Lessons learned January 18, 2021

I wasted $40k on a fantastic startup idea (not me)

Leo Nagano @Leo
  1. 12

    I just read this on HN and was about to share it here, but you beat me to the punch!

    Anyway, this poor soul has made the same mistake that many startups/indie hackers make, so this is a good read on what not to do.

    Sadly, I don't think the author took away the right lessons, so I'm going to give my opinion here:

    1. Author should have validated the idea before building (author kinda says this in passing, but not without enough emphasis).
    2. Author was disadvantaged by not being an industry insider. He thinks the product is valuable as an outsider, but no insiders think so. If he was a doctor or had experience working in medicine/health, he would already have known his idea wouldn't work before building anything. I think the author is still deluded into thinking his idea has value to consumers.
    3. "Build something that people want." This is terrible advice. There are many things that people want that they are unwilling to pay for. I suspect that "build something people want" is perpetuated by silicon valley venture capitalists because sometimes businesses that are hard to monetize can still become big if enough people "want" them. For example, no one is willing to pay for Facebook, but enough people want it so it can be monetized by advertising. But if your goal is to make money directly (which would apply to most indie hackers), go for what people are willing to pay for, not what they "want".

    Just my 2 cents.

    1. 1

      I think most people very much agree with your views Steven.

      What has been difficult for me is to know when my idea/solution can be considered validated. Perhaps more importantly, how you can practically validate your idea/solution. Of course, when people put money into your business, you know that you have something that works, but it often requires that something is built and before you build something, you have to make sure that what you build actually also gives others enough value that they will pay for it, right?

      For me, this theme often lacks concrete guidelines, especially for first-time entrepreneurs, on how to actually validate their idea/solution.

      After 12 years as an entrepreneur, I have only in recent years understood how to do so, but it has cost me 4 startups and $ 35k to reach this point.

      For me, these three books have helped a lot and I hope they can help others who may be in the same situation as I did:

      Thinking, Fast and Slow - Daniel Kahneman

      The Right It - Alberto Savoia

      The Mom Test - Rob Fitzpatrick

      1. 1

        I actually don't like the word "validated" because it makes it sound binary "yes/no". The reality is that validation is risk mitigation, and as you take steps towards validation, the risk is simply reduced, never eliminated.

        I think Mom Test is a good book, but a concern I have with it is that if you are using Mom Test methods to validate your idea, there's a good chance that you are not an industry insider and therefore need to be asking questions to get industry insights ... that means you're inherently starting from a very risky position.

        In my opinion, the best way to reduce risk is to (1) see that other companies exist and are already making money, and (2) have deep insight usually from domain expertise on what customers value and how to deliver a better, differentiated product. If (1) is true, then your risk is greatly reduced. If (1) is not true, you almost certainly have a bad idea unless you are the rare genius that is inventing a brand new industry.

        1. 1

          I like your point regarding validation. The world is not dualistic and neither is a "validation".

          I think Mom Test is a good book, but a concern I have with it is that if you are using Mom Test methods to validate your idea, there's a good chance that you are not an industry insider and therefore need to be asking questions to get industry insights

          Yes and no I would say. The fact that you are an insider is not always an advantage because you will be biased on so many fronts. Experts are often the worst at predicting the future: https://www.researchgate.net/publication/309579253_Developing_expert_political_judgment_The_impact_of_training_and_practice_on_judgmental_accuracy_in_geopolitical_forecasting_tournaments - This is why economists, SEO experts, sports experts, etc. almost never get it right in their predictions.

          have deep insight usually from domain expertise on what customers value

          How would you know that? - People often think they know what others want where the reality is unfortunately not always the same, therefore you MUST investigate and try to falsify or at least challenge your assumptions (insights).

          Having said that, it is clear that as an insider, you have some basic knowledge that means that you should not start with an early-stage design thinking approach, but that you have probably seen a hole in the market and you probably already have in your years as an insider received feedback from people. But just to headlessly rely on it I would think is a mistake.

          1. 1

            I agree that if you have inside knowledge, you should still do mom-test interviews to validate. My concern is that some people think that mom-test interviews are a substitute for inside knowledge. I think if you don't have inside knowledge, the failure of risk skyrockets.

  2. 2

    Love the writing style, good story telling and humorous.

    This is a good case for an MVP. He built a platform, hired people and made all those assumptions without actually knowing if they were true. Hell, he could start talking to Susan before even building anything.

    There's a reason insiders and people with industry knowledge are preferred by VCs. They know the problem, it's just a matter of building the product to solve it.

  3. 1

    What a great read, haha. Thanks for sharing :)

    I suppose the lesson is to talk about your product before you actually build it, hehe. It has certainly helped me avoid a business idea I almost pursued, and helped me become reassured about what I'm currently building.

  4. 1

    That was a really great read, thanks for sharing!

  5. 1

    That was a fun read with some good lessons. I wonder if the author should have explored more business models, I think there was a lot of value in his idea. Examine.com has something similar and has found at least indie success.

    1. 1

      Yeah, I was wondering the same thing. But I suppose he just concluded that about $0.5 per user per year in advertising revenue wasn't enough to cover his costs. Too bad :/

  6. 1

    Really interesting read, thanks so much!

Recommended Posts