TMBA 280: How Our Software Startup Died a Slow Quiet Death

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In April 2013, Ian and I founded a business with Jesse Lawler (founder of Smart Drugs Smarts and Podcast Pop) to found Nearly two years later we find ourselves on the other side of the looking glass wondering what went wrong. In today’s episode, we’re going to talk about what we learned from that experience, how we failed, and what we are going to do about it in the future. We’re also going to hear from Jesse about his new project, Podcast Pop, and how it is going to benefit podcasters who are looking to build a more organic connection with their audience.

Listen to this week’s show and learn:

  • Where the initial concept behind ValetUp came from and how we agreed to partner up.
  • The key assumption we made about the marketplace that turned out to be wrong.
  • Exactly how much money the three of us lost on this venture.
  • How we each realized that it was time to get out.
  • What we believe went wrong and the three things we would do differently
  • What to expect from Jessie’s new business endeavor.

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Thanks for listening to our show! We’ll be back next Thursday morning 8AM EST.


Dan & Ian

Published on 02.05.15
  • I particularly loved this episode. I think it might be the most real episode of all. I appreciate the honesty. You guys will undoubtedly take what you’ve learned from this and use for even bigger successes in the future.

  • Fun one… well for us watching from the sidelines at least!

    Yeah my biggest feedback was and is that software AINT a part-time gig. It’s hard enough with all of your attention to get it right.

    Appreciate the honesty from you guys always and I bought Podcast Pop bitches! :)

  • Episodes like these are why I love the show. You guys are dropping numbers and owning that honesty like no one else in the space.

  • Fascinating episode – really interesting to hear the analysis of the specific reasons things went wrong, as well as the indicators.

    It can be super tough for entrepreneurs to decide when a project just needs more time/effort/persistence (or a pivot) to get it going, vs. when it’s just not going to work out and it’s time to scrap it. I also enjoyed reading Dan Norris’ whole process and documentation around the development and death of informly.

    Food for thought – for you guys, it was certainly a huge time/money sink and ego blow… however, you still have your other successful ventures. Imagine how devastating a failure like this would be for a first-time entrepreneur who’s working off his/her personal savings. Really highlights the importance of starting with markets and processes/business models that you know well and enjoy.

  • P.S. The links to Podcast Pop go to Jesse’s post inside the DC. Might want to include this for listeners who aren’t DC members:

  • Man, I remember sweating like a whore in church writing that email.

    “Hey guys, I think you wasted a lot of money and BTdubs, my position is now a cost center!”

    Probably spent the better part of a week on it.

    Some other thoughts that might be interesting for listeners I would have done differently looking back:

    Stick to Customer Development and Rip/Pivot/Jam

    The biggest thing I would have done different in this project was spent the first month calling our entire customer list at The Valet Spot and figuring out major pain points and gaining market intelligence.

    This would have saved us a substantial amount of time and development costs and established if the project was worth pursuing in the first place and reached a success/fail point much faster.

    By trying to start from scratch and solve the ticket problem (which actually wasn’t a problem as Ian pointed out), we spent 6 months of time/cash before we got to building a second iteration based on existing solutions and really understood the market.

    Having Development Resources can be a disadvantage – there’s a pressure to always be building something, even if that isn’t clearly defined. That was good to an extent because it forced me to go out and call people and figure out what needed to be built, but there was still a lot of waste created.

    I really like the idea of pre-selling both the product and features – show people how it works in a design mock-up and then sell that. Forces you to very clearly define what the product will look like and that users will pay for it. Also makes you learn to sell from the get go.

    Have a 10x Advantage

    The competitor we were looking at that made the market attractive had come in and taken the existing solution and moved it from on-site servers and custom hardware to cloud/mobile hardware. This was a 10x advantage. So all they had to do was figure out people on existing systems and say “we do exactly what those guys do, but it’s ten times cheaper.”

    That’s a good sales pitch.

    We had a lot of 10% advantages – 10% better UI/Design, 10% better customer service, 10% simpler.

    When you’re asking someone to switch platforms, buy hardware, and/or retrain their team, 10% won’t cut it, you gotta go 10x.

  • Really looking forward to listening to this one over the weekend…

  • Thank you Shayna I made those updates.

  • Truly an honor to be in your ear buds sir!

  • Great point about development advantage (counterintuitive) and customer development (the party line, so much so that we overlooked it because we assumed both that we knew and also that our customers couldn’t talk about something that didn’t exist etc).

