Why my startup failed

Why my startup failed

Over the recent bank holiday weekend, I was reminded about my startup, Sorted, when RatedPeople.com started TV advertising using ‘sorted’ as a strap line for their very similar product.

When my delicately stacked house of cards fell down, I wrote a blog post penning all the reasons why I thought it had failed. Since then, I’ve worked at 2 very successful fast-growth companies and am now in a much better position to properly diagnose the problems. I was far too close to it at my last attempt, so here’s what I’ve learnt since. Hopefully this can help you in your next business adventure!

  1. MVP to us, was ‘most valuable product’
    • The whole concept of an MVP is to build a quick and dirty version of your product, then build and optimise based on a constant feedback loop with your users. The goal being to grow with the market and build the perfect product, in a cost and time efficient manner
    • Whilst this made sense to us in theory, in reality it’s quite a hurdle to overcome. Professionalism is, in general, about quality. We struggled with the concept of taking something to market that we weren’t 100% behind, something that was simply unfinished.
    • In the end, we launched a product that was stuck between the 2 extremes of barely functional and finished article. We lacked an identify, we lacked a direction in product development. We basically launched something that left us with no idea of “what to do next” regardless of it it were successful or an utter failure.
    • Lesson Learned: Having an idea is great, having a product is better, but both have something in common – they need a way to grow. Focus on the single most important thing for your business, build a slick product that achieves that simple yet crucial goal, then build out from there based on data. Never let personal pride, opinion or your competition cloud your judgement.
  2. Mentors were not allowed to mentor
    • We went through an accelerator. A few years ago these were all the rage, to be a successful startup you had to go through one. It’s like going to a redbrick or ivy league university. The basic concept is that alongside your lesson plan, you get introduced to a tonne of mentors and investors, who work with you through the programme to maximise your success.
    • Towards the start of an accelerator programme, you go through a sort of ‘death-by-mentor’ week where you meet a tonne of people for back-to-back 30 minute 1-2-1 sessions. A mentors roll in this is environment is to rip your business to shreds then help you put it back together again.
    • The problem here, was that we just weren’t willing to listen. Wave after wave of mentors told us the same thing – ‘focus on one vertical and one geo’ – but we wanted to take over the world. Just like the MVP point above, our failure here was our inability to focus. Yet another example of trying to run a marathon before you can even crawl.
    • Lesson Learned: Whether you’re in an accelerator or just down the pub, if everyone in the room is telling you you’re making a mistake, you need to pay attention. That doesn’t mean you have to act on it, but you need to take it seriously.
  3. Working hard not smart
    • Like many people in startup-land, we put in the hours. 7 days a week, 16+ hours/day. We even rented a house facebook-style and worked round the clock with the team.
    • The biggest issue with working in this way, is you have too much time. I know that sounds silly, but when you’re working 100+ hours/week, you end up working for the sake of working. Our marketing strategy was to cast a net out and see what stuck, so we wasted a tonne of resources and valuable time due to a lack of purpose and direction.
    • Think of it this way – an 8-hour work day is an arbitrary number. If it was 6 hours, and if you would lose your job if you didn’t still hit targets, think you’d work out a way to do it? Of course you would, because you’d prioritise and focus on efficiency.
    • Lesson Learned: working insane hours can be counterproductive, it’s not smart and you never work out the best way to do something. Yes startups are hard and require a tonne of work, but it has to be the RIGHT work, it has to be SMART work and just like product development, it has to have a purpose.
  4. We built for scale from day 1
    • Everyone that starts a tech company wants to be ‘the next big thing’. The media ‘teaches’ us that overnight success is possible with the right idea and a bit of luck on marketing. Dropbox took off thanks to amazing traction on Dig, facebook was a single email to influencers at Harvard, airbnb even said something along the lines of “it took us 1000 days to become an overnight success”. You’re taught from day 1 that if your product is good and the market is there, one big input can send your numbers off the charts.
    • The problem with this? If you’re half decent at marketing, particularly PR, you end up building your architecture for scale for fear that when this big influx of customers does come in, it’ll crash your system.
    • We went from our quick and simple hosting with GoDaddy to an expensive and complex solution with AWS. Not only were we fronting the cost for the bandwidth that in reality was never needed, but we had to pay an outside contractor to put everything in place because it went beyond our expertise.
    • We didn’t fail because of any one reason, but when things took a downward turn and we failed to raise money, our burn rate was the final kick in the face that knocked us out.
    • Lesson Learned: You very rarely hear a success story that started with “they did global email marketing to get their first 1,000 users”. Normally you hear about people going to cafés and offering coffee in return for a product demo. Don’t oversell your product by mass-marketing, don’t set yourself up to be a huge success, don’t waste money on resources that aren’t needed. Heck, if you do happen to stumble across something that generates so much demand it crashes your servers… that’s a story that’s newsworthy!

When I first blogged about the demise of Sorted, I pretty much just blamed the world and claimed the primary reason was that we didn’t ask for enough money. I can now confidently say that that was total BS (although I believed it at the time).
The fundamental issue is consistent throughout the above diagnoses, Sorted failed because of a combination of overexertion and overconfidence.

I hope you found this post insightful! I know I learned a lot writing it. In a recent post I wrote about the goals I set myself when I was 19, one of which was to start a company that would likely fail, but to learn from it!
It took slightly longer than I’d thought to really understand what happened with Sorted and learn from it for the future. But this combined with all the things I’ve seen as carwow and SimilarWeb have grown, hopefully set’s me up well should an opportunity present itself in the future.

Over to you guys – have any of you had a serious reflection on failure after-the-fact? Let me know in the comments below.

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3 thoughts on “Why my startup failed

  1. […] Sidebar: I just blogged about this, an objective diagnosis of why my startup failed. […]

  2. Thanks for re-writing your thoughts on this! Startups can be like a long term relationship; it’s hard to think clearly about what happened until some time has passed.

    I failed when I tried to build a viable business with a bitcoin-based food delivery app that won prizes in a competition.. Sine then, I’ve definitely learned lessons that I’ve taken to my next venture. The biggest lesson is strikingly similar to your #1 – ‘most valuable product’. Now instead of building out every single feature, I focus on the one feature that customers are willing to put down money for 🙂

  3. Very interesting read, as someone who’s in the very early days of a startup (couple of clients and a basic MVP) I could easily see myself falling down the above holes. We have actually been bitten my AWS fee’s already but thankfully, we managed to address it early enough!

    Thank you for sharing your experience.

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