Should have focused on a specific sub-market at first, used it to proof-out internal tools and design->front door delivery processes, show the potential.
Something boutique-ish but simple, maybe a few internal configurables, that could use customization. Like headphone amplifiers (since headphones are becoming like fashion accessories).
But that's not how they marketed themselves from the get go. It was more about enabling the end user to come up with stuff (I remember reading they were basically targeting other software developers who had a hardware itch they wanted scratched). I think that was _specifically_ the leap too many.
It's really easy to say this is why someone failed and this is what they should have done instead but take a moment to walk in their shoes. Do you really think it never occurred to them? Every decision has incredible amount of weight to it and only they had to the bear the consequences of the those decisions.
I spoke about that in the post - we had narrowed our efforts to just be hardware focused, but soon realized that wasn't enough. We then narrowed even further and were going to simply offer a podcast radio with a number of customizations. But that decision was made too late.
I agree. My personal choice: they should have focused on "build your own personal digital alarm clock - make it snooze however you want: shouting at it, moving it or just placing the snooze button on a particular hard to reach place".
I had a speculative-design project in the back of my head, where objects physically evolve over successive versions, using only existing use data fed into a generative design. The alarm clock was the specific object I chose (what method of waking you up works the best for you?), and this would've been the perfect platform to realize it. Just a silly concept, but you need to come up with a reason to do millions of one-offs, rather than letting a designer doing her job well for a single universal model.
Something to think about WRT focus is consider a world, magically without retail car part stores. Actually I'm old enough to remember the world before autozone and pep boys and whatever other competitors I'm forgetting, and we got by pretty easily. But anyway...
It would be tough to startup the first ever disruptive retail car parts store if you focused deeply on parts for a '98 Saturn, however convenient it would be for a couple people. You'd have to make sure you focused deeply on ... How bout sparkplugs? Every spark plug commercially available today. It probably sounds insane, but there's a successful chain that theoretically sells nothing but batteries. This was actually pretty easy to focus. I think their project was immensely harder to focus. I think it would be extremely challenging to narrow their market yet still have more than a handful of customers.
Thanks for the mostly transparent insight into your experience.
How does one enter a deal to pay back investors with a shuttered operation? Does that mean make them whole or just pay something back? It seems like someone is holding onto a bag - THE bag?
Nobody is holding a bag of money. I only wish it played out that way. It was essentially an acquihire, so I'll be going to another company, and part of that deal allows me to make our investors whole.
How did Wattage secure a deal to return its investors money? Presumably they had spent it. Did they arrange a loan on terms that would give the original investors liquidation preferences?
The good news is the vision of mass-customized electronics is a huge deal. The bad news is, Apple proved it in 2007-2008 with the iPhone + App Store.
The points that you could've focused on a specific object are good. It would've made you think like your intended customer, the designer. You would've been forced to answer the question "Who wants this?" instead of planning layers of abstraction.
You should've taken a smaller slice not only so that a small team could execute it well, but also to make the concept much more graspable to customers. That's the true brilliance of the App Store.
The customization people actually want is met by the software layer. With a responsive touch screen and apps, you can satisfactorily reproduce physical interfaces, and more importantly, their functions.
People expect total plasticity of software. But that cannot satisfactorily reproduce all physical interfaces - people cannot operate a touchscreen without looking at it. Despite this they seem to be becoming popular in cars where they cannot be safely operated by the driver.
The rise of smartwatches suggests that people want another kind of interface. The complaints over screen size are another aspect. You can't have a screen that's both small (easily carried) and large (easily read) at the same time.
Finally there's an aesthetic argument. People like the appearance and heft of twiddly knobs and clicky buttons. This is why Roberts DAB radios are so popular.
People customise the external appearance of their featureless iPhones with flip or shell cases. People like to be visibly a bit different.
There are some questions about the deal we secured to return our investors' money. Without going into the specifics, I can say it was essentially an acquihire. I'm going to another company, and part of that deal allows me to repay our investors in full.
Just wanted to ask how common is it to return money to VC's?
