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Think Big. Move Fast.

Monitor110 recently shut down after raising $20m over three rounds. One of the co-founders wrote a portmortem of Monitor110, highlighting 7 mistakes that the company made:

1. The lack of a single, “the buck stops here” leader until too late in the game
2. No separation between the technology organization and the product organization
3. Too much PR, too early
4. Too much money
5. Not close enough to the customer
6. Slow to adapt to market reality
7. Disagreement on strategy both within the Company and with the Board

(found via Brad Feld)

At the other end of the spectrum is a post mortem of a bootstrapped two person startup that shut down last month after building for 1.5 years but not raising any venture capital. This founder’s lessons learned are more tactical, but no less important:

1. If your idea starts with “We’re building a platform to…” and you don’t have a billion dollars in capital, find a new idea. Now.
2. It’s a marathon, but it’s a marathon made of sprints
3. Initial conditions matter. A lot.
4. Developing in a vacuum never works.
5. Beware the chicken and the egg.
6. Prototype any 3rd-party libraries that you’ll be depending upon, before you base your product on them.
7. If you’re doing anything other than building your project and getting users, it’s premature.
8. The product will take longer than you expect. Design for the long-term.
9. People have an incentive not to crush your dreams. Take everything they say with a grain of salt.
10. Know your limitations.

(found via Brian Green)

I would recommend entrepreneurs to read both posts.

“Those who cannot remember the past, are condemned to repeat it.” — George Santayana

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  • http://www.betterlabs.net Vaibhav Domkundwar

    These two stories that surfaced recently are a good example of the argument around raising or not raising (too much) money (too soon) and its effect on the success and failure of a startup. I guess these two companies cover both extremes and the lessons are right on.

    However, I think one critical thing that I found missing in the highlights was the “focus on milestones”. If as a startup, you clearly define what your milestones are from a “getting closer to revenue perspective” then it can instill a strong discipline in solving most of the problems in both these cases. Be close to the customer, track your product development to see how soon it can make money for you and most often it will help get everyone working in the right direction, whether or not there is VC money. Ofcourse, this doesn’t guarantee anything either but I think it helps to unite everyone to be constructive and in an objective way.

  • http://www.betterlabs.net Vaibhav Domkundwar

    I just read this post on GigaOm http://gigaom.com/2008/07/20/fr-how-to-avoid-the-curse-of-vision-overload/ and the first couple paragraphs brings home the same point I mentioned above.

  • Uh

    “1. If your idea starts with “We’re building a platform to…” and you don’t have a billion dollars in capital, find a new idea. Now.” Bullshit

  • http://wanderer.lifeinlines.com Ankur Gattani

    Interesting stuff..

    I’ll only refer to the second post mortem here.. guess some lessons only sink in the hard way.. till then you’re happy believing that you know what you’re doing.. and how far are you stretching..

    and anyway.. unless you bite more than what you think you can chew.. you really won’t know your limits.. or would you?

    and if people stopped stretching themselves.. would it be entrepreneurship really? Lesson is in knowing when to stop!

  • Sathyashankar

    Its important to have a prototype in hand when you are building your application using 3rd party tools and software. Prototype should at the least should cover the basic features of the product which uses 3rd party tools. Any commitment to external world with respect to features and financial projections should be made only on having the prototype ready in hand.
    and there is nothing like “We should have done….” because, you can not change the past.
    Yes, some lessons are learnt hard way. Its available to others at low cost in the form of blogs and forums :-)

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  • http://www.golearnto.com Vanessa Lenssen

    Another tip – remember the law of Pie, everything takes 3.14 times longer and costs 3.14 times as much as you budgeted for and you’ll be fine…

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  • B

    My advice for start ups… Do you think you can do better? significantly? DO IT!
    BELIEVE in it. Put ALL your Passion in it. Be critical. Listen. Invite other passionate people to join in for the love of it.

    Once you feel you have momentum start thinking about how you can make real money with it, at this point you should be more sure it will work. This will also make you more convincing for investors.

    This has worked for any business start up. No matter if your startup was planning to make cookies or track cookies.