Three years ago, a close friend and I came up with an idea for an Internet start-up company based around the notion of using a map as an event calendar. The idea came about when we noticed that we would miss many events in our own neighbourhood because we didn’t know about what was happening around us. Wouldn’t it be nice, we postulated, if we could see a map of our neighbourhood and see all the events that were coming up. The idea is sound and is actually now the premise of many emerging location-based applications that are popping up in Facebook, Twitter and others. At the time there were few options for mapping events the way we were thinking so we scared up some investors (including us) and developed SwankyAnts.com . . . a community based event map. On October 31, 2011 we shut the project down.
You will find a host of articles on the Internet about failed start-ups and I read many of them. I particularly like, and can appreciate, this one by Mark Goldenson, 10 Lessons Learned from a Failed Startup. Perhaps the most poignant point is that there is a huge gap between knowing and doing. Despite our best efforts to read and listen to excellent advice we made many of the mistakes that we knew we shouldn’t make. Perhaps then that makes articles that talk about failures moot. There is no way around having to live the experience to truly understand what it’s all about. Having said this, I will try anyway to share my five key lessons in the faint hope that others will learn from our mistakes.
1. Do it for love. You have to assume that what you are starting isn’t going to go anywhere and that you are really doing it because you love to do it. We took our idea and forced it into a business when, perhaps, there wasn’t one there. Had we simply focused on what we set out to do – build a tool that better showed where events were going on – the money would have likely followed.
2. Spend less time on structure. Because we started with the notion of building a business first rather than the idea we spent far too much time and money on structuring a company. Lawyers were happy but we weren’t. There was no need to do this early on. We could have easily carried on with the idea and worried about company structure once we showed that the idea would generate money. Remember lesson 1, do it for love – forget the business and focus on the idea.
3. But you still need money. You still need money and investors to get your idea off the ground and you may find someone to invest to get you started but once you are up and running and proved the concept you’ll need a lot more. Perhaps, though, more importantly you have to know when your idea isn’t going anywhere and pull the plug. It’s so easy to get caught in the game of “if”; if we just add this functionality, if we just spend money on this marketing, if we just bring this person on-board. If you are doing it for love then keep going. If you are doing it for a business then you have to consider that maybe it’s not going to work and it’s time to move onto something else.
4. Value your time. We did not do this and it led to much conflict when lawyers and developers were getting paid but others were expected to contribute their time freely. Even amongst the free labour contributors there was no value given to these efforts so much effort would be expended on activities that may or may not lead to a return. Again, not a problem if the project is being done for love; big problem if it’s a business.
5. Never do business with friends. You’ll find many articles about this topic too and many will tell you the same. The emotional attachment that comes along with friendship clouds your business judgement to the point where you would never make certain decisions if friends were not involved. There is much to loose and I believe the risk too great to the friendship and to the business for friends to become business partners.
I am reminded of teenagers when considering starting out in a business venture. As parents we attempt to impart wisdom onto our children so that they don’t have to make the same mistakes we did but our teenage children are not likely to heed our advice no matter how well founded. They have to find out for themselves, make their own mistakes and own the experience. Such is the way of business and I too am the proud owner of my mistakes.