Or how is this any different than a bank loan, If the VC doesn't shoulder the risks that come with these kind of projects I wonder what is the value they add.
The post says they raised "$250,000 from friends & family". That seems like a strong incentive to make sure your investors (read: loved ones) can recover their investments.
Seed round funding usually uses a convertible note. Assuming the VC round is a priced round, the seed round investors are treated as if they had put in money during the price round.
Thus they would have same class of stock as the VC investors, with the same liquidation preferences.
FWIW any professional investors, especially VCs, would love to buy out previous investors: fewer signatures, less dilution, fewer lines on the cap table, etc. But as a seed or early investor, you probably don't want to be bought out if further rounds of investment are happening (and in any standard deal you'll have the right to hold your stock as long as you want).
Further rounds of investment normally means the company is successful and growing. It also means that professional investors think the investment is a good deal, so as an early stage investor your best bet is generally to stay on the bandwagon.
In the case of Wattage, the company is going bankrupt, so as an investor you are going to be getting between 0 - 100% of your money back. So it seems like the founders tried to get that closer to 100% so there wouldn't be any negative feelings. But if you are an investor in a successful and growing company, getting your money back is not a good return.
That's a good question, but realize that the OP is returning the money to angels, the $250k they got from "friends and family". So, even more than being a standup guy, he's ensuring congeniality with the in-laws. :)
I'm astonished at the amount raised from "friends and family." If my network of people I can ask is 250 people (a lot!), and my success rate for securing some amount of money is 10%, the average amount contributed per person is $10,000. Maybe it's my modest means speaking here, but that's an insane amount.
If you have the sort of friends and family who will put up $50k, this is much more achievable, no? (I have no idea what sort of situation the poster is in, but F&F rounds can certainly go higher than $250k).
It's not "Friends and Family." It's "Friends and Family who qualify as accredited investors." (at least in the US).
An accredited investor is "someone whose net worth exceeds $1M not including their primary residence." The vast majority of people are not accredited investors because they cannot use their house as part of their net worth.
This is not your extended family giving you a $500 or $1000 to pursue your dream. These are wealthy people who know what they are doing, and are putting in several thousand if not tens of thousands of dollars each.
Friends and family are allowed to invest in a company without being an accredited investor. The rule about accredited investors involves soliciting investment from the general public. Rule 504 allows a company to raise upwards of 1 million dollars over a 12 month period from non-accredited investors so long as that money is raised from pre-existing contacts, that is no general solicitation is made.
Or maybe seeed studios is reminiscent of what they're aiming for.
The more advanced part being assembly and the like, plus coupling with suppliers.
I can only imagine how entertaining the customer support would be for something like that. FPE has it easy, whip out the digital dial calipers and is there, or is there not a 2.54 mm hole there or not, customer support is just simple yes no QA work, whereas debugging someone else's electronics design is not for the faint of heart.
Think of it like print on demand for books. Somebody PODs a "Complete genealogy of the Towne family in colonial Massachusetts" and puts it in the background photo of the pitch deck and the point isn't that almost nobody is interested in that topic, but that everyone who isn't hopelessly boring has something to make, whatever it is.
> 1,600 people signup for our email newsletters, and each of them received a personal message from me. I gave them my email address and phone number, and invited them to chat if they had any questions. I heard from 100's of them, and many shared “the thing” they wanted to create. The problem is many of them simply weren’t feasible with the current technology. I suspect we could have eventually delivered on most of them, but not in the foreseeable future.
I would love to see these emails (anonymized in some way).
That sucks. I really like that you were pushing boundaries and creating a platform that had the potential to advance mankind - too few people are building things that have that potential.
That deck is really pretty but I'm really curious whether investors would spend their time going through so much text. Here is a pitch deck that buffer used.
I felt I needed to tell a richer story about what we were trying to achieve, mainly because we were created an entirely new market. I couldn't point to another company and say "we're like them, but 10x better." I didn't exactly have market numbers to use as a method of framing the investment potential. I felt
I needed to paint a picture about a future we were trying to create... but you may very well be correct.
