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Ask HN: Crashed founders, what was the point of failure?

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Re: Ask HN: Crashed founders, what was the point of failure?

#31

Post by lisper »

jlbnjmn wrote: post #22
lisper wrote: post #10

> the need to compare crashed planes to the survivors As someone who is both a pilot and a "survivor" of three failed startups (and a coattail-rider at one successful one), this is the wrong analogy. The reason it's the wrong analogy is that most airplanes don't crash, but most startups do. This makes a big difference. The reason that it is possible to make reliable aircraft but not reliable startups is that the succ…

The analogy comes from aircraft surviving combat, as opposed to general aviation, although I'm not sure that's enough to overcome the flaw you've pointed out. One thing I disagree on is the failure rate. Surely the failure rate of all businesses is skewed by restaurants and the self employed. It seems like building a $1B+ startup is as you say, but what about building a $1M-$10M startup?

> The analogy comes from aircraft surviving combat

Yeah, that doesn't work either because you can't see the holes in a successful startup.

Re: Ask HN: Crashed founders, what was the point of failure?

#32

Post by jlbnjmn »

petewailes wrote: post #30
jlbnjmn wrote: post #26

Earlier quoted context omitted.

Would I be simplifying too much to say the cause of failure was, in all cases, "a failure to economically supply demand"?

To simplify too much, yes. Firstly, demand is not always a given. Sometimes it's built in to a market, other times it needs to be created. Other times, there's demand but no known solution if your work is novel, so you need to educate the market as to the benefits of your solution and to win trust in it. Also, it's entirely possible to supply a product which meets a demand at good unit economics but fail because of o…

Thank you, I'm glad I asked.

Re: Ask HN: Crashed founders, what was the point of failure?

#33

Post by shostack »

bob33212 wrote: post #12

I was engineer #1 and CTO for a SaaS analytics start-up. It was pretty obvious after 2 years that there was no Product Market Fit. The CEO/Investor was OK with losing 900k/year so he wanted to keep going. I negotiated away my equity for high pay and an expense account. But I still quit 2 years later because the wheels were coming off as the sales pipeline dried up and the lead sales person was trying to sign anything…

Any thoughts on how to better align sales with net outcomes based on your experience?

Re: Ask HN: Crashed founders, what was the point of failure?

#34

Post by benibela »

When I wrote a Windows app for my university's library and they told me they do not want a commercial app

Then I spent years sending them emails. I did not receive an answer, but it kept me too busy to any other projects or jobs.

Now they have a mobile app, probably bought from some company

Re: Ask HN: Crashed founders, what was the point of failure?

#35

Post by robocat »

mindvirus wrote: post #15
mmcconnell1618 wrote: post #7

Built a e-commerce platform company in 2002. Packaged software sales model with designers and web hosting companies as the sales channel. Reasonably successful for more than 10 years but I call it a "vampire start up." I had enough income to eat and hire a few people but never hit the right growth numbers. Also, small business is just as demanding as Enterprise customers for features and support but doesn't have the…

My econ prof always said that moderate success is the worst outcome for entrepreneurs - failure means you can do something else and learn, and massive success means you are rich, but moderate success can trap you for years.

I view many multi-million dollar businesses as economic failures, because too often:

(a) owners ignore their opportunity costs (especially prevalent for software engineers that can get a huge salary in a safe job)

(b) owners ignore that they need to get extreme returns to cover the large risks that they take of business failure. The standard pass-mark is a 30-times return after 10 years. If one “invests” $y00_000 savings, and one forgoes $x00_000/yr salary by quitting work, one needs to get back say a minimum of ten million. (10_000_000 divided by 30 is $330k, which is a surprisingly easy amount to have “spent”, especially due to what one could earn in a boring 9-5 job).

Edit: I am ignoring other personal benefits or costs, and only considering a startup from a purely economic POV.

Re: Ask HN: Crashed founders, what was the point of failure?

