Labit — is a website that helps researchers to create web-pages for their laboratories.
Not is. It was.
On December 5th we shut down the server. Our website www.labit.io is no longer available.
Closing your startup I believe is somewhat like knowing that your child is dying.
Not like I have experienced the latter but it somehow feels this way and it is worse in some sense because you know that everything bad that happened in its life and the reason behind its death is your responsibility.
Here are the mistakes that I made and the lessons that I learned the hard way as a Founder and CEO of Labit.
If you are thinking about starting a company or you are at the very beginning of your journey I hope this essay will help you to avoid making the same mistakes that I did.
1. Choosing your co-founder.
On the hindsight, I got very lucky with my co-founder.
We did many things wrong but we did them together. From the idea stage to the closing day he was beside me.
These are the things you want to see in a co-founder:
He should be fierce.
Being fierce is a combination of grit, resilience, resourcefulness, and constant hunger.
This is the ability to never give up.
Failures should not discourage him, they should charge him with anger.
When you feel down he should be supportive and inspiring, not going down with you in a crisis but uplifting.
Your co-founder should be a “marathon runner”.
I am a “sprinter” myself. Both on the running track and in business. I can run and do things with immense energy and get a lot of things done in a short period of time but then I usually exhaust myself and need time to restore my breath.
My co-founder, on the other hand, is a “marathonist”. He is a slower and more profound thinker than I am and in many cases where I would act he would think twice but that helps him to be wise with his energy.
He supported me a lot when I needed to take my time to recover from another sprint.
Your co-founder has to be smarter than you.
Especially in areas where you know you lack expertise. Your skills should be complementary not redundant. For me being a non-technical co-founder it was critical to have someone technical who could have a dialogue with engineers. For my co-founder, I think he valued my skill of getting things done.
Lastly, your co-founder should be very mindful.
He should possess high EQ and have the skill to separate emotions from business.
Mistake #1. Choose the right co-founder
Not long after we started, we invited a third guy as a co-founder. He was an absolutely brilliant mind and a great scientist too but his EQ was tremendously low. Oftentimes, he was very emotional and had to take his time to calm down but I thought that I can tolerate that charmed by his intelligence.
He failed to execute several tasks that he assigned to himself. We made a meeting to talk about it but when we started he got mad, stood up, slammed the door and left.
At that moment it was over. We both knew that we can’t work with him. The guy was immature to admit his mistakes and absorb constructive criticism.
He cracked under slightest pressure and the pressure is the medium where startup operates.
He would compromise all of the business in a critical situation and I couldn’t let that happen, there were people depending on me and the success of the startup. I had to let him go.
I lost a friend but I saved a company. At least for some time.
Always make sure that you are not working with a time-bomb sitting on the barrel with gunpowder.
2. Coming up with the idea.
The brainstorm is crucial. Take the smartest people and work on your idea. Create a pool of ideas and work on them until your brain bleeds.
This is the starting point. Make it right.
Elaborate on all your ideas. Evaluate Pros, Cons, potential risks and threats.
Don’t keep secrets from anyone. Tell about your idea to everybody and get instant feedback.
Don’t be afraid that someone will steal your idea. No one will.
People are too busy living their own lives and starting a startup is not something that one can do spontaneously.
Mistake #2. Innovate from 0 to 1.
“Zero to One” by Peter Thiel. Must read.
The message is simple. All of the great companies innovated vertically not horizontally. They went from one level to another.
This is where we failed. We wanted to be a Facebook for Research Labs.
There are so many opportunities to create clones out there. Uber for pets, Facebook for kids, Airbnb for parking places. First of all, when you pitch your idea like this it sounds like a copycat which is really bad. Secondly, if there is no innovation from zero to one there is a very little chance that your company will become great just because your execution is excellent.
What is more important Idea or Execution?
The answer is — BOTH.
Mistake #3. Choose the right audience.
There are several options B2C (business to consumer) or B2B (business to enterprise), and the worst possible option that we chose — B2A (business to academia).
Thinking about academia in terms of innovation is very counter-intuitive. Outside observer might think that scientists are the innovators, those are the people who are standing on the cutting edge of technology and innovation. Right?
People in academia are extremely reluctant. Researchers hide their heads in the science and see nothing around them. Most of the decision-making administrative positions are held by professors who tend to be old-school, conservative people. They are satisfied with the existing system and don’t care if the efficiency could be increased with the offered technology.
We were scientists ourselves so we were driven by the noble intent to contribute to our community. But we failed to admit the obvious inertia of academia and paid the price.
Make sure you are at the right place
The decision of starting a startup is already a reason to question your sanity. The decision to start a startup in South Korea as a foreigner is a pure madness.
Culture and language define a lot. I was shocked to discover how different people could be mentality-wise living with me on the same planet. Koreans are aliens. Or should I say — we are aliens here? The way they do business is incomprehensible. The bureaucracy and rules that simply don’t make sense are excruciating. The academic culture in South Korea is a whole different story and I guess deserves a separate analysis. The struggle was real.
