The year is 2015, myself and three of my friends had an idea for a business which also fit the requirements for the Challenge 22 competition in Qatar that year. We applied, we presented, we got short-listed, we made it to the final, and we won in one of the six categories. We decided of course to take it to the next level and have a start-up with that idea. We also did that. Fast forward to 2018 and the business hasn’t gotten as far as we had hoped. Let’s be upfront about it, we made mistakes and we failed. When I looked back at it in restrospect, we could have done better. Much much better.
In this blog post I’ll talk about some non-trivial mistakes we made along the way which ended up compromising our chances of establishing a good company. Follow those steps if you want to increase your odds of failing splendidly.
Background
The start-up we had was in the areas of Augemented Reality (AR) and Virtual Reality (VR). Particularly anything related to production and streaming, live or on-demand, of AR and VR content. This is pretty much all the context you need to understand all the next sections.
Think Global and Build Global
Ambition is great. If you’re building a start-up you should think big, you should dream big. In these years of global markets, you should think of how you’re going expand and operate globally. This is good and all but let’s snap back to reality for a second; YOU CAN’T BUILD GLOBAL FROM DAY 1. You’re going to start in a local market, that market will be your starting point. It’s going to be the launch station from which you’ll launch the rocket that is you’re globally scalable company. But you need to accommodate that local market first.
When we were in Doha, we were thinking too much about our global opportunities, we had potential partnerships in New Zealand and UK. As it turns out, penetrating international markets, any market where you’re not physically there, is extremely difficult, and will consume a lot of your resources. We realized that a bit too late and we pivoted to establish solid grounds in the local market first. Had we done that few months earlier we might have had a running company now.
So the first step to failing is think global and build global. If you want to succeed, however, you should think global long-term and build local short-term.
Don’t Ask for Money
We had around 300K in pre-seed fund. Not bad at all, considering that Qatar wasn’t known back then for having lots of investors willing to invest in early-stage start-ups. This was enough to get us through the first year comfortably, but not far beyond that. We decided to not pitch to investors to get more fund, and decided to reduce our costs instead. Sounds responsible, right? Idiotic I call it now.
You see, we have mastered cost reduction. And by mastered I mean we were absolutely great at it. We bought a high-end camera to capture 360 images and with hacks with duct-tape, pieces of plastic, modified HDMI hub, and few other hardware hacks, we managed to turn that camera into a 360 video camera as well. For nearly half the price of a video camera of the same quality. While this is good, you can’t hack your way around other aspects of the business (for example marketing, business trips..etc). We ended up doing less and less of those and what did we gain from reducing (or cutting) such costs? Lots of missed opportunities which could have paid off with potential clients and partners.
Trust Speculative Statistics
“Experts estimate that VR streaming will be a 459 billion dollars market in 2020”, the number is as arbitrary as the ones given by any of those articles. Those speculations are bubble-inducing and hype-driven, they’re really as worthless as the headline I just made up. When you’re starting a business you need to focus on the real world, not that which is woven by such headlines.
Another important point to think of, assuming the estimate is actually correct, is how are you going to get to that year in the first place?. We started in 2015 and we were operating in 2015, not in 2020. So how are we going to make it to 2020 successfully to be part of that big market? We didn’t pay enough attention to that question.
Overestimate the Technology
Back in 2015/2016, there was a lot of hype about VR, and AR as well. I mean lots of great products which really made a mark and are now very widely spread. I mean Facebook’s 360 camera is a as huge of a deal as they made it seem. Just kidding, most of those products were fads and had no real traction after the hype had died off. This was one of the things we were guilty of. We found all those big companies: Microsoft, Google, Nokia, Facebook, and many many more developing and improving AR and VR products so we thought that we had good technology coming our way. We didn’t. It took much longer than expected to have realiable technology which would fit our business model.
Try to Change the Local Market
We talked about the importance of understanding the local market in the first point. But what if the market isn’t ready for your new high-tech super advanced products and services? Of course you might think let’s educate the people and make them aware of the technology. Big mistake buddy. There are two problems with this approach: 1. you’ll be wasting a lot of your resources educating people instead of selling, and 2. you’ll be the first in the market which means that you’ll be the one doing the market validation for your future competition.
The first one is obvious, you won’t have enough resources to introduce something entirely new to the market. Either convince investors to give you a lot more money to support that, or leave it to the big player and join again when the market is ready. I know it’s quite pessimistic but it’s the reality. We spent way too much time introducing and explaining AR and VR to people and giving them demos.
The second point might not be as obvious, after all it’s good to the first to market, right? Nope, it ain’t, at least in most cases. Think about most of the big companies that made it, have a look what preceded them. Even companies which introduced new product, Apple wasn’t the first to introduce tablets; they learned from those who failed and avoided their mistakes.
Conclusion
Those were only few steps to help you drive your start-up into the ground. Of course there are many more, but those were the ones which we followed. I hope that you found it helpful.