Ask HN: Should I give up?
So, I find myself in this situation: After developing my start-up over the last 2 years outside of work, I quit, and launched doing it full-time 3 months ago, and have been working at it since then.
Without going into too much detail, my start-up is in the B2B space, in a reasonably conservative industry. I have been doing everything myself, from development, to sys-admin stuff, to sales, marketing etc. I'd characterize the feedback I've got from people in the industry so far as "mildly positive" - they express some interest in the idea, but are not yet willing to commit to it.
At the moment, I have enough cash on hand in the business to last until November, at current boot-strapped burn rates, and I have enough cash on hand personally (since the business isn't paying me a wage) until the end of September. After that, I can sell some stocks (around $10K worth) which would give me enough personal income and business income to last until around January 2010. However, if I took that path, and the business didn't then succeed, I would be facing bankruptcy.
My feeling is that I have perhaps started a business which attempts to do too much for a single founder with no employees and limited capital, trying to do something in the business/enterprise space which has long lead times, big perceived risks (for my clients, not me) and in an industry which is very slow to change.
I don't want to give the impression that I've already decided to give up, because I haven't.
So that's why I'm asking HN: How should I decide whether to give up, and go back and get a job until I have another startup idea, or keep going with this one, knowing that there is perhaps only a slim chance of success (but if I do succeed, it will be well and truly worth it)?
Happy to provide any further information if you think it relevant.
70 comments
[ 3.1 ms ] story [ 95.4 ms ] threadTake a really close look and make sure that you're not a hammer looking for a nail, but that you're solving a problem people actually have.
Three months is nothing in the B2B space. It usually takes longer than that to figure out the stuff above. I'm not saying to continuously beat a dead horse -- if you solved the wrong problem you need to find the right one, but that's a process not a crap-shoot.
This is very true.
You can measure whether consumer sites have any traction pretty quickly because you can make changes constantly and redeploy daily. With B2B you need to constantly reiterate on what problem your solving and that takes time.
B2B is something that needs to be built up like an old school business, measured in years not months. But the pay off is much higher the consumer sites.
The main reason why is that its difficult to get into companies and find out where the real problems are. Once you build those relationships and find out - then sales will become easier.
Then you have to deal with long sales cycles. So be prepared with a long runway.
Reduce your costs, and experiment as much as possible.
The worst that can happen is you end up getting a day job.
Bob Parsons (found of GoDaddy) has some pretty good advice in this area: http://www.bobparsons.me/SuccesskeyNevergiveupbutbeveryquick...
What have your potential customers got to do to get a benefit from your start-up? That could be adding to the inertia - mild interest will only turn into a sale when everyone else is doing it OR there are no barriers to entry. It may be that you can offer to solve your first customer's problems by doing the leg work, development work, managing process change (what have you) for them. For instance, most businesses plan IT development work 12 to 24 months ahead - with competition for resources.
A pain yes - but others will follow soon enough if they see someone else getting an advantage.
Maybe you're so in to it, you don't see what's missing.
I think it's especially hard because you're on your own. Try talking about it with friends or family. They'll mostly give some high level advice, but you'll see it will give you comfort to a certain degree.
First off, 2k a month could be considered frugal depending on area of the world they're living, etc, even for a single person (especially if not living at home or if it's difficult to find roommate situations where they live) when they may have debts, etc.
Also note that number includes further expenses for his business from November to January (at least). And depending on the business, there's no way you can "judge his frugality" on the numbers he's given.
Even if the costs can be $1k or $1.5k a month, I highly recommend he estimates this out with somewhat conservative estimates (for an emergency issue or two) when deciding how long a runway he has. If it turns out to be 9 months instead of an estimated 8, that's awesome, but you don't want to be in month 9 thinking you've got a month to spare and have your car being repossessed.
http://sfbay.craigslist.org/sfc/roo/
And there's probably no more expensive/better place to be for startups. There are places that are more expensive, but at that point, you should move to save money. And like I said, you can get by on less and still be in the bay area, if it's important to be there physically.
So I'm not judging his frugality, just saying that from what little we have to go on, it doesn't sound quite right.
Maybe we could even help him figure out how to save somewhere...
Being frugal is good too... but sometimes spending money makes sense, I think. Me, for example, I drive a $3,000 car, and pay $750 in rent. (I live in the south bay, my girlfriend and I split the rent on a $1500/month duplex) . Paying more isn't going to free up any time, so I don't. But I do hire someone to clean out my house once a week; It seems like a big win, as that saves me a lot of time, for a relatively small amount of money.
Good luck.
Note that in SF or NY renting a room in an apartment is often more than $1000. Renting your own studio is usually at LEAST $1300. I have a special situation, I don't have to pay utilities. Everywhere else you will have to pay utilities on top of rent.NYC will cost at least 30% more than this.
It's very easy to spend $2000 living a "cheap" lifestyle. I don't know what I'd cut out here. Aside from coffee and the beer, I don't really do anything a normal adult single male would do. That budget contains no dates, no movies, no restaurants, no books from the book store, etc. If I do any of those things a couple times a month I'm hitting $2K.
