The number one reason my startup failed
In this postmortem from 2009, @fjabre candidly breaks down the dissolution of their startup, examining the fatal assumptions, misallocated resources, and market dynamics that led to its shutdown.
Core Principles for Independent Builders:
Early signals were often rationalized away instead of prompting an immediate pivot in distribution or pricing.
The psychological toll of running out of capital compounds operational friction in a solo or small team setup.
Key Antidote: Validate paying willingness before committing months to building sophisticated product features.
Community Debate Themes:
Community discussions on HN centered on identifying product-market fit early, avoiding vanity metrics, and the emotional recovery process after shutting down.
CATEGORY Postmortems & Failures →
HISTORICAL ERA Web 2.0 Genesis (2007–2013)
COMMUNITY SCORE 89 points
TOTAL DISCUSSIONS 28 comments
My impression is that the main reason of your startup failure is that it ran out of money. It seems you have a valuable product in your hands and a potential for a successful startup, since you had significant user interest when the application was free.
If you manage to provide the service and run your startup at the cost of a reasonable fraction of your salary, you would never meet this "end of money" wall and your startup could run forever.
So first, check out to cut the costs to a minimum, eventually offering a more modest service, especially if it's free. User will understand this, as they will understand that an extended service would require sharing the costs of hosting. You should then make sure the benefit compensates largely its cost, from the user perspective of course.
You wrote that there was no need for such service. How do you know ? The users could come up with a usage, and thus a need, you didn't thought out before. This is what you can gain from offering the service for free. Collect feedback and suggestions, you might find gold gems and perls in it.
The freemium model would make sense, if you can keep the cost of free service to a minimum. It is preferable, if you can manage it, to provide the service without depending on fixed amount of investment money that will be running out soon or later. You can achieve this by reducing the cost to a reasonable fraction of your salary.
That's the plan for my startup. I will start by hosting the service at home and thus without hosting cost. If there is income, and its progression ensures break even may be reached, then I'll invest in the next step, and so on.
The trick is to make an investment only if a positive money flow balance is restored shortly after it, progressing by steps, minimizing the risks of "end of money" failure. With this policy, your startup can only fail because of bad luck, like being hit by lightning for instance.
nice to hear such a story, indeed they don't come out often... i recognise the focusing on feature thing. I and some friends/colleagues built a few years ago a website were musicians could record online video jams, someone recorded a video, another one another and in total 4 streams were recorded and played at once split screen. It worked great and some great tunes were recorded. But it also didn't provide a solution to a problem and the project is dead now, dead pool oww yeah. We didn't invest any money in it, only lots of time, so nothing to worry about. When I have a little new project in mind, I now know I have to think if it fulfils a need, most of the time it doesn't and then it's very difficult to let that idea go. About my project: hey I learnt a very important skill and he will also! Failure makes smart!
It’s really nice hearing from failures from time to time. These kinds of stories don’t often get out, but they’re very educational on so many levels.
Especially now when all too many people become so easily enthralled by success stories the likes of Google, Facebook, Youtube, Digg, Twitter, …
It can happen so fast, losing oneself in wishful thinking, losing all reason in the process. I’m speaking from experience, this story really relates to me (although my project isn't as far down the line as yours yet).
If there is something like a Startup Failure Anonymous group, I would like to join it :)
We went through a very similar phase for our startup which is also about developing iPhone/desktop/web apps. We have a lot of shiny features in our apps like syncing across platforms, real time percentile scores, meetup features, turning the iPhone screen into a scratch paper etc., most of which are useful but given the fact that we were bootstrapping, got us into a deeper and deeper hole. If we wouldn't have found an awesome developer we would have to end our startup too.
Good luck for your future endeavors. You have learnt a lot from this. Don't be disappointed and keep trying.
Awesome read!
We're dodging this problem by shelfing most so-called shiny features till we are making money. Thing is shiny features can be really useful--but once they take off, you are too busy maintaining them than figuring out how to make dollars that will fund the shiny features.
In some cases the shiny features and the $ makers are not mutually exclusive and there is definitely a lot of gray.