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Why I turned down $500K and shut down my startup

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Re: Why I turned down $500K and shut down my startup

#101

Post by mpbm »

seibelj wrote: post #55
cft wrote: post #54

Earlier quoted context omitted.

When PayPal started, they were beaming money between PDAs. Then after a while when their curves were no good, they noticed that some confused users thought that their Confinity website that described how to beam money, was actually the place itself to transfer money to others. Then they pivoted. Then this new product was not viral. Then they started paying $10 when you open the account.

Please don't down vote this comment. He is making a salient point about why it might not be a good idea to quit at such an early stage. Whether it was the right decision for Contract Beast or not, he is trying to provide a counterpoint to the idea of giving up by providing an alternative anecdote. Some people in a similar situation could use the boost.

Yeah, but Tim already addressed that scenario when he said that nobody but him had quit their job or lost any money yet. The PayPal team was already well into being a committed startup.

Re: Why I turned down $500K and shut down my startup

#102

Post by StavrosK »

timoth3y wrote: post #70
a-saleh wrote: post #63

Earlier quoted context omitted.

You mention that you might write an article on distinguishing the tangential feature requests from the useful ones. I would really like to read that :) Especially if I could send it to our product managers, because our product has been in a cycle "we need an enterprise sale" > "potential customer mentions a feature they would have liked" > "we scramble for a month to write the feature and close the deal". To be hones…

That's a bad place to be stuck in. I'll see if I can put something together that makes sense and is fairly comprehensive. At the moment, a lot of it is "I know it when I see it" but that's not exactly helpful.

Isn't a big part of it the client saying that "it would be nice if..." versus "we can't use this unless"?

Re: Why I turned down $500K and shut down my startup

#103

Post by mpbm »

santoshalper wrote: post #10

It sucks when you realize you have built something that users like, but they don't really NEED. I like the good habits analogy - I built several great workflow apps for a Fortune 500 company in the past few years, but discovered most users don't really want the yoke of workflow and there wasn't enough immediate lift to tempt them. Sorry man. Good call not to waste a year of your life.

"It sucks when you realize you have built something that users like, but they don't really NEED"

That's a great point. There are a lot of intractable problems that everybody wishes could be "solved" but the reason they're intractable is that solving them simply requires working harder. They can't be solved with cleverness they just require doing all of the work, rather than doing as much of the work as you absolutely have to. A ton of "solutions" just shuffle the work around. So it's like you have a clean sink, but if you want to use the oven you have to find another place for the dirty dishes. One pseudo-solution that doesn't actually reduce the work is just as good as another, so there's no NEED to switch.

Re: Why I turned down $500K and shut down my startup

#104

Post by SmellyGeekBoy »

arviewer wrote: post #89
onion2k wrote: post #59

Earlier quoted context omitted.

If the situation were really "take the money and do 70+ hours a week for a year" versus "shut down the business" then I'd agree, but that's a false dichotomy. You can run a startup putting in far less time than that; putting in long hours is a choice. You can bring in a team or outsource the parts you don't like. It makes it harder to succee but it's an option. You could (depending on lots of caveats) simply hand the…

It's not about time or money. It's about wasting time on something while you're not motivated anymore because you know it will fail 99% sure. If you can't commit to it, you make that 100%.

Absolutely. I'm not sure why everyone else in this thread seems to be focussing on the "70+ hours" part specifically. I agree with your interpretation.

Re: Why I turned down $500K and shut down my startup

#105

Post by 50CNT »

vertex-four wrote: post #90
mediascreen wrote: post #83

Earlier quoted context omitted.

I think Graham's definition aligns much better with general usage of the word than a definition that would make the new ice cream stand at the corner a startup.

Really, only on HN and other "startup forums". Anywhere else... well, do you think even an ice cream stand is immediately a viable, profitable business? Usually not. The space between "having a registered company" and "actually in the black and stable" is a startup.

What about bootstrapped startups? They have to be in the black very quickly, if not from day 1. Do they count as startups?

Really, we've got four different terms we're trying to delineate.

"Exponential growth business" vs. "Incremental growth business".

and

"Unstable business with total expenses exceeding profits" vs. "Stable business with total expenses below profits"

All 4 permutations are valid. I personally like putting the startup vs. small business terms on the first category, which makes for the 4 pairings ["stable startup", "unstable startup", "stable small business", "unstable small business"]. I think this helps prevent the confusion that makes fruit stands think about E rounds.

Re: Why I turned down $500K and shut down my startup

#106

Post by mpbm »

encoderer wrote: post #24
joeemison wrote: post #21

Earlier quoted context omitted.