    It might make sense to work with Ian / Jesse to see if parts of the email could be published for public consumption, at least inside the DC its worth posting. It was one of the top 5 business emails I’ve ever received and I feel like it could be hugely instructional in particular for people seeking to fill apprentice shoes. That is how you do it, by acting and thinking like an owner when you are not in that role technically.

  • yeah I thought of that today as I was listing out a chronology of our businesses over the years, we really really got lucky that the Valet thing took off early, who knows we could have lost steam… that said, as Taylor mentioned above, we wouldn’t have take these kinds of risks in the beginning. A lot of our failure can be chalked up to decadence, we had money to throw at the problem so we preferred to do that rather than getting on the horn with our clients for a month or more. Anyway glad you dug it. :D

  • Thank you Radhika, hopefully we don’t have to drop any more numbers like these!!!! :P

  • This episode ought to single handedly implode the entire podcast series, as we systematically don’t follow our own advice. Typical! Awesome about Podcast Pop, I’m excited to start playing with it.

  • Thanks Greg means a lot coming from you!

  • TJ

    I’m curious, how much software development was done before the concept was put in front of a potential customer, even as a mockup?

  • dylanized

    Badass episode. Would be fun to hear other behind the scenes post-mortems like this, good or bad.

    One part that jumped out at me was the customer avatar, “Mark” from St. Louis who managed a couple dozen valet locations. I live in St. Louis, this seemed like fantasy to me. Around here I would expect Markos or Dmitri to be managing a handful of locations, at most. (Maybe I’m totally wrong!) But my point being, I think it’s helpful to model avatars on real customers instead of making up a total make believe identity.

    At the end of the day – I would propose the big problem here is, you guys didn’t scratch your own itch!!!

  • you get props for trying…..
    I’m curious:
    1. did you guys run any numbers before investing a dime
    2. did you pre-sell without investing heavily
    3. did you follow an SOP around how you test launch new products

    Many of us rarely go forward with a project esp. if we have a warm customer list and the concept (even in rough form) doesn’t pre-sell.

    Just some thoughts.

    Who was responsible for running the SaaS metrics analysis in your biz? (great article by DS on this – )

  • hey Dylan thanks for that, you are probably right about the Dmitri thing! :) Yeah the Mark guy was built off of guys that we knew personally, and these were real pain points for them, but implementing our product ended up being more painful then just keeping the pain points!

  • Also I agree I like to scratch my own itch, but most of our success has come from scratching others with our skill sets.

  • hey Shola thanks for the link, I’ll ask the guys about this one, we had interest but not any pre-revenue, also the product we developed was costly enough and our customers middle-market enough that we couldn’t have covered our costs (although we could have gotten more buy in and validation) we probably would have ended up building something different (or nothing at all, which in retrospect would have been pretty good) :P

  • Pinged Taylor about this!

  • 1. I suspect Ian has a better answer for this than me, but short answer would be “yes.” I wasn’t involved until after the project was already underway though. I think the biggest reason it went forward was we saw another company having success (and we estimated their revenues) in the market and believed we could build a comparable product and take it to a much larger customer list.

    2. No. Biggest Mistake By Far.

    3. Sort of/Not Really. There was definitely experiences we drew on but nothing was explicitly defined and as per #2, we didn’t tow the party line of rip/pivot/jam and/or pre-sell

    If anyone was responsible for the metrics it was me. At least for early stage SaaS companies which we never got out of though, there wasn’t a lot of quantitative data to draw on. We were making decisions based on predictions with those sorts of data but at leass than 10k mrr or less than 50ish customers, quantitative data felt pretty useless compared to qualitative.

  • howtowinajob

    This was a great postmortem. We can look at our failures as soul-crushing or use them to grow.. The three of you took a mature approach to a painful situation and it will pay off in the long run. Thanks for the retrospective and letting us in on a raw time for all three of you. The one thing I found interesting is the naysayer comments. I have a personal approach go/no-go process on this – if a “naysayer” I don’t know can give a specific reason what I am doing will not work and I hear a similar reason from 3 or more people, I heed and review. If I just hear random reasons with no substance or ill-defined reasons I move forward. If 2 people I know and trust give me pause, I actually stop the process until I can re-evaluate. It sounds like several people gave you the same reason for no-go; that it doesn’t just bolt on to your existing business. Hopefully, of all the things you learned from this the process of go/no-go is the most important. Thanks for the great episode.

  • Claus Geissendoerfer

    Finally caught on to the latest episode … and a really good one too.

  • thanks Claus!

  • thank you! i don’t think we did a good enough job of going out of our way to get critical feedback. also nobody really ‘owning’ this project would have made it difficult to heed as we all passed the buck until Taylor (the guy who was getting paid, aka neck in the game) spoke up and said it wasn’t going to work.

