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Summary:

If you’re looking for tips on what not to do with your startup, reading about the failure of someone else’s company can be a good place to start. Today, it was entrepreneur Ben Yoskovitz’s turn to write about the recent failure of his startup, Standout Jobs.

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Entrepreneur and startup advisor Eric Ries yesterday wrote an impassioned blog post at Startup Lessons Learned asking startups and other companies to “stop lying on stage” about their accomplishments, and to be more honest about their failures. Among other things, he mentioned a blog post last week from Wesabe co-founder Marc Hedlund that went into detail about why the company failed and its competitor (Mint) succeeded. Now Ries’s plea has sparked another failure post-mortem, from Standout Jobs co-founder Ben Yoskovitz, who wrote a post today about his company’s shortcomings.

Yoskovitz, who has since become the co-founder of a Montreal-based seed fund/incubator known as Year One Labs, sold the job-related startup he founded with investor and entrepreneur Austin Hill in May for an undisclosed price, but makes it clear in his post that the company more or less failed to achieve what he had hoped to achieve. Why? The founder names several factors, including:

  • Bad timing. “Our timing was terrible. We launched the paying version of our application in the fall of 2008 about 5 minutes before the economy collapsed.”
  • Not fast enough. “I had an exceptionally strong team… but in reality we didn’t code and launch fast enough. We didn’t get product into customers’ hands fast enough.”
  • Too much money. “Raising the money felt like winning. It felt like all (or most of) the justification we needed. It set us on a path of building a bigger product than we should have, and committing (falsely) to our own assumptions of what would work, without fully testing them.”

Yoskovitz also mentions that he didn’t make it easy enough for users to do what they wanted to do with the site, in part because Standout Jobs was trying to change user behavior in ways that the company thought would be better. The reality is that most users don’t like to change, and Standout Jobs didn’t manage to convince them otherwise. Marc Hedlund mentions a similar point in his post-mortem: Despite being first to market, and being revenue-positive, Hedlund says Wesabe failed because it simply made things too difficult and complicated for users, while its competitor Mint made them very simple, and simple almost always wins.

Another point the Standout Jobs founder mentions is that he didn’t have a strong enough understanding of the market he was attacking before he launched the service. “I see countless entrepreneurs make the same mistake,” he says. “They look at a market objectively and think, “I can fix that!” only to realize when they get neck-deep into it that there are a whole bunch of issues they didn’t understand.” As it turns out, this is almost the exact same advice given by Paul Biggar in another recent startup post-mortem — a post about the failure of NewsTilt earlier this year — when he admits that he didn’t really know much about the market he was trying to fix.

Final word goes to Marc Hedlund:

You’ll hear a lot about why company A won and company B lost in any market, and in my experience, a lot of the theories thrown about — even or especially by the participants — are utter crap. A domain name doesn’t win you a market; launching second or fifth or tenth doesn’t lose you a market. You can’t blame your competitors or your board or the lack of or excess of investment. Focus on what really matters: making users happy with your product as quickly as you can, and helping them as much as you can after that.

If you want to explore some more examples of the startup post-mortem oeuvre, ChubbyBrain has put together a list (hat tip to Paul Kedrosky for pointing that one out) that includes an analysis from investor Roger Ehrenberg about why one of his startups failed, as well as founder Scott Rafer’s post-mortem on the failure of Lookery (which he blames in large part on an over-dependence on Facebook). In a nice touch, Chubby Brain has even included its own failure post-mortem as part of the list.

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Post and thumbnail photos courtesy of Flickr user Alex Proimos

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  1. Guillermo | Social Media apps Tuesday, October 5, 2010

    Thanks for this post and the links included. You cannot find many people talking about their own mistakes, and you can really learn a lot from them, specially when you are running an startup.
    Thanks again!

  2. A big up to Eric Ries! I wish we had heard more about the failures so that we could have avoided some pitfalls. You gain so much more from hearing about what went wrong. Nonetheless it’s a natural human tendency to cover up shortcomings and to trumpet any successes, even small ones.

  3. george kyaw naing Wednesday, October 6, 2010

    Tolstoy: Happy families are happy for similar reasons while unhappy ones are unhappy for different, unique reasons.

    Drucker: Purpose of business is to create and keep customers.(Then, I guess we should keep the rest as minimal as possible.)

    george

  4. bored already Friday, October 8, 2010

    Startups stop lying on stage?

    The silence would be deafening.

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