Failure is the best friend of a startup
Only a few market niches tolerated a more crushing fall in the days of Web 1.0 than the niche occupied by pet sites. In just nine months after its creation in 2000, Pets.com (Pets.com) earned an incredible amount of $ 82.5 million by entering the stock market through an IPO; spent 1.2 million advertising his puppet pet mascot at the American Football Cup Super Bowl; received funding from Amazon.com ; I opened a network of huge stores ... and flew out of business, left without a penny of profit.
The demise of Pets.com in November 2000 foreshadowed a series of future crashes of dot-coms and, as it seemed, forever closed the door to the pet business.
So when Ted Rheingold, a San Francisco web designer, co-founded Dogster.com , the dog version of Friendster , in January 2004, only a few smiles could be heard about it. How could a pet site, made on the knees on weekends, with a ridiculous budget, hope to succeed where companies generously funded burned out? Everyone gave a unanimous comment - failure awaits him. And in fact, since its launch, Dogster has failed more than once - in areas that its creators did not even suspect.
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But as it turned out, it was for the good. Dogster figured out how to use these errors to improve his work. Having spent almost nothing on advertising, Dogster (together with Catster's twin brother , launched in August 2004) became the leading social network for pet lovers, numbering 275,000 people who have registered on the site, 340,000 photos and accounts of dogs and cats and permanent reputable advertisers such as Disney, Holiday Inn, and Target.
Dogster did something that Pets.com didn't even get close to - it became profitable. Although the founders of the site refuse to disclose the details, they claim that Dogster became profitable in July 2005. Last year, the company earned more than $ 1.1 million and almost doubled the number of users.
The site has become a good example of how to make failures for the good - quickly launching new functions, depending on what works and what doesn't, and on the fly to solve problems. “When we introduce new functionality, we know that most likely it will not work the first time,” Reinhold says.
Companies such as Dogster, who constantly look at the data on users' work, and notice mistakes - and especially some offensive trivialities - find vital information for the project. “Instead of months working on a new function, trying to polish it to perfection,” Reingold says, “we work on it for two weeks, and then spend another two or three days listening to users and debugging it.”
Where the giants of the old model boasted of their work “without flaws,” today's successful Internet companies perceive shortcomings as a way to improve. Some management consultants even advise their clients to “learn” to spoil something.
“Bugs are the enemy of effective work, but they are the best way to learn,” says Robert Gunther, a business consultant at Decision Strategies International. Gunther even encourages clients to make “deliberate mistakes” in order to learn faster.
However, in the case of the Dogster, Reinhold with his partners John Wars and Stephen Riding was mistaken as “old-fashioned” - that is, unintentionally. For example, this happened when they decided to sell advertising space to other sites. “We’ve almost embraced,” Reinhold says, “Everyone expected a big income.” But non-original advertising strategy did not work. The income was meager, and the existing advertising is too low quality.
Therefore, Reingold stopped it and after several false starts, he found a successful business model - sponsorship and large advertising packages. Forget about selling Disney a $ 13,000 banner advertising the new cartoon “Lady and the Tramp” - Reingold sold a sponsorship package, which included mention of the company in all letters of news, contests and messages sent to new users. Disney was so pleased with the results that he planned additional advertising campaigns on the site for his new movies with animals.
And it attracted the attention of skeptical investors before. In September, Dogster, consisting of 14 people, received an initial investment of one million dollars from a group of angel investors, including Michael Arrington, the creator of TechCrunch.
Of course, failing faster is not the best content for startups. One of the best companies in Silicon Valley, able to cope with failures, is also the first in the entire list - Google. “In general, everything we do is an experiment,” says Douglas Merrill, vice president of engineering. “The most important thing in experiments is to get data, and then analyze it, being completely honest with yourself.” Introducing new features, Google continues to adhere to the “quick start” strategy: launch, listen, improve and launch again.
For example, by brainstorming the Google Toolbar, the development team tried to implement at least five different key functions before the final version was obtained, and most of them were rejected during the first week of testing. Some of the features included in the final version, such as customizable buttons and general bookmarks, less than a week earlier were only prototypes.
