By Cass Phillipps (Executive Producer, Failcon) I had a chance to chat with Elizabeth Lin on the mistakes made in her first startup. She is now the CEO and Co-Founder of LaunchBit, an ad network for email. Learn more http://launchbit.com.
Cass Phillipps: Before LaunchBit, I’ve heard you founded and lost a fair amount of time and money on an unsuccessful startup. Can you give me a little bit of background on that?
Elizabeth Yin: I previously had a social shopping web application that my friend and I worked on for about 1.5+ years on and off. We were so sure that this would be super awesome that we also hired some other people to help us build. We spent about $20k of our own personal money and certainly wasted a lot of time. We just built and built and built, and when we were done building, we realized that no one wanted it.
Cass Phillipps: How has that experience changed your approach to building LaunchBit?
Elizabeth Yin: During the downfall of that company, 2 things happened:
- We actually tried to pivot, but we didn’t know it was called a pivot then. We decided that instead of being a consumer app for social shopping, we would try to sell our technology to online retailers so that their users could use our tool. Since we were running out of money and time to re-build our application, I started trying to sell this using just a 5 slide powerpoint deck: no technology, no demo. A lot of online retailers told me no, but a couple told me yes. It was amazing to me that you could actually sell something before building it. That was when I first realized that you can get customers without a product.
- I started reading more from and about Eric Ries, whostarted something he dubbed the Lean Startup Methodology. In these articles, Eric talked a lot about building the least possible to test your hypothesis about your market and customers. These two experiences really resonated with me. Instead of spending a year or two building, I should have been finding my customers first by doing as little building as possible.
So for LaunchBit, I teamed up with a different friend, my best friend Jennifer from middle/high school. We decided that we needed to spend some time testing ideas and learning how this whole lean startup method worked. In some sense, we played “poker” with our startup. We decided that we would place small bets on various business ideas, and if they looked promising, we would bet some more by building out some more. So along the way, we built out a couple of sites fully, but we also folded many bad ideas too.
My mindset has definitely changed. I no longer automatically assume I have the next big hit with a particular idea or implementation. Instead, now I believe that with some luck, I will be able to find a hit with enough testing and experimenting.
Cass Phillipps: What advice would you have for new founders so they can avoid your mistake?
Elizabeth Yin: It’s so easy to get caught up in the frenzy of an awesome idea. But, honestly, ideas are a dime-a-dozen. You really have no idea before you start if you have something amazing. I think one of the best things an internet entrepreneur can do is actually just set aside a couple of months to experiment with ideas — don’t commit to any one thing until you get your first customers. And, even when you do get your first customers, work with them manually or with as little product as possible to figure out if your customers/users are great customers for your business. Do they keep coming back to use your service? Do they tell their friends? Do you address their needs? Also, understand your rough initial business model numbers (customer acquisition costs, revenue, etc) before deciding to take the plunge.
Editor's note: FailCon is a one-day conference on October 24, 2011 in San Francisco for technology entrepreneurs, investors, developers and designers to study their failures and prepare for success. Women 2.0 members save 15% on FailCon tickets with coupon code "women2" here.
As an entrepreneur, you will inevitably encounter failure. Overcoming failure is the biggest challenge. Join founders from Color, Cuil, Airbnb, PBworks, and more as they share advice on how to overcome failures and reach success.
This post was originally posted at The Failcon Blog.