Sick Start-up Syndrome

While managing DSX Labs for the past year, I have come across a variety tech start-ups in South Florida, mainly because we were running tech start-up pitch events in Boca Raton at The Greenhouse.

They range from 1 guy with just an idea to 3 people with a full blown app or website. They can have 100 years of combined experience or none at all.  We had a few 15 to 17 year olds interested in starting their own tech company.  There have been 1 or 2 where the entrepreneurs were in their 70s

Out of the 100 start-ups we met with, there were common patterns you could immediately identify.  These patterns can be success related or potential failure related. I call them patterns because they appear over and over again.  This is a generalization. I am being specific about a start-up.  And you know that generalizations could be wrong.  So this is just opinion.

Here are my list of start-up syndromes you need to look out for.  It’s like looking at your body in the mirror.  Some symptoms are obvious, some are not.

No Strategic Advantage
I have run into this myself.  You get going in some specific tech start-up direction.  You have a product.  You have built out some serious code!  Yet, you or you and your partners can not come up with a strategic advantage vs. a competitor.  Face it, you are building a commodity product at this point!

How To Fix: If it is early on, you can pivot or change something slightly that makes you competitive.  But pivoting will take some serious pain and some capital.  It may not be possible. You have to have a compelling reason or value proposition for customers.  Find it immediately.  Sometimes it is right in front of you and you are ignoring it.

Tech Svengali Has Taken Over The Show
This I have seen many times.  The actual business owners have been mesmerized and persuaded by some tech guy to let him make all the decisions. Yet, either he or she is not really all that he says he is or really has no clue what the market wants.  The tech Svengali may actually have their best interest at heart for you. But they are not you!

How To Fix: Sadly enough, if this has gone on too far it could be the death of the start-up.  Start-up owners need to be in charge of their ventures and give it direction.  The solution is often to let him go and if it is too late, it could be time to shut down the operation.

Money Looking For A Place To Spend It!
Sometimes in some rare cases, there is a partner or a person with a boatload of personal wealth looking to hit the next one out of the park.  They are looking at Facebook and saying “hey I can do that!”  But they are forgetting one thing; they don’t know anything about tech, or their knowledge is cloudy because they themselves are not the demographic they are serving.  So they spend like crazy, hire tons of people and find themselves in a pickle.

How To Fix: My recommendation to these want to be billionaires is stop being the owner and start being the investor when you have the capital. There are a good 20 ventures in south Florida right now that could use $50k and have a great start-up that needs capital.  Instead of spending $300k on your “idea” (which is just an idea) become the investor and invest in 6 start-up ventures. At least then you will have 6 lottery tickets and not 1.

One Feature Does Not Make A Solution
I have had a bunch of start-ups come to me with a concept that is simply a smaller piece of a larger puzzle.  For instance, I have heard of a few improvements to dating businesses.  So the start-up concept is a small piece of what dating sites do, and can’t really be a product unto itself.  Or another good example is a site that just does nice 3D products for sale.

How To Fix: Typically I would recommend that the start-up goes back and rethinks the whole idea.  Just a small part of something bigger is not enough.  One way to fix this is to pivot into being a B2B software provider. So instead of selling 3D products yourself, your start-up provides the technology for other e-commerce companies. Different market, but then you can focus on a narrow feature you offer!

Nobody Is In Charge
A single person building a start-up without a partner or team is an issue. What is a bigger issue is a group of founders with nobody actually in charge.  When they ask you, the consultant, to be in charge and be the decision-maker, you know they have bigger issues than you can really deal with in one session.

How To Fix: One of the partners has to be the CEO.  There has to be an ultimate decision-maker.  If you can’t make that decision, then maybe the start-up should end now.

Can’t Describe What You Do
I have had this problem myself several times.  It is a common problem. Why does this happen?  My answer to why it happens to me is if you spend a year or longer on a start-up you start to lose you way (and you mind) and you end up changing the business around,  You get lost as to what you ultimate do. This is especially true if you are pivoting or evolving to something else. And we are always evolving. What is your service and can you describe it?  If not, you have to recognize the problem and fix it.