I'm with you on having a narrative and conveying the drive. Did you find that some investors understood that and made decisions based on it or was it that you found them to be speaking a different language?
Btw, I respect the effort and thought that went into analyzing the reasons for failure and the courage required to be open about it. Hope things work out in your next attempt.
Sorry to hear things didn't work out. I am curious to know more about your thoughts on VCs in Toronto versus those south of the border. Canadian VCs have this rep of being quite conservative, only wanting to invest at later stages when there is very little risk. Does your experience agree with this characterization?
Right? I see this a lot and it's often an investors first response when asking for small seed rounds: "Well have you considered raising money internally? Ask around your friends and family".
If I had friends and family that could just toss me a $250k I don't think I'd be in this position.
Reminds me of Mitt Romney's entrepreneurial advice: "Borrow money if you have to from your parents." Such a disconnect. Must be nice to have parents to be able to bankroll your businesses, Mitt.
I don't think it was a slight on you. Just the idea that some people (again, not you) think that it's easy to get access to this sort of cash (or even 1/10th, or even 1/100th of it) to "bootstrap" themselves to success (bootstrap in quotes because relying on cash from others isn't equally feasible and I'm not sure if it's really pulling yourself up from your bootstraps).
My parents (who owned a house) offered to lend me five figures to buy a house, together with my savings I think that would have been enough to bankroll a small business. I earn more than they do these days. I think Mitt's advice is valid for middle class families who don't max out their credit to spend on cars and holidays.
Raising $250k from your close network should be very easy for anyone hoping to be a founder. If you can't get 10 people to write a $25k check, you should reconsider founding a company.
It's really stupid what you are saying. Some people live with $25k per 10 years...
Not everybody is rich or knows rich people.
You just need to be smart to start a good company.
Also only the "american" style starts with huge amount of money and burns it.
It's not always good to just "fail-fast". Sometimes business needs some time, time to grow, not just "put a lot of money in it and if nobody likes it it will die."
Or they don't need since their business is making revenue since day 1.
Okai maybe not since day 1, but its making revenue.
As already said there are also businesses where you don't need any funding. Business 2 Business models mostly don't need that much money with a great idea.
Your point stands, however, I didn't mean "board" management literally. I should have said "shareholders management". I'm not entirely familiar with US corporate law, but on roman based civil law, 10 investors with 25K of seed capital (ie non trivial amount of % votes) can get messy.
(although we did create a board with the breakdown I suggested, because we were lucky to pick the "right" FoaF investors, attorneys and counsels)
Under U.S. corporation law, shareholders have very little ability to affect corporate management, unless they own a large enough stake to impact board elections. In a start-up valued at $1MM post-money, these 10 angels are not going to own more than a couple percent each, while the founders will control 75 percent of the company. The founders will have more than enough voting control, assuming they vote together, to ignore the investors.
I would say an answer of "yes" is a huge red flag. A good CEO needs to understand risk/reward. VCs are investing in risky things, and thus distribute their cash amongst hundreds of start ups, fully aware that most will go to zero. It doesn't matter because 1 will go to $1 billion.
OTOH, family usually can't afford to lose what they give. They make emotional decisions, not financially rational ones.
If a CEO can't distinguish those entire distinguish those entirely different cases I doubt their financial acumen. You go to VC for moon shots, to the bank for proven business models, and to family and friends to build a family 'lifestyle' and asset heavy businesses (asset heavy so you can recoup some of the money if your business fails).
No one rational should believe that their startup will succeed no matter what. We know, with certainty, that it almost certainly will fail. It's a flutter - a bet on a fabulous future (fabulous in terms of success, making a difference, huge wads of cash, whatever). If VCs expect that kind of naivety, well, you get what you pay for. How many other ways will that CEO be naive?
If this is true, then I'm even more wary of ever seeking VC money than I was before. No way in hell I'm asking my middle-class and lower-middle class family members to support risky venture X. That's the job of the wealthy venture capitalist, who can afford to lose X dollars on my venture (that's the whole rationale behind the "accredited investor" thing, as much as I disagree with the regulation).
