The startup that didn't.
After 4 years of working on the ClikTO project, I realized that without a paycheck, my days were numbered. I left as the ship was sinking. I wasn't the first nor the last to leave. We had built a new innovative online networking product that no one else had yet done. When we first envisioned it, no one had thought to tap into social networking sites along with local search functionality for building personal networks to create business opportunities.
This is a list of mistakes detailing how a great idea failed so miserably.
Mistake 1: No resources, no money, and empty promises
The small team was dedicated. But, with only a few guys working on the project full time, things were not getting done. No one was getting paid at first (2001), instead the compensation was tied to sweat equity. The sweaty equity would have been paid by taking a percentage of sales of each ClikTO. So, until launch we wouldn't see any money. Yet, somehow we all fell for the same Get Rich Quick speech given by the owner. We were convinced that we would all be rich beyond belief when the sales came pouring in.
Mistake 2: Outsourcing
With no major milestones being met in the first 12-24 months, and with staff changes, the team realized something neeeded to be done. Miraculously, investment money was finally available to the project, and the team decided to outsource development to India for something like $25K. The guys in India were not managed well and did not really understand our product and as a result they did a terrible job. There was nothing that they did that we could salvage and we tried. Eventually it was scrapped. They are probably still wondering where their last check is...
Mistake 3: Launching without an organized plan
The owner had no organized plan to market the product, instead he'd show up to networking meetings here and there and pitch our product. We heard about countless deals that were about to happen, and they never did.
Although it was not our area of expertise, the technical team realized that a plan was needed to help the owner sell the product. We visited a university library and checked out books on guerilla marketing. We also worked to get our website ranked in the search engines. We scheduled and held our own ClikTO Networking Meetings at restaurants around Dallas. We'd have a decent crowd show up but there was NEVER A HARD SELL of the product. Why, I don't know. It angered us to see that the
owner could talk the talk, but failed to walk the walk. Instead visitors listened to others sell their services. We did a poor job of selling ClikTO's and ClikTO in these meetings. This was not a good sign as it was our only way of generating leads without cold calling. And we eventually made cold calls.
Mistake 4: Nontechnical sales people unable to sell
We had been told that family members of the owner, his friends, his colleagues,his associates, his friends from church, etc. would be selling the product and not worry about that. We had quite a few people willing to sell. However we didn't realize that most of them were not computer literate enough to send an email. A couple of awful consultant websites popped up in the search engines which didn't help us at all when we pitched our product to larger companies. Of the 50 or so sales consultants, less than a handful were capable of demonstrating the product. Less than that could close the deal. The majority of the sales consultant pool was made up of former multilevel marketing consultants. To them, it was a chain letter. Few cared about the product, they just wanted to be the quickest to the top of the pyramid.
Mistake 5: Winging it
As time went on, the compensation agreements changed for those spending more time on the project. By launch, the amount of sweat equity accrued by the team over the lifecycle of the project became rediculous. There would have been little money left to run the company, and it would have taken years to pay those who deserved it.
Mistake 6: Greed
The product was not ready when we launched, but we had to launch. We were told we had to launch. We needed more money to invest into employees and desperately needed a qualified management team to lead us. To do this, I suggested we research venture Capitalist firms. I was told that the owners did not want to give up their share of the company and lose control. So, instead of taking a smaller piece of the pie, no one had any pie at all. At the time, I had read that Plaxo, a competeting product, received over 40 Million in venture Capital funding. Surely we could have
raised one to two million. Maybe not.
Mistake 7: Not paying employees
After launch, with more sales people complaining than selling, we had serious problems. Our technical team was dedicated but could not live on sweat equity. The owner appeared to care less. His talk was about to catch up to him and he new this. There appeared to be no effort to raise money from investors, instead, the business model was to run the company off of sales alone. This was just plain stupid. We needed time to work out the bugs, for product adoption and marketing efforts. The owners did not plan for this. With no money available, the owners tried to buy time
by telling the employees they were working on getting us paid. And we never were.
Final Thoughts
In the end, the project cost a TOTAL of around $300K - $350K over the course of 4 years. The money was not available immediately. At the beginning we were told there was no money at all. Had they had this amount to begin with, the project may have been successful. It sounds like a lot of money, but for a startup creating a web based product it was very little.
By mid 2005, the entire team had quit because they were not being paid. The site lasted for another year and a half with no noticeable activity before it was finally laid to rest with all of the other failed dot coms.
