Like Edison and the lightbulb, like Gates and the pc operating system...I was about to become the first person in America to sell condom key chains.
That was probably your first mistake. Neither of your heroes succeeded by being first with a great new product. They won through ruthless competition (some may even say cheating), unfair advantages, endless promotion, and competing in the courtroom and legislature as much as in the marketplace.
Perhaps Googling things like "Nikola Tesla" or "CP/M" or reading http://theoatmeal.com/comics/tesla may have changed your business plan.
Interesting to know about Tesla and Edison. I've always seen somewhat similar parallel between Jobs and Wozniak. For all his greatness, I always see Jobs as an overrated CEO and Wozniak as underrated geek.
I like a lot of the stuff Matthew Inman has done, but I wouldn't suggest citing his Tesla comic if you're trying to make a point about Edison v. Tesla.
I quit my business january the first. I sold people. Actual people including kids, grandma's, six-pack's and what not as models for agency's and photographers. My company was different: You could select people like you can cars: Size, color, tattoos and a location. I sold people including all the royalties, like a Shutterstock for people with a fixed price (no matter how well known the client is). I had everything worked out: a simple signup process, legal protection for models (no nudity) and a legal framework for clients and my own company.
I upset the expensive agencies (boy were some mad at me), but ultimately failed because I underestimated how far people will go to get something for "free". People would rather spend 8 of their own hours finding friends, neighbors, relatives to use as a model, than select a perfect local model and pay him or her a few bucks. I work for a design agency for the biggest names you can think of but even those PR-people would rather throw away 8 of their own hours and work with shitty contracts if it could save them a few dimes.
Of course becoming blind didn't help. Thank God the doctors got my vision back, but if you're a one-person-company shit like that can certainly kill your company. But that's not why I failed. I failed because I thought I could use greed and let people save a lot of money. Turns out people were even more greedy (or dumber?) than I thought.
Yup, even the smallest price creates a huge barriere for most people. Personally I'd rather throw some money at problems than waste my precious time, but everyone is different.
Which markets were you focusing on? I would assume this would work well here in California, based on the need for stock photos and models in the LA & Bay Area. From what I gather in your writing, the choices were having a companies own PR-people waste hours of their billable time or have to go out to an expensive agency to get models, while you provided a service that catered to the middle market?
This grind feels very familiar. I joined a product company when it was at this stage and can say that this guy's story resembles our own quite a bit. The difference, though, was that we did not shut down shop because we had a little bit of debt. We kept going, are still going, and after more than two years in business are finally beginning to see some traction. The truth is, building a consumer product is just not easy. It takes time to build channels! The struggles that the author had were completely to be expected... every business has its quirks that you can't know until you're waist deep.
He probably learned more about business from this venture than $10,000 of business education would have given him. I've also lost that much on a venture once, and the irony is that like his business it was also a potentially profitable and viable business and may have succeeded if we had the experience to approach it differently.
"My love affair with my product soon began to fade. The key chains would not come clean. No matter how much I scrubbed, they still felt as though a posse of banana slugs had just oozed over them."
Like so many startup ideas, this could probably be a great idea for somebody who can actually execute it. I feel like a jerk saying this, but this seems like a recurring theme lately - people saying "the market was too small" when the reality that they needed a huge target because their execution was near non-existent.
I'll tell you the story of how one of my startups died.
Some years ago, I was looking for the next business the start. Being one of those serial entrepreneurs, I was used to searching for products that could be easily marketed by me. I'm one of those weirdos who enjoys to program and enjoys marketing. Anyhow, I found my next product on a magazine article. There it was, all shiny and plasticky. Why? Because it was actual plastic. Or better yet, shrink wrapping plastic. The one used to cover botas during winter.
The magazine article talked about a business in Arizona who was shrink repo'd houses, cars, boats, equipment, etc. They were doing a fine job with all the people going bankrupt, and all the banks needing a way to keep their properties in good shape for re-sell. I did some market research and it was a viable business to do locally. There were plenty of things to shrink wrap.