If they expect someone else to do their job, I wouldn't want anything to do with them, anyway.
"You are willing to lose my money, but not your friends or family?"
"Yes. Because if I asked my family to fund a business venture, it would be something bland, low-risk, and low-return. Exactly the kind of things you guys can't stand funding."
An investor should be willing to make a "10% chance for a 100X return" type investment, but no, I wouldn't usually suggest that to my friends and family unless the amount of money was not significant to them. I don't think that's a red flag; investors have different risk tolerances for good reasons.
It helps you determine how much of your bankroll you can wager depending on (1) the odds, and (2) the size of your bankroll. It's the same reason why you shouldn't (mathematically) play the lottery (when it's expected value is actually positive) unless you're already filthy rich. The same math applies for hyper-risky startup investing.
See the comment above. It's not "Friends and Family." It's "Friends and Family who qualify as accredited investors."
This is not your extended family giving you a $500 or $1000 to pursue your dream.
I would never ask my middle class friends and family for funding on such a speculative venture to begin with. I would ask--if I had rich friends and family, and it was a great idea. This was not, but I don't understand most fashion anyways.
You may have failed, Wattage, but you certainly left the place in better shape than you found it!
In a time where a good portion of the industry is helping us click on ads that we would rather not see, you attempted something difficult, different, and with less money than most VC backed start-ups spend on their espresso machine.
So, so true. Also, I've long noticed that startups who call themselves beautiful on their front page seem 99% bound to fail. Noticeably higher failure rate.
I would tend to agree with this, but it's usually a sign that the startup has incorrectly focused their energies and money on design, instead of focusing on the underlaying business itself.
In this case, I simply designed the deck myself. I'm flattered that everyone thinks it looks nice, but my intention wasn't to make something with style over substance.
On the penultimate slide, p.24, what's the relevance of the company logos? It appears to be an endorsement, in what way is that true or false. The alternative interpretation is that the 70 years of product development has been for the listed companies?
This is like making a McDonalds because everyone says they want it their way but deep down the truth is we just want an In-N-Out menu of 5 things. And the McDonald's way is bloated, slow, expensive, and dying.
That strategy worked because Apple was dying and Jobs needed to focus their efforts. But that all changed once they found their footing. Consider the iPod and all the sizes and colours they offered, or what Apple is now doing with the Watch. There are many many customization options, and I suspect these options are only going to grow.
Still, compare, say, "Mac mini, iMac, or Mac Pro?" to the set of desktops available from Dell. Apple has lots of options, but they generally stick to consistent branding of a couple of core product lines.
I don't know you, but you seem stuck on customization? A lot of us out here just want a functional product with a decent half life. I think Apple is making a big mistake putting form over function? I cringe when I hear I need a heat gun in order to open their sleek products. If a product is well made, and does what it's suspose to do, I don't see the need for a bunch of aesthetic nonsense. The best watchmakers don't vary their designs much-- Rolex, Patek, and Omega vary their styles so little, I mistake some older models for new. I glad you have a new job. I'm just more mystified over VC funding/hiring than before I came here today.
Just the other week I was listening to a podcast where they were talking about how Apple seems to be moving in the opposite direction now. They have the MacBook, MacBook Air, MacBook Pro (and a non-Retina version), iMac (and a Retina version), Mac Pro, and a Mac mini.
You're thinking of Burger King's "have it your way", not McD's. Regardless, I'm not sure it's an apt comparison. McD's is dying not because they offer lots of choice, but rather because the food is shit and unhealthy. In-N-Out is in a similar situation, but their food just happens to be of a higher quality.
When it comes to mass-customization, there's actually a lot of evidence that shows people do want more choice. You're seeing it with products like Moto X and NikeiD. Or even with what Apple is doing with the Watch. It's logistically more difficult to pull off, but it's doable online.
It's not about the pitch deck. It's about the product. How many people really want a custom radio front panel?
There are other customized products in that space which might be more useful.
