Web software has been a prevalent part of our world since the mid-90’s. Entrepreneurship since the 17th Century. That said, does the challenge lie in using web software to solve a problem? Not particularly. The challenge becomes how can we use web software to solve the right problem that people will want to use and ideally, pay to use?
For us, it’s through validation. Building web products has been repeated throughout, but building the right product solving the right problems is shot in the dark if you find yourself making too many assumptions. Assuming what your users want and what they will use is dangerous and can kill a startup slowly; wasting time, energy, money and reputation.
Talking to users, understanding the market, the useful vs. necessary vs. luxury debate and risk from other uncontrollable factors all play into early validation while pre-orders, price point, execution and timing all play into validation in later stages. The ironic part of it all, even if a combination (or sometimes, all) are validated the idea should still be killed.
Reading How I Killed a Startup In 4 Hours finally pushed me over the edge to write this because sometimes the situation arises where there is a good idea, great team, interest, traction...and the idea still dies because of something the founders didn’t think about or something completely out of left field. We’ve invalidated a few ideas, some of which I talk about below, and while yes, the idea failed, we consider the experience and lessons a win.
As a cloud based [alt-coin] mining contract business, BgM had quite a few things going for it during the early days. The bitcoin/altcoin market was the hottest it had been and only the risky, bold individuals were daring enough to play which attracted quite a few preorders. In just under a month we received $30,000 in preorders and constructed our own, custom BgM miner.
Where We Went Wrong
The preorders and general buzz around Bluegrass Mining were great, but the success of the business was completely reliant on the volatile alt-coin market. Prices fluctuated with the tide and, in order to provide the return we anticipated, the return per day would need to stay around .011 BTC/day/MHs. This was fine at the time, because the return per day had held at those rates for more than a few weeks, however we had no control over the price and a drop could crush us. In the two weeks before contracts started the return per day dropped 50% to .005 BTC/day/MHs.
Preorders alone won’t make a business successful. While we could have started contracts, cashed checks and moved forward with BgM, we didn’t even think about it because it would have been doomed with bad customer feedback. If the return per day rose back to the profitable levels, it could still drop to a deathly low the very next day. Idea: killed.
Joe Thirty (v1)
As a team mainly comprised of technical talent, the non-tech hustlers were eager to build something not based around web software. As a subscription based coffee service delivering craft (quality) K-cups to your door each month, Joe Thirty’s timing seemed perfect. The K-cup patent had just expired opening the door for thousands of beaneries around the country plus subscription services (Birch Box, Bark Box, CoEd Supply) were spreading rapidly so, again, the time was right.
Where We Went Wrong
While coffee drinkers ourselves (obviously), we weren’t necessarily keen on beaneries and their suppliers. Relying heavily that the expired patent motivated the smaller craft beaneries to get their coffees into K-cups and, knowing most order fulfillment shops had minimums, we hoped the beaneries would be doing whatever it takes to ‘K-cup their coffee’. Without already-sourced coffees, we couldn’t show products on the website and, although the pricing fit, preorder numbers were lackluster and demotivating.
In the end, it wasn’t lack of motivation that killed Joe. It was the fact that we, as a technical team, were trying to tackle a market whose inner workings we weren’t too familiar with and couldn’t rely on our core, tech, to carry us forward.
Version 2 of Joe Thirty is soon to launch and is completely unrelated to Version 1, the name just fit too well :)
Killing an Idea Isn’t a Bad Thing
All of the situations above plus some others all happened within a couple months of starting, meaning we killed the ideas quickly. There shouldn’t be shame in killing an idea so long as you thoroughly think through alternatives (pivoting, persistence, etc) and as opposed to just giving up, you make a smart decision to kill it quickly. It can save time, money and heartache and doesn’t mean that you’re a failure, it actually speaks volumes about your ability to see things you may not want to.
If you are able to take what you’ve experienced in the failure, and learn from it then chalk it up as a win on your journey to becoming a successful entrepreneur. Everyone will fail, but why you fail and how you rebound is what will set you apart from the masses.