Saturday, November 27, 2010

Failure to Launch


Over the last six months I have been living one of my dreams - doing another software startup. During the 90's I founded and sold two companies, the last being Netoria that was sold to Novell in 1999.  So in April this year I founded Majura as a mobile security company in the rapidly exploding mobile device marketplace.  However, a few weeks ago I ceased all activity and put Majura to rest.  

Many people have been contacting me saying how hard it must be right now, but the truth is that I feel great and had a fantastic six months.  Failure is a part of life and something that every entrepreneur must face - but something that we often we don't like to discuss.  Without an open discussion and analysis of failure we won't learn and grow as individuals. Plus, there is the hope that others can learn from failures such as Majura.  

So what happened?

The fundamental reason for the failure of Majura was lack of what Steve Blank calls "customer development". We simply were not close enough to enough potential customers to validate that what we were proposing would work, and in particular:
  • The exact problem we were solving
  • Who would be the buyer
  • How much they would pay
  • Whether they would buy the solution from a startup
Yes, we did speak to potential customers, and we did get very positive feedback, but only THREE of them. We really should have had feedback from 10+ potential customers. The lack of close and continual customer feedback also prevented us from realizing early that we were likely biting off more than we could chew - i.e. our solution made sense, but would have taken far too long to implement and get right.

We also spoke to investors far to early, even before our prototype was functional. While everyone agreed the space we were in was exploding, the lack of actual customers and a running prototype/solution really made investors uncomfortable.  After all, they can invest in consumer businesses that has already launched a web site, and has real customers and possibly revenue.

So what would I do differently? 
  1. Get closer to many more potential customers - at least 10, and preferably more. Really understand their routine and the problems they face. 
  2. Find a problem that it easier and simpler to solve i.e. find an "impedance match" between the problem and the capabilities of the startup.  By starting out simply you can get in the market quickly and start iterating quickly into a bigger solution. As an example, the various mobile device device app stores offer a simple and quick route to market and a way to validate mobile technology and ideas.
  3. Rapidly iterate in the marketplace, according to Steve Blank's philosophy.
  4. Don't go to investors without marketplace validation.
Netoria's initial product was only 50 or so lines of code, but it's rapid uptake in the market allowed us to quickly improve and move the product into other areas - and upon acquisition we had over 1 million enterprise seats installed of four products. We solved a simple, but important problem that got us into the market and provided the needed customer input.

This has been a fairly short post, because the mistakes made are fairly clear and obvious. I may or may not do another startup, but this lesson will stay with me for the rest of my life, and for that I am very grateful.