* Customized entertainment remotes. Tell us what gear you have, what you like to do with it, and we make a remote or remotes that makes it easier to use. You might have a simple "watch TV only" remote, and a tablet type "does everything" remote.
* Light your house and garden. Send us pictures of your house and garden, answer some questions about how you use them, and we'll design an outdoor lighting system for it and have an installer put it in. You get to see renders of what it looks like at night before you buy. (There are Autodesk tools for that.)
* Custom control panels for the aftermarket auto sound industry. Make cool stuff for LA rappers and wannabees.
* There are lots of industrial products which need heavy customization. Offer on-line ordering tools for such products as a service to industrial sellers.
Trying to hammer a customized product model into the web-based "order on line, ship to customer, integration is someone else's problem, no customer service" model wasn't going to work.
> How many people really want a custom radio front panel?
It looks like they finally decided to focus on this one product which I think is smart because my guess is "way more than you think". Customization may be difficult to make but it is very easy to sell.
You may be right. We liked the radio because it was unique enough that we felt it would stand out. Instead of flipping between AM/FM stations, you'd be flipping between podcasts. I think that would have sold pretty well... or at least well enough for us to prove the concept and raise the large amounts we needed.
> * There are lots of industrial products which need heavy customization. Offer on-line ordering tools for such products as a service to industrial sellers.
Yup. This definitely should have started out as a B2B play. Industry will pay an arm and a leg for customization for lots of random parts. Use the cash to build the foundation of the biz then go after the finicky consumer market later.
Yes, and there's a business model. There are industrial companies that are good at making things, but not so good at making web interfaces for ordering complex products. So there's a niche for an online service. There are lots of things a good online service could do that few industrial companies now offer. Consider:
* proper cross-checking of compatibility of items ordered
* generate image of finished product
* on-line generation of installation drawing/CAD file,
including mounting holes and electrical connections.
Let users play with the options. Huge win for
designers - "If we add option B, will it fit?"
This, in fact, is the big win - let users try your
options and see what works for them.
* generate manufacturing data in format the seller's
production system can use
* provide cross-company integration. If you need
something that requires parts from several
companies, and they're often used together, give
the user help in getting everybody going in the
same direction.
Most industrial sites have a big parts list and a "call for details" phone number. Getting all the right pieces together is hard. The automation level in this space is low, except for a few big companies.
In Germany at least there is a big initiative backed government. See industry 4.0 and mass customization. They see it as the next thing that will give then a competitive edge
In Germany at least there is a big initiative backed government. See industry 4.0 and mass customization. They see it as the next thing that will give then a competitive edge
IMO, the custom radio is not really a terrible idea; the problem was all the pictures where of the same radio with a new paint job. At least make the knobs look like chess pieces, rocket ships, airplanes, or cats etc.
Then again who buys radios? Custom clocks seem far more universal and let people use a wider range of shapes.
To some extent, the initial product wasn't important. Yes, it needed to resonate with an audience, but it's sole purpose was to test the waters and prove that we could ship.
We liked the radio because it was unique enough that we felt it would stand out. Instead of flipping between AM/FM stations, you'd be flipping between podcasts. I think that would have sold pretty well... or at least well enough for us to prove the concept and raise the large amounts we needed.
I have to disagree...I think your choice of products and the blandness of the customizations may not have buried you, but they certainly helped dig the hole.
>>> To some extent, the initial product wasn't important.
I am not sure if I agree with this.
I think a good initial product choice is really important to gain the much needed initial traction.
If the initial product is good, the potential users will resonate with it. They will think 'Yeah! I want it!'. They will think 'Yeah! These <initial_product> could be so much more convenient to use / cooler'. You get the idea.
But nowadays, few people use radios other than a car radio. It's much harder for the users to resonate and see what problem it solves for them.
Actually, I use a cheap portable AM radio every day. I started using one when I was in construction--the're cheap, and simple. I don't have to fiddle with it, don't care if it's stolen, or I break it.
Geeze, they really missed an opportunity: the electronic musician market.
