9facts: debriefing

/ > In mid-March, we actually shut down our startup 9facts.com, which I wrote on Habrahabr in December. And so by may I was ready to write this post.

Start with the most important:

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What mistakes do we?

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1. The idea was not validated using past

The most important hypotheses for any startup:

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Product will use the following categories of users: ...
market size of product: ...

Each of them needs to be tested. The most reliable method of this test — development prototype, everything else (surveys, etc.) has a much lower accuracy. We actually missed this step and decided to make a relatively quality product from.

It happened because I (and not only) was the absolute confidence that we are doing the product that will find its users. In fact it was just a hypothesis.

It is worth saying that the signals that the idea is risky — was:

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Not found any successful startup that uses a similar model describing the activities of the users. “Of course, all this is because just nobody else thought of!” — or so I thought.
We should have alerted the fact that almost all girls and women I interviewed and other participants of the project, didn't quite understand why they on this site go all the time. Men reacted to the description of the service is very, very optimistic, but women — more skeptical. It seems true that they are more pragmatic in their assessments, and we should pay attention to it and not attribute it to the fact that they're just not our target audience.

All this brought about a chain of events:

To develop the first version of the service has been allocated too many resources. The prototype was not.
After starting the service quickly became clear that the user base is growing not as fast as we would like.

We made several attempts to fix it (improved UX, added features virus a La “the Questionnaire”, check whether it makes sense to slightly change the concept) — to no avail. the

In fact, the key problem was that we have low user engagement. Simply put, it is not clear why the users to appear on it again and again. But as soon as we realized this (it happened in January-February), it became clear that we don't know how to fix this in the current service concept and available budget.
And this is why you need to start with a prototype. I think even a serious attempt of simulation of a user on the service could lead us to the conclusion that we have problems with user engagement.

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2. The wrong risk model

Since I believed that the product is guaranteed to be interesting to users (see 1), the risk of potential competitors was considered the most important for us in the first months. Because our goal was the production of quality product in the shortest possible time.

It's hard to say how much I was wrong in part of what the competitors will appear in the autumn appeared at Facebook Open Graph API, which is aimed at solving very similar problems. But it is true that competitors should be afraid only when you already have the market and users. If they do not exist, it is necessary to think not about the competition.

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3. The wrong allocation of resources

The result for the first 6 months we spent significantly more money to develop than it should, spending almost all the money “raised” me in may. Suffice it to say that in July-September on a project at the same time worked up to 8 people.

Large team size, lack of a prototype, respectively, and live user feedback had a negative impact on our priorities:
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We have spent considerable time creating a taxonomy of keywords (we “pumped” a lot of categories of terms with freebase.com), although at the time of launch it was possible to do without it.
value for full “score” of the group. But since resources were, we made them.

the Entire UI with the “friendship” was not worth doing at all. Instead, it made sense to consider all of your friends in Facebook/LinkedIn, etc. your friends and on 9facts. “Friendship” on another website — the evil in itself, and I think we run even a very crude prototype, we would understand it immediately (actually, this happened in November). the

Works on preparation of the service to scale could not do now well understand why.

This is not a complete list of what I shouldn't have — in retrospect, the mistakes often seem obvious, because to list now everything just doesn't make sense.

What is important is that if I hadn't made mistake # 1 (and as a result, No. 2 and No. 3), team size at the initial stage would be considerably less, and as a result there would be much fewer opportunities to do something unnecessary. I'm pretty sure we all do a Threesome, we launched a prototype in September-October. Yes, it would be somewhat easier, but the main question he would be no worse.

Perhaps the only drawback of the “cost” of the option could be just what we would get on Start-up Rocket. But even this is debatable, because the Start-up Rocket and all subsequent such events, despite their obvious benefit to me personally, took a lot of time and energy.

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4. The lack of a “pessimistic” plan

Frankly, I didn't know what to do if things go wrong, I think. In such a situation we need to change how the service itself and the approach to its promotion, and it's extremely difficult to do if these options have not been considered seriously in advance.

“Didn't know” doesn't mean I didn't know — we tried to change the concept of service, to add viral features, etc., but none of it worked. It seems to me now to see all of these shortcomings it was still possible during the development of the service concept.

The “worst-case” development plan must be primary.

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Addition from investors

Leonid and Alexander (“Spotlight venchurz”) called the key error made by them: “they Gave too much money too early. If the money is not there, then you would not be able to hire 8 people to do unnecessary. The lesson to us.”.

It is worth saying that I as well this osposobljaet, agreeing on co-financing the project with two other co-founders of X-tensive.com, thus doubling the amount of available us funds.

A much more detailed debriefing on the part of investors set out in the relevant post Leonid Volkov — I really suggest you read it.

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Insights

Idea is not worth anything.
the Most significant risk IT-startup is the mismatch of product to the market, but because...
Idea should be validated using past. Practically the only reliable method of validation of new ideas for IT startups — the development of a prototype.
If you don't have prototype, you can spend any money to develop the first version of the product is extremely risky. Probably in our case it would be possible to spend 2-3 times smaller amount economical option, and therefore receive several times more time to adapt.
the Optimal size of the team in the development and launch of a prototype 2-3 people. The fewer people November in Komenda, the less likely that will be done something extra.
in No case do not expect that all will go well and smoothly. In 99% of cases everything goes completely wrong, as was seen by the founders. Because “skinny” (economical) start — the only reasonable development option.
No secondary indicators of success (winning the competitions, startups, etc.) do not play absolutely any role. The only relevant indicator of success is the growth of user base or revenue (depending on your goals at the moment).

