Real-Life Startup Post-Mortems [Part II]
We always hear about success stories, but can learn so much more from failure.
This is a 4-post series:
3x editions featuring 2 startups each
1x edition with research and my SXSW presentation
9 out of 10 startups don’t work out.
The 1 out 10 startups that do work we try to learn from:
perseverance, hard work, and doing things that don’t scale.
But the 9 out of 10 companies that didn’t work also had these characteristics
- so are they the right lessons?
Learn from the companies that didn’t work, so you don’t repeat the same mistakes.
Planes in WWII had bullet holes upon return from missions (red dots).
The WRONG interpretation is that these are the places getting hit and need more armor (= the success stories).
The CORRECT interpretation is that these are the places where hits were non-fatal so the other spots need additional armor (= the failures that we never hear from).👉 Want to share your startup story that didn’t work out?
Fill this out so everyone gets to learn from you.
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Here are the post-mortems of Aussie startups captured by their founders.
👨⚕️ Keylead Health - digitising health
Customer: Hospital departments (St Vincent Melb Diabetes and Gastro)
Problem: No digital clinical trial solution
Solution: Providing an app that digitized data collection
Pivot?
Yes, to clinical trial recruitment, and to predictive medicine.
Because the departments had no money.
Best success?
Multiple small contracts ($20k-50k)
Top 3 Problems?
No convergence to a single product
No founder market fit (we thought we had but not really)
Very long sales cycles
One reason it failed?
Founding team had no experience and was not fit to solve the problems.
If you were to solve again, how do it differently?
No, I will stay away from the health space.
You need deep industry experience in health to change the industry.
Your main lessons?
Be more careful in finding cofounders
See early positive signals but don’t read too much into them (very hard to do while keeping a healthy optimism)
Do not raise money until you know exactly why you need it and exactly how much. It has to be the absolute bare minimum needed
4. Stay away from problems that are hard or slow to validate and iterate
🧠 Thought-Wired
Customer: Complicated.
User of the product: people who were paralysed and non-verbal.
Customer: either the user and their family OR organisations that provide services/tech for the usersProblem: Our users could not communicate/access technology through existing physical interfaces nor voice which led to all-encompassing limitations in their daily life
Solution: We built a wearable + app that allowed the users to interact with communication systems and computers by blinking their eyes on purpose in a variety of physical environments.
Pivot?
Yes, multiple times.
We originally were attempting to build a solution based on the translation of brain signals. It proved too difficult to crack the user training part of the solution so we pivoted to using eye blink as input.
When we realised in practice how long the sales cycle for this solution was going to be, we attempted to build another product on the same tech platform for different customers’ problems, e.g. to bring objectivity into specific talking therapies (problem: talking therapies and their effectiveness are often hard to track; customer: therapists wanting to provide better evidence-based service)
Best success?
Following the STartmate accelerator in late 2019 we were ~3 months away from breakeven with a core team of 4 as we had started to develop a methodology and pipeline of paying customers internationally for the blink product.
Top 3 Problems?
Definition of customer was always unclear and would differ across markets, e.g. in the US we could be selling to via school districts if the user was of school age, or via state assistive technology program, or via rehab hospital. A lot of complexity, relationship building and long sales cycle for a small-ticket product.
The solution was not just a new product but a new type of product so required a bunch of education for users and customers/channels before it was trusted.
Our solution was a piece of a larger solution puzzle for the user and other pieces had to fit, be funded etc. Again, complexity and time.
One reason it failed?
The immediate surface reason was Covid: it shut down the assistive tech industry globally, especially face-to-face services for many months.
Our product due to its nature almost always needed the physical presence of a professional at least at the beginning of the adoption/sales process. And a lot of these professionals weren’t used to doing things virtually. This killed all the momentum we had.
However, the sheer complexity of the customer & solution aspects meant that it’d never be able to grow sustainably. We knew that and were attempting to build the next product for a larger and more functional market but losing the momentum with the existing product and one of our co-founders meant we couldn’t get out of the downward spiral.
If you were to solve again, how do it differently?
I would try again. Some things to do differently:
focus on a segment of the market with the most robust funding system, potentially rehab hospitals and veterans rather than spreading ourselves too thin;
even more importantly, partner early with established orgs in the space to have them market the product using their knowledge of the landscape. The challenge in pulling that off is how to get enough of their buy-in early to build meaningful momentum and revenue.
raise more money to begin with: we were always undercapitalised - total $$ in from equity and grants was <$1M and we managed to develop and ship a hardware+software product with that! But it meant we had little money to get the best talent for functions/roles our team wasn’t well equipped to cover.
Your main lessons?
There might be too many to list here, but the experience defined my life in so many ways (for better or worse).
Few big ones:
Try to do hard meaningful things if you have the opportunity & safety net to do so, even if they seem too hard.
On the flip side, be realistic about when it’s time to wrap things up and move on. There’s a balance between persistence and beating a dead horse while doing some serious damage to yourselves as founders personally.
Surround yourself with mentors and fellow founders who care about you and what you’re doing so you can ask for advice both practical in your venture and more personal on how to be a founder and deal with the pressures. Earlier is better.
Avoid combining building a never-before-done technology and applying it in a very complex multi-stakeholder market, especially as your first company!
5. Obsess over customer problems and not your tech (if you’re building tech).
What you’re building can and will change, what your customers need stays largely constant.