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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?

#241

Post by mmsimanga »

mkagenius wrote: post #228
mmsimanga wrote: post #219

I come from a coal mining region. For over a 100 years there has only been one mine in the area, a big mine. There is plenty of coal in the surrounding areas. This is Africa. An uncle of mine had the idea that we start a mine. He invited about 20 of us, all related. We started putting aside money to register a company, pay a geologist to prospect for the coal and get mining permit to mine the coal. We all contributed…

> owing 5% I ownwed 0.00086% of the mine Didn't you sign after reading? I dont know how it works there but generally one has to get all signatures for approval.

So this uncle was elected as the chairperson and given power of attorney to register everything on our behalf. The capital city is a good 800km away and we all had day jobs. As I said in another comment, the true problem was we (I) believed a family member wouldn't screw us like that. So it was literally a handshake agreement.

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

#242

Post by rubyfan »

Because you’ve done something similar three times before in different categories doesn’t mean you’ve found a market.

Solutions shouldn’t search for problems.

Identify market fit without investing tremendous time and energy. If you have to contort yourself then you haven’t found it.

CEO should sell the product vision above all.

Hire people who are smarter than you, hard working and honest. At any sense of dishonesty or questionable behavior, show them the door.

Know when you’re done and cut bait ASAP.

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

#243

Post by GFischer »

MisterOctober wrote: post #9
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 is real talk. Big companies love to be behind on AP for a variety of reasons, among them: - Their own 'highly matrixed' organizational structure makes it near impossible to find 'the correct person' to talk to about accounting issues, let alone get a straight answer out of them - so chasing these issues down becomes a huge drag on your time and energy and you may very well just give up after a while - Past-due…

they can gleefully treat you as a bank with really low interest on short-term loans

Exactly. On MBA finance courses (and I guess CPAs too) you're taught about working capital - and one half of that is basically stretching supplier payments as far as you can.

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

#244

Post by mooreds »

I was part of a startup in the mid 2000s that wanted to make it easy to shop for homes using your mobile phone. We used j2me and actually got the app installed on a few phones. I wrote up a small white paper on j2me: http://www.mooreds.com/midp/midp.html

I believe the startup failed because it wasn't anyone's first priority. Every one of the four founders had a day job, even though we all had double digit ownership percentages. I don't recall if we even knew enough to have the stock vest.

So the tech folks worked on the product on weekends and I don't know how much the sales and marketing folks worked.

There were also issues with marketing, distribution and the fact the mobile ecosystem wasn't quite there which made the app painful to use, but I think it might have worked had we been all in (or even one of us had).

RIP homesonphones.com

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

#245

Post by mmsimanga »

restalis wrote: post #239
mmsimanga wrote: post #219

I come from a coal mining region. For over a 100 years there has only been one mine in the area, a big mine. There is plenty of coal in the surrounding areas. This is Africa. An uncle of mine had the idea that we start a mine. He invited about 20 of us, all related. We started putting aside money to register a company, pay a geologist to prospect for the coal and get mining permit to mine the coal. We all contributed…

"He invited about 20 of us" then "instead of owing 5% I ownwed 0.00086% of the mine." Have you made explicit the share you will end up with or you just assumed that all of you would get 100% / 20 people, i.e. equal share? It sounds that your uncle worked a lot more (from the moment he looked for partners and invited them into the venture till the end of the paperwork and beginning of the operations). I concede though…

Its a really long story. I mean long. No the uncle didn't do all the work. Infact he contributed no money at all. There was a lot of legwork done by other family members hiring equipment to do prospecting, providing transport and wooing potential investors. You have bear in mind that half of the relatives were not educated. There was a lot of trust and good will because were "family". We are still are family.

On a side note, this made me realise why there is so much conflict in some mineral rich areas in Africa. Honestly if we weren't peaceful people there could have been serious conflict.

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

#246

Post by gm-conspiracy »

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…

It doesn't sound like she was working for your company, really.

Reminds me of kozmo.com at the end, when they started hiring "experienced" executives from traditional logistics companies.

Best way to take out a competitor is from within?

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

#247

Post by jhowell »

mmsimanga wrote: post #245
restalis wrote: post #239

Earlier quoted context omitted.

"He invited about 20 of us" then "instead of owing 5% I ownwed 0.00086% of the mine." Have you made explicit the share you will end up with or you just assumed that all of you would get 100% / 20 people, i.e. equal share? It sounds that your uncle worked a lot more (from the moment he looked for partners and invited them into the venture till the end of the paperwork and beginning of the operations). I concede though…

Its a really long story. I mean long. No the uncle didn't do all the work. Infact he contributed no money at all. There was a lot of legwork done by other family members hiring equipment to do prospecting, providing transport and wooing potential investors. You have bear in mind that half of the relatives were not educated. There was a lot of trust and good will because were "family". We are still are family. On a si…

> On a side note, this made me realise why there is so much conflict in some mineral rich areas in Africa. Honestly if we weren't peaceful people there could have been serious conflict.

Care to elaborate?

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

#248

Post by koolba »

TheOtherHobbes wrote: post #225
newman8r wrote: post #137

Earlier quoted context omitted.

I'm curious if there's any examples of this ever happening. Some company keeps ignoring a contractor's requests for a couple of years and ends up owing ~$20 million on a thousand dollar debt. But like you, I'm pretty skeptical. Probably wouldn't hold up in court.

The outcome would be entirely random - dependent on the inclination of the judges. A sensible business would settle out of court with a very low offer. A sensible contractor would accept the offer. But generally this is another example of corporate privilege. In reality, late payments kill many small businesses. In a political system that was genuinely friendly to the small guy, fines for late payment would be mandat…

All my contracts that include such an interest clause also include language to the effect of “the lesser of X or the maximum allowed by law”.

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

#249

Post by michaelbuckbee »

tixocloud wrote: post #233
the_clarence wrote: post #152

Earlier quoted context omitted.

Can someone in this thread summarize what are the terms? AR, AP, APR, retainer, etc.

AR: Accounts Receivable (money owed to you) AP: Accounts Payable (money you owe) APR: Annual percentage rate (usually converted from a different timeframe so you have a consistent timeframe to compare with other metrics) Retainer: A fee that you pay to get priority from a consultant, which may or may not come with services included.

There's another overarching term that needs put in here:

Cash Flow: the balancing of AP and AR so that you can stay afloat.

Say your startup needs $10k a week to meet payroll. You have $20k in the bank and Accounts Receivable of $100k. "On paper" you have $120k. Cash flow wise you have 2 weeks of money left on hand.

This situation is in constant tension as:

- Large companies stall regularly on paying or require terms like "Net60", aka you complete the work, then send them an invoice, then they can take 60 days to pay that.

- Public companies have to report their financials and will often manipulate their AP schedules to help "massage" their numbers. I was once told bluntly: "our CFO said we aren't paying any more invoices this quarter"

- The reason large companies do this is they are also trying to balance their cash flow (just at a larger scale).

The two general things to do to help with this situation:

1. Keep invoicing tight, bill as often and in as small as increments as possible. Better to ask for $20k every 2 weeks than $40k at the end of the month.

2. Offer discount terms where they pay less if they pay earlier.

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

#250

Post by dandare »

eadz wrote: post #214
dandare wrote: post #170

My story is rather typical. I have built something visionary that everybody liked but nobody needed. I hated the very idea of selling something that is not finished so I never validated the product with customers. How could I explain to them how revolutionary will the product be? The only way was to show them. Like the first iPhone. In fact, I didn't like the "talking to customers" part at all, so I focused on coding…

what was it?

https://uk.wikibudgets.org/w/united-kingdom-budget-2015
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