As of today, November 28th, 2006, the site no longer loads. I assume the owner finally realized that neither his drive (read: greed) or business skills (read: winging it) would keep the company afloat. The plug was finally pulled. Merry Christmas.
This is a list of mistakes detailing how a great idea failed so miserably.
Mistake 1: No resources, no money, and empty promises
The small team was dedicated. But, with only a few guys working on the project full time, things were not getting done. No one was getting paid at first (2001), instead the compensation was tied to sweat equity. The sweaty equity would have been paid by taking a percentage of sales of each ClikTO. So, until launch we wouldn't see any money. Yet, somehow we all fell for the same Get Rich Quick speech given by the owner. We were convinced that we would all be rich beyond belief when the sales came pouring in.
Mistake 2: Outsourcing
With no major milestones being met in the first 12-24 months, and with staff changes, the team realized something neeeded to be done. Miraculously, investment money was finally available to the project, and the team decided to outsource development to India for something like $25K. The guys in India were not managed well and did not really understand our product and as a result they did a terrible job. There was nothing that they did that we could salvage and we tried. Eventually it was scrapped. They are probably still wondering where their last check is...
Mistake 3: Launching without an organized plan
The owner had no organized plan to market the product, instead he'd show up to networking meetings here and there and pitch our product. We heard about countless deals that were about to happen, and they never did.
Although it was not our area of expertise, the technical team realized that a plan was needed to help the owner sell the product. We visited a university library and checked out books on guerilla marketing. We also worked to get our website ranked in the search engines. We scheduled and held our own ClikTO Networking Meetings at restaurants around Dallas. We'd have a decent crowd show up but there was NEVER A HARD SELL of the product. Why, I don't know. It angered us to see that the
owner could talk the talk, but failed to walk the walk. Instead visitors listened to others sell their services. We did a poor job of selling ClikTO's and ClikTO in these meetings. This was not a good sign as it was our only way of generating leads without cold calling. And we eventually made cold calls.
Mistake 4: Nontechnical sales people unable to sell
We had been told that family members of the owner, his friends, his colleagues,his associates, his friends from church, etc. would be selling the product and not worry about that. We had quite a few people willing to sell. However we didn't realize that most of them were not computer literate enough to send an email. A couple of awful consultant websites popped up in the search engines which didn't help us at all when we pitched our product to larger companies. Of the 50 or so sales consultants, less than a handful were capable of demonstrating the product. Less than that could close the deal. The majority of the sales consultant pool was made up of former multilevel marketing consultants. To them, it was a chain letter. Few cared about the product, they just wanted to be the quickest to the top of the pyramid.
Mistake 5: Winging it
As time went on, the compensation agreements changed for those spending more time on the project. By launch, the amount of sweat equity accrued by the team over the lifecycle of the project became rediculous. There would have been little money left to run the company, and it would have taken years to pay those who deserved it.
Mistake 6: Greed
The product was not ready when we launched, but we had to launch. We were told we had to launch. We needed more money to invest into employees and desperately needed a qualified management team to lead us. To do this, I suggested we research venture Capitalist firms. I was told that the owners did not want to give up their share of the company and lose control. So, instead of taking a smaller piece of the pie, no one had any pie at all. At the time, I had read that Plaxo, a competeting product, received over 40 Million in venture Capital funding. Surely we could have
raised one to two million. Maybe not.
Mistake 7: Not paying employees
After launch, with more sales people complaining than selling, we had serious problems. Our technical team was dedicated but could not live on sweat equity. The owner appeared to care less. His talk was about to catch up to him and he new this. There appeared to be no effort to raise money from investors, instead, the business model was to run the company off of sales alone. This was just plain stupid. We needed time to work out the bugs, for product adoption and marketing efforts. The owners did not plan for this. With no money available, the owners tried to buy time
by telling the employees they were working on getting us paid. And we never were.
Final Thoughts
In the end, the project cost a TOTAL of around $300K - $350K over the course of 4 years. The money was not available immediately. At the beginning we were told there was no money at all. Had they had this amount to begin with, the project may have been successful. It sounds like a lot of money, but for a startup creating a web based product it was very little.
By mid 2005, the entire team had quit because they were not being paid. The site lasted for another year and a half with no noticeable activity before it was finally laid to rest with all of the other failed dot coms.
As of today, November 28th, 2006, the site no longer loads. I assume the owner finally realized that neither his drive (read: greed) or business skills (read: winging it) would keep the company afloat. The plug was finally pulled. Merry Christmas.
posted by grillcheese at 5:31 PM
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