Friday, January 2nd, 2009

Why your web startup will fail

Why your web startup will fail
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Somewhere in the back of your mind, there’s likely an idea for a startup that rears its head from time to time. Perhaps it’s an iPhone app that reads minds, a search engine that’s better than Google, or it could even be the best way to buy music online. I can’t tell you how to make it a success, but I can share a few obstacles that you should be mindful of before starting out.

For nearly a decade now, Eric Shelkie and I have run an interactive agency with a reasonable level of success. We’ve won some awards, generated some publicity, and managed to keep paying the rent along the way. Meanwhile, we thought it would be “fun” to start something a little more challenging, and it has been just that.

In May 2007 we started to work on MakeFive. It started from us wishing that the conversations on Facebook could be a little more involved, and has turned out to be our biggest investment to date. Every month we get a few new users (most months traffic doubles), and people email us noting that they love the site. In the meanwhile, it’s a tooth and nail struggle to keep building, improving, and trying to get the thing to profitability.

You won’t have an audience

In high-school we all got the feeling that everyone else was looking at what we were doing. This meant that we obsessed over our haircuts, brand of acid-wash jeans, and size of “OP” logo on our t-shirts. We just wanted to make sure that we didn’t stand out too much, in order to save ourselves from being social outcasts. That mind-set is really hard to shake, but believe me, it’s something that you absolutely must break in the interests of your startup.

No one is looking at you. No one is listening to you. (You don’t believe me, but I’m right.)

You may think you have a lot of friends. You may have a blog that a great many people read. You might even have “qualified” people who claim that they will buy or use your product. None of this matters. People are way to busy thinking about themselves to care about your new innovation. They may say that your idea “sounds great”; that you’ve done a wonderful job; or, simply “congratulations”; but frankly, they have more important things to do. Their kid is sick from school. Their boss is screaming about a late report. They have really bad hemorrhoids. Take your pick; the point is: you shouldn’t confuse politeness for interest.

Even if you create a portable fountain-of-youth, your startup’s biggest challenge will be to get anyone to pay attention. Really–it’s that hard.

You’re going to run out of cash

As you work on a project, milestones get really exciting: “Once we complete this next version, everyone will see why it’s so awesome!” This is an important aspect for any startup as it keeps you working. The tricky part is that it can distract you from the fact that you’re burning cash. Last fall we dropped all client work for about four months. We were convinced that the next version of MakeFive would “do it”, but it still hasn’t. We awoke one day in December and realized that we really needed to get some billable work through the shop or we’d be sunk.

Now, this is somewhat different if you’re a funded company. Those groups at least have something to sustain themselves while they work on their startup and spend money. The reality, however, is that funding largely seems like a crapshoot that’s “hibernating” until this recession-thing blows over. So, for most of us, we simply have to keep doing something to pay the bills, while working on this new, amazing thing. That being said, regardless of how you’re getting cash, you will probably spend more of it than you should.

If you can work from home, you probably should. I see money as time. Any that we save allows us more time for iterations, experiments, and tweaking, while we try to get the formula right.

You’ll get frustrated

Startup dreams are quickly replaced by startup work. And even if you like work, you may find startup work to be quite daunting. Spend a week emailing bloggers asking them to try out your new site/product/whatever and see how many get back to you. I call it, “making a mountain, one grain of sand at a time”. You just have to plug, and plug, and plug away to gain some traction. (Unless you start something like Twitter and it’s a wildfire hit; but again, those are “lottery-odds”.)

The real tests come at moments like we had about a week after our initial launch. Lots of people dropped by, told us they loved the site, and didn’t come back. So, there we were, left with one big question that lead to endless others: Why aren’t they coming back? Is something too confusing? Is our idea a bad one? Do we just wait and see if they come back later? Do we need to build another tool? Should we run a contest? Would weekly emails be a good idea, or just become an irritant? (And on, and on, and on.)

I can tell you why a brand doesn’t work. I can explain why your website is hard for people to navigate. I can help you craft a strategy to build your marketing efforts around. That being said, when we’re building something no one has ever quite done, it’s very difficult to determine what the problem is (or problems are). And although everyone will tell you what they think, most of this is subjective feedback that may not be any more telling than your own observations.