  • Jesse Lawler

    Trying to remember when in the process that happened… Definitely “not early enough.” As Ian mentioned in the episode, what we thought was was going to be a key (and beloved) differentiator was our ability to move people off of paper tickets… so we built a pretty elaborate first iteration that was very far down that road before we learned that our suppositions were not so bueno.

    A lot of the stuff we were concerned about — like not tipping our hat to some market competitors that we existed yet — factored way too heavily in our early thinking. 20/20 hindsight, of course.

  • Jesse Lawler

    Yeah, that email definitely earns the “Email That Made Me Come Closest to Crapping My Pants 2014” prize. I didn’t actually, but in retrospect I wish I had.

    Brave email for Taylor to write, terrible one to read.

  • Jesse Lawler

    And now the horrific fact is, as I do a better job with customer-feedback-gathering this time around, I’ve got to get on the phone with Damian Thompson. #lawofunintendedconsequences #teeheehee

  • Jesse Lawler

    I’m definitely trying the “scratch my own itch” approach with Podcast Pop this time around, but I agree with Dan that it can be equally effective to scratch other itchy people.

  • Jesse Lawler

    Reading all these comments, it strikes me how much everyone loves a good crash-and-burn story. I feel a little like the SaaS version of Lindsay Lohan right now. :|

  • It always hurts the first time, I’ll be gentle. Just the tip just for a sec..

  • I would love to see that email !

  • Ian

    Not enough!! Should have been more from day 1

  • 14:36 “We all kind of maybe glazed over the ‘on stage test’ for sure. Like we thought that we were going to hire somebody to be on stage for us” –

    Hi guys, what is the ‘on stage test’ ?

  • Hey Duncan, it’s a heuristic we’ve talked about on the show that can be useful for niche/product selection, it says that (public speaking fears aside) “if you can’t envision yourself on the stage of the industry leading convention [giving a talk about your product/industry] in 3 to 5 years, it’s probably not a business worth starting.”

  • That’s very clever! thanks

  • JR

    Sucks about ValetUp… It sounds like Jesse is listening to the StartUp podcast. The idea of a new podcast platform is a big topic on there.

  • Thanks for the heads up JR, I didn’t know about that but have been hoping somebody would do this type of app for a few years now! looking forward to getting on the platform

  • Loved this episode guys. Wondering how did you sunset valetup? What did you do to notify/satisfy the existing customers?

  • Eric Reinholdt

    Great deep dive on this topic, always appreciate the honesty you guys bring to every topic – even painful ones.

    JR mentioned the StartUp podcast by former TAL contributor Alex Blumberg – the latest episode ‘Fake It Til You Make It’ deconstructs their idea to create a podcast app / platform. The Google Ventures team collaborates and conducts ‘design sprints’ with them. The customer feedback section is priceless – perception vs. reality. Lots of timely advice and a worthwhile listen for Jesse.

    RE: Podcast Pop – As an avid podcast listener the pain point for me centers around curating the good from the bad and having it collated in one place (app). Serving it up in an ecosystem (vs. a singular app) is useful to me. Is PP solving the podcaster’s pain or the listener’s?

    Thanks again for your candor and for shipping great stuff every Thursday…

  • great question Aric, asked the guys about it

  • Hey Eric that’s for pointing that out, I’m on episode two and already jumping out of my chair and some of the stuff being talked about! (YOU DON’T NEED MONEY!) :D

    Good point RE: podcast pop, interested in Jesse’s response there.

    Love to do the show thank you for listening!

  • Ian

    It was mostly just a fizzle. Then eventually we let them know we wouldn’t be supporting the platform any longer.

  • I hired Shola Abidoye, founder of Converport last April to help me create, publish, and market a bestselling book for $5,000. Unfortunately, after delaying everything six months past the due date, she decided to cut off all contact with me without delivering what I paid for.

    You can read the full details of my experience getting ripped off and scammed by Convertport here:

    I know these are strong accusations I am making, and I am prepared to support them with emails and recorded calls if necessary. Please let me know if you have any questions or any suggestions for getting Shola to reach out to me so we can resolve this dispute.

    Because she has ignored all my attempts at peaceful resolution, I don’t see what other choice I have but to start warning others about her fraudulent behavior before I gather to evidence necessary to take her to court and try to get my money back.

    I have yet to receive even a partial refund for what I paid, and Ms. Abidoye publicly denies that I hired her to do these things. She has taken a very insulting and condescending tone to me or anyone who questions her about this incident.

    Gregory Diehl

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