Even if the new feature turns out to be a failure, Google prefers to view it as an experiment that reveals important information. This is exactly what happened with the Google Answers service, a four-year attempt to build an expert response system closed in November last year. “I don’t think that Google Answers was a failure, because many of the things that we learned by working on it were introduced into our new custom search engine,” Meryl says. “Failures are something from which you don’t learn anything.”
But what if the failure is not just a new feature, but your entire project? This is what happened with Munjal Shah. In August 2004, Shah, a veteran of web entrepreneurship, co-founder of Andale, a successful analytics service for Ebay's online auction, co-founded a new company called Riya, initially developing an image recognition system that helped users find and organize their digital photos.
In March last year, Riya launched an online service and generally received good reviews. But after a few weeks, thanks to data on the work of users, it became clear that something had gone completely wrong. “About 94 percent of all people using the system said they were either satisfied or very satisfied,” Shah said. “The problem was that once a person visited a site, a person never returned to it.”
It was a real failure. But Shah kept calm and carefully reviewed user reviews. Most visitors did not use the service to search and store their own photographs, as intended. Instead, the Riya website was used as a tool to search for images on the web.
Just eight months after Riya, like a stone, went to the bottom, Shah presented a completely updated website, called Like.com , which became a visual search service for online purchases. The Like.com mechanism analyzed photographs of various things, such as bags, jewelry, shoes, or watches, and then found objects similar to these images on the web.
And it seems that a sudden change in strategy is paying off. Shah did not disclose figures, but said that Like.com already surpasses Riya in the amount of traffic and income. And, most importantly, users return to the site again. Like.com does not bring profit yet, but according to Shah, financing will be enough for several more years. The online jewelry, handbags and apparel business is estimated at $ 15 billion, and Like.com plans to expand to other areas, such as furniture and home and garden accessories.
Shah admits that admitting failures can be tough for those building their business. “By doing this, you acknowledge that your initial presentation was wrong,” he says. "And it can be very difficult."
Reinhold, the creator of the Dogster, would definitely agree with him. He was able to create a thriving business on the ruins of his own mistakes, a living monument to learning from failures. “I learned how to forget about my ego and just keep working,” he says. And these words inspire puppetry around the world.
Techme translations
The demise of Pets.com in November 2000 foreshadowed a series of future crashes of dot-coms and, as it seemed, forever closed the door to the pet business.
So when Ted Rheingold, a San Francisco web designer, co-founded Dogster.com , the dog version of Friendster , in January 2004, only a few smiles could be heard about it. How could a pet site, made on the knees on weekends, with a ridiculous budget, hope to succeed where companies generously funded burned out? Everyone gave a unanimous comment - failure awaits him. And in fact, since its launch, Dogster has failed more than once - in areas that its creators did not even suspect.
')
But as it turned out, it was for the good. Dogster figured out how to use these errors to improve his work. Having spent almost nothing on advertising, Dogster (together with Catster's twin brother , launched in August 2004) became the leading social network for pet lovers, numbering 275,000 people who have registered on the site, 340,000 photos and accounts of dogs and cats and permanent reputable advertisers such as Disney, Holiday Inn, and Target.
Dogster did something that Pets.com didn't even get close to - it became profitable. Although the founders of the site refuse to disclose the details, they claim that Dogster became profitable in July 2005. Last year, the company earned more than $ 1.1 million and almost doubled the number of users.
The site has become a good example of how to make failures for the good - quickly launching new functions, depending on what works and what doesn't, and on the fly to solve problems. “When we introduce new functionality, we know that most likely it will not work the first time,” Reinhold says.
Companies such as Dogster, who constantly look at the data on users' work, and notice mistakes - and especially some offensive trivialities - find vital information for the project. “Instead of months working on a new function, trying to polish it to perfection,” Reingold says, “we work on it for two weeks, and then spend another two or three days listening to users and debugging it.”
Where the giants of the old model boasted of their work “without flaws,” today's successful Internet companies perceive shortcomings as a way to improve. Some management consultants even advise their clients to “learn” to spoil something.
