When Your First Start-up “Fails”. What Do You Do?

Photo from Ethan Hein

Photo from Ethan Hein

If you are working on or thinking on working on your first startup, read this. It should help you avoid a messy situation.

In the journey of entrepreneurship, ups and downs are expected. So when BlackTop Hoops had an entire month of everything going right, it was to be assumed that the perfect storm was waiting right around the corner. Here is a quick story of how the perfect storm hit my first big scale entrepreneurial project, BlackTop Hoops, how I handled it and how you can do better.

I tried to forge the river and my wagon got flooded (everyone likes nostalgic analogies right?).

For those of you not familiar with me or BlackTop Hoops, I have been working on “BTH” for a little over a year trying to figure how to help recreational basketball connect and organize. I set forth to create social platform which would allow online communities of basketball players to highlight their basketball skill set, find courts to play on and organize game to play in (this was BTH’s core). Our (I’ll tell you the reason for the “our” usage later) grandiose plan was to help basketball organizations (leagues, tournaments and trainers) promote their companies and organize their members. We believe that rec. basketball is far too segmented to the detriment of basketball players …so we would build the community, bring in the organizations and create a meaningful/ profitable company Yayayy!! Easier written then executed. It turns out that when I started I knew absolutely nothing, but was ballsy enough to take the leap of faith and get going on the project. I guess I knew so little that a year later, I still didn’t have a finished product to push public.

In September I worked with my CMO on bringing on a developer who would be a partner of the project and work for sweat equity. It sounded perfect! A month earlier I spent too much time and money on a development team who could not execute. I was desperate, I did not want to spend any significant amount of money yet at the same time, I didn’t have many options. That was until my CMO came to me with what seemed to be a great option. He was a good programmer, a better business man, a cool guy and best of all, he believed in BlackTop Hoops. This was going to work out perfectly.

Fast forward a month later. It’s early October and we’re about a month away from launching our Beta version to the public. I was rushing to solidify our marketing plan, incorporate our business, and make sure the development process was running smoothly. Being in the web development sector, I should have known that development never goes smoothly. So in the first week of October, right before me and my developer got our meeting rolling, he uttered the unequivocally painful words, “I am going to have to pull out of this project”. I remember this so crystal clear, everything stopped; I listened and did not respond. I felt a slight sense of shock mixed in with the emotion you would feel if your baby was kidnapped (no adjective for that). His reasoning was he did not see the benefit outweighing the cost at that point and the benefit in his mind was money. After reflecting on this, the real reason it fell through wasn’t the money potential or compensation. It was because we didn’t take enough time to fully understand each other’s expectations. Since I am the president of the company…I deserve all the blame.

I remember just sitting at the desk after the phone was hung up. My mind stopped and I was immediately comforted by the feeling that ran through me. It was the feeling of opportunity. Idea after idea came to my head. Some having to do with how to move forward with BTH and others suggesting that I buy a ticket to Peru; the good thing was that they were all ideas of hope instead of self loathing. After babying it at the expense of my girlfriend I love, I decided to put BTH on the back burner for an indefinite amount of time and focus on my next move.

So here I am today, almost a month later and have one temporarily stalled project on my hands. Hindsight is always 20/20, so I thought I’d cast my eagle eye vision on this blog post and tell what I would have done differently to prevent this mini catastrophe.