Geographical location is crucial. Residing in Gwangju located 268 km from Seoul kept us isolated from the startup scene and all the potential networking that Seoul has to offer.
Many things would go the right way if we started a company in the USA or at least somewhere where people speak decent English.
Of course, that might be not your case but I want to emphasize how important it is to place yourself in the right setting.
Aim for the Silicon Valley or any other major startup hub of the world.
Staying in a small city far from the business world is shooting yourself in the leg.
Mistake #4. Validate the idea
This is where the things went wrong in the first place.
The mistake that I made is one of the most common:
I took the desired reality for an objective one.
I thought that the problem is more painful than it really was. In fact, it was more an inconvenience rather than a problem. But I was convincing myself and others that science community needs our solution. I was driven by the vision how things could be done and it led me to the wrong place.
Make sure the problem is a real pain, not just inconvenience.
Don’t fall into things that you want to believe. Validate your idea thoroughly. Read the Lean Startup by Eric Ries.
Use the Validation Board.
- Surveys can give you some information but for the most part, they are not so valuable. They are not representing the real picture.
- Do real interviews with your users. Don’t try to sell, and by sell I mean don’t try to create an opinion. Present and observe.
- When you talk about your idea don’t make it personal. See how people will react, ask how they would interact with the product. Would they buy it? If yes, how much are they willing to pay?
The only guideline for this step is the motto of Y Combinator:
Build things that people want.
And by this, they mean that you should make sure you can find potential customers and sell your idea before building anything or writing the first line of code.
Make sure that you found the people who are willing to pay money for your product.
Or putting it in the words of Brian Chesky, CEO at Airbnb:
It’s better to have 100 people that love you than to have 1,000,000 people that sort of like you.
The MVP — Minimal Viable Product
Don’t start building MVP if you didn’t validate properly.
Build it only in case it is absolutely necessary for proof of concept.
Your MVP should be just enough to serve as a proof of concept and has the basic functionality that solves the targeted problem. Nothing more, nothing less. Otherwise, you will waste your time and money.
In many cases, it can be a simple landing page which serves as a pitch explaining what is the problem and why it is important, what is the solution, and selling on a vision of a better world.
With this, you can see if you can build up a mailing list of people who are interested in this.
The famous and brilliant example of MVP was presented by Dropbox. They made a video demo and the rest is the history.
Mistake #5. Launch!
So we built MVP.
My team built initial version in less than 2 months and it was ok. I should have launched right away. I waited way too long. If I could go back in time I would tell myself:
Just f launch!
I spent money on redesign, logo design, adding extra features. I wanted it to look perfect for first customers. It took many months to go from alpha-version that was basically ready for launch to the beta that was better and looked better but was unnecessary. I wasted time for polishing the product that I wasn’t sure people needed.
This mistake is one of the most common. Founders hesitate to launch. They always try to iterate over an unreleased product.
The objective is to get it out there and start learning from real users. Let it be ugly, buggy, malfunctioning but real. Just give the painful birth to your “child” and let it evolve afterward.
Mistake #6. Secure the Money.
The most important job of a CEO is to make sure that a company has money.
In fact, it might be so that at first stages that’s your only job.
Make sure you always have money in the bank.
I was able to fundraise some money from the Korean government. There were severe limitations on the ways we can use that money but we managed to build MVP, design logo and interface, and invest some in marketing and incorporation.
This is another reason why founders shouldn’t care about competition. As Paul Graham says, the most common reason for a startup death is not the competition it is a suicide.
Running out of money will most certainly kill you.
Mistake #7. Choose the right Team
The second most important job of the CEO is hiring.
Every CEO that I met say that getting the right people to the team is the hardest part of the job.
First I failed with my co-founder and then I failed again with my hire.
We met another guy in GIST, he was an excellent programmer and a database engineer. A real pro at what he does and I was sold on it. For me as for a non-technical founder, the level of his expertise was intimidating. I wanted to believe that he will eventually solve some problems with spending too much money on freelance developers.
I started to pay him little money to supervise two freelance developers. But they needed no supervision. They worked flawlessly so this guy ended up doing nothing and getting money for it. It would be ok if he would learn the framework of the product as he promised. He did nothing.
He was a big mouth with zero execution.
I made the same mistake twice.
My problem is that I always think about people way higher than they often deserve. I believe that people can change. Oftentimes they are proving me wrong.
This guy was a mess. He switched to being a Christian from being a life-long atheist (and a scientist) overnight after falling in love with a Korean girl whom he married after dating her for 2 months.
His personal life would be irrelevant to the topic if his poor professionalism and lack of integrity didn’t jeopardize the business and the team.
The point I am trying to make is:
Choose people carefully.
