Don’t want to fail in your startups? Take some advice from Vinod who has been there http://bit.ly/diPg9Y #echelon2010
This comment was originally posted on Twitter

Don’t want to fail in your startups? Take some advice from Vinod who has been there http://bit.ly/diPg9Y #echelon2010

This comment was originally posted on Twitter

RT @e27sg [Case Study] Vinod – Only One Reason Why Companies Fail, No Money http://bit.ly/aLXw0i #GOAP #echelon2010
This comment was originally posted on Twitter

RT @e27sg [Case Study] Vinod – Only One Reason Why Companies Fail, No Money http://bit.ly/aLXw0i #GOAP #echelon2010

This comment was originally posted on Twitter

Explain hotmail, Facebook, Twitter, etc. Its not so straightforward..

Explain hotmail, Facebook, Twitter, etc. Its not so straightforward..

@BigJoe

Hotmail, Facebook and Twitter are the exceptions.

Most of us are not going to create these once a year, spectacular outliers. Whilst it’s nice to aspire, it’s better to plan for realistic success.

@BigJoe

Hotmail, Facebook and Twitter are the exceptions.

Most of us are not going to create these once a year, spectacular outliers. Whilst it’s nice to aspire, it’s better to plan for realistic success.

What I was trying to get at was that building for acquisition is not a good idea. If you don’t get acquired you’re screwed. Youtube was perhaps one of the few web companies that I think really needed VC money. They blew 30 million in 6 months coz of bandwidth costs. If youtube didnt get acquired, I guarantee you they will not be around today.

So unless you’re doing it as a side project/hobby (like koprol) or you have another stabie business that constantly generates good profits. I wouldnt bet on a startup that is working towards an exit without a business model.

What I was trying to get at was that building for acquisition is not a good idea. If you don’t get acquired you’re screwed. Youtube was perhaps one of the few web companies that I think really needed VC money. They blew 30 million in 6 months coz of bandwidth costs. If youtube didnt get acquired, I guarantee you they will not be around today.

So unless you’re doing it as a side project/hobby (like koprol) or you have another stabie business that constantly generates good profits. I wouldnt bet on a startup that is working towards an exit without a business model.

Sage advice Vin. It’s a shame that due to the overwhelming success of Facebook and the like, many young entrepreneurs believe building such a company is realistic and an easy way to riches.

Sage advice Vin. It’s a shame that due to the overwhelming success of Facebook and the like, many young entrepreneurs believe building such a company is realistic and an easy way to riches.

[...] I was able to play catch-up well after the event had ended. Vinod’s case study titled “Only One Reason Why Start-ups Fail, No Money” gives some solid advice to aspiring entrepreneurs on adopting a laser-like focus on [...]

OK, I’ll bite
I completely disagree with your comment:
“However, ”planning for realistic success” and “shooting for the moon” are business objectives that reside on opposite ends of the spectrum; it is inconceivable for entrepreneurs to optimize for both”
That’s just nonsense. It assumes a binary outcome, and the world is a lot messier than that. Your inference is that if you create a small successful (read profitable and surviving) company in six months or a year that you can not have that as a stepping stone to something else.
It’s all very well to aim for the moon, but it really helps to plan and build and demonstrate your rocket rather than just jumping up at it.
Arun and I have ‘moonshot’ plans for Gameplan, but we’re both well aware that we have put those on the backburner to focus on making a great product, and then selling that to paying customers, before we can realise any broader canvas at which we are aiming. If it’s inconceivable to plan for both, then I expect to title my memoirs “An Inconceivable Man”.
An interesting thing, and one that was raised in Dave McClure’s talk, was that the goals of an entrepreneur and a (typical) VC are not aligned. They want 1 in 10 (or 100?) to go to the moon but that’s not necessarily in the interests of the other 9 (or 99).
Surely we should be encouraging a survival planing approach, and depending on the opportunity then go for it. A web business is no different to a normal business other than (typically) the size of potential audience. Its all very well to aim to be Wallmart but it starts with a successful single store. The same applies to Facebook: it starts with a single well-executed website that makes money.
This comment was originally posted on Master Of The Obvious

OK, I’ll bite

I completely disagree with your comment:

“However, ”planning for realistic success” and “shooting for the moon” are business objectives that reside on opposite ends of the spectrum; it is inconceivable for entrepreneurs to optimize for both”

That’s just nonsense. It assumes a binary outcome, and the world is a lot messier than that. Your inference is that if you create a small successful (read profitable and surviving) company in six months or a year that you can not have that as a stepping stone to something else.

