Five Indicators of a Bad Startup

Xobni is not my first startup.

During the spring of 2005 I worked on a company named Swift Ride Technologies. I was taking a light load of classes at MIT and working with one cofounder, Greg Duffy, who was also a student.

This company was our first foray into the world of companies trying to hit it big. I had been operating a small online shareware company for seven years at that point, and we had both done consulting. But this was different.

Although we had some of the indicators of a good startup previously mentioned, we made several serious mistakes.

  1. We were not full time.
    As students, we could only put in 30 or 40 hours per week. There is such an infrastructure cost in startups that dedicating only this small amount of time won’t get you to escape velocity. We could have worked at this level for five years and had little to show for it.
  2. We focused on MBA-type issues too early.
    I spent way too much time focusing on the business side of the company. The advantage for me was that I got to learn about the startup world. I interfaced with 2 core advisors, 5 ancillary advisors, 10 hardware design vendors (4 were Taiwanese), 3 potential customers, gave Powerpoint pitches to about 25 people, and picked up 18 business books. I built a financial model with several worksheets, detailing plans for expenses, staffing, unit sales, share allocations, and so on.Why? Because they were sexy.People always want to focus on the sexy thing when they’re learning something new, as opposed to the fundamentals. Aspiring comedians want to learn the punch lines, instead of focusing on good delivery. Upcoming technologists want to learn an array of languages, instead of development fundamentals. 

    The down side was that the code suffered. The fundamentals weren’t there, so the sexy things didn’t matter.

  3. Our idea was bad. 
    It required us to develop hardware, and we had to reach a critical mass of users before it would work. Both of  these are non-starters, especially for cofounders with little street credibility.
  4. We lived 3,000 miles apart.
    The distance was a killer. It was like having a football team in which the offensive and defensive players practice on different sides of the world. Greg and I had a clear delineation of disjoint responsibilities, but it hurt us at game time.First, it meant that we were less excited. We couldn’t see each other working. We couldn’t jump up and down together in joy when something good happened.It also meant that we couldn’t collaborate on the small, tactical decisions. The importance of these small decisions add up over time.
  5. We had other obligations.
    We each had one more semester of school left before we could graduate. Our families wanted us to graduate. So we would have pressure to put the project on half throttle even if we were successful after working through the summer. The pressures were similar to those that a married person, or parent, might have.

If those five conditions were not true, we would have had a good shot at success.

But the bits were flipped in the wrong direction, and the startup sank without a trace in late April, 2005. Greg is now working at another startup in Dallas; he got in on the ground floor. They have since raised substantial funding.

I am now working on Xobni. We seem to have these five bits flipped in the right direction, but I’m still not sleeping well at night. There are 100 other things we’re trying to nail down. They might be less significant bits, but we still have years to go.

3 Responses to “Five Indicators of a Bad Startup”

  1. 1 Joe June 26, 2006 at 3:56 am

    Oh wow, I didn’t know you and Greg worked on a startup last year. What was Swift Ride about?

  2. 2 Adam Smith June 28, 2006 at 4:13 am

    Hi Joe,

    We were trying to solve the roadway traffic problem. The idea was to sell GPS navigation devies, but with a cellular data modem built in. We could use collaborative filtering and historical data to build a picture of the traffic conditions everywhere, and then show people how to navigate around the jams.

    Once again: hardware, and critical mass.

  3. 3 Bryan July 19, 2006 at 8:00 am

    You of course know about Mercedes’ implementation of your idea? It sounds pretty cool – it takes traffic conditions from the internet (presumably recorded by the dept of transport) and alerts you of slow spots, and offers different routes. That at least doesn’t rely on critical mass, but I applaud your gusto in the hardware dept – I’ve had several hardware ideas that I just throw away because of my perceived inability to develop them.

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Xobni’s contact management products offer lightning fast email search and organization of your inbox, as well as an innovative and comprehensive address book for the mobile device.


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