Business Lessons from the Land of Hard Knocks

I wrote this three years ago  after burning through my family’s life savings in a failed startup, but never posted or published it – as frankly it hurt too much.

After all, no one ever dreams at the end of the ride, they’ll be wondering whether they should put a bullet in their head so their family can collect the life insurance to pay the bills – or that they’ll be forced to rip their family from Sunny San Diego and relocate to the mid-south.

So I have to thank my little brother Matt, who inspired me with hisrecent postings on about the lessons he’s learned in the last year of working on his startup speakertext.


Be kind – but ruthless

Acts of kindness go a long way and often cost next to nothing – but at the same time success requires being ruthless. If your best friend isn’t carrying his weight – and his incompetence puts the company at risk, then firing him may not be nice but may be required to succeed. Or if you can’t cut the mustard, be honest with yourself and get help. So whether it’s people, strategy or products, there’s no room for rose-colored glasses in a start up if you want to succeed.

Fail as fast as you can

As Thomas Edison said, “I have not failed. I’ve just found 10,000 ways that won’t work.”  As my brother pointed out in his post, where you end up is typically way different from where you start and the only way you get there is to find out what doesn’t work.

Know when 80% is good enough

Achieving perfection is almost impossible – since no matter how much time you spend on a project, as soon as you test the concept on a real life user or prospect, they’ll surprise you with completely unanticipated feedback. So unless it’s something that has to be perfect the first time, it’s more important to complete the initial phase quickly and get feedback faster – so you can deliver a successful product sooner.

Create a culture of execution

Establish a culture of execution and accountability. The best ideas will get nowhere if you don’t execute – so agreeing on specific deliverables and tracking them to make sure they are done – is critical. Otherwise, everything gets lost in the swirl of day-to-day events.

Projects cost twice as much and take three times as long

Since most projects either cost twice as much or take three times longer than predicted, the fact that you don’t complete everything in the desired time frame isn’t as important as making sure you are making consistent progress toward your goals. So reset your expectations, tighten your belts, keep a close eye on your bank account and assess and reassess your progress on a weekly and monthly basis to make sure your still on track – and that the track actually leads somewhere profitable.

Great management trumps great products

Entrepreneurs are often in love with their ideas and inventions. Occasionally,  a great product will float to the top regardless of the company management, but more often than not it will drown because the people responsible for shepherding it to the top can’t swim. Good managers quickly learn what’s required to make it to the top even if the product isn’t the greatest.

Cash Flow is King

No cash means you are out of business. Revenue is irrelevant if you don’t have cash to pay the bills – so it’s critical to focus on ways to increase your cash flow and focus on those things that will generate cash sooner than later. So while you may look at your product as your golden goose, professional services is often your fastest way to increase your cashflow, and in the process learn what the market really wants and enhance your customer experience.

No pain, no gain

What you enjoy and what’s required to be successful are often two different things, so sometimes it requires some pain in order to grow.

I have a friend, who keeps telling me she wants to take her business to the next level – but in order for her to do that she needs to spend more time on the things she doesn’t like, such as operations, and less time on the fun stuff, like networking, or give up control to someone who will do what’s necessary – but then it won’t be her company any more. So whether you’re an engineer who loves engineering and hates selling or a salesman who doesn’t want to be bothered with operations, you have to grow in order to grow your company.

The issues that bother you at the beginning will be what kills you later

I had concerns from the very beginning about my two partners but I thought as long as the product worked as advertised the people issues wouldn’t be real problems. In the end, while we had product problems it was the people issues that prevented the organization from adapting and quickly overcoming the inevitable roadblocks – so even if the financial-opportunity look fantastic, run away if your gut tells you.

If it looks like a goose, walks like a goose, it’s a goose.

You can try to define your product however you want, but if your customers think of it as X, it’s X and will be very difficult to get them to see it as Y. We proved our product could add 10% to a customer’s top line – but most customers couldn’t get over the cost – since they viewed our product as an add on to their existing product – and couldn’t see paying nearly as much for our add on as the primary product. No matter how much we tried to convince them that we were selling apples, they insisted on comparing us to the oranges they were already buying.

Share your Success

We all stand on the shoulders of giants, so when we are successful, it’s not because we did it all by ourselves but that we were able to take advantage of the infrastructure others created. And if you’re lucky enough to succeed, it’s critical to share your success with others so that we can make the world a better place.


  1. roberto says:

    Very nice article, thanks for sharing with all of us. I hope that you went well until now. Thanks again!

  2. Mark Essel says:

    Glad you got over the pains of crashing, and shared this post. Excellent write up!

    ps. I really enjoy your bro’s blog posts

  3. Shawn Yuan says:

    I love it. Thx for sharing.

    I loved the no pain, no gain part. I’m going to start doing that today.

  4. Chris says:

    Good on you mate for giving it a try. All the best in the future, and hey there’s nothing wrong with living in the south! Never give up either, now you’ve got all this wisdom i bet you’d be successful next time you give it a try.

  5. Peter says:

    Whenever I start anything like that I have some spare money that I won’t invest into the venture under *any* circumstances. That money is enough to run my personal life on a standard my family got used to. It also prevents me (along with the aid of psychiatrists 🙂 to drive a bullet into my hand. Also I do not have a gun.

  6. 1place says:

    Great article – Would it have been different if you tested your value proposition through modelling it and attempting to get a patent? I have just written an article titled “Startup consideration – can you patent it?”
    My proposition is that a startup (which I still consider my firm as one) needs a means to test out its competitive advantage – which can be done by applying for a patent: this is not a panacea just one of many tools to test the market

    1. A patent takes 3 to 5 years to get – so if you want to wait that long it might. On the flip side, a patent doesn’t tell you whether or how much people will pay for your product. And as I wrote above, the product is just one small piece of the success puzzle- leadership, channels, brand, etc… are generally much more important. For more product lessons, read my piece about developing successful products Product Adoption: Lessons on how to maximize product adoption and avoid common pitfalls

  7. Great article – a team really has to gel!

    It sux that you learned that the hard way, but I’m certainly gonna try and learn from your lessons.

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