Moving to the east bay doesn't save much money unless you move far, far away. The nearby nice parts are not cheaper, the nearby bad parts are sketchy, and the far away parts require a car or else hours on the bus.
As a piece of generic advice: I think it is never, ever, ever a good idea to get in the situation where you will go bankrupt if your business fails. Be relentlessly resourceful, but also be relentless at managing your risks to ensure you don't lose everything if things don't work out. When it all comes crashing down, you need to be still able to pick yourself up and move on to the next thing (perhaps even another start-up).
I guess the fact that I can't, easily, is indicative of why that site isn't going anywhere, though:-/
Wow. That's inane. Yes, 'exceptional' is a fine goal, but there are many people doing pretty good by being pretty good.
Godin's books have struck me as little more than collections of pithy but ill-supported aphorisms, where the reader brings more to the book than is actually there. People find what they want to find, to "prove" what they want to believe.
(I'm sure there's some value in that, though by no means exceptional.)
One says, "It doesn't matter". This is for when I get so stressed out, I have trouble doing anything. It helps keep things in perspective.
The other says, "Jabez Wolffe". His guide boat forced him to abandon his swim across the English Channel because they couldn't see through the darkness and fog, and it was too dangerous to continue. What they didn't realize was that they were only 100 yards from shore, but they had no way of knowing.
How far from shore are you?
I would suggest doing whatever you can to find out before making any decision.
[Aside: Please contact me off-line. I am in a similar situation and would like to talk.]
How much time did it take for you to adopt twitter/google/whatever? Even for trying out free products people take months (you have a product that solves a real problem, but people don't know yet that they have a problem!).
Give it enough time. Learn more about and be good at sales. Be at their face all the time. Be so good that they cannot ignore you.
Just try to keep the buzz around your product/service alive. It is difficult in the B2B market, but not impossible. Then again, B2B (like any other market) is about the people involved and nothing else. Get to know more people and persuade them to use your product.
It sounds like a challenge; run up and meet it head on. Im sure your project has pitched numerous technical challenges at you previously. Now this is a business one. Throw yourself at it the same way as you would with a coding problem and you might find it surprising what you can achieve :)
(also if business copy and "spin" is your problem I am happy to read over any material to critique it; I've found a modicum of skill in that area in the past, so if it's useful to you then drop me a mail [check my profile])
I spent a lot of time consulting for, managing projects in and selling into the wholesale banking industry - pretty conservative, slow to change and hard to break into. I found that simplifying both my offering and my message to focus on one or two major points of functionality and pain helped pique interest enough that I could get a decent conversation going, during which I could gently introduce other features and benefits.
In terms of long lead times I would suggest, if it's at all possible for your product or service, offering risk-free trials for a month or two. Manage the install, the maintenance, the training yourself, so the prospect has little or no reason to say no. Once they become users, and assuming your product or service is good, it will be easier to upgrade them to paying status.
A major feature of selling into the B2B space is to know who your buyer is. It is rarely an IT manager. It is rarely an HR manager. It is not always the Operations manager. It is very often, however, the Finance guy. This is not always true, of course, and many people have more or less influence over a given purchasing decision, but you need to know who those people are, what they care about and how to communicate with them in terms they each understand and care about.
To answer your question about how you decide whether to give up, I would advise you to do the above until you are 3-months from zero net worth. At that point, find a paying gig (consultancy, full-time job, whatever you need to do to keep your head above water), then use those three months to go all in on your startup - phone clients and push them hard, phone/email/meet with as many prospects as possible, and push, push, push. If it's going to fail, there is little harm in being harder-nosed / cheekier about the sales process. I would also, in that last 3-month period, look for a buyer for your technology, to at least get some return back on your investment. If, however, you land a contract or two during those three months, you can cancel the paying gig and continue with the startup.
Really good luck, whatever happens! Please do post an update - I think your story will be of interest to pretty much the whole of HN!
If it helps, I spend a reasonable amount of time helping people formulate business and marketing strategy. Happy to offer a specific opinion and ideas (gratis, of course) if you want to email me.
From your comments in reply to others I assume you are young(ish) with no dependents. That has to be the best situation to start a business in. You talk about perhaps doing this again in the future with another idea, but imagine in that future you are married, you have kids, you have a mortgage. I'm in that position and I can tell you it is a lot lot harder than it is when you have no body depending on you - I can go without for a while, but kids grow, they need new clothes etc. You also get more accustomed to a lifestyle as you get older - which is hard to give up (Thank God I built up a cellar over the last few years because I cannot afford to buy wine now!).
If you've lost faith in your idea or don't see it being a success then cut your losses now, but if you still think you can make it work my advice would be to go for it.
Good luck.
PS. Also you mention that you are doing everything from dev to sales and marketing. If you actually have contacts in the industry I would focus 100% on dev, then get them to look at the product properly. People you know don't need to see your sales and marketing to tell you if the product will be a success.
