Roger Ehrenberg posted a post mortem of Monitor 110:
Writing a post mortem is hard, particularly when the result is failure: a failed deal; a failed investment; a failed concept. That said, without a post mortem, without deep reflection, honesty and introspection, how can we get better and do better the next time? Quite simply, we can’t.
I had considered writing an in-depth post mortem after leaving Rojo and decided that it wasn’t really a good idea.
The only major lessons learned were already discovered a LONG time ago by the tech industry (too much money, lack of focus on the customer, slow innovation, etc).
Too often raising VC forces a company to make the same mistakes made by past failed companies. Basically, the VCs force your hand and a year later you’re looking at the skeleton of your startup beached on shores of Web 2.0.
Needless to say I’ve avoided raising funding for Spinn3r for just this reason (Ehrenberg’s post is significant evidence that my anti-VC hypothesis is correct – see below).
It’s working too. We’re profitable and growing fast. I need to hire 2-3 more people this month.
It seems like they really should have used Spinn3r and not partnered with PubSub… the timeline wasn’t really right because Spinn3r has only been up and running for a little over a year now.
As an aside, I now think that avoiding VC is a significant competitive advantage. It allows you to avoid all the mistakes that caused Monitor 110 to fail.
Specifically you avoid a number of their seven deadly sins:
1. The lack of a single, “the buck stops here” leader until too late in the game
This is easy. I’m the founder. The buck LITERALLY stops here because I sign all the checks and fully control the organization.
3. Too much PR, too early
Not a problem. Wasting money on PR is not a high priority for a bootstrapping startup.
4. Too much money
Pretty hard to waste money when you’re focused on closing deals and scaling the team.
5. Not close enough to the customer
This is really easy to solve. Spinn3r is highly prioritized by customer requests. If we aren’t then they’re not going to be cutting us checks every month.
We talk to our customers frequently and are constantly implementing new features per their request.
6. Slow to adapt to market reality
This can often bite a startup because they might not have the architecture or hardware to move fast enough.
We’ve hit a few snags (which is inevitable for most companies) but all and all I’m pretty proud of our architecture.
7. Disagreement on strategy both within the Company and with the Board
That’s easily solved. If you’re a single founder you’re the CEO and Chairman of the Board. If you have two founders that see eye to eye then problems are also easily rectified.
Two founders that are at odds can really doom a startup though…
I’ve had Tailrank and Spinn3r outlast other well funded startups. We’re still in business and profitable and they’re dead, buried, and six feet under.
By mid-2005 the system worked, but spam was becoming more prevalent and caused the matching results to deteriorate, e.g., too much junk clogging the output. Around the same time we started to dig into natural language processing and the statistical processing of text, thinking that this might be a better way to address the spam issue and to get more targeted, relevant results.
We’ve seen this a number of times with new Spinn3r customers. They switch from Feedster, Technorati, or PubSub and are immediately encouraged by the lack of spam and tuning options available with our crawler.
The problem isn’t necessarily that these guys can’t build a spam-free crawler it’s that there’s a disincentive to spend time building out these features because it’s against their main focus – selling to consumers.
Selling data and competing with Spinn3r is a secondary goal. They want to compete with Google and sell for a billion. They’re funded to accomplish this task so building a smaller product with high quality isn’t in their interest.
This hasn’t been true with Spinn3r. The less spam we index the better. Our index capacity right now is 13M weblogs but we’re quick to point out that the vast majority of these posts come from the top 1M weblogs.
I’ve been quick to criticize Technorati in the past for their ‘state of the blogosphere’ and hyper-inflation of the numbers.
They were NEVER able to prove that the blogosphere wasn’t a scale free network yet we kept seeing their hyped numbers.
This isn’t really as much about being not focused on customers as having too many and somewhat incompatible customers.
Jeremy correctly notes that there are a number of deadly sins that bootstrapped startups must avoid too.
I need to do a better job of noting these in the future. I’ve bootstrapped a number of OSS projects and I’ve already come to accept these as standard wisdom by now.
These might bite a younger or first time entrepreneur though so it’s probably important to point these out.
Note that raising VC probably isn’t going to help you avoid these pitfalls.