How To Fix: Best to meet to mentors and advisers and figure this out.  I had a great question asked of me recently about my start-up. That question was “What Was The Aha Moment?”  At that moment I went back in time and thought carefully about that moment. This is the moment when you first had the idea.  Sometimes that moment describes the problem you are solving and ultimately putting together a solution statement solves that problem.

That’s it for now.  I could add a hundred of these items to this blog, but I am publishing anyway.  Maybe there will be a part II.

Have a great day!

Need To Build A Social Network, Read On

Over the past year I have been working on the first serious social networking site, with heavy Facebook and Linkedin integration, and I have found the following to be true.  When you first start out looking to build out a website with social networking functionality you come across the following solution “methods”:

1. Free/Opensource “Downloadable” Social Networking Solutions
These are things like BuddyPress (WordPress), Drupal Based, Joomla Based Solutions, and Others.
Pros: Sometimes easy to deploy, designs easy to find on ThemeForest.net.
At first glance this seems like a perfect solution.  4 or 5 standard functions like friending people, messaging, groups and chat.  Well, it’s a perfect solution for small outfits that want a social network to be added on to something like a store or a group that has all the needs for social-like functionality.
Cons: Biggest con of them all is niche functionality.  If your social networking-like site (I use “like” because this is a qualifier) is anything other than a social networking site these solutions are not really what you want.  Trust me, all the developers in the world that do development will tell you they can take BuddyPress and add on all kinds of functions, make groups do this or that, but in the end, the amount of customization involved is going to be higher than the original cost of something I am going to mention later.  Another big con is the overhead.  You wanted a social network, but you got  a big pile of code, and with this overhead and complexity.  So, this is a good solution for your book club group or groupies of a band, but if anything needs to be different, like you don’t want the ability for people to friend and groups are kind of different, than stop now!

2. Hosted Social Networking Solution
Ning and others
Pros: Sounds great, right!  You use Ning and they generate a site for you. Speed to market is the biggest pro and learning curve is lower because you don’t need to learn WordPress for BuddyPress so you are not having to take a class!
Cons: Well, the biggest con is you don’t control your data.  You may be able to get a download, but who knows where it is and what they are going to do with it.  You have to read the terms carefully.  But even more so, like the con in the downloadable opensource solutions, you lose control of your app.  If you want to do something or anything outside the norm, you are going to be limited to their functionality. So great for these little social networking sites, but not for prime-time or something serious.

3. Customized Solution In-sourced Social Networking Solutions
Having a customized solution built by a local programmer or programming team is plausible, but it is financially practical.
Pros: Control over the project.  Able to meet with the guy in charge. Get it general close to what you want.
Cons: Cost.  You are going to get burned financially.  A good social networking implementation should cost, in the US about $35,000, and that is for a basic implementation of friends, connections, groups, specialized forms, contacts, and any facebook like or Linkedin like functions.  It could end up over $100,000 if you choose the most expensive team or use a web agency.  That is what it costs to build a site with this kind of functionality, using a typical american development firm!

4. Customized Solution Outsourced Social Networking Solution Without Team or Specialized Experience
You meet some guy on oDesk who says he can do it at $15 an hour.
Pros: Cheap
Cons: If it is a sophisticated implementation, this is going to be a disaster.  Let’s just start with communications.  Even the best outsourced firm will get things wrong.  That’s because english is often not their primary language.  And they most likely will be truthful, but you will find that most of these implementation, especially one man team ones. turn out to be 10 times more costly than you thought and all the functions will be completely wrong!  In fact, I have seen 3 in the past year that were disasters!

5. Customized Social Networking Solution Outsourced With Specialized Experience In Building Social Networks!
Contact us about building a customized solution!
Pros: If you are serious and there is a serious budget or opportunity to build your social network the way you want it, then do it right and control the project.  This is not cheap, but it is cost effective.  In the end, it is cheaper.  This particular team I work with are experts at social networking functionality, so that is the key to working with them.  Just choosing a random solution provider, based on price, is pretty much a mistake.
Cons: I am sure there are some, because there are few in this situation.  One con that comes with all outsourcing-like projects is that the communications must be continual and work correctly.  That is why the team I work with has a specific process for managing the web development from design through html, to a final website or app.

Ok, now that we have gone over all the options for building a social network, please consider building one with the team I have used.  Just fill out the form below and start the process of working with us:

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