#36

Post by mmcconnell1618 »

codegeek wrote: post #20
mmcconnell1618 wrote: post #7

Built a e-commerce platform company in 2002. Packaged software sales model with designers and web hosting companies as the sales channel. Reasonably successful for more than 10 years but I call it a "vampire start up." I had enough income to eat and hire a few people but never hit the right growth numbers. Also, small business is just as demanding as Enterprise customers for features and support but doesn't have the…

Thanks for sharing your experience. I can totally relate to the "small business is just as demanding as Enterprise customers for features and support but doesn't have the budget to pay for it" bit. Curious, what are you doing these days considering the lessons learned from the e-commerce platform venture ?

Currently getting a health paycheck from FAANG, less stress and operating some passive income side businesses. Good work life balance at the moment but will consider changing things up in the future if the balance goes the wrong direction.

Re: Ask HN: Crashed founders, what was the point of failure?

#37

Post by ykevinator »

mindvirus wrote: post #15
mmcconnell1618 wrote: post #7

Built a e-commerce platform company in 2002. Packaged software sales model with designers and web hosting companies as the sales channel. Reasonably successful for more than 10 years but I call it a "vampire start up." I had enough income to eat and hire a few people but never hit the right growth numbers. Also, small business is just as demanding as Enterprise customers for features and support but doesn't have the…

My econ prof always said that moderate success is the worst outcome for entrepreneurs - failure means you can do something else and learn, and massive success means you are rich, but moderate success can trap you for years.

I think there is a bit of a free pass in this thinking. A company that makes $100 a year makes more money than peleton, slack, palantir, dropbox (is drop box making money yet? Not sure about this one) etc. I think vc produces a lot of high user unprofitable businesses that are worse than a moderate success.

Re: Ask HN: Crashed founders, what was the point of failure?

#38

Post by smt88 »

jlbnjmn wrote: post #24
smt88 wrote: post #6

This is like asking, "What was the point of buying a lottery ticket?" For most people, the point is having a chance at being wealthy. Most founders believe they have a 90-100% chance of success, even though it's more like 0.01%. Some others may start companies in order to get out of a painful career track or because they want to understand the process or some other ancillary reason, and they'll get more value out of…

Sorry, the title was vague. More specifically the question is "what were the specific, direct causes of failure?" "My car broke down" vs. "the alternator went out so my battery died and my car wouldn't start".

My mistake, sorry.

Years ago, there was a survey for founders called Startup Genome that asked about what went wrong.

It found that most companies failed because they had the wrong team or because they scaled prematurely (e.g. hiring full-time people to do part-time work).

My anecdata tells me most people never even get that far because they underestimate the cost of customer acquisition, and they can't survive the time it takes to get someone to write a check.

Re: Ask HN: Crashed founders, what was the point of failure?

#39

Post by jlbnjmn »

shostack wrote: post #33
bob33212 wrote: post #12

I was engineer #1 and CTO for a SaaS analytics start-up. It was pretty obvious after 2 years that there was no Product Market Fit. The CEO/Investor was OK with losing 900k/year so he wanted to keep going. I negotiated away my equity for high pay and an expense account. But I still quit 2 years later because the wheels were coming off as the sales pipeline dried up and the lead sales person was trying to sign anything…

Any thoughts on how to better align sales with net outcomes based on your experience?

I'm not the person you asked, but the most relevant advice I got was to pay half the commission after month 1 and half after month 12.

It helps weed out the less honest people, aligns sales with support, and protects cash flow.

Re: Ask HN: Crashed founders, what was the point of failure?

#40

Post by bob33212 »

shostack wrote: post #33
bob33212 wrote: post #12

I was engineer #1 and CTO for a SaaS analytics start-up. It was pretty obvious after 2 years that there was no Product Market Fit. The CEO/Investor was OK with losing 900k/year so he wanted to keep going. I negotiated away my equity for high pay and an expense account. But I still quit 2 years later because the wheels were coming off as the sales pipeline dried up and the lead sales person was trying to sign anything…

Any thoughts on how to better align sales with net outcomes based on your experience?

At a small company you would ideally have engineering involved before any contracts were signed.

At a large company you generally pass the sale off to a integration team who isn't commission based. And that team will quickly find out if the customer was badly lied to, And you will have time to cancel the commission.

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