It’s all very well to aim for the moon, but it really helps to plan and build and demonstrate your rocket rather than just jumping up at it.

Arun and I have ‘moonshot’ plans for Gameplan, but we’re both well aware that we have put those on the backburner to focus on making a great product, and then selling that to paying customers, before we can realise any broader canvas at which we are aiming. If it’s inconceivable to plan for both, then I expect to title my memoirs “An Inconceivable Man”.

An interesting thing, and one that was raised in Dave McClure’s talk, was that the goals of an entrepreneur and a (typical) VC are not aligned. They want 1 in 10 (or 100?) to go to the moon but that’s not necessarily in the interests of the other 9 (or 99).

Surely we should be encouraging a survival planing approach, and depending on the opportunity then go for it. A web business is no different to a normal business other than (typically) the size of potential audience. Its all very well to aim to be Wallmart but it starts with a successful single store. The same applies to Facebook: it starts with a single well-executed website that makes money.

This comment was originally posted on Master Of The Obvious

Hey Andy, I was hoping to hear from you .
My references to “planning for realistic success” and “shooting for the moon” are with respect to the entrepreneurs’ states of mind, and not the outcomes that it can lead to. Business outcomes are certainly not binary, and I’m all for entrepreneurs building something as a cash cow, to fund their moonshots.
I also totally agree with the need for startups to be scrappy and adapt to changing circumstances. I’m glad you guys have moonshot plans – I just feel there isn’t enough of that amongst the entrepreneurs I’m meeting.
The goals of VCs and entrepreneurs don’t align down the road, but they most certainly did at the point of financing! There’s no reason those VCs would have funded them otherwise. VCs may dream of moonshots, but aren’t generally an unrealistic group either. VCs worth their salt won’t push their startups into oblivion just to chase the moon and the stars. VCs would be happy with an exit at break-even or slight loss, or even 10 – 20 cents to the dollar for investments that fail to enter the horse race for top dog in its category.
This comment was originally posted on Master Of The Obvious

Hey Andy, I was hoping to hear from you .

My references to “planning for realistic success” and “shooting for the moon” are with respect to the entrepreneurs’ states of mind, and not the outcomes that it can lead to. Business outcomes are certainly not binary, and I’m all for entrepreneurs building something as a cash cow, to fund their moonshots.

I also totally agree with the need for startups to be scrappy and adapt to changing circumstances. I’m glad you guys have moonshot plans – I just feel there isn’t enough of that amongst the entrepreneurs I’m meeting.

The goals of VCs and entrepreneurs don’t align down the road, but they most certainly did at the point of financing! There’s no reason those VCs would have funded them otherwise. VCs may dream of moonshots, but aren’t generally an unrealistic group either. VCs worth their salt won’t push their startups into oblivion just to chase the moon and the stars. VCs would be happy with an exit at break-even or slight loss, or even 10 – 20 cents to the dollar for investments that fail to enter the horse race for top dog in its category.

This comment was originally posted on Master Of The Obvious

Hey James, I like that we have a debate going here. I think the video did not capture the starting part of the talk, in which I mentioned, that most startups dont need VC money.
VC money is detrimental to most startups and can leads the founders to spend unnecceasily and not worry about making money from the start and distract them by focusing on “useless” things like eyeballs and users. As I mentioned in the talk, you can’t pay your bills with eyeballs. Hits and users only make a difference when it results in revenue for the company.
This comment was originally posted on Master Of The Obvious

Hey James, I like that we have a debate going here. I think the video did not capture the starting part of the talk, in which I mentioned, that most startups dont need VC money.

VC money is detrimental to most startups and can leads the founders to spend unnecceasily and not worry about making money from the start and distract them by focusing on “useless” things like eyeballs and users. As I mentioned in the talk, you can’t pay your bills with eyeballs. Hits and users only make a difference when it results in revenue for the company.

