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Ask HN: Why did your startup fail and what did you learn?

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Re: Ask HN: Why did your startup fail and what did you learn?

#201

Post by tixocloud »

subhobroto wrote: post #40
mrhappyunhappy wrote: post #35

Earlier quoted context omitted.

As a consultant I state that I will charge a 10% late fee for every week a payment is late. I’ve never had a late payment. I’d say offering a discount does the exact opposite.

Clients past a certain size just "forget" about the late payment penalties in my experience, which is why I offer a "on time" payment discount. I tried both methods and clients would rarely pay the premium compared to those who would avail of the "on time" payment discount. I have less happier clients when I make them pay a fee than when I take away a discount although mathematically they are the same number.

From big co perspective, absolutely true. Tons of other priorities to get out of the door than paying on time. Our invoice process was dreadful. Thinking back, if a vendor made it easy for us, we might always pay on-time!

Re: Ask HN: Why did your startup fail and what did you learn?

#202

Post by tixocloud »

subhobroto wrote: post #46
tptacek wrote: post #42

Earlier quoted context omitted.

I mean, if you're careful about who you work with, 0% isn't really a meaningful risk. Bank of America (or, for that matter, Airbnb) isn't going to default on you; the pain the ass you could generate if they did would cost more than the invoice.

Agreed with a caveat. Having actually worked with BofA, the amount of overhead for a contract could have put me out of business if I was not a BIG5 employee. The big boys are not even going to consider me unless I am a safe choice (they really don't care if I am a kickass programmer who can solve their problems - they want to do business only if I am a known quantity so that they don't get fired if a deal with me go…

Entrepreneurs should absolutely be thinking about cash flow because it’s essential for survival. Demanding yes but necessary to become a successful startup.

Too many startups riding high on how much revenue they bring in without controlling the costs. If you spend to get revenue, it really isn’t a business (or at least a solid one anyway)

Re: Ask HN: Why did your startup fail and what did you learn?

#203

Post by tonyoconnell »

skunkworker wrote: post #175
tonyoconnell wrote: post #127

10 years ago I built an almost amazing business that schools, universities, teachers and students could use to build elearning and web apps. Think Square Space + Moodle + Udemy. Heres a demo if you're interested https://vimeo.com/2221065 The demo doesn't show much of the learning management features but they were also complete. But the app had memory leaks and I didn't have the cash to pay expensive engineers to fix…

Interesting, at the time you were dissuaded from going into that market could the actual TAM support your business idea or would it have been more viable later?

My mentors were based in Ireland, one was Managing Director of the European Software Centre for a huge computer hardware company and another was president of the university in my city. In Ireland education is mostly financed by the government and I suppose they couldn't see the market. I live in Thailand where the only good schools are private so I saw things from another perspective. Yes, the management and support fees could have supported the business if I focused on private schools who were willing to pay a few hundred dollars a month.

Re: Ask HN: Why did your startup fail and what did you learn?

#204

Post by shodan666 »

god_bless_texas wrote: post #4

I chased and successfully won a huge customer for my small and fledgling startup. I chased and successfully won a sole service contract for a key part of their business process. I allowed a credit situation with them to grow over the course of 3 months while I allowed them to have 60 day terms. And then, they went out of business and left me holding the bag with $150,000 in unpaid AR after I spent $90,000 generating…

This could solve half of your problems with late or non existent AR payments:

https://en.wikipedia.org/wiki/Factoring_(finance)

It's worth it.

Re: Ask HN: Why did your startup fail and what did you learn?

#205

Post by shodan666 »

jwatte wrote: post #86
cataflam wrote: post #59

Earlier quoted context omitted.

I'm curious, how much would you have paid to be protected from this kind of risk and make sure you'd get your money?

Isn't that what factoring does? That's a well established line of business for a very long time. And because you sell your invoices, the factor now takes the payment default risk. Does cost a penny though.

It's not that expensive. Typically just 2-4 % per invoice. It's worth it.

Re: Ask HN: Why did your startup fail and what did you learn?

#206

Post by wink »

hef19898 wrote: post #165
wink wrote: post #155

Earlier quoted context omitted.

That sounds... kind of weird, especially the "a lot of cases" part. If you have an official company with official employees (and if either is not true, then well, everything's illegal anyway and your employees are not really employees) the health insurance will be on your toes quite quickly to pay your stuff (as I've experienced firsthand). The only thing I can think about is having all your staff as unpaid/underpaid…

Just from the top of my head. A lot was, obviously an exaggeration, sorry for any confusion. Still, there are more than one might think. Skipping on social security seema to be easier and more common than health care. Health care usually are insurance companies, so any missing payments are likely to be flagged. But atill it is possible to skip for a couple of months. Social security is wired by the company to the aut…

Thanks for the clarification, no need to dig deeper. I don't usually feel the need to defend anything going on this country, but this broad statement just went contrary to my experience in a) being an employee b) running a business c) talking to people doing both ;)

Re: Ask HN: Why did your startup fail and what did you learn?

#207

Post by pandapower2 »

rqmedes wrote: post #160

As an engineer what I learnt was that commercialization is the most important factor and that its difficult/near impossible to sell without strong branding, marketing and networking. I now work for a multi-billion dollar company, the product I developed is superior to theirs in almost every regard. What they have is an amazing marketing team.

Its kind of demoralizing to see technically inferior products doing well but, as you described, the technology is only a small part of the puzzle.

Re: Ask HN: Why did your startup fail and what did you learn?

#208

Post by raverbashing »

RandyRanderson wrote: post #106
woogiewonka wrote: post #103

Earlier quoted context omitted.

How do we know which ones are irrational or how to find them? :)

I have this theory that ppl throw out crazy ides like the earth being flat or that there are giant apes living in the pacific northwest in order to find irrational consumers. If anything sticks, you've got one! Makes sense, right? If someone, say, actually believes the earth is flat, despite having access to the Internet, etc they must an imbecile. These are exactly the types of ppl that can easily be separated from…

Then you can sell supplements that turn people red, it's a win win

Re: Ask HN: Why did your startup fail and what did you learn?

#209

Post by phonebucket »

gfarah wrote: post #163

On my first startup right after university, we were doing an IoT device (hardware + software), our MVP was good enough to make a couple of sales amounting to 550 consumers. At that point the board decided the best way to grow was to bring in “adult supervision” aka a seasoned CEO to run the company. Even though I did all the software, I had only around an 8% stake in the company at the time. The person in question de…

"Lesson learned: Big-corp CEOs don’t make for good startup CEOs 99% of the time."

While this may be true, I don't believe it is fair to reach this conclusion on the basis of a single experience.

Re: Ask HN: Why did your startup fail and what did you learn?

#210

Post by woogiewonka »

pandapower2 wrote: post #184
woogiewonka wrote: post #39

My first startup failed because I had no idea what I was doing. I started an online vacation rental site, similar to vacationrentals.com vrbo, homeaway etc... I was getting traction and had people list their rentals on my site but I failed to collect any revenue. The thought was, build it, offer it for free to grow it and then charge. Well, I built it (wasting way too much money on an original solution when existing…

>The thought was, build it, offer it for free to grow it and then charge. I feel like this is an incredibly common software developer turned entrepreneur mistake. Lack of confidence in asking for money leads to a reluctance to put a price tag on the thing you have built.

With vacation rentals, you have to have people who actually rent stuff and that's the part of the chicken/egg problem I haven't solved yet. While I was able to bootstrap the site, the traffic to it was non-existent thus I felt guilty if I charged people to list. The premise was that they would list for free first, their listings would attract traffic, then I would charge people to list. Meanwhile people are booking and more are listing - that was the idea.
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