The shrink wrap was sourced from a distributor in Michigan. It was dirt cheap, and would allow me to mark it up without fear. Each sq. foot cost me around fifteen cents, and I would sell it for three dollars. Problem was the shipping. I reside in the Caribbean. The plastic had to travel all the way down from Michigan, get on a plane, and to my doorstep. The costs tripled, but the nice margin kept things at bay.
I went off to market it the product and made a huge first sale. It was for about $2k worth of shrink wrap. It was to wrap industrial machinery that was being shipped overseas to Zeus knows where. I got so excited by the "sale" that I ordered a roll of shrink wrap without taking a deposit or a purchase order number (the sale was for a local construction company). The client was actually pressuring me to get the material so they could ship it out. It was a safe bet, or so I thought.
The plastic arrives a couple days later, and its a heavy sumbitch. I pushed and pushed until it was resting in my garage. I call the client and let him know that everything is ready to. He replies by stating that everything will be setup for me to go and do the shrink wrapping. Awesome!
But wait. He asks for my proof of insurance. Yes. I had forgotten to check with the local insurance company to see if they would insure me. So I told him that I would process the insurance, but to go ahead and schedule, because I was sure someone would step forward and insure me. After contacting every insurance agency, pawn shop, church, and barber shop on the island, my dreams of being the shrink wrap king were fading away.
I call the client and let him know that no one would insure it. Surprisingly, he told me that they were so needy of the product (I was the only person offering the service locally), that they would take the risk. At the end of that phone call he said "I'll call you back when it setup."
One week passes. Two weeks. On the third week I call him. He says they were having trouble scheduling access to the equipment, but to not fear, because they need it to do it. I wait another week and he calls. Finally!
That was not a good phone call. They had sold the equipment to a local, and would not be needing my product. I did not have an agreement, deposit or anything. There was no way to get them to pay, and it was a waste of time.
From that experience, I created my party-pooper business checklist. It has all sorts of questions that I must answer before even thinking about investing my time or money into anything. It has saved me countless headaches, and resources. It keeps my serial entrepreneur in check, and forces me to think about every little bit before doing anything. Sadly, it cannot predict when people will scam me. I've had people in the valley scam me out of work, just like every freelancer out there. It sucks, but each time it happens I get to learn from it. One thing you get to learn after doing business for as long as I've been doing it, is that bad shit is going to happen no matter what. You are going to get scammed by people who sell you their close association to YC-funded company (which I thought made their project more legit, but it doesn't), and you will make costly mistakes. Being really good at marketing doesn't save me from those things. But anyhow, realize that you will make mistakes. Those mistakes do not define you, but teach you. Failure is all but guaranteed. So have fun, learn, and don't take it personal. After all, like the founder of a startup that scammed me not long ago, its business and not personal.
Great story. Would you mind sharing with the HN community your checklist? I'm sure we could all learn something from that... or maybe would make a nice blog post?
Out of curiosity, where does all the used shrink wrap go when winter is over? I'm picturing a whole house's worth of plastic wrap ending up in a landfill or floating its way out to trash island in the middle of the Pacific Ocean, and it makes me throw up a little bit in my mouth.
Anyway, thanks for sharing the story -- a good case study to learn from -- but I hope for the sake of humanity that this business of shrink-wrapping boats and houses is a thing of the past.
I really hate these badly designed web sites:
"Sorry, we are unable to supply content for this web page, either because the Internet security on your browser is set to high, or because you have disabled Javascript. For information on how to change these settings in your browser, please see the Help page"
You should call the article "How My Business Failed", because that what it was.
If I opened a restaurant, even if on a new set of dishes, no one will call it a start-up, and it can be a huge business.
PG:
"A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of "exit." The only essential thing is growth. Everything else we associate with startups follows from growth."
I wonder if fellow news readers can chime in as to what are the boundary conditions to let go and shut down a service. Some services have survived through waves of investment cycles - ie flickr etc, others vanished and are not remembered by but a few.
There are couple of scenarios I am currently involved in. One is sort of bootstrapping traveler assistance service - this one is bootstrapped but with fairly large - 10 people editorial staff. The other is my small project that I am interested in using myself. The third one is a job style project that is suppose to break open a new market in the internet retail and has been running for already a month...
