My startup failure story

Why founders fail, what rookie mistakes even experienced entrepreneurs can make and why it's hard to find a tech cofounder.

I've been building my own businesses since I was 23. I've built a content marketing agency — and sold my shares to my co-founders 4 years later at a 7-figure price tag. I've built a profitable retail chain with >10M revenue. I've been running an e-comm side project that I also sold at 6-figure.

When 4 years ago I decided to launch a startup I had no hesitation — my experience promised me good odds to win.
It was an epic failure. I made every mistake possible and lost over $200K.

Here are the lessons I learned. 👇

There are 2 ways to succeed in the startup industry:
— do what others do
— or do something totally different.

Despite the general belief that startups are always about innovation — they actually are not. Well, at least, not every startup is about it. Or, to better put it, not every startup requires innovative technology. When you're doing just one part of the business better than anyone else — you can already be a startup (even if your A-game is about physical delivery). So basically, there are two different types of startups:

1. A-players in a little part of the game that everyone else is playing

2. Players that create the game by introducing a disruptive solution to the problem that existed long ago but was not solved or was not perceived to be a problem.

Classic example — AirBnB. It's not that we did not travel in the pre-AirBnB era. We booked hotel rooms. Yes, we were not excited about the prices – but, what's the heck, we needed that vacation, so it did not even occur to us to start looking in some other direction or not going somewhere at all. The problem (high hotel room prices) was there but it was not perceived as an important or even urgent problem. On the other hand, apartment owners did not sit days and nights trying to figure out how to make more money on their property. There was Craigslist (and lots of local copycats in many countries). It was not perfect, but before it, there had been nothing, just word of mouth and a sheet of paper on the window offering a room for rent (and in some places, it is still a widely used tool, more popular than AirBnB).

What they don't teach us in schools or what we can't read in business literature is that both types of startups are absolutely legit — you just have to use totally different strategies and tactics to prevent them from failure.

Why do the A-game startups fail?
Because a founder has not done the homework properly. When the market research is not done. When I say "market research" — what do you think about it? Your competition, right? Who else is doing what I'm doing? It is a mistake!
Doing "market research" should mean first and foremost research of your customers!
— It should mean a meticulous collection of the information online: any place where your customers are hanging out — you should be there.
— It should mean doing customer interviews properly: not like you imagine it should be done and like I did it too (post an idea in a Facebook group and ask: so, you think someone will pay for it?)
— It should mean talking constantly to real people trying to figure out that sweet spot that only you will know. The secret that is not a secret, but that remains a mystery because no one had actually cared to ask these people HOW they do something and what the bottlenecks of the process are.

If this part of the job is not done properly — the startup will probably fail. There are lucky guesses (like this one I wrote about in my blog: https://www.anaspiringfounder.com/post/4-startup-hacks

but I still believe cases like these are the result of pure luck. Meaning, you can't have any impact whatsoever on your odds. You just roll the dice and see how it will fall knowing all the way that your chances of getting 6 are close to 0.

Why do the "disruptors" fail?
They fail when founders don't have enough business experience or enough connections to help them get this experience from top-tier advisors. Whatever successful disruptive startup you take (Mailchimp, Apple, Shopify, Tesla, PayPal, Stripe, Amazon, Airbnb) — they succeeded not because the technology they had was so unique or amazing. But because they managed to build a robust business on this tech. With all due respect: Apple would not be Apple if another Steve, Steve The Developer was in charge of business decisions.

I'm not saying that developers are unimportant. They are! Very much so. What I want to point out here is that you should not mix up these two types of startups. If you have a disruptive tech (say, a cancer treatment) you should focus on business aspects of building a company. If you don't — you have to focus on making a copy of what is already there but just a little bit better in one small detail. And to find out what that small detail is, you have to focus on customers, not the tech. You should never focus on tech too much – it is not your golden ticket.

My mistake from the very beginning was that being a non-techie, I was thinking only about the tech side of the deal. I forgot everything I knew as an experienced entrepreneur— in order to solve something that I did not know. My main goal from day 1 was to find a tech cofounder. What I did not realize is that my problem was not the code. My problem was that I had not found out that small secret about my customers that no one else was privy to.

When I failed to find a cofounder, instead of going to square 1 and doing a thorough analysis of the "why", I just concluded that I was not communicating my brilliant idea properly and that I'll just go ahead, hire an agency and when they build a product for me — everyone would see what a genius I was 😂

No need to say that this approach led me to lots of tears and losses instead of much-anticipated success.

If you want to read more of my stories, how I used the lessons learned to build a successful company, and how I do thorough user research now — you're welcome to follow me on Twitter or here.

I've also launched a course How to Find a Tech cofounder. DM me on Twitter if you want to get it for free — I'm not selling anything to the Indiehackers community 😁 just sharing the lessons learned