I received another great question from @softwaregravy
@ryancarson I’d love to see a blog post on when to walk away from something in progress. When do you pull the plug? cut your losses?— John Hinnegan (@softwaregravy) June 11, 2012
I’ve started five products. Two failed, two were acquired and one is active (Treehouse).
Why did two products fail and when did I pull the plug?
FlightDeck: 2004 - 2005
In this post I’m going to focus on my first app called FlightDeck. I built it in PHP and funded it with three months of savings. I quit my full time job as Lead Developer at a web shop and sailed into the unknown.
FlightDeck was a product for sending large design files to clients for approval, when email attachments were usually limited to 2MB.
It was a SaaS solution that was priced at £199/mo. I put my Sales Hat on and tried to sell the thing. It was hard going.
My first customers came from my connections that I had built up over several years of networking in the web design industry. They took my calls because they knew and liked me. The product solved a real need that design studios had so they were willing to give it a try. Once they started using it they had client lock-in, so they usually wouldn’t cancel.
The trouble is once I used up my connections I had to try to sell it to strangers. I failed miserably at this for two simple reasons: I hate rejection and I’m a little shy (hard to believe, I know).
I made a chart on the wall with the number of current customers (six, yay!) and a goal number of 20. I stared at that thing and procrastinated picking up the phone for as long as possible. I worked from home by myself so I didn’t have any external motivation. It all had to come from me.
I remember I started taking longer and longer lunches which occasionally turned into watching films.
Clearly the business was headed for trouble and it was time to make a choice:
- Leave the price high, man-up, and deal with large amounts of rejection (but celebrate the higher value sales)
- Hire a good salesperson
- Increase marketing spend
- Drop the price and introduce a freemium model
- Raise funding to give us more runway to find product-market fit
- Kill the product and move on
I knew I couldn’t change my nature, so #1 was out. I couldn’t afford #2 or #3. Option #4 would take too much dev time to execute and I would run out of money. Option #5 made me feel really nervous because I’d never raised money before and had no idea where to start.
After a lot of soul searching I decided to take Option #6 and kill the product. I could’ve figured out a way to make options 1-5 work if I truly believed in the product and it’s mission. Deep down though, sending large files wasn’t something I was truly passionate about.
I wanted to cry. I had made cashflow models showing how we’d be doing millions of revenue by year two and crushingly, I had to admit it was a fantasy. Totally disconnected from reality.
Worse, I had to admit to my wife that I failed. I couldn’t even pay my half of the mortgage. I remember the conversation clearly. We were standing in the doorway to our kitchen and I said something like “It just isn’t working. I’m so sorry.” She was very understanding and supportive but I’m sure she was frustrated and disappointed.
Once I made the decision to shut the app down we focused on the idea of running workshops for web designers and developers. I got the idea from 37signals “How we built Basecamp” workshop. We ran our first workshop on “Building Enterprise Web Apps with PHP” taught by Chris Lea and Mike Buzzard in 2005. I emailed my friends to spread the word, posted on several web design sites and thankfully, it sold out.
We scheduled a second one with Eric Meyer on CSS and that also sold out. And that was the genesis of our events business (later acquired in 2011).
In 2006 we were generating around £100,000 of gross revenue from events and roughly £20,000 of net income. We decided to invest the profits in reviving FlightDeck as a simple freemium service. We called it DropSend, hired Nick Nettleton to build it, hired my good friend Ryan Shelton to design it and launched it.
Thankfully it took off and was later acquired in 2008. (I’ll blog more extensively about that process later).
The lifecycle of FlightDeck, like any startup, was a very emotional journey. If I was able to rewind time I would’ve simply started with DropSend instead. That’s the problem though, you can’t time the markets and you can’t time your startups.
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