Qualitatively there are different reason for closing a startup - boreddom, disinterest, lack of funds, the growth curve is too slow. From my understanding startup is not a company but a place to invest money in - that has a vertical market and near future potential for geometric function style growth and if it isn't happening startup isn't a startup anymore... but there are so many stories out there of people sticking it out for 2 years and others giving up in 3-6 months...
It would be nice to have some sort of coherent picture when to give up and when to soldier on evolving product, adding users - trying new things...
Whenever someone comes to me with a physical consumer product idea, I tell them to go read MouseDriver Chronicles first. The authors went through similar experience with golf driver head shaped mouse. It is an interesting read.
He went with an idea that needs to be validated (I don't find obvious that condom key chains are a sure kill ...) and instead tries to produce 10,000 of them the first time. Wow.
Lean Startup is really hard to apply to this kind of business. Even when he had them made 10k at a time, he was only able to eke out 75 cents of profit on each one. If he tried a smaller batch, the production costs would have eaten him alive.
That said, I could see making a first batch knowing it will sell at a loss just to test the market.
Yep, he should have hand-made early protos, sold them to people, and iterated. He would have found out that people want real working condoms much sooner (I mean, duh, right?).
The airplane cargo pressure thing was an oversight that I would have made too, except it shows that he never tried shipping even 1 sample from an Asian supplier to him before, or the issue would have been detected sooner at essentially no cost.
Nice story, a little too long though and I'd have liked bigger and sharper pics of the actual products.
What seems very obvious to me or maybe I didn't get the point: Carrying a key chain with a condom is more than just a key chain, it's a statement. It somehow says in a very obtrusive way that you want to f$%#, that you are anytime ready to f$%#, yeah it just says that you are so desperate and unf$%#$% that any f$%# is welcome. And that's definitely not the way to get laid (for men at least).
Sorry, but who should buy this? 12yr old kids?
However, I think that the OP learned a lot, so it should have been a good entrepreneurial experience in any case.
>Sorry, but who should buy this?? Maybe 12yr old kids?
I take it you've never seen college boys (or even some young professionals in certain areas) wearing shirts with slogans such as this one (http://i.imgur.com/4vt3m.jpg).
(in case you're located outside the US- American culture, despite its puritan roots and persistent culture, is quite open about crass jokes in that spirit)
I think this underscores the need to have smart advisors. I could see myself making similar mistakes; to avoid them, consult people who have done stuff similar to what you're trying to do. It seems most of these issues could have been prevented if the author had consulted folks in his MBA network and gotten their advice on what he should do in his business, on pricing, on setting expectations for how hard it is to launch a successful product like this, on importing, and on general advice. Who knows--he might even have gotten a smart business partner to help him sort through these tough issues.
[+] [-] edw519|13 years ago|reply
That was probably your first mistake. Neither of your heroes succeeded by being first with a great new product. They won through ruthless competition (some may even say cheating), unfair advantages, endless promotion, and competing in the courtroom and legislature as much as in the marketplace.
Perhaps Googling things like "Nikola Tesla" or "CP/M" or reading http://theoatmeal.com/comics/tesla may have changed your business plan.
[+] [-] seanlinehan|13 years ago|reply
[+] [-] swapnilt|13 years ago|reply
[+] [-] charlieok|13 years ago|reply
[+] [-] digitalengineer|13 years ago|reply
I upset the expensive agencies (boy were some mad at me), but ultimately failed because I underestimated how far people will go to get something for "free". People would rather spend 8 of their own hours finding friends, neighbors, relatives to use as a model, than select a perfect local model and pay him or her a few bucks. I work for a design agency for the biggest names you can think of but even those PR-people would rather throw away 8 of their own hours and work with shitty contracts if it could save them a few dimes.
Of course becoming blind didn't help. Thank God the doctors got my vision back, but if you're a one-person-company shit like that can certainly kill your company. But that's not why I failed. I failed because I thought I could use greed and let people save a lot of money. Turns out people were even more greedy (or dumber?) than I thought.
A few screenshots (as the site is offline): http://imgur.com/4JMDS http://i.imgur.com/63e4Z.png
[+] [-] Avalaxy|13 years ago|reply
P.s. groetjes uit holland! ;)
[+] [-] TezzellEnt|13 years ago|reply
[+] [-] seanlinehan|13 years ago|reply
[+] [-] jacquesm|13 years ago|reply
Underestimating the time it takes to get off the ground is a very frequent cause of business death.