Right now the electronic-music market is undergoing a massive explosion of new technologies - new products, new synths, just a real explosion of technology for music-makers.
Imagine if a company sprang up that could viably produce custom panels - real hardware - for all the synth software thats on the market? Do this, become the leader, and you will fill in a very big hole ..
Does anyone know how big the hobbyist market is for electronic musicians? I've noticed a lot of my acquaintances talk about "making beats", including a lot of people I'd never suspect. It's made me think that group is larger than I would have thought.
Use Googles Adwords Keyword Planner to research search query stats, aka the number of people per month searching for "making beats" & other similar keywords.
Its a multi-million dollar industry. Musicians are everywhere. There are a lot more hobbyist synth players than "professionals", although there seem to be a fair few of those too.
I would like to know how far you got with the product. Even if it's incomplete, I think I would rather judge this on how far completed to beta launch you guys were.
I signed up a few weeks back and was interested in seeing what the product would look like.
We have a fully working version of the creation tools, which would output all of the files required for fabrication. We had created all of the custom electronics, and were able to produce a number of functioning prototypes.
The beta was intended to do a few things:
1. Measure interest in the platform and generate traction for investors.
2. User-test and see what was/wasn't working
3. Get a sense of what parts and materials were most popular, to ensure we properly handled inventory.
I would like to know how far you got with the product. Even if it's incomplete, I think I would rather judge this on how far completed to beta launch you guys were.
I signed up a few weeks back and was interested in seeing what the product would look like.
One of the few postmortems that actually may be fairly accurate. Yes, the pitch deck is easy on the eyes but terrible at piquing investor interest. I still wasn't quite sure what the product was or why so much energy was being spent trying to create a picture of 10 years from now.
Focusing on 1 (or 2) promising products was definitely the way to go. A customizable wifi radio that plays a podcast, Pandora or Spotify sounds kinda cool.
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[ 3.0 ms ] story [ 230 ms ] threadSomething boutique-ish but simple, maybe a few internal configurables, that could use customization. Like headphone amplifiers (since headphones are becoming like fashion accessories).
Or e-ink pens.
It would be tough to startup the first ever disruptive retail car parts store if you focused deeply on parts for a '98 Saturn, however convenient it would be for a couple people. You'd have to make sure you focused deeply on ... How bout sparkplugs? Every spark plug commercially available today. It probably sounds insane, but there's a successful chain that theoretically sells nothing but batteries. This was actually pretty easy to focus. I think their project was immensely harder to focus. I think it would be extremely challenging to narrow their market yet still have more than a handful of customers.
In this case I would have told them up front this is too much to do to start with. To get big wins eventually you have to start with small ones.
How does one enter a deal to pay back investors with a shuttered operation? Does that mean make them whole or just pay something back? It seems like someone is holding onto a bag - THE bag?
The points that you could've focused on a specific object are good. It would've made you think like your intended customer, the designer. You would've been forced to answer the question "Who wants this?" instead of planning layers of abstraction.
You should've taken a smaller slice not only so that a small team could execute it well, but also to make the concept much more graspable to customers. That's the true brilliance of the App Store.
The rise of smartwatches suggests that people want another kind of interface. The complaints over screen size are another aspect. You can't have a screen that's both small (easily carried) and large (easily read) at the same time.
Finally there's an aesthetic argument. People like the appearance and heft of twiddly knobs and clicky buttons. This is why Roberts DAB radios are so popular.
People customise the external appearance of their featureless iPhones with flip or shell cases. People like to be visibly a bit different.
Or how is this any different than a bank loan, If the VC doesn't shoulder the risks that come with these kind of projects I wonder what is the value they add.
People might as well borrow the money on loan.
Seed round funding usually uses a convertible note. Assuming the VC round is a priced round, the seed round investors are treated as if they had put in money during the price round.
Thus they would have same class of stock as the VC investors, with the same liquidation preferences.
Further rounds of investment normally means the company is successful and growing. It also means that professional investors think the investment is a good deal, so as an early stage investor your best bet is generally to stay on the bandwagon.