Also, pay close attention to your mental health. Working alone, under deadline pressure and financial stress can lead to poor decision-making.
You can always get another job but even that takes some time, especially in this market, so keep that in mind.
Good luck and keep us updated!!!
With our startup we had a six month financial abyss timeframe, which was doable but risky. So, we spent the last two months pushing out a series of products- we shipped four different things in those two months, with the criteria being 'novel, simple, and potentially profitable in the short term'. Fortunately enough, one of them has taken off on the App Store enough that we're on track to make 2-3k/month with it
Now, 2-3k isn't a lot... except for the little detail that my co-founder and I are living in Budapest! I'm American and he's Hungarian so it was a no-brainer for us, but if you are working on your own, pick a place!
From my perspective, living in America is a waste of money if you have an internet based income- by moving to somewhere somewhere in South America or Eastern Europe your money will go three times as far, and you'll have a great time in the process.
Great idea for things that don't require that presence though.
In my view that's appropriate "shilling" on this site.
Unfortunately, I strongly suspect it wouldn't be in the company's best interest to associate it with a post about possibly "giving up". Business customers already perceive the product as a risk (or the OP said) and uncovering a topic about it on Google where they can see the founder in tough financial situations won't excite customers one bit.
1. If you absolutely love the idea you've built (like you were born to build this idea) take it to the very end. If you believe this is what your are meant to do then quitting will be a regret you'll never get over. And bankruptcy is bad but it is short lived (relatively).
2. If you are in the business because you saw an opportunity and are taking advantage of it... If you saw this as an opportunity, but don't love it for what it is, then get out before it causes too much debt, but not a minute earlier. In the meantime try like hell to get it to work but there will be other businesses to build.
That's the beuty of a small start-up, you've got room to experiment and if it doesn't go well you can cut and run without too much loss. Just don't pour everything into it unless you are in love with the idea and know your potential market loves it too.
You need a source of income! Unless just 1-3 sales will keep you paying your bills for months, you need to start making money outside the business. In the best assumption, your business will not be cashflow positive within six months: few product busineses are.
If you're committed to the idea, they by all means keep growing the business, but you simply can't rely on it as a source of income right now. Get a job, even a part time one, or do consulting.
I was in a similar situation in the late 90's except I was making sales -- just not enough to pay rent, etc. With about 3 months of runway left I got a job and it was the right decision. In hindsight, there's no way I could have built up the market in the limited time I had left and the "niche" was being commoditized.
You aren't ready, financially, to see through even 1 year of unprofitability. Give up while your credit rating is intact and before you have to fire your friends who might go along with your idea/dream. The market is a disaster for unproven, new offerings that you describe as 'mildly postiive'. Hell for most companies, if you cut a sale -today- you wouldn't be paid until October or later. I'd say that if you give up now you'll have enough time to get a job worth going to work for and get paid in time for your November deadline.
If you shut down now, you can skip a bunch of calender year bs in 2010 and keep it all in 2009. You can stop paying/playing accountant, lawyer, marketer and pr person. You don't have to clean the toilet, do the corp taxes and reporting, ship an mail, vacuum the floor and maintain the copy machine. :-)
Sorry if I seem negative, but not every idea works out the way you might like. Don't send good money and time after bad. I've had two companies fail, both taking time and one taking big old hunks of cash with it. I don't regret it, but I don't regret shutting them down, either. Well, maybe a little....
Nice to have a sanity check amongst all the cheerleading.
Your feedback if "mildly positive" ???? Allowing for the fact that people are usually polite and diplomatic, that is not a good sign. Why don't you find out what you would have to include / change to move them to passionate - hot to to trot ????
Agree with the posts about "The Dip" and persistence. It does take a long time and you don't want to give up 4 feet from the gold seam.
However, companies have a lot of money, and typically they will not be that price sensitive, so there could be a sizable pot of gold once things start moving.
I know you won't want to talk about this company in any way that could be tracked down via Google, but if you'd like to get more advice by phone involving the specifics, I'd be happy to help--just shoot me an email. I've been where you are before.
I also started, bootstrapped, in a very competitive B2B space and it took years to get significant traction and comfortable profitability. However, the feedback I received from potential customers made it clear I was addressing an actual market and that, if I could build a product which suited the market I was targeting, I would receive more than enough profit to compensate for the effort I had expended to build the business. I was, I did and it has, but it wasn't easy.
So, my advice to you would be: Be realistic about your business. Examine your chosen market and identify if the customer base and the pricing you have planned would be sufficient to support you within the next six months. If it is, focus laser-sharp on that market and address it in the best way possible. If it isn't, put things on hold, start consulting for a bit or take on a job to build up your reservoir of cash. I can almost guarantee it's going to take a lot longer to build your business to profitability than you have planned, so just assume your savings are gone.
For myself, I had set aside an amount which I had thought more than sufficient to build a business and it took all of my savings (and a bit of debt) before things were positive. No matter how you look at it that's a hard game of 'chicken' to play, but it's what bootstrapping is all about.