[+] [-] paulmolluzzo|13 years ago|reply
[+] [-] ytadesse|13 years ago|reply
[+] [-] kokey|13 years ago|reply
[+] [-] onlyup|13 years ago|reply
- Do better market research
- Do the maths before proceeding
- Know all the ins and outs with shipping your product
- Don't give your product away
[+] [-] mijustin|13 years ago|reply
[+] [-] tferris|13 years ago|reply
[+] [-] delinquentme|13 years ago|reply
Not a stanford chemist I take it?
[+] [-] dmor|13 years ago|reply
[+] [-] robbiea|13 years ago|reply
[+] [-] onlyup|13 years ago|reply
And thanks for pointing the date out, I had missed that!
[+] [-] orangethirty|13 years ago|reply
Some years ago, I was looking for the next business the start. Being one of those serial entrepreneurs, I was used to searching for products that could be easily marketed by me. I'm one of those weirdos who enjoys to program and enjoys marketing. Anyhow, I found my next product on a magazine article. There it was, all shiny and plasticky. Why? Because it was actual plastic. Or better yet, shrink wrapping plastic. The one used to cover botas during winter.
The magazine article talked about a business in Arizona who was shrink repo'd houses, cars, boats, equipment, etc. They were doing a fine job with all the people going bankrupt, and all the banks needing a way to keep their properties in good shape for re-sell. I did some market research and it was a viable business to do locally. There were plenty of things to shrink wrap.
The shrink wrap was sourced from a distributor in Michigan. It was dirt cheap, and would allow me to mark it up without fear. Each sq. foot cost me around fifteen cents, and I would sell it for three dollars. Problem was the shipping. I reside in the Caribbean. The plastic had to travel all the way down from Michigan, get on a plane, and to my doorstep. The costs tripled, but the nice margin kept things at bay.
I went off to market it the product and made a huge first sale. It was for about $2k worth of shrink wrap. It was to wrap industrial machinery that was being shipped overseas to Zeus knows where. I got so excited by the "sale" that I ordered a roll of shrink wrap without taking a deposit or a purchase order number (the sale was for a local construction company). The client was actually pressuring me to get the material so they could ship it out. It was a safe bet, or so I thought.
The plastic arrives a couple days later, and its a heavy sumbitch. I pushed and pushed until it was resting in my garage. I call the client and let him know that everything is ready to. He replies by stating that everything will be setup for me to go and do the shrink wrapping. Awesome!
But wait. He asks for my proof of insurance. Yes. I had forgotten to check with the local insurance company to see if they would insure me. So I told him that I would process the insurance, but to go ahead and schedule, because I was sure someone would step forward and insure me. After contacting every insurance agency, pawn shop, church, and barber shop on the island, my dreams of being the shrink wrap king were fading away.
I call the client and let him know that no one would insure it. Surprisingly, he told me that they were so needy of the product (I was the only person offering the service locally), that they would take the risk. At the end of that phone call he said "I'll call you back when it setup."
One week passes. Two weeks. On the third week I call him. He says they were having trouble scheduling access to the equipment, but to not fear, because they need it to do it. I wait another week and he calls. Finally!
That was not a good phone call. They had sold the equipment to a local, and would not be needing my product. I did not have an agreement, deposit or anything. There was no way to get them to pay, and it was a waste of time.
From that experience, I created my party-pooper business checklist. It has all sorts of questions that I must answer before even thinking about investing my time or money into anything. It has saved me countless headaches, and resources. It keeps my serial entrepreneur in check, and forces me to think about every little bit before doing anything. Sadly, it cannot predict when people will scam me. I've had people in the valley scam me out of work, just like every freelancer out there. It sucks, but each time it happens I get to learn from it. One thing you get to learn after doing business for as long as I've been doing it, is that bad shit is going to happen no matter what. You are going to get scammed by people who sell you their close association to YC-funded company (which I thought made their project more legit, but it doesn't), and you will make costly mistakes. Being really good at marketing doesn't save me from those things. But anyhow, realize that you will make mistakes. Those mistakes do not define you, but teach you. Failure is all but guaranteed. So have fun, learn, and don't take it personal. After all, like the founder of a startup that scammed me not long ago, its business and not personal.