Even if your potential employee is a brilliant engineer he will fail you if he has no integrity.
No one in the team should get a salary at first.
If people on your team work for the money they don’t have the same motivation as you. They will flee as soon as you start sinking.
First employees are as important as the founders themselves. They will contribute to the DNA of the company and all of the future hires will be conditioned on the first ones. If you don’t get the first hires right you will be dealing with the consequences throughout the whole life of your startup.
The best book that I read on this topic is “Hello, startup” by Yevgeniy Brikman. Chapter 11 is about hiring and a must-read and the whole book is precious.
There are good people too.
It is extremely hard to find decent people who have skills. But sometimes you find real diamonds.
The freelancers that first worked on a salary basis eventually agreed to join the team and sacrifice the salary for the idea and potential to grow it into business.
These guys are simply amazing.
I never met them in person and we didn’t talk much online but their professionalism and integrity never made me doubt them.
There was an unspoken rule that all of us followed:
A man says — a man does.
And this is what I believe is the only right way of doing things.
The developers always executed on time, were very productive and responsible. And here comes another rule regarding teams in startups:
Stick to the right people.
Mistake #8. Don’t combine jobs.
If you have a full-time job it is extremely hard to do a startup. At the end of the day, you get tired from your day job and naturally want to have some rest.
Your energy is not infinite and there are only 24 hours in a day for everyone. Something will suffer.
What can be worse than a full-time job? Graduate studies.
When you are an M.S. or a Ph.D. student you have no life. When you are trying to integrate a startup on top of your studies it becomes a living hell. This is a piece of advice to all students out there thinking about a startup and planning to drop out:
Don’t. Finish your school first. I mean it.
Get the degree. Get one thing done. Regardless of what you will do afterward in your life the educational status that you will put on the papers whenever you present yourself will define how serious will people perceive you. Having a degree opens many doors and conditions your image in the eyes of others. A startup can wait. Seriously.
Ok, you didn’t listen. You still started a startup.
Welcome to hell and here are some things you must know about the initial stages of running it.
Mistake #9. Mind your burn!
There are several points to be really careful about:
There is a beautiful well-known service called Stripe Atlas.
For 500$ they will take care of the opening the company for you. It can be done really fast so don’t rush into it.
At initial stages, you don’t need incorporation.
Do it only after your business is profitable or you found investors and they require incorporation.
If you do, incorporate it as a Delaware C-Corp. No need to be creative here, just go with the crowd.
Stripe Atlas will automatically open a bank account for you in Silicon Valley bank, and here is another burn.
Bank Account Maintenance burn.
Silicon Valley Bank charges you with 25$ a month of the maintenance fee. At an early stage, it is unnecessary burn.
Maintaining your website even at minimum expenses will cost you about 20$ a month. Make sure you have enough money to cover the server expenses.
Don’t pay any money to people if it can be avoided. Find people who share your passion and are willing to work for idea and percent of the company.
Don’t be greedy with the percentage too. Be generous to people who help you to build you your empire.
100% of 0$ company is 0
1.5% of a billion dollar company is a lot of money.
Mistake #10. Be ready to fail.
I wasn’t ready. I thought I was but I wasn’t. I have invested quite a lot in this endeavor and seeing how your ship sinks sucks.
9 out of 10 startups fail.
This is what people at YC keep saying and I believe this is very close to the truth. Running a startup is extremely hard and it is almost impossible to get it right from the start.
“Running a startup is like chewing glass.” – Elon Musk
Thank you, Elon for finding the right words.
Here is the bitter truth:
If you are running a startup you will fail.
Maybe not ultimately but there will be times when you will just want it all to end.
We have applied to both Y Combinator and TechStars and got rejected. I pitched many times and couldn’t raise the money. I tried to sell my product to academia and no one was interested. It felt bad.
When you fly in your dreams too much, trust me, the impact with the solid ground of reality sobers you up very quickly.
I share my experience not to discourage you. Not at all.
On the contrary, I want to inspire you to start a startup.
But do it in a smart way and try to avoid the mistakes that I made.
The world is lacking good things because many smart and talented men don’t have balls to take the risk. Take the risk!
Don’t give up.
But don’t persist on stupid paths either.
Admit your f ups.
I f’ed up.
There could be many sweet words about how there is no such thing as failure and we either win or learn.
When I f up I need to admit it.
I need to embrace my failures because they made me who I am.
I don’t have any regrets because during one year of running a company I learned more about myself than in 3 years before that.
I still don’t know how to do things the right way but I definitely walked many ways that are wrong.
I believe this knowledge may help you to recognize them in your own startup journey.
Whatever I do, I keep in mind the wise words of Steve Jobs:
The journey is the reward.
I took notes. I learned my lessons. I got toughened up.
It’s time to move on.
This article was first published on Medium and has been reproduced here with the permission of author.
- 10 lessons I learned from my failed startup - January 2, 2018