Here is what I would have done differently

  • Defined each partner’s expectations right from the beginning- I am not that dumb. I made sure we all define our expectations. However, not to the extent that we all were completely on the same page. We were fine with the undefined gray area (in this case it was partnership terms, rev share, etc.) hoping that we can work on good faith until we were ready to solidify the partnership fully.  That turned out to be a big mistake as I was working with a developer who owned a dev firm so needed to see immediate ROI.  He wanted revenue streams from the start while I wanted to build a community first and monetize second.  No wonder it didn’t work.
  • Created less of a Partnership and more of a Team- We were working to better basketball, we should have known the concept of team. Each person in the group worked together but seemed to have their own agenda. The camaraderie wasn’t there and it really needed to be to make it work. Make sure to not commit to a team before you need to. Get help from friends, VAs, mentors, etc…but when you get your first partner you best make sure they are a true team member.
  • Do a little more market research- You MUST test your assumptions. If you feel like your market wants X…ask if your market wants X. I got held up with thinking my concept was full proof. Of course I met with some amazing people who had some amazing input and made sure to include my friends in on the process, but for the most part I failed to ask the people that mattered…the basketball players. Do not make the same mistake.  On the other side of the coin, don’t get caught up doing too much market research.  Too much research can be more of a hindrance then anything else and doom a promising project right from the start.
  • Created a budget for almost everything- I jumped in not understanding competitive pricing of web development.  Boy was that a mistake…actually…I’ll call it an expensive education. Next time I will make sure to find a development team that will work at a fixed project rate, that has a development shop big enough to deliver a finished product on time and give the project the attention it deserves. Disclaimer: many large development shops do not work under the guiding principle of transparency. You must make sure to find one that does.
  • Gave it that extra percentage point- It’s hard for me to admit this but, I could have put more into this project. Don’t get me wrong I shed sweat, blood and tears for BTH but I could have hustled a bit more. You can always hustle a bit more, ask Gary V. As a young entrepreneur you most likely have fewer resources, less knowledge, a smaller network then your competitors. What you do have is an unlimited amount of energy, passion and the naivety that could possibility work in your favor. Embrace being the underdog and hustle like crazy!

Please let me know what you would do differently if you were in my situation. Better yet, please let me know what tips you have for BlackTop Hoops…I would love to hear from you and this time my ears are fully open.

Thanks for listening…I hope you can learn from my mistakes!

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10 Responses

11.03.09

Great post Brenton…I hope BTH gets launched again soon. Sounds like you learned an invaluable lesson from this unfortunate situation. Once BTH is released, how are you planning on marketing the site? I have been working as a marketing intern for like the past two months and am just realizing the full potential of web 2.0. I thought you had a good product with the old BTH but I don’t think it had found its audience yet. It’s out there, you just got to actively look for it. Good luck with everything.

11.03.09

Great post Brenton,
I can completely relate to what your going through. A few years ago I started a collaboration software company GroupTable (http://grouptable.com/) and brought on a developer as a partner to bring it to life.

My partner worked 30 hours a week, went to school full time and had a full time girlfriend. Being a marketer I have a very strong sense of urgency as speed to market is often important. It always seemed like things wouldn’t get done on time, or there was always a debate on how a feature should work and what should be added in, etc. It can be very frustrating.

Looking back on it…..It may have been better to save up and invest a few thousand into getting the software professionally developed by a reliable team (possibly overseas). This way you would have more control and fire power (more human resources than just 1 dev). Plus if the idea really blows up you’d have more equity for investors or profits for yourself.

I’ve started over 3-4 different companies and tons of ventures in between. The learning experience of launching your own venture or company is better than any class.

I’m sure you’ll figure something out. If you ever want to chat about anything let me know. I started a marketing and web-design company: BrandAdvance.net that is doing quite well so far. If you ever want to bounce anything off me or if there is ever anything I can do to help let me know.

11.03.09

Just goes to show we all need to just keep plugging away at what is wanted and if you have to fail a thousand times to get that one good break .. It should be all worth the effort in the end… Great Post.

11.03.09

This is a GREAAT post for entrepreneurs or anyone looking to succeed and rise above just being average. I can see this post going into a success book that will remember the greatest entrepreneurs of our time.

Honestly Brenton, this chapter in your life is a MUST if you truly are going to be a success. Who wants to read about a person who had it easy and succeeded with minimal hardships on their first endeavor? This is where MOST people quit and decide to stop trying….. which is why MOST people don’t ever make it.

