VCs cut off startup's oxygen(gigaom.com)

http://gigaom.com/2007/11/08/mashup-startup-teqlo-shuts-down-after-struggles/

This is a company that had a product that was well engineered, but didn't get initial traction. This is not an uncommon situation: No product plan can survive contact with the market completely intact.

Sometimes only minor adjustments need to be made, but sometimes it takes several months (And really, many of the big-name overnight successes that have become household words took several years of adjustment to start getting significant traction.)

But the faustian bargain with venture capital is you take a lot of money, hire a lot of people and you shorten your runway dramatically. In this case, the technology is good the idea is good and extremely flexible-- but the company will never have a chance to find the market position where this technology starts turning its value into revenue and profits.

Its too bad. I'm sure some company will acquire the remains, but odds are pretty good that they won't understand what they have, or won't have the interest in it to make it what it could have been.

This story is particularly keen to me because I've followed Teqlo- they are one of my competitors as I am building a similar technology. Near as I can tell, by myself (well, I'm the only programmer, I have a partner whose doing marketing and project management stuff) I've been keeping pace in terms of development speed (they had quite a head start though.) My product too has evolved in the problem it is attempting to solve as I get to better understand the market... but as a solo guy with no outside investment, I don't have the pressure of a VC firm. If my first attempt to market the product fails, there are 3-4 other possibilities that will be easy to try. (And at essentially no cost too...) Hell the hardest problem has been figuring out which market opportunity is the best... that's been harder than building the software itself.

So, for the majority of you who will not get VC funding for your startup- don't lament. Go without and enjoy the benefits of being able to be flexible- to find the right niche and to make adjustments if things don't go as planned, with the the fear that you'll be strangled in your sleep by your investors before you get a chance to adjust to the market reality.

If you have to do your startup part time to make ends meet, remember Matt Muellenburg did that to create wordpress and there's scores of other examples. (My partner is working %50 time right now in fact.)

Don't fret over finding investors-- build it, and if they don't come, you can adjust until they do.

BitGeek

PS-- for those who will think I'm a hypocrite for having a partner after authoring the "don't get a cofounder" article- we don't operate by consensus, and while they have a good chunk of equity, and we generally agree on things, we have none of that tension that cofounders have because the buck stops with me... and when we disagree, the partner gets to try their idea and see if it works.

0 comments

—