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My Startup Failed. F#*k.

I finally said it, my startup failed. Fuck. I felt like I was coming out of the closet when I first stated it aloud to my co-founder. We both knew for months it was not working out, but we never explicitly defined our situation as a failed one. Now that the elephant in the room has a name, we’ll call him “Dumbo” which stands for “Didn’t Understand Markets Brain Outline”. That right there was our main problem. Our market demographic was musicians, and although a few of us had worked around the industry, we concluded recently we were not music SALES domain experts.

The product was a flash sale platform for musicians to release their music using dynamic pricing (zillionears.com). To us, this software was a no brainer for musicians to use. The artists get to engage their fans while enticing their community to share with friends. So we talked to a few artists who said they thought it was a cool idea. BOOM! Our idea had been validated! After that moment we basically stopped talking to artists for a year and built (and rebuilt) the software until we thought it was acceptable.

Our first beta test was a disaster when Amazon (who was our payment processor) suspended our account for not complying with money transfer issues. Fans were able to participate in the sale, but we were unable to capture their billing. We ended up paying the artist out of our own pocket and giving everyone his music for free (and we never told him that happened until now).

From that beta test we found out that our software needed to be rewritten to comply with Amazons terms. More importantly though, people really didn’t really LIKE anything about our product. No one that used the service thought it was that cool. In fact, some people that participated in the sale didn’t even like our “dynamic pricing” system. They were trying to support the artist, so saving a few dollars didn’t excite them. They could easily have just gotten his music for free elsewhere.

We should have packed it up early right then, but we felt like we had already gone too far to quit. We rebuilt (and re-designed) the majority of the software, got approved by Amazon, and reached out to over 1,700 artists (each individually through different platforms). We got between 1 and 10 artists interested. Again, this just screams “PUT IT OUT OF ITS MISERY!” But we kept going. Finally the day came for our second beta (which was totally gonna kick ass for sure). The artist we had on board set up his sale page and was ready to go. Only problem is he totally misunderstood what our software was all about. Once he found out about the dynamic pricing he tells us “I think I am just going to release with another platform.” FUCK! Are you serious????

After that we spent another month slowly letting it linger in our day to day lives. We went for one last ditch effort to make a press release, but couldn’t get a single artist (out of the 1,700+ we talked to) to run a sale. My co-founder called me to tell me this news. I asked him “Would you like to use my gun?” I was referring to the scene in The Social Network where Zuckerberg’s lawyer asks Saverin “Would you like to use my pen?” to manipulatively sign his shares over. I, of course, was referring to shooting this fucking company in the head and moving on with our lives! He agreed. We took Zillionears out back, and shot it in the head. It felt good.

Although our company did not succeed the way we would have hoped for, we all learned more in the past year than we had in college. Our insights and experiences have been invaluable. For each of my future posts I will go into detail about the things I learned while on this journey, and how to apply the knowledge to future startups so you can avoid ending up in a room with “Dumbo”!

Hit me up on twitter! I just got on there. I love to talk to folks about startup experiences! @nemrow

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  • Next time talk to a range of artists about their needs. I don’t have problems selling or distributing my music, I have problems advertising and getting gigs that pay good money. There needs to be a good gig app for getting gigs.

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  • “Although our company did not succeed the way we would have hoped for, we all learned more in the past year than we had in college.”

    This is the most important concept to keep reminding yourself of. My 3.5 year old startup failed about 4 months ago. It totally sucked. I knew at least nine months before shutting it down we were doomed though.

    One fact I keep reminding myself of is that my current position, which totally rocks, is the ultimate results of working my ass for over three years, refining my skills and learning how to be relentlessly resourceful.

    Behind every overnight success is 10 years of failures, learning, and determination. You’re just starting out on your journey, so don’t give up and you’ll eventually pull out a big win. People will think “That guy’s an overnight success”, and you and I will both know the real truth.

    Good luck on whatever comes next and thanks for sharing your story.

    Reply

  • This post is like the story of my recent life. So I guess we are all in this together. My startup had been cranking for 3-4 years (hard to put a start date on it) but I recently had the same conversation with my co-founder. I had been internally thinking about this myself for about a few months but I was so scared of telling my co-founder because I didn’t want him to feel like I had given up and left him alone. As you may know, your co-founder is almost like your spouse. Its your job to keep eachother motivated during rough times.

    I love how you explained it as “Coming out of the closet”. I had never thought about it that way, but that is exactly how I felt. The same fear and embarrassment with the up sided potential of mental relief as someone that is deciding to come out of the closet.

    Our moment was at CES 2014 a few weeks back now. I was there with my co-founder representing our company. In a moment of absolute clarity, we saw something together, and left the booth, both turned to each other and almost simultaneously we finally both said the same thing. Essentially its time to take our gig out back and shoot it. It was sort of relieving to find out that he had been feeling the same and was going through the same emotions as i was with declaring defeat.

    Just like coming out of the closet must be, the rest of that same day was a moment of bliss. There was no sad mourning period. We were both relieved and now since we were no longer worried about keeping up appearances with our previous business, we could mentally move forward to “what’s next”. What better place to do that then CES. We had millions of new business ideas by the end of the conference and we have already moved on to start a new venture. That moment can be very relieving and doesn’t have to be negative one bit. We are co-founders in a new business now. Still wrapping up the legal documentation to close down the previous one. But we both feel incredible about the future.

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  • There’s no shame in failing. Moot’s startups recently died and he’s loaded with money, fame, connections, and (almost) literally a cult backing him up and things still didn’t work. The vast majority of businesses end up failing. There are two really big problems that startups have that I think most developers don’t consider.

    * Getting paying customers is really hard. You think to yourself I’ll mail some bloggers and send out a press release or something and get a bunch of media coverage. That never materializes and you’re left with the reality of trying to pitch a product. There’s display ads and search ads and social media, but it’s hard to create content and work it and get some traction on a budget. Even on social media, while there’s a lot of options listed at http://www.buyfacebookfansreviews.com to get more likes you still have to work at it and create content and engage with your visitors. All of this takes time and energy and many small startups don’t have this in large supply.

    * The right business model isn’t easy to find. Finding out how to charge for something to maximize customer satisfaction and income isn’t hard. Many people expect stuff online to be free, so its sometimes hard to charge for stuff.

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  • This story is a perfect case study for the Lean Startup method. Take for example this part of your post:

    “So we talked to a few artists who said they thought it was a cool idea. BOOM! Our idea had been validated! After that moment we basically stopped talking to artists for a year and built (and rebuilt) the software until we thought it was acceptable.”

    Without actually validating your idea, you went ahead and wasted a year coding the site. All you had to do was throw up a simple page and test it with one artist to see if people would actually want to buy music this way.

    I’m not trying to put you down or anything like that, just pointing out how we entrepreneurs usually end up wasting more time than we need to, in order to validate an idea.

    A good example of validating an idea quickly is the Zappos story. They didn’t spend months coding the site and building up hype, or making purchase orders for large quantities of shoes.

    Instead, they threw up a simple page, listed some shoes that they knew were for sale at FootLocker, and watched to see if people would buy those shoes.

    When customers would buy a shoe, they would go to Footlocker, purchase it, and ship it to the customer.

    It seems primitive now, but that was the fastest and cheapest way to validate their idea.

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