Wednesday, April 15, 2009

Startup Lessons #1 - The Valley of Death

If nothing else I've gained considerable insight into the startup process during these last 10 months of chasing the dream. The lessons are abundant.

You've heard it said that it's all about the journey, not the destination. Well, not when you are a startup. The destination is everything.

But there is much to be said about the journey as well. If you are an entrepreneur and thinking of going off on your own, you won't find a lot of war stories. I imagine that those who succeed guard their formula for success and those who don't prefer to pretend that nothing happened. The way I see it we've neither failed nor succeeded at this point, so why not reflect on a few of the lessons learned?

Personally,the journey has been both rewarding and costly. There were a lot of great experiences. I met fellow entrepreneurs. I learned about what it takes to look someone in the eye and ask them for money. I was able to practice the art of giving presentations to Fortune 1000 CTOs and VPs, and of course, I was able to build a substantial---though incomplete---enterprise software system using some of my favorite technologies. And there is so much more--- consensus building when working with partners, learning to recognize when you are self-deluding, finding the energy to take action on the days when it seems there is no hope.

I probably wouldn't be blogging about this today if everything with the business had gone as planned. Friends and former co-workers keep asking me, "Is the company dead?" Well, no. But it is true that we're not where we had hoped to be at this point, that's for sure.

We recently held a second meeting with an Oklahoma-based VC and he said it best,"You're in the valley of death," a chasm between the initial seed funding and a substantial VC round. It's a place where companies who have burned through their initial funding but have yet to make it to revenue reside. Word to the wise: A substantial revenue generating customer relationship is paramount; this must happen before any serious investment consideration will be given to you by a venture fund.

If you go back and read our business plan, at this moment in time we should have a development staff, a beta release, and we should be engaged with at least two paid pilots. But that didn't happen and for a lot of reasons. So what went wrong and is there any way to turn things around now? I'll reflect and blog on it over the next several weeks.

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