Post-Mortem (noun): a discussion of an event after it has occurred.
This is where hindsight becomes conventional wisdom. Before writing this I looked for a few examples of other Start-up Post-Mortems to see if there was a particular pattern or commonality in the termination of new ventures. Our friends over at ChubbyBrain did a great job of compiling a list of 25 startup failures in which the founders reflected back on the decisions and regrets. Good read.
So here’s my attempt at a few lessons learned.
Spec before you jump
Back when I decided to take a jump from working for someone else to just myself I had been working on it for a few months with my partners. The concept had been kicked around, we created a logo, got a domain name with accompanying YouTube, Facebook and Twitter accounts. We had server space ready and available. We just needed to get our website up and going.
Little did I or my partners realize how much that would take to complete. Some of that had to do with our team being semi virtual and the rest had to do with my limited experience of development. I had been spoiled working at a company in which a small, talented team could dedicate their full attention to a quick turnaround.
Now my partner was talented but only part-time and until we sat in the same room with a whiteboard and talked through the use cases he didn’t know what was in my brain other than the occasional gibberish I’d communicate on our weekly team conference call.
So I left a paying gig thinking he’d be able to do it all within a relatively short-time. Come to find out the total estimated cost using a developer shop in Latin America would be about $20k and a few months. I should have waited a few months longer to be able to partially finance the majority of the development.
Test your biggest assumptions first
The other problem was that we were going off assumptions of what the customer might want and that people would behave a certain way. As we started to work with our customers we were much like someone who was learning to drive a stick shift, stopping and going and stopping again. Redesigning or reprioritizing what needed to be done and shifting our business model to something that required more resources and expertise we didn’t have readily available.
Is your team investable?
We were a trio of co-founders. I pitched an idea to a couple of friends who were willing to jump on the crazy train with me. Thanks guys! However, only 1 out of the 3 (not me) had expertise or experience in what we were about to do. I had chosen them because I trusted them and they were willing. I had looked at their skill set and imagined that we each could fulfill certain roles. I told myself that commitment and trust were more important. I still believe that but I also came to recognize during a pitching event that our team didn’t instill confidence in the investing community. Too bad that is one of the main things they look for in start-ups. What I should have done is find an idea in which our experience or passions did natural fit instead of forcing an idea that required different skill sets than we possessed.
Equity early w/vesting on the side sprinkled with milestones
I botched this one big-time. We waited awhile to create the paperwork that officially designated who got what equity but began with a handshake 3-way split. I wanted partners that were as committed as I was and was tired of corporate compensation handing out slivers of equity for people that give their lives to the company. My partners were wise and expressed concern regarding how much they were getting for what they weren’t putting in. I insisted it was okay and that we’re in this together.
It wasn’t okay. Expectations weren’t met, life priorities shifted, and I dragged my feet to talk about it because I didn’t want it to be about money or that an altruistic approach couldn’t work. My friends were gracious enough to patiently let me bungle through it. They even were helping me by offering to take less and ultimately signing over their equity claim when we parted ways.
When the first partner left we were in the process of putting the paperwork together and decided to utilize vesting to minimize the impact that could happen if one of us had a change of heart or didn’t deliver on what was expected. It made it much easier when he decided to move on. His departure brought me to my last and perhaps biggest lesson.
You can’t do it alone
Even if you’re a sole owner you still rely on others to help you get set-up and run your business. Finding the right logistics partner took much longer and was much more important to our business viability than I previously had supposed.
As my partners left I found the concept testing at a critical point. If it didn’t work then what was the point of finding someone. I should have continued recruiting; it is always easier to make the right decision when you have someone else to keep you in check or encourage you. I’d also failed to create an advisory board that we could go to for counsel and resources. So the majority of my recruiting efforts were limited to my own network of individuals that didn’t necessarily overlap with what I needed.
Well there it is. My own startup post-mortem. A couple of major mistakes, quite a few lessons learned, some debt and one great life-changing experience. Man that was fun!