The life and death of a startup

This is a bit of a strange article. I see where they're coming from, but a number of things that come to mind as I read through this:

- Competing against Yell, Yelp, Google...etc. for local reviews and listings isn't exactly going to be easy. I'm not sure how prevalent all those local services were in 2010, but even if it had gained traction, it likely wouldn't have lasted long (or perhaps if they're lucky, been bought out).

- Did they only try cold calling? If so, that's ridiculous. Did they attempt multiple marketing methods? Did they try to educate the market before trying to get a meeting/sale? Did they run group sales events? They really didn't seem to know what they were doing at all, so how is this enlightening to people reading? Maybe learn sales and marketing before trying to actually build a business...

- Local businesses often aren't very good at running a business. It's that simple. Some survive through luck (and referrals). They're often disorganized, and so busy dealing with clients they can't even think about sales and marketing. And often even if you can outline a very clear ROI, they won't go for it since small businesses are often more of the consumer mindset (emotion driven) rather than bigger business mindset (ROI driven).

- And also, as another comment mentions, a lot of small businesses don't want to really grow. If they're earning enough to cover their bills, they're happy. The stress of managing employees is often more of a deterrent than the benefit of earning more.

- A $50k solution to a local business? That's a ridiculous price and expectation. At least have multiple service levels, and a free version is a great starting point too.

- At least they understand that there's often massive resistance to changing how they do things, especially if some members of staff aren't comfortable with technology (as many people aren't).

I'm just slightly shocked that they had to learn such fundamental truths about business, in such a hard way.

Did they consider hiring a sales/marketing consultant?

Did they test other selling approaches?

With great sales and marketing, you can sell a poor quality product. Not recommended of course, so if your product's good you have happy customers and also referrals.

They had the product-part right, but didn't seem to have a clear product-market fit, and certainly hadn't found a dependable sales/marketing approach that allowed them to grow.

I think a lot of this comes down to the sector they were going after.

Speaking from experience, software for Plumbers, Roofers, Pest Control, Cleaners and most home improvement type sectors are really hard to scale. It really is an up-hill battle getting them to spend more than a couple hundred a month and the churn was so much higher than any other sector I have worked in.

You have HomeAdvisor, Angie's List, etc. who are heavily tapped into this market and understand the challenges that come along with it. We developed a lead gen, crm and follow up system targeting this sector. So many of the Plumbers and Roofers we talked to would complain about HomeAdvisor and other similar providers. How bad the leads were, that they were shared (sent to 5+ others), etc. but were not willing to pay for a higher priced offering that fixed those things. Most that were willing to invest were horrible at even answering calls from prospects. They would call prospects back 2+ days later to discover they went with someone else who actually did answer their phone and would then say it was a bad lead.

The experience gave me a much better understanding on why the competitors focus on shared leads. Hopefully at least 1 of the 5 roofers the lead is sent to will actually respond in a timely manner.

but in our case, the purchase decision was rarely made by the person who actually had to use the software. And you have to get those people on board. If anything, they're more important, because they're the ones who are going to make the bosses life hell if the software they buy isn't doing the job - or worse - is doing the job too well.

Over and over again, we saw internal sabotage. People would simply refuse to change processes, and would find any excuse. "Oh, the software didn't work, so I had to go back to doing it manually".

This one resonated with me, from a former workplace. Even when their jobs were nowhere near at risk, people don't want to change habits. The employees did not get paid more for being more productive, so they would find fairly pointless excuses for not using tools that made their lives easier.

Ultimately, it's a problem with management and their incentives (or lack thereof).

we were selling software

No. You were selling the solution to a painful problem that just happened to implemented in software. That's not the same as selling software.

We've been conditioned to expect that physical, tangible things are expensive - but software? That should be cheap, or better still free.

I think this is where the Django influence is strongest. People who buy enterprise software don't think that it should be free. Quite often they have strange expectations that they need to pay prices far higher than anyone would reasonably charge. $5000/month for an app that could be replaced by a cron job and a shell script isn't unheard of. I strongly suspect Tradescloud could have greatly benefitted from a mentor who had experience and success in selling B2B software.

I wish startup and industry publications spend more time with post mortem style stories of businesses that didn't work, rather than making it seem that all you need to do to print money is to start some sort of software as a service company.

Sure, it won't sell as many copies or ads for the publication, and some may say it will discourage the entrepreneurial spirit, but I think it is far worse to see a legion of young, bright, keen people quit jobs and start writing code dreaming about what colour their Ferrari is going to be.

The inevitable disappointment (for 99.9% of them) from unrealistic expectations, and the sheer, gruelling reality of just how hard it is to make a dollar in a self owned business will surely do more to crush spirits and shatter dreams.