In failing to build a company, I have learned many things. Core to all of them is that a company is not a product. Ideas change, products change, people change. We “pivot”, rapidly, relentlessly, sometimes ruthlessly.
Managed well, change is a catalyst. Managed badly, it can be catastrophic.
In this series, I try to explain the various ways in which I failed to understand this, and how I would endeavour to do better next time. You may notice that the style of these posts is more instructive than usual. Remember that these are mostly addressed to my future self, and as such, I am telling myself what to do; you, my dear reader of blogs, can do whatever you want.
It seems that more and more startups raise money before producing, well, anything. Mine included.
We raised a significant amount of cash from angel investors within a few months of starting, thanks to some incredible work by our CEO. It was enough to pay ourselves a reasonable salary, rent an office, and hire a few people.
I have no proof, of course, but I believe it was this act that led to our downfall.
Now, of course, the money wasn’t the issue. The issue is that we spent it. We hired people without knowing what it was that we were making, including an ML specialist before we needed any real ML (as opposed to something “good enough to prove the point”), and a web developer before we really needed a web interface.
And so, we got some ML, and a web app, long before we knew what our customers wanted. This caused us to double down on these, treating them as the result rather than the mechanism.
If you don’t have investment, you have to make money through sales. While having the money in the bank meant we could quit our jobs, I think in our case, it would have been far healthier to act as if we had only enough for our own salaries, and knock on some (metaphorical) doors, delivering demonstrations, talks, and consulting until we got someone to pay some money. That would have enabled us to figure out what it is that people actually wanted.
We had the runway to do a bunch of programming, rather than talk to people, and so we did. If you don’t have money, you need to deliver.
This is not to say you shouldn’t go out and raise money, if you think that’s necessary or useful. Go for it. I recommend it, in fact; if your project is uninvestable for some reason, better to find out sooner rather than later.
And then take most of that money, lock it in a box, and put a sign above it saying, “to be opened when we have a clue what we’re doing”.
More in the series
- Focus on the problem, not the solution
- If the company goals change, the company should probably change too
- "Do research" is not a corporate strategy
- Your corporate values transcend your product vision
- Trust your gut, understand your heart, and open your mind
- Go to therapy with your co-founders
- Explore the terrain first
- Unless someone cares, don't waste your time
- Code is a liability; ship without coding, if possible
- Do less, and do it better
- Agile methods are tools to try more ideas in less time
- Until you have traction, money is a trap
- If you don’t know how to do it, that’s your biggest problem
- Roles can be fluid, but they must be defined
- Camaraderie is helpful, but no substitute for working together