For evolutionary features, you're right. But I think the point in the article is that if you're trying to get to product-market fit, your customers' feature suggestions are rarely the ways to get there; you generally have to watch, think, synthesize, hypothesize, and iterate again and again to get to the solution that actually does what you need done.

That's a little too hand-wavy for me. I think you solve a problem, produce an acceptably bad solution, and as you get traction you improve it. You do it evolutionary because you're not Steve Jobs and improving something continuously is a repeatable, adaptable technique in a way that spontaneous invention isn't. If you never get traction, and can't crack it, then you invested a minimal amount and you can move on. A po…

I think that's repeatable and adaptable for two reasons:

1) technology keeps changing and it's usually easier to just write new software to take advantage of new infrastructure or design assumptions or whatever

2) almost nobody who has the expertise to do so gets paid to research pre-existing software, test it out, and find something that already exists that does the job. However, there is a large financial incentive to sell people on why they should use your new thing

So, there is never-ending opportunity to sell something new that solves the same old problem. It's a marketing-driven approach. You're basically just exploring the frontier of what people are willing to pay for, rather than the frontier of what's technically possible. It's "there's a sucker born every minute" style repeatable.

Not that there's anything wrong with that. People would have had to pay for research/adaptation to find an existing solution, so paying for development of a brand new solution is the same money. And marketing is one of those skills that's necessary no matter what your approach, so laying a foundation on top of it makes sense.

They're just two different approaches. The big idea approach isn't hand-wavy, it's just less common than the marketing driven approach. I think maybe it seems hand-wavy when people try to wear the big idea's skin like a mask cuz they don't actually have a big idea and everybody's like "grandma, what big teeth you have".

Re: Why I turned down $500K and shut down my startup

#108

Post by CPLX »

LionessLover wrote: post #97
seibelj wrote: post #55

Earlier quoted context omitted.

Please don't down vote this comment. He is making a salient point about why it might not be a good idea to quit at such an early stage. Whether it was the right decision for Contract Beast or not, he is trying to provide a counterpoint to the idea of giving up by providing an alternative anecdote. Some people in a similar situation could use the boost.

The "salient point" as you put it suffers from a huge acute case of selection bias and survivorship bias, two deadly diseases that kill the argument immediately after it's born.

Indeed. Not to mention the Internet was basically a wide open green field to build companies on in those days. There is no shortage of B2B focused web-based software in 2016.

Re: Why I turned down $500K and shut down my startup

#109

Post by macca321 »

timoth3y wrote: post #49

Hi. Tim here. I'm delighted that this article struck such a chord. I'll try to answer the most common questions here. I wish I could answer everyone directly. 1) I called it off before anyone sent money or quit their jobs. The only one who lost money or a job because of ContractBeast was me. If the money was in the bank and the team on board we would have gone ahead. That's why I had to make that decision when I did.…

I'm very interested in your learnings.

I've worked on enterprise collaboration software before, and came to the conclusions that the users will favour using the simplest thing for the task in hand (email or excel) no matter what SAAS products they have.

The trick then becomes 1. sell to management and get them to gamble on enforcing it's usage, (maybe by taking away the other tools, extensive training), or 2. have something that works at a grass roots level (e.g. dropbox being used to work around IT constraints) .

I think I may have just restated your post, oops!

I keep wondering if the future for workflow tools might be to unobtrusively monitor user interactions by hooking into the email client, and have an intelligent Clippy-like service which prompts and decorates their tools i.e. prompting to use ContractBeast if a contract is attached to an email (or in fact just doing so), and to display relevant information as and when needed. There was some CRM system extension for gmail years ago which I remember being radically successful.

Could something like that have worked out for you?

*and server in order to provide analysis, archiving etc.

Re: Why I turned down $500K and shut down my startup

#110

Post by chaostheory »

timoth3y wrote: post #100
chaostheory wrote: post #94

Earlier quoted context omitted.

"I'm not saying there was no solution. There might have been, but the team and I could not find one. Think of it this way. You and a team decide to summit a mountain. It's a high-risk endeavor. After weeks of going over your maps and equipment you just can't see a plausible way up. Do you call it off or set out hoping you'll be able to figure it out. It doesn't mean no one can do it. I means I could not do it with th…

Tired certainly, but not burned out. If we could have come up with an approach to solving the problem, I would have been 100% on board. I have no problem working 70+ hour weeks for something I believe in. I've done it before, and there's a good chance I'll do it again. Just not on this project.

Isn't uncertainty a major characteristic of a startup though? Even if you guys had a hypothesis that you believed in, would it necessarily be correct? I'm just saying that maybe you'd have more faith if either you weren't working 70 hour weeks or you had another full time co-founder
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