This comment was originally posted on Master Of The Obvious

VC money is meant to accelerate a good idea into a great one. Entrepreneurs will find it difficult to raise VC money prior to figuring out the quality of their idea.- gleaned from article “Kleiner Perkins’ Randy Komisar: Maybe Web startups don’t need venture capital“Startups that don’t need VC money are probably going to be lifestyle businesses. VCs won’t invest because these businesses aren’t going to give them the big returns they need.- gleaned from article “Should You Raise Venture Capital for your Startup?“
This comment was originally posted on Master Of The Obvious

VC money is meant to accelerate a good idea into a great one. Entrepreneurs will find it difficult to raise VC money prior to figuring out the quality of their idea.- gleaned from article “Kleiner Perkins’ Randy Komisar: Maybe Web startups don’t need venture capital“Startups that don’t need VC money are probably going to be lifestyle businesses. VCs won’t invest because these businesses aren’t going to give them the big returns they need.- gleaned from article “Should You Raise Venture Capital for your Startup?“

This comment was originally posted on Master Of The Obvious

I just think it’s a bit rude to denigrate a startup company as a ‘lifestyle business’ or ‘cash cow’. How many businesses are there that will be an Amazon, Twitter or Youtube? Not many. How many perfectly functional multi-million dollar businesses could we create in Singapore (to break the economic stranglehold of the banks and MNCs)? Loads.
I think the issue is that you’re coming from a different perspective (you’re ‘the money’ if you don’t mind me saying) and most entrepreneurs need to listen to the sort of things Vinod is saying for their own personal sanity and business survival.
The is too much focus on funding. As if availability of cash was the major issue if you have a successful idea. What we should invest in is quality tertiary education in design and development.
But that is a whole other argument.
This comment was originally posted on Master Of The Obvious

I just think it’s a bit rude to denigrate a startup company as a ‘lifestyle business’ or ‘cash cow’. How many businesses are there that will be an Amazon, Twitter or Youtube? Not many. How many perfectly functional multi-million dollar businesses could we create in Singapore (to break the economic stranglehold of the banks and MNCs)? Loads.

I think the issue is that you’re coming from a different perspective (you’re ‘the money’ if you don’t mind me saying) and most entrepreneurs need to listen to the sort of things Vinod is saying for their own personal sanity and business survival.

The is too much focus on funding. As if availability of cash was the major issue if you have a successful idea. What we should invest in is quality tertiary education in design and development.

But that is a whole other argument.

This comment was originally posted on Master Of The Obvious

Also… interesting related posts on this sort of thing from the last couple of days…
http://measuringmeasures.com/blog/2010/6/8/maximum-viable-product.html
…and the abridged ’sort of forced to sell by my investors’ story of Zappos:
http://www.inc.com/magazine/20100601/why-i-sold-zappos.html
This comment was originally posted on Master Of The Obvious

Also… interesting related posts on this sort of thing from the last couple of days…

http://measuringmeasures.com/blog/2010/6/8/maximum-viable-product.html

…and the abridged ’sort of forced to sell by my investors’ story of Zappos:

http://www.inc.com/magazine/20100601/why-i-sold-zappos.html

This comment was originally posted on Master Of The Obvious

Woah, I didn’t have denigrating intentions when I used “lifestyle business” and “cash cow”. It’s a compliment! I’ve seen and passed on deals with good profitability on the horizon, and wished them the best of fortunes.
I for one would love to have a profitable business that just brings home the bacon. My main point is to stress on the other end of the spectrum that wasn’t covered by Vinod. I was hoping to balance Vinod’s perspective by offering an alternative.
Be it VC funding or consistent and stable profitability, I think it’s a conscious choice that entrepreneurs need to be aware of, as they start on their venture. And it is my wish, for those who want to shoot for a big exit, to know what it will take.
This comment was originally posted on Master Of The Obvious

Woah, I didn’t have denigrating intentions when I used “lifestyle business” and “cash cow”. It’s a compliment! I’ve seen and passed on deals with good profitability on the horizon, and wished them the best of fortunes.

I for one would love to have a profitable business that just brings home the bacon. My main point is to stress on the other end of the spectrum that wasn’t covered by Vinod. I was hoping to balance Vinod’s perspective by offering an alternative.

