Inside the Failure of a Startup

After the dust settles and a startup fails, there’s an odd period of self-reflection to figure out what went wrong. It’s usually fairly obvious and you wonder why you didn’t see it earlier — or why you ignored the elephant in the room for so long.

A really good idea

We build software solutions for other companies in our day jobs, and we started this venture on the side. It was a simple idea — our product makes WordPress websites unhackable, scalable and very fast.

Like many startup ideas, this arrived on our laps by accident. In every client project there’s always a website at the end, and it’s always WordPress. The problem is, there’s really little you can do to solve the problem from within the WordPress platform, though that’s where most of the existing security and performance products live. Our product took a different approach, putting a nuclear bunker around your WordPress install and handling the site delivery separately.

We built this as a safety wrapper and deployed it to client sites automatically without really telling anyone, just to avoid the embarrassment of clients getting hacked or their sites falling over because a product is successful.

Within a few weeks, we had 10 websites running on this solution. The clients loved it, the sites were blisteringly fast, and every security expert we engaged was a little mystified that there were no servers to hack and all the classic WordPress issues were mitigated.

By August, we started to dedicate much more time to this project and my partners developed business plans, go-to-market strategies, slide decks and all the other fun stuff that makes you a legitimate startup.

We started to dedicate more time on this project after great customer reviews. Photo by Jud Mackrill on Unsplash.

The day you are a paper millionaire

My co-founder was doing amazing work at raising interest levels among VCs, angel investors and other business influencers she knew. By the end of September, we had verbal offers of investment and were meeting with some significant people every couple of days.

If you’ve worked at any startup, you’ve likely had a day when some Valuation Black Magic (VBM) happens and you end up being comfortably rich. That day happened when an investor casually offered $150,000 for a 10% stake of a company with no revenue. That made my part worth $750,000 in just the first round and we all know what happens in subsequent investment rounds.

The financial offerings were contingent on finding a handful of paying customers, which seemed a small hurdle. We researched the competitive landscape and believed most companies would be willing to pay $50-$100 a month for something that would secure and permanently accelerate their websites with no configuration or ongoing management.

This also coincided with daily news about WordPress hacks, major security breaches and hackers everywhere – all of which emphasized the need for our product.

The first paying customer

My co-founder had found a promising seam of willing target clients who were a perfect fit. The first was a large web agency that managed dozens of client websites and had serious SSL certificate installation problems on their own client sites. The product demo went well with their CTO and CEO. They were eager to try it out.

I provided the setup instructions and the change itself took minutes, but then days went by, emails were ignored and calls went to voicemail. *Crickets*

But not to worry — we had others. One security company showed interest and their CEO said ‘yes, yes, yes’ to everything. We hurriedly prepared the ‘pre’ report to expedite their product launch and sent along the DNS changes needed. *Crickets*

And this kept happening. We figured there was some resistance to DNS modifications so we tweaked the product to eliminate any downtime and to create a staging site where the client could see the new-and-improved site, for comparing speed and security metrics. *Crickets*

Why is nobody answering our calls?

I started to feel there was something seriously wrong in early October. Despite all the interest, the promising meetings, the fantastic demos and the glowing speed and security reports, nobody came back to us. From nearly two dozen hot leads, the road went nowhere.

We went through a phase of self-analysis that led to a number of questionable conclusions. Maybe it was the product name? Maybe it was confusing, poorly explained or too complicated? Maybe we lacked credibility? Maybe the product made too many claims and customers preferred select features, instead of getting everything in one shot?

We explored each of these issues and created new decks, new landing pages, new content. Our software capabilities improved by leaps and bounds – 15 second page-load on mobile reduced to 3 seconds, or a reduction in WordFence attacks from ~15,000 a month to 0. Still no interest.

Despite all the interest in our product, nobody came back to us. Photo by Jud Mackrill on Unsplash

People I’d known for a long time stopped responding to me. Meetings were always planned for “next week” or postponed until “after the holidays” which I knew was codeword for “never”. Even people who had reached out to me showing rabid initial interest went cold.

After several weeks of spinning our wheels, I contacted all the leads with an anonymous survey to find out why none of them had taken action. Would anyone tell us honestly what the problem was? Still, we got no actual, constructive feedback.

The day you can’t afford a cup of coffee

If you’ve worked at any startup, you’ve likely had a day where you realize you are dead. You are walking, breathing, looking around and realise that there’s no other semblance of life. The death of your startup — it’s unavoidable.

For us that day came in early December. One company had responded to our email about making a DNS change, and two months down, they decided they were ready.

We had lost all illusions about $50–100 a month and were examining the viability of the business at $20 a month. For $20, you even got a free SSL certificate! When we asked what they would be willing to pay for this service, their answer effectively ended the business:

“Oh, you mean we have to pay for it? We thought it was free.”

And they weren’t the only ones. We could never get to that first paying customer, so we could never realize the investor money, and my million-dollar valuation evaporated. While I probably never really believed it was worth a million dollars, I also didn’t think it was worth nothing.

The hard lessons learned

Our product worked. It solved a major problem with WordPress sites using enterprise infrastructure. It had passed beta testing with flying colours. No fails or glitches. I met with a few mentors to see what on earth we were doing wrong.

“Security products are impossible to sell,” said a seasoned software veteran who had worked for two large security startups. “People won’t pay for it, they don’t understand the problem and never think they’ll get hacked. It’s impossible.” His short 10-second explanation mirrored everything we had seen.

“Nobody cares about speed unless it’s ecommerce,” said another. “You can only charge for this if it saves 10 times the money somewhere else.” Again, this mirrored the reality that we were facing.

In the end, it wasn’t the DNS switch, the credibility or possibly even the money that killed the idea. The reality is that I had found a major problem — speed and security on WordPress— that customers didn’t care about. I had committed the cardinal sin of product management, solving a problem nobody has. And the reason for my failed startup had always been right in front of me – like the elephant sitting in the room – that I refused to take into sight.

For now, we keep thinking of the next idea and we take these lessons forward. Are we solving a real customer problem? Is it a real need? Will somebody pay for the solution? We also try to avoid the echo chambers of supportive comments, because it’s easy for companies to pay lip service but stop short at buying the product in the end. Most importantly, we have to remind ourselves that every “startup” could become a “shutdown”, but you have to keep trying anyway.


This article was first published in December 2018 on Medium. James Beswick is a Senior Developer Advocate in the AWS Serverless team, helping developers build solutions and learn about the benefits of a serverless approach. Read more of his works here.

Disclaimer: This article was written by a community contributor. All content is written by and reflects the personal perspective of the interviewee herself. If you’d like to contribute, you can apply here

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