Every large tech company was once a startup and every startup that hasn’t evolved is most likely dead. Competition is fierce and even the best products or services may not survive. Acquiring funding and carving a share in the market is equally important to the quality of the product or service you are offering. It’s an exciting yet unpredictable space to be in regardless of the outcome.
Joining a young company represents an opportunity to be a part of something great, to set a standard, to change the world. We set our sights on new horizons to discover possibilities. Amidst the journey to success, we are then told the company is shutting down permanently. Some of us will continue to work as we begin an exit strategy and for others, this is their last day on the job. Why do most startups fail? What are the lessons we can learn from failed startups? With first-hand experience in my career, I find value in doing a post-mortem analysis.
Runway to closure
Having been a part of not one but two failed startups, I’ve learned a few things. One of them is how to shut down gracefully. This involves evaluating the runway to closure to ensure all stakeholders are not left empty-handed. Accounts need to be closed and all outstanding debts need to be paid. Be prepared to recognize when your business is failing so that your team is compensated before funds dry up.
Another lesson learned is to focus on lean operations by using resources effectively. Hiring more people doesn’t translate to higher output. The phrase “too many cooks in the kitchen” applies perfectly to the software development team. Too many engineers can create a bottleneck in itself when trying to collaborate. Before hiring more people, explore areas where efficiency can be increased. See if your process needs improvement or consult with someone in your network who has proven experience managing a high-output team.
One opportunity to improve our process was directly related to team sizes. Oversized dedicated software development teams created a lack of ownership and focus. At one time we had large teams of ten or more people. The work was scattered throughout the app which translated to tech debt in maintenance and documentation. Eventually, we made improvements to reorganize into smaller focused teams that were well balanced. As a result, we saw a noticeable change in output, and the tech dept was becoming resolved. We should have been operating like this from the start.
Prioritization is everything. Beginning work on a feature that hasn’t been fully fleshed out and having to modify parts of it after launch is a waste of time. Even worse, building the wrong features based on assumptions rather than research is like throwing money away. Our user data suggested that parts of our app were confusing to use and others showed no signs of use at all. Some features that took a considerable effort were eventually discarded. Whether the company is outsourcing product development or is set up with dedicated software development teams, engineering is expensive so product managers should be very calculated when choosing what to prioritize next.
Too many meetings
Meetings are essential but can be a loose end if not used properly. To quote Elon Musk: "Walk out of a meeting or drop off a call as soon as it is obvious you aren’t adding value. It is not rude to leave, it is rude to make someone stay and waste their time." Often a meeting can be avoided with a write-up sent out to teams. It's also important to be mindful of an MVP approach in companies large or small. During the ideation and feasibility phase of product development, keeping your target small will eliminate unproductive discussion. We need to use our meetings wisely, always.
Sometimes we can’t afford to migrate parts of the stack despite how intriguing new technologies are. Racing to new tech without the need is a losing gamble. The goal was to migrate our backend to tech that would allow engineers to be more autonomous which was a nice idea although wishful and unrealistic. It ended up costing more than we could afford and we now had to maintain two technologies instead of one which created additional difficulties. In the future, I would suggest only doing so if integral parts of older tech had become deprecated and require a migration.
Too many company holidays hurt a startup. We all need a break and deserve some R&R when appropriate. However, in a smaller company, work-life balance and vacation time should look different than in a well-established corporation. Until your startup is out of the weeds and generating a steady stream of revenue, we need all hands on deck. The future of the company and our employment depends on success. A minimalistic approach should be taken for time off if we want what’s best for the company.
Valuing products or services appropriately all begins with a solid business plan. In our case, it seemed like our plan may not have been the best. We couldn’t sell our product and wouldn’t compromise on value. Going into debt or reducing the number of staff wasn’t an option either. Ultimately it cost us the company and leads me to wonder if our business model was sound. Starting a business of any kind has risks, be sure to measure those risks and remain agile when navigating rough waters.
Some takeaways to remember:
No matter what position or level of seniority you have, if you feel a change in the air working at a smaller company, I encourage you to ask questions and express your concern. Make yourself aware so that you can be prepared for changes ahead. Maybe if you take action, you can help alter the course that your company is on.