Be it VC funding or consistent and stable profitability, I think it’s a conscious choice that entrepreneurs need to be aware of, as they start on their venture. And it is my wish, for those who want to shoot for a big exit, to know what it will take.

This comment was originally posted on Master Of The Obvious

I realised that wasn’t your intention, but the article does fall dangerously into the ‘Calcanis trap’ of pretending that the only way to grow a ‘big’ business is ’swing for the fences’ (ugh) and take VC and I’m just not convinced that’s true.

For most startups, being paid is not the stunting influence you suggest. Refusing to change your pricing or focus if unsuccessful could be. It means you aren’t listening to your users – you’re very right on that point!

I’m going to stop ranting now, as this is beginning to sound like I should be in a pub with a beer in my hand. Let’s do that instead.

NB ‘Calcanis Trap’ demonstrated by his insistence that 37s is a hobby business on the fascinating interview with DHH on TWIST.

This comment was originally posted on Master Of The Obvious

I realised that wasn’t your intention, but the article does fall dangerously into the ‘Calcanis trap’ of pretending that the only way to grow a ‘big’ business is ’swing for the fences’ (ugh) and take VC and I’m just not convinced that’s true.
For most startups, being paid is not the stunting influence you suggest. Refusing to change your pricing or focus if unsuccessful could be. It means you aren’t listening to your users – you’re very right on that point!
I’m going to stop ranting now, as this is beginning to sound like I should be in a pub with a beer in my hand. Let’s do that instead.
NB ‘Calcanis Trap’ demonstrated by his insistence that 37s is a hobby business on the fascinating interview with DHH on TWIST.
This comment was originally posted on Master Of The Obvious

Agreed. Beer-time!
This comment was originally posted on Master Of The Obvious

Agreed. Beer-time!

This comment was originally posted on Master Of The Obvious

A passenger on his first flight ever, boarded SIA from Singapore to travel to SFO. Even with an economy class ticket, he sat on the Business Class seat. The stewardess tried her best to convince him to move to the economy class, but he wouldn’t budge, as he insisted on reaching SFO first. The stewardess gave up, and asked the pilot to help. The pilot smiled, walked up to the passenger and whispered something in his ear. To this, the passenger immediately got up, picked his stuff, and moved to the economy class. Amused, the stewardess asked the pilot what he said to the passenger. He answered ” I told him, that the business class only goes till Narita, Japan. The economy class goes all the way to SFO”.

Vinod’s observations are good. It puts some things in perspective for a lot of people who might read this article, or listen to his talk. There are many reasons why startups fail. Running out of money, lousy value proposition, lousy team, lousy politics, sometimes pure ego. Pump as much money as u want into these companies, its could be a bottomless pit. Or sometimes, just inactive with a lot of money at bank. ‘Failure’ doesn’t necessarily mean ‘out of money’. It could just mean – not worth investing, or not worth working at, or not worth spending time on.

Its just that sometimes we need to hear things in a certain tone and color, so a good number of us understand and remember what the message conveys.

A passenger on his first flight ever, boarded SIA from Singapore to travel to SFO. Even with an economy class ticket, he sat on the Business Class seat. The stewardess tried her best to convince him to move to the economy class, but he wouldn’t budge, as he insisted on reaching SFO first. The stewardess gave up, and asked the pilot to help. The pilot smiled, walked up to the passenger and whispered something in his ear. To this, the passenger immediately got up, picked his stuff, and moved to the economy class. Amused, the stewardess asked the pilot what he said to the passenger. He answered ” I told him, that the business class only goes till Narita, Japan. The economy class goes all the way to SFO”.

Vinod’s observations are good. It puts some things in perspective for a lot of people who might read this article, or listen to his talk. There are many reasons why startups fail. Running out of money, lousy value proposition, lousy team, lousy politics, sometimes pure ego. Pump as much money as u want into these companies, its could be a bottomless pit. Or sometimes, just inactive with a lot of money at bank. ‘Failure’ doesn’t necessarily mean ‘out of money’. It could just mean – not worth investing, or not worth working at, or not worth spending time on.

Its just that sometimes we need to hear things in a certain tone and color, so a good number of us understand and remember what the message conveys.