We all know that the success rate of any startup is one in two hundred, which makes 99% of entrepreneurs do the inevitable, pull the plug on their dying product. Steve Sammartino has a good article on when to quit your startup, and one of the main reasons for pulling the plug is when it stops making money. And looks like this is exactly what happened to HomeSpace and RentSpace. HomeSpace and RentSpace were mainly map based service which provided access to properties for sale and rent through these platforms. I spoke to Vinod Nair, founder of Homespace and Rentspace on what he has learnt from his experiences with building a business to finally cease its services.

Focus on business model

This is the deal breaker for most startups. Vinod mentions that initially they were focused solely on the product and building a ‘cool’ site that was useful. They decided to get the eyeballs first and then figure out how to make money. While your Twitters, Facebooks and YouTubes started off with this model, this does not necessarily work for majority of the startups. He feels the whole notion of “Build and they will come is not a strategy, it’s a prayer” and figuring out how to make money in the first place is the most important thing.

Good board of advisors

There has been a lot of talk in the cybersphere about lack of mentors in Singapore, Vinod echoes the exact sentiment. Specifically, he thinks there is a need for advisors who have built their business from scratch, made money and ideally from the same space as the company. While this is a difficult problem to solve, the government agencies are seemingly taking a lot of intiatives in this respect and have started luring experienced entrepreneurs and investors to this region.

Take minimal risks

While many media outlets or in some cases entrepreneurs themselves potray a picture of them as knights in shining armour, taking huge risks and fighting valiantly against injustice or in this case, competitors. He feels this perpetuates a wrong notion in everyones mind. One of the major lessons he has learnt from setting up his other two running businesses, i.e Smartloans and Textuate, is to take small and calculated risks. If these risks seems to pay off, then proceed and invest more time and money into it. He strongly advises against throwing caution to the wind and putting all the eggs in one basket.

On another interesting note, when talking about competitors, Vinod mentions that main competitors of Homespace – PropertyGuru and iProperty all started at the same time. They were in the same unproven market but with radically different approaches. While iProperty and PropertyGuru focused on making revenue first, i.e getting agents to use their service, Homespace’s focus was on a consumer-first philosophy, which in the long run didn’t work for them.

But as the saying goes, every cloud has a silver lining and this is definitely not the end of the entrepreneurial journey for Vinod. He is still running SmartLoans and his spanking new product – Textuate.

Textuate is a simple web SMS software that eases the pain of SMS marketing for companies. Currently it offers the basic features of uploading and organizing your contacts, delivery of SMSes and keeping track of them. To know more about the product, look out for them at echelon 2010.

Sometimes, we all learn more from failures than successes and to share his insights on what he has learned from creating multitude of products, you can check out his case study at echelon 2010.

PS: Thanks to Joash Wee for coming up with the title of this post.