In the case of Wattage, the company is going bankrupt, so as an investor you are going to be getting between 0 - 100% of your money back. So it seems like the founders tried to get that closer to 100% so there wouldn't be any negative feelings. But if you are an investor in a successful and growing company, getting your money back is not a good return.
An accredited investor is "someone whose net worth exceeds $1M not including their primary residence." The vast majority of people are not accredited investors because they cannot use their house as part of their net worth.
This is not your extended family giving you a $500 or $1000 to pursue your dream. These are wealthy people who know what they are doing, and are putting in several thousand if not tens of thousands of dollars each.
http://www.sec.gov/answers/rule504.htm
Just allowing me to customize a radio (do people still buy radios? I'm curious) isn't of incredible value right now.
I'd wager that "custom drones" would have been a more successful start point, but scalability would have been a problem.
http://www.frontpanelexpress.com/
Or maybe seeed studios is reminiscent of what they're aiming for.
The more advanced part being assembly and the like, plus coupling with suppliers.
I can only imagine how entertaining the customer support would be for something like that. FPE has it easy, whip out the digital dial calipers and is there, or is there not a 2.54 mm hole there or not, customer support is just simple yes no QA work, whereas debugging someone else's electronics design is not for the faint of heart.
Think of it like print on demand for books. Somebody PODs a "Complete genealogy of the Towne family in colonial Massachusetts" and puts it in the background photo of the pitch deck and the point isn't that almost nobody is interested in that topic, but that everyone who isn't hopelessly boring has something to make, whatever it is.
I would love to see these emails (anonymized in some way).
https://drive.google.com/file/d/0B95cJ2uw4oQlSm5rSTEwU0NZLUk...
http://www.slideshare.net/Bufferapp/buffer-seedrounddeck
I needed to paint a picture about a future we were trying to create... but you may very well be correct.
Btw, I respect the effort and thought that went into analyzing the reasons for failure and the courage required to be open about it. Hope things work out in your next attempt.
Really well designed but they really neglected to talk about their business model.
I mean I would have loved to have known how much their 'OneWatt' breadboard cost to manufacture and what they were planning on selling it for.
That being said I loved their slide on 'HOW BIG IS THE MARKET?'.
I cant imagine any of my friends or family being able to give me a quarter million.
If I had friends and family that could just toss me a $250k I don't think I'd be in this position.
Not sure what that means or how it's relevant.
> You just need to be smart to start a good company.
Short answer is, No. Longer answer is, if you're really smart a) you realize what I said is true and b) you'd figure out a way to raise the money.
They do. They go to VCs.
1 with 100k, 2 with 50, 4 with 12.5 : yeah, why not.
With that, you have one clear lead, with whom future investors and bank can relate to.
My bank wouldn't have bankrolled us if we had 10 "small" investors from the start.
[This said, I'm no expert on the subject, just anecdotal evidence...]
Yes, your breakdown is both preferable and more likely. But my point stands.
(although we did create a board with the breakdown I suggested, because we were lucky to pick the "right" FoaF investors, attorneys and counsels)
OTOH, family usually can't afford to lose what they give. They make emotional decisions, not financially rational ones.
If a CEO can't distinguish those entire distinguish those entirely different cases I doubt their financial acumen. You go to VC for moon shots, to the bank for proven business models, and to family and friends to build a family 'lifestyle' and asset heavy businesses (asset heavy so you can recoup some of the money if your business fails).
No one rational should believe that their startup will succeed no matter what. We know, with certainty, that it almost certainly will fail. It's a flutter - a bet on a fabulous future (fabulous in terms of success, making a difference, huge wads of cash, whatever). If VCs expect that kind of naivety, well, you get what you pay for. How many other ways will that CEO be naive?
If they expect someone else to do their job, I wouldn't want anything to do with them, anyway.
"You are willing to lose my money, but not your friends or family?"
"Yes. Because if I asked my family to fund a business venture, it would be something bland, low-risk, and low-return. Exactly the kind of things you guys can't stand funding."
