TL,DR, my main takeaways are:
- it's all about the team (what every VC will tell you)
- don't start a company with friends you haven't already worked with and really tested
- first mover advantage won't help if you move straight into a wall
It's really all about the humans. I started a UAV company with some friends about 12 years ago, and we had a very ambitious initial project: an amphibious drone. I had gone to work right after graduating, while my friends had studied some more, so that when we started the company, with my 2 years of work experience, I was the most experienced one around. Needless to say, the original plan didn't work, and it was all about the team not being good enough.
We raised over a million, paid ourselves shit salaries (ie less than minimum wage), and managed to survive 3 years. After year two, a couple of the co-founders were given the boot for gross negligence (burning over 100k through sending the wrong plans to production..), and a pivot happened. It started working, then an accident happened and no money was left to recover from it.
It could seem that a bit more money could have saved the day, as in the third year we finally were onto something which we could do and for which there was a market fit. But the pivot only happened because the team changed. The remaining members of the team, notably the flight test / composite manufacturing team, were very competent, but I suspect they were just spent after 3 years of startup purgatory. So, when it seemed like we might survive a bit longer, they decided to just kill any such possibility and finally be able to walk away. The other co-founder that was left let it happen and just folded, going so far as to forbid me in writing to try anything further to sell our assets or save the company.
It was very hard realizing that my co-founder friends, some of whom I thought of as brothers, had behaved the way they did. It is heartbreaking to see people you trust be negligent and ruin the efforts made by others, and betray the trust of the people who had trusted a bunch of 20-somethings with a big pile of money.
I'm not blameless either. I should have reacted much earlier to the lack of professional standards of some of my colleagues, and either left or asked for them to leave. Friendship made me blind, and way too trusting. I should also have tried to raise more money when we pivoted, and focused a little less on product and business development, but I couldn't see that at the time.