The downside

There's been a lot of blogtalk about a couple of startups that have recently pulled the plug on their failing ventures, some after many millions of dollars of spending and years of effort. There are two that I found interesting because they contemplated the possibility of failure and how it could become reality - the downside of startups.

The first was about the recent closure of Edgeio and what appears to the similar fate facing Podtech. Both companies had high profile guys - the kind that were sought after to opine about tech trends at big-ticket conferences - at the helm, both raised decent VC funds, but that didn't guarantee success. According to the blogger (here's the post) it all boils down to too much hype and too little focus on the business.

The second one is by a founder of the company that shutdown, Zingdom. His post details how the company went through 5 years and three rounds of funding, built a product with a supportive customer base and still couldn't stay in business. It is extremely interesting to see how things can appear to be moving forward on the surface while unraveling below. A most cautionary tale. The lessons learned span everything from development methodology to keeping up with the Valley happenings, but one of particular note is that 'having too much money' can be dangerous.

Focus on the customer/user. It's a very simple and powerful mantra whether you're opening a Cali-French bistro or creating a website for folks hot-footing it to global-warming travel sites. But however well-intentioned you are, and even if you think that's exactly what you're doing, it is easy to get your sights blurry. For instance, our team made a technology decision in the interests of getting the product out to the user quickly. User-focused right? Maybe, but not comprehensively so, as they missed the requirement that users would want adds and changes and the tools used should easily support that - which unfortunately the bleeding-edge choice wouldn't be able to without much bandaiding. Lucky for us we saw this before we got too far, and it has made us hyper-aware about double-checking our decision-making at all levels. And it makes us more sympathetic and less know-it-all-y. The companies mentioned above didn't seek to fail and they had sharp people leading them. And yet they strayed off the path, stumbled and couldn't get up. And as conjectured in the blogs, it could be that all the money they got muffled the 'stay on target' message in their ear. Money - too much can deliver too little.