It helps you determine how much of your bankroll you can wager depending on (1) the odds, and (2) the size of your bankroll. It's the same reason why you shouldn't (mathematically) play the lottery (when it's expected value is actually positive) unless you're already filthy rich. The same math applies for hyper-risky startup investing.
In a time where a good portion of the industry is helping us click on ads that we would rather not see, you attempted something difficult, different, and with less money than most VC backed start-ups spend on their espresso machine.
I am looking forward to your next venture.
Reminds me of this quote:
"As a designer, this is hard to admit: Extremely beautiful design is a negative warning signal for startup success. (70%+ accuracy.)"
https://twitter.com/dcurtis/status/571082598920925187
So, so true. Also, I've long noticed that startups who call themselves beautiful on their front page seem 99% bound to fail. Noticeably higher failure rate.
In this case, I simply designed the deck myself. I'm flattered that everyone thinks it looks nice, but my intention wasn't to make something with style over substance.
(Maybe not the best link, but it shows what I'm talking about.)
http://www.slopefillers.com/steve-jobs-product-matrix/
When it comes to mass-customization, there's actually a lot of evidence that shows people do want more choice. You're seeing it with products like Moto X and NikeiD. Or even with what Apple is doing with the Watch. It's logistically more difficult to pull off, but it's doable online.
There are other customized products in that space which might be more useful.
* Customized entertainment remotes. Tell us what gear you have, what you like to do with it, and we make a remote or remotes that makes it easier to use. You might have a simple "watch TV only" remote, and a tablet type "does everything" remote.
* Light your house and garden. Send us pictures of your house and garden, answer some questions about how you use them, and we'll design an outdoor lighting system for it and have an installer put it in. You get to see renders of what it looks like at night before you buy. (There are Autodesk tools for that.)
* Custom control panels for the aftermarket auto sound industry. Make cool stuff for LA rappers and wannabees.
* There are lots of industrial products which need heavy customization. Offer on-line ordering tools for such products as a service to industrial sellers.
Trying to hammer a customized product model into the web-based "order on line, ship to customer, integration is someone else's problem, no customer service" model wasn't going to work.
It looks like they finally decided to focus on this one product which I think is smart because my guess is "way more than you think". Customization may be difficult to make but it is very easy to sell.
Yup. This definitely should have started out as a B2B play. Industry will pay an arm and a leg for customization for lots of random parts. Use the cash to build the foundation of the biz then go after the finicky consumer market later.
Then again who buys radios? Custom clocks seem far more universal and let people use a wider range of shapes.
We liked the radio because it was unique enough that we felt it would stand out. Instead of flipping between AM/FM stations, you'd be flipping between podcasts. I think that would have sold pretty well... or at least well enough for us to prove the concept and raise the large amounts we needed.
Hats off to you for trying, but I'm going to file this statement under my "I'm reliving 1999 in 2015" heading...
I am not sure if I agree with this.
I think a good initial product choice is really important to gain the much needed initial traction.
If the initial product is good, the potential users will resonate with it. They will think 'Yeah! I want it!'. They will think 'Yeah! These <initial_product> could be so much more convenient to use / cooler'. You get the idea.
But nowadays, few people use radios other than a car radio. It's much harder for the users to resonate and see what problem it solves for them.
Right now the electronic-music market is undergoing a massive explosion of new technologies - new products, new synths, just a real explosion of technology for music-makers.
Imagine if a company sprang up that could viably produce custom panels - real hardware - for all the synth software thats on the market? Do this, become the leader, and you will fill in a very big hole ..
https://adwords.google.com/KeywordPlanner
I signed up a few weeks back and was interested in seeing what the product would look like.
The beta was intended to do a few things:
1. Measure interest in the platform and generate traction for investors. 2. User-test and see what was/wasn't working 3. Get a sense of what parts and materials were most popular, to ensure we properly handled inventory.
I signed up a few weeks back and was interested in seeing what the product would look like.
Focusing on 1 (or 2) promising products was definitely the way to go. A customizable wifi radio that plays a podcast, Pandora or Spotify sounds kinda cool.