Today my startup failed
In this postmortem from 2014, @jc4p 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 Cloud & Mobile Era (2014–2019)
COMMUNITY SCORE 342 points
TOTAL DISCUSSIONS 128 comments
I help run a site called Doodle Or Die (http://doodleordie.com ↗), which is very similar to DrawQuest. Much like them; we barely cover our costs. But we've largely automated away most human effort so that we can keep the site going for our community while we figure out a brighter future for it.
While our game is similar; I think the way we have approached it from the business standpoint is more realistic. We fully bootstrapped it ourselves and never put ourselves in a position where it had to make money. All of the people working on it still have day jobs. We see Doodle or Die as a great side project that we will continue to work on and maybe we will get it enough traction to attract a buyer. As much as we want it to be the next DrawSomething we knew that it would be a hard road towards that and therefore we were never holding our breath.
There is something to be said for going out and taking the bigger risk like DrawQuest did. But I think we have all agreed to save our bigger risks for bigger opportunities (i.e. we are all working at successful startups outside of Doodle Or Die that have a much better future). We never took the risk; and that's why you don't see us writing a blog about our failure. With all that being said we welcome DrawQuest users to try out Doodle Or Die.
I have a thesis that the success of startups that operate in a market with strong network effects is often more about luck than skill and that, therefore, repeat success on the part of the founder(s) is by no means guaranteed.
It's like when a first-time golf player scores a hole-in-one. If you try to get them to repeat the feat, they can't because they don't actually know what they did to get the ball in the hole - they just whacked the ball in the general direction of the tee.
Now, take a thousand ball-whackers (startups) all targetting the same tee (market). If the network effects are strong enough, one of them is going to win simply by getting their ball closest to the pin. They don't have to actually get it in the hole - as long as it's the closest, the network effects will take over and push the ball into the hole.
Result: The ball-whacker is perceived as a genius and VCs line up to invest in his next startup.
However, if the first success was, indeed, down to luck, there's no guarantee that the second attempt will be equally (or, indeed, anywhere near as) successful.
This isn't to say that all first-time hole-in-one ball-whackers are just lucky. Some are clearly naturals. The trick is distinguishing between the naturals and those who were simply lucky.
"As we approached the end of our runway, it became clear to us that DrawQuest didn’t represent a venture-backed opportunity, and even with more time that was unlikely to change."
I believe this is the heart of the message. It looks like there was no revenue generation model that could give back the money invested ($3.6 million) and provide a real return.
The application is successful and there is a large user base. Let's assume DrawQuest is able to make a profit of $200,000 a year on revenue of $400,000 based on some simple changes to allow users to pay for premium features. For a very small company with 2-3 people, this may be enough to keep going. Now, I don't know what these numbers can really be but I would imagine for a bootstrapped company it would be viable.
It's unfortunate that this business "failed" because the profit it can generate just isn't enough for the investors and the founders.
It would be nice if instead of shutting it down, it's handed out to others that will be happy with its lower profit potential.
Canvas was fun. While I don't know the details, imo it failed (at least community-wise) because they made some strange changes for strange reasons (removing so called sticker-rain, removing audio-remixes, etc). The weeks after these changes the user base dropped largely and once that started there was obviously no coming back due to massive decrease in activity on the site that would scare away new users. Myself included: Previously I was spending at least 1 full hour a day on Canvas for about 5 months straight and just some days later it went down to like 5 minutes a day before leaving completely.
To this day I fail to see how they ever wanted to monetize Canvas. I think that was the real issue here. It looks like the site had a few hundred uniques a day for the last couple of months and the servers are still running...
http://www.alexa.com/siteinfo/canv.as ↗
I think it's important to distinguish between having an audience and having a market. As is fairly well understood, it's possible to have very small audiences that monetise effectively, and very large ones with next to no spending.
One more subtle problem is that products aimed at highly internet savvy westerners seem less likely to stand a chance of making money, as those people are precisely the least likely to spend anything. Reddit has a similar disparity between audience size and ability to get money from them, but aiming at the 4chan crowd strikes me as a recipe for pain. Hopefully eventually he'll find an actual market.