Craig Daniel - Learning From Failure - Lean Startup Circle Boston - September 29, 2011


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Craig Daniel presents "Learning From Failure" to the Lean Startup Circle Boston on September 29, 2011.

We covered two reasons startups die: the Services Death Spiral and the Rationality Trap.

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Craig Daniel - Learning From Failure - Lean Startup Circle Boston - September 29, 2011

  1. 1. LEARNING FROM FAILURE Craig Daniel Presentation to Lean Startup Circle Boston September 29, 2011
  2. 2. Who am I? <ul><li>Co-Founder & Head of Product at VisibleGains </li></ul><ul><li>Worked in B2B Startups for majority of career since 1996 </li></ul><ul><li>A veteran in product failure </li></ul><ul><li>Novice public speaker! ;-) </li></ul><ul><li>Follow me: </li></ul><ul><ul><li> </li></ul></ul><ul><ul><li> </li></ul></ul>
  3. 3. Most of the case studies are about successes
  4. 4. But it’s easier to learn from the failures
  5. 5. We’ll focus on two common mistakes <ul><li>The Services Death Spiral </li></ul><ul><li>The Rationality Trap </li></ul>
  6. 6. The “Services Death Spiral” A customer loves your vision So you fill the gaps with services But the product isn’t “ready” yet And you make something that furthers your vision
  7. 7. Case Study <ul><li>An Interactive Video Platform founded in 2004 </li></ul><ul><li>~$27 Million in funding </li></ul><ul><li>Competed with Brightcove, Ooyala, thePlatform </li></ul>
  8. 8. Business Model Hypothesis <ul><li>Provide Interactive Video Platform and “ Player Development Kit (PDK)” to make stunning video-centric portals on the web </li></ul><ul><li>Sell monthly access and “ Jump Starts” for training </li></ul>
  9. 9. Out Of Business: 2010 <ul><li>Cause of Death: </li></ul><ul><li>Services Death Spiral </li></ul><ul><ul><li>Even with some remarkable customers, millions in revenue, the Services Death Spiral killed permissionTV. </li></ul></ul>
  10. 10. How do you avoid the Services Death Spiral? -or- Split the services out to a new business entity
  11. 11. “ The Rationality Trap” You frantically build your MVP You received overwhelming response You got “out of the building” Your shiny new product is a ghost town
  12. 12. Why does this happen? Humans are horrible at predicting what they’ll do in the future Humans are irrational with their decision making &
  13. 13. Case Study <ul><li>A Healthcare Transaction Platform founded in late 90’s </li></ul><ul><li>$10’s of Millions in funding </li></ul><ul><li>Still in business today – servicing ~1 Million providers </li></ul>
  14. 14. Business Model Hypothesis <ul><li>Provide an ePrescribing add-on to deal with pain points around liability and inefficiencies in the provider office </li></ul><ul><li>Charge a monthly fee based on transaction volume </li></ul>
  15. 15. Product shelved within 6 months <ul><li>Cause of Death: </li></ul><ul><li>The Rationality Trap </li></ul><ul><ul><li>“ Don’t fix it if it ain’t broke.“ Even if it makes perfect sense. </li></ul></ul>
  16. 16. How do you avoid the Rationality Trap? <ul><li>Rather than validating…try invalidating your hypothesis </li></ul><ul><li>Don’t sell or pitch during customer development. Listen. </li></ul><ul><li>Ask for introductions to people who would “never use your product” </li></ul><ul><li>Don’t assume they’ll use it. Your MVP should be the minimum that it takes to get your customer to try it </li></ul>
  17. 17. In closing… <ul><li>Some further reading: </li></ul><ul><ul><li>32 Startup Post Mortems: </li></ul></ul><ul><ul><li>Services Death Spiral: </li></ul></ul><ul><ul><li>The Rationality Trap: </li></ul></ul><ul><li>If you liked this, follow me: </li></ul><ul><ul><li> </li></ul></ul><ul><ul><li> </li></ul></ul><ul><li>Any Questions? </li></ul>