[+] [-] technotony|13 years ago|reply
[+] [-] nanijoe|13 years ago|reply
[+] [-] vrodic|13 years ago|reply
[+] [-] trvlngwlbry|13 years ago|reply
Anyway, thanks for sharing the story -- a good case study to learn from -- but I hope for the sake of humanity that this business of shrink-wrapping boats and houses is a thing of the past.
[+] [-] xanmas|13 years ago|reply
[+] [-] Sami_Lehtinen|13 years ago|reply
[+] [-] CamperBob2|13 years ago|reply
[+] [-] amikazmi|13 years ago|reply
If I opened a restaurant, even if on a new set of dishes, no one will call it a start-up, and it can be a huge business.
PG: "A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of "exit." The only essential thing is growth. Everything else we associate with startups follows from growth."
[+] [-] bparsons|13 years ago|reply
This guy was awarded a Stanford MBA and didn't know that you had to have paperwork to import goods from Thailand? Am I missing something?
[+] [-] netrus|13 years ago|reply
[+] [-] perlpimp|13 years ago|reply
There are couple of scenarios I am currently involved in. One is sort of bootstrapping traveler assistance service - this one is bootstrapped but with fairly large - 10 people editorial staff. The other is my small project that I am interested in using myself. The third one is a job style project that is suppose to break open a new market in the internet retail and has been running for already a month...
Qualitatively there are different reason for closing a startup - boreddom, disinterest, lack of funds, the growth curve is too slow. From my understanding startup is not a company but a place to invest money in - that has a vertical market and near future potential for geometric function style growth and if it isn't happening startup isn't a startup anymore... but there are so many stories out there of people sticking it out for 2 years and others giving up in 3-6 months...
It would be nice to have some sort of coherent picture when to give up and when to soldier on evolving product, adding users - trying new things...
links to resources are welcome! TIA!
[+] [-] sdrinf|13 years ago|reply
[+] [-] porter|13 years ago|reply
Truth. The only way to learn how to start a business is to start one, mess up, and keep going.
[+] [-] akg_67|13 years ago|reply
http://www.amazon.com/The-MouseDriver-Chronicles-Adventures-...
[+] [-] louischatriot|13 years ago|reply
He went with an idea that needs to be validated (I don't find obvious that condom key chains are a sure kill ...) and instead tries to produce 10,000 of them the first time. Wow.
[+] [-] wtracy|13 years ago|reply
That said, I could see making a first batch knowing it will sell at a loss just to test the market.
[+] [-] jonmrodriguez|13 years ago|reply
The airplane cargo pressure thing was an oversight that I would have made too, except it shows that he never tried shipping even 1 sample from an Asian supplier to him before, or the issue would have been detected sooner at essentially no cost.
[+] [-] dexter313|13 years ago|reply
[+] [-] mikeryan|13 years ago|reply
There goes carrying a condom around in my pockets... (no wait marriage took care of that one)
These were encased in hard plastic, I'm pretty sure they were safer then most condom transportation mechanisms.
[+] [-] tferris|13 years ago|reply
What seems very obvious to me or maybe I didn't get the point: Carrying a key chain with a condom is more than just a key chain, it's a statement. It somehow says in a very obtrusive way that you want to f$%#, that you are anytime ready to f$%#, yeah it just says that you are so desperate and unf$%#$% that any f$%# is welcome. And that's definitely not the way to get laid (for men at least).
Sorry, but who should buy this? 12yr old kids?
However, I think that the OP learned a lot, so it should have been a good entrepreneurial experience in any case.
[+] [-] GuiA|13 years ago|reply
I take it you've never seen college boys (or even some young professionals in certain areas) wearing shirts with slogans such as this one (http://i.imgur.com/4vt3m.jpg).
Somewhat related, these (http://en.wikipedia.org/wiki/Truck_nuts) are also quite popular in Texas.
(in case you're located outside the US- American culture, despite its puritan roots and persistent culture, is quite open about crass jokes in that spirit)
[+] [-] meisterbrendan|13 years ago|reply