hard to test without actually having an accessible HTTP server and making phones actually ring -- so I have a script which commits my changes, tags a new staging release, and pushes it to the staging server in one command.)
[ Edit: supporting research I did, which I've now cited twice in comments on Hacker News. I should probably write a blog post. http://news.ycombinator.com/item?id=499929 ]
The Vitamins business is big, true, but absolutely dwarfed by the pharmaceutical industry.
You don't need salesmen, multi-level marketing or flashy advertising to sell aspirin. The only aspirin advertising is between different aspirin brands, not to convince people they need it at all. Take one, headache goes away. It's a binary test = it either works or it doesn't. That's how to build a simple business that sells. Your software should be an aspirin not a multi-vitamin. It should be self-evident on the first try how it solves a headache.
I've driven in my car late at night to out-of-the-way shops to buy aspirin. I've never bought a vitamin in my life.
yet you know, recognize and buy aspirin at a mind-boggling mark up prize, not even recognizing that bayer has stopped producing the stuff by themselves and that it comes out of the same factories like its generic counterparts.
and why is that?
bayer still invests heavily in marketing and sales. aspirin is the most "researched" drug as there are countless phaseIV studies going on all the time. which are just a legal way of paying docs to push the product to patients. then you have key accounters and pharmacy-reps (depending on the market) out there, influencing big chains (USA) or tiny pharmacies (Europe) to stock, display and recommend the product.
never underestimate the power and smartness of big pharma when it comes to sales and marketing.
i make my living implementing crm systems for them worldwide - these guys are never sitting on their hands.
Even the generic aspirin manufacturers can sell the stuff with little or no advertising.
The vitamins business has to spend a lot of money convincing to buy people stuff, the aspirin business doesn't.
At $5 a month, that's only .1% signup required.
Sales start from 0, and they continue from there. Until you have sold it a few times, who knows if .1% is incredibly easy or impossible. Sometimes any number >0 just isn't going to happen.
The fact is that you guaranteeing sales are $0 if you never ask for money.
I mean if only ask for $1, and get that dollar from only 1% of China, I'd be a millionaire!
They didn't even ask anyone to pay.