Funny: what is written above, is nothing new and unique. Despite the fact that startups “take off” and “fall” on completely different laws, according to which built a really successful model amenable to generalization:

the

if you spend all the money to develop just one model, your risks are insanely high
small and cheap model usually gives a good estimate flying qualities of a full-fledged model of the same shape

the team of engineers determines the success of the enterprise by 80-90%.

In this sense, Eric Ries and Steve Blank are absolutely right. You should make the most of the experience of those who walked this path before you.

I'll try to list what you hardly notice, reading about startups:

1. what you've read “The Lean Startup”, etc., does not guarantee that you will be able to apply all the recommendations of the authors in practice at the first opportunity. Personally, I deceived myself by assuming that my idea is obviously good, and therefore doesn't require validation — the result was excellent, but very expensive lesson.

2. Even if you perfectly follow all the recommendations, this will not eliminate a huge risk of failure. The # 1 goal of any viable methodology for the management of start-UPS is to maximize the ratio of profits to investments on average (i.e. on a large sample of start-UPS). She may not significantly affect such factors as the quality of the team founders and the viability of the idea. Thus, to minimize losses in case of failure and maximize the time for adoption is the best thing that can give a good methodology for the average startup.

3. Closing of a startup — a very unpleasant process for its founder. Some detail I described the sensations of the closing 9facts in response to the relevant question on Quora. In that period even on my blog it was noticeable that with the Affairs and the mood I'm not very well — with the new year, I almost wrote nothing. I think once I decide on the next project, I will “return” in the blog (but you don't wait — subscribe you can now :) ); while I am pleased that I saved so time is not wasted.

4. Money at the idea stage to much easier than at the stage when you already have a product. At the idea stage all decides what kind of impression on the investor make you personally, your team, and if he liked the idea of the product. If you are extremely competitive as a developer and team lead, and the idea is not completely insane, the chances of finding an investor at this stage is quite high, even if the presentation is all that you have.

It's much harder if you already have a prototype or product (it doesn't matter what quality): at this stage, any investor with whom you communicate, are only interested in traction. The growth of the user base, the number of paying subscribers, turnover, monthly users, etc. — any metrics that characterize the potential of the product. And if you can't show good growth (which is at least 20-30% per month at the initial stage, but preferably 50-60%), things go wrong. No presentations will not help as conversations in the style of “we just started, and estimate our audience too early.” Any investor in this situation will be inclined to take a wait — agree that it is much wiser to wait 2-3 months to evaluate the result, rather than take risks blindly.

5. Earlier I thought to check the quality of your ideas, you should definitely find an investor at this stage. Now I am inclined to think that the prototype of the product (or MVP) is almost always better to do on their own (i.e. exclusively due to the time and resources of the team of founders). To attract investors is already after you got your first users who really like your product.
Why?
the

of the Previous paragraph shows that if you find an investor at the idea stage it will be 95% the assessment team the founders and your presentation abilities; the idea just passes the test for at least adequacy. By the way, this explains why the idea is not worth anything.
tighter restrictions on the available resources will lead to better selection of features MVP.
most Likely, this bootstrapping will take more time, because you can't allocate all your time to work on a prototype. On the other hand, the time for decision-making you will also be more, which means they will be more balanced.
You don't have to waste time opening company negotiations and agreements with investors, recruiting and hiring employees, reporting, etc.
You will substantially reduce risks for the investor and all future members of your team, and probably 5-10 times will increase the assessed value of a startup at the time of first investment. Now if you all do not seem important, remember that 95% of startups shut down within 1-2 years, and therefore undergo the most risky area for yourself is if you are not inclined to shift some risks on others. If you don't quite understand why it's not as attractive as it may seem — re-read paragraph 3 and remember about 95%.

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epilogue

In conclusion, we should say that 9facts brought a lot of positive in our lives:

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the Project was a great practice for the whole team — even in a technical sense it was very interesting. the

I got a new to me experience of communicating with investors, investment funds, and just a lot of interesting people related to IT start-UPS. First and foremost is communication with Leonid Volkov and Alexander Goshchitskii (Spotlight venchurz), and then the Rocket Startup, Startup Sauna (there was Alex Steen), two StartupPoint, i-Convention (Y Combinator, 500 Startups, etc.), etc.Start, Farminers and Runa Capital.
Think each of us got one of the best lessons in his life, adding 100,500 to experience.
Finally, I wrote this article, + the backstory. Hope this helps some of you, friends, to do something worthwhile, and as a result, our world will become a better and more convenient. And you say, “All thanks to 9facts!”. Just kidding, of course :)

9facts, R. I. P.

PS For authors already “dead” startups: stories fellow on Habrahabr (and in General) not so much, although in their tens and hundreds times more, than success stories. For me, there's considerably less not because no one wants to read them. No one wants to write them. “First, do something SuperCool, and then we'll do a memoir, which will tell about all my fails!” — like excuses is quite typical and understandable. So, try to write your “memoirs” right now. If history is big enough, habré may be a new category of “Epic fail”, ~~offering to every loser under a rough applause of the public to dig a hole of appropriate size~~, to read that is not less interesting than “success Stories”.

Article based on information from habrahabr.ru

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