The way we got by this hump was to just look at our project as an enormous control panel, littered with thousands of knobs. Somewhere in there is the right combination of settings, but we just had to twiddle knobs until things started to react as we hoped. (It does start to work when you do this, but that endless number of variations and settings can seem pretty daunting.)

The emotional rollercoaster will beat you

When I first read other entrepreneurs talk about the “emotional rollercoaster” of a startup, I felt reassured: “Ah-ha! It’s not just me! We all go through this thing! Thank goodness!”

One day you’ll get a great review of what you’re doing, followed by a traffic spike, and a flurry of activity and you’ll think that you’ve finally done it. No more struggling. You’re on top of this thing and all of that work paid off. You’re (forgive me for saying it) “the king of the world”. The next day you’ll find yourself back to where you were two days before, just working away, with that excitement turning out to have been a fleeting moment.

The next day someone will tear your idea apart publicly in the most venomous way you can imagine. Or, money that you had expected won’t arrive. Or, a key staff member will leave your company. Or, your servers will crash. Or, your roof will start leaking. (I could go on forever.)

A startup is a Sisyphean task with momentary glimpses of promise. It’s a wild emotional rollercoaster ride. (I know, I already said this twice, but it deserves to be said again.) And if you have manic tendencies, as I believe that I may, you’ll feel these ups-and-downs even more acutely.

My only suggestion is to turn up the Metallica, get back to work, and try to take any praise/criticism with a grain of salt. Lots of people will tell you that you’re an idiot or a genius; it’s unlikely that either of these are accurate. This being said, stay open to useable feedback. We’ve had a few suggestions that have been really helpful. Keep your ears open for sensible observations while muting some of the hyperbole.

You’ll get excited about something else

In “start-up-land”, there always seems to be another thing that would be more fun, exciting, easy, profitable (again, take your pick) to do. There are possibilities for mobile apps, new tools, widgets, offshoots of your existing product, speaking opportunities, articles, book possibilities, and consulting gigs. You name it, there’s always plenty to do, and most things seem “less hard” than what you’re toiling away at.

The problem with ideas isn’t having them. Shit–I have plenty of ideas. The challenge is to be able to determine which ones are worth acting upon. While building out MakeFive, we’ve had numerous moments when we’ve thought of another thing we could do. The thing is–having an idea is quick, while executing upon it takes time. If you act on every idea you have, you’ll never get anything to market.

So, start a list and record them as they arise. We have a list of a couple of hundred start-up ideas that will continue to sit on the backburner until we have the time/resources to act upon them. In fact, I’ve done the same for ideasonideas, and have a list of a few hundred articles that I will someday (maybe) get to.

My feeling is that it’s important to keep traveling on the path you’re on until it makes no sense to do so any longer. In the meanwhile, keep adding ideas to that list, so that you have a backlog of possibilities should you choose to change course at some point in the future.

But it probably won’t be the competition

My friends get awfully tired of how I promise them to secrecy with every “amazing” startup idea that I have. In fact, my friend Hans often pre-empts my request for discretion with his own, knowing that I’ll almost inevitably ask for one each time we speak. (I don’t know if I’ll ever break myself of this habit.) The truth is that when you have an idea that you’re excited by, it’s hard to say it out loud, given the worry that someone else will get it to market faster than you do.

In my experience, however, competition rarely really has much to do with it. If your startup gets killed it will be one of the above things that does-you-in way before someone rips your idea and makes a fortune from it. I once noted to my wife that I was no longer worried about someone copying MakeFive as I once had been. (If someone did, they’d be faced with all of the headaches and struggles we were fighting through.)

Closing thoughts

With all of that said, I have to emphasize that little of this really matters. If you’re inclined to start a startup, nothing anyone says will stand in your way, nor, should it. If you have the bug to make something, it’s impossible to shake, and in my mind can be one of the best life experiences you can have.

Every month we get a some new users, a couple of excited emails, a few glimpses at just how neat our project could be. And more than that, we get to build something that we really love.

I wouldn’t trade that for anything.

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