- Michal Jordan was cut from the B team

- Thomas Edison failed over 10,000 times before finding the solution to the light bulb

- Colonel Sanders was contemplating suicide months before his restaurant launched

- The Team went through that whole lawsuit

- My first two websites (I started when I was 19) were a complete bust even though I spend WELL over a 1000 hours on them

The list goes on and on. As Orrin Woodward once said, “what you think is a tragedy may very well be your greatest blessing in disguise.”

It is not what happens to us, it is how we RESPOND to what happens to us that makes the difference, and as you stated in your blog, you already unconsciously embraced that habit by flooding your mind with OPPORTUNITY rather then throwing a pity party.

How I love the path of the entrepreneur: hardships, uncertainty, stress, criticism, constant failures, and ALL OF IT by CHOICE. Being so familiar with the bitter taste of failure will just make the victory taste that much sweeter.

“Adversity introduces a man to himself.”

- DMan

11.03.09

Thanks for sharing your experiences! This is something we can definitely all learn from. One thing you said that I wanted to highlight: “Since I am the president of the company…I deserve all the blame.” – I think this is important to bring up. I remember a speaker once told me, “As an entrepreneur, the ball is ALWAYS in your court.” I took this to heart and very rarely will you find me blaming someone else.

I think the most important lessen here to be learned is communication. This is one reason I’m so adamant on having very good blueprints when working on a new project. I want to make sure I’m on the same page with the client and that I fully understand what they are looking for. I’d say that’s the biggest take away from your story.

Thanks for sharing these experiences! As with David, feel free to let me know if you need help on anything. My strengths are in starting businesses and having a fluent understanding of any technologies involved.

11.03.09

Thanks for the kind words Matt. I hope to bring discussion to email sometime soon.

[...] My first venture Blacktop Hoops is the quintessential example of friendships and ventures turned ugly.  I ended up collaborating with a friend I only knew for a short period of time.  We had our differences but since we believed we needed each other we stuck through it.  He later brought his friend on to be our developer.  Communication was terrible and there was far too much tippy toeing around people’s feelings.  End result, is that the partnership is now dissolved.  Learn the whole ugly story here. [...]

11.03.09

Hey Brenton. Great to read your post, my condolences for this setback. As you’ve noted, it’s only a setback- our team here has lost a few people for one reason or another over the last two years. It’s tough at first but you’ll be fine.

Anyhow, others have addressed some of your questions, so I’ll answer another one.

“Better yet, please let me know what tips you have for BlackTop Hoops…I would love to hear from you and this time my ears are fully open.”

We didn’t really talk in depth about your strategy for developing a userbase for BTH, so I’ll only give my thoughts on how I would do it if I were starting from scratch.

With PhatDeals, we’ve seen how several competitors have attempted to go national all at once. Create the interface, check. Okay.. now to spend all our budget on marketing by blanketing the internets and hoping it sticks..

Thus, our decision to spend a lot of time developing our service with SB as our test market. The reason why we’re in SB is that the constellation of our target market requirements- lots of young, tech-oriented people with smartphones and who need to save money (aka college students and recent alums) + high density of small businesses.

For BTH, you have your own metrics- I imagine they include a high density of streetball players that are tech-savvy (smart phones and internet) + location where recruiters already frequent. There might be more. If I were starting BTH from scratch, I’d identify where these hotspots are, and find the one that balances those factors best with your team’s personal connections. Cleveland, Philly and Oakland come to mind.

Then I’d work my ass off getting plugged into those communities. If the BTH concept gets some wind in its sails you’ll go places.

Aaron

11.03.09

You are always very insightful Aaron. We still need to get on that phone call.

As for you test local expand nationwide approach, I think with you successes you have proved this is a viable model. Let’s touch base soon, it looks like we have alot to talk about.

[...] Here is a post from Brenton’s Website that I found very insightful and practical, with more info about how his first start-up “failed” and some of the lessons he learned:   What to Do When Your First Start-up Fails [...]

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