“Bugs are the enemy of effective work, but they are the best way to learn,” says Robert Gunther, a business consultant at Decision Strategies International. Gunther even encourages clients to make “deliberate mistakes” in order to learn faster.
However, in the case of the Dogster, Reinhold with his partners John Wars and Stephen Riding was mistaken as “old-fashioned” - that is, unintentionally. For example, this happened when they decided to sell advertising space to other sites. “We’ve almost embraced,” Reinhold says, “Everyone expected a big income.” But non-original advertising strategy did not work. The income was meager, and the existing advertising is too low quality.
Therefore, Reingold stopped it and after several false starts, he found a successful business model - sponsorship and large advertising packages. Forget about selling Disney a $ 13,000 banner advertising the new cartoon “Lady and the Tramp” - Reingold sold a sponsorship package, which included mention of the company in all letters of news, contests and messages sent to new users. Disney was so pleased with the results that he planned additional advertising campaigns on the site for his new movies with animals.
And it attracted the attention of skeptical investors before. In September, Dogster, consisting of 14 people, received an initial investment of one million dollars from a group of angel investors, including Michael Arrington, the creator of TechCrunch.
Of course, failing faster is not the best content for startups. One of the best companies in Silicon Valley, able to cope with failures, is also the first in the entire list - Google. “In general, everything we do is an experiment,” says Douglas Merrill, vice president of engineering. “The most important thing in experiments is to get data, and then analyze it, being completely honest with yourself.” Introducing new features, Google continues to adhere to the “quick start” strategy: launch, listen, improve and launch again.
For example, by brainstorming the Google Toolbar, the development team tried to implement at least five different key functions before the final version was obtained, and most of them were rejected during the first week of testing. Some of the features included in the final version, such as customizable buttons and general bookmarks, less than a week earlier were only prototypes.
Even if the new feature turns out to be a failure, Google prefers to view it as an experiment that reveals important information. This is exactly what happened with the Google Answers service, a four-year attempt to build an expert response system closed in November last year. “I don’t think that Google Answers was a failure, because many of the things that we learned by working on it were introduced into our new custom search engine,” Meryl says. “Failures are something from which you don’t learn anything.”
But what if the failure is not just a new feature, but your entire project? This is what happened with Munjal Shah. In August 2004, Shah, a veteran of web entrepreneurship, co-founder of Andale, a successful analytics service for Ebay's online auction, co-founded a new company called Riya, initially developing an image recognition system that helped users find and organize their digital photos.
In March last year, Riya launched an online service and generally received good reviews. But after a few weeks, thanks to data on the work of users, it became clear that something had gone completely wrong. “About 94 percent of all people using the system said they were either satisfied or very satisfied,” Shah said. “The problem was that once a person visited a site, a person never returned to it.”
It was a real failure. But Shah kept calm and carefully reviewed user reviews. Most visitors did not use the service to search and store their own photographs, as intended. Instead, the Riya website was used as a tool to search for images on the web.
Just eight months after Riya, like a stone, went to the bottom, Shah presented a completely updated website, called Like.com , which became a visual search service for online purchases. The Like.com mechanism analyzed photographs of various things, such as bags, jewelry, shoes, or watches, and then found objects similar to these images on the web.
And it seems that a sudden change in strategy is paying off. Shah did not disclose figures, but said that Like.com already surpasses Riya in the amount of traffic and income. And, most importantly, users return to the site again. Like.com does not bring profit yet, but according to Shah, financing will be enough for several more years. The online jewelry, handbags and apparel business is estimated at $ 15 billion, and Like.com plans to expand to other areas, such as furniture and home and garden accessories.
Shah admits that admitting failures can be tough for those building their business. “By doing this, you acknowledge that your initial presentation was wrong,” he says. "And it can be very difficult."
Reinhold, the creator of the Dogster, would definitely agree with him. He was able to create a thriving business on the ruins of his own mistakes, a living monument to learning from failures. “I learned how to forget about my ego and just keep working,” he says. And these words inspire puppetry around the world.
Techme translations
Source: https://habr.com/ru/post/30911/
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