Bubble 2.0 begins to deflate – 9 lessons

Do you remember the way we used to be? Our lives untainted by memories. And we laughed and we cried and we…. yeah yeah yeah. You know the song.

Well it had to happen. Bubble 2.0 is starting to deflate. Just as the new economy resulted in effed company which tracked the fall from dizzy heights and good companies with good people became road kill… in the same way Bubble 2.0 has deadpool and the body count is rising.

Well, the inevitable is starting to happen – a few new web startups are starting to close up shop as they find that building an application is a lot easier than getting users to try it out, and keep coming back. – Fold.com…Folds

Never a truer words has been spoken. Well, ok. Very seldom has… well yes… many truer words have been spoken. But still. This is a good word.

In our company we have been trying to focus on certain strategies and to avoid certain things for some time now. The acid test for me was not the hype, not the investment, not the long tail, not the ideas, not the talent, not the committment nor the features or buzz or excitement… it was the income.

You can’t take home and eat excitement. The proof of the pudding is still in the eating. Do people want to eat what you are offering… more specifically, will they pay for it? If someone doesn’t pay for it, you have NO business model.

Here are some really good posts about a recent startdown called Kiko:

• Kiko in the deadpool
• Actual lessons from Kiko 1
• Actual lessons from Kiko 2
  
• Kiko Flatlines

As Richard White, member of the Kiko team, wrote:

I agree with the 37signals argument that having paying customers forces you to hone in on what that market wants, and that probably would have done us a lot of good – Actual lessons from Kiko 2

As Justin Kan blogged about Kiko

Stay Focused. … snip… If you’re a creative person, it’s very easy to get side-tracked on side ideas when you really should be working on your main one. This is bad. Bad, bad, bad. We did this a lot with Kiko, and it caused many delays in getting the product out the door.

Cute hacks can cost you time. Take the time to do things right from the beginning. Seriously.
Build incrementally. We tried to build the ultimate AJAX calendar all at once. It took a long time. We could have done it piece by piece. Nuff said. – Actual lessons from Kiko 1

These simple pieces of advice can absolutely mean the difference between earning an income and just getting by and never actually being able to make a difference in the world. The cute hacks one still drives me absolutely nuts as I struggle with moving us forward while having to undo the junk legacy code that was written in the past.
Some other lessons worth considering

Too many features killed the cat – It didn’t look it at first, but if you played around with Kiko 1.0 for 15 minutes you found out that there was a *lot* of functionality under the hood. Problem was that we felt we needed to bring *all* of that functionality over to Kiko 2.0. I mean you can’t cut features between versions, right? Wrong. We should have cut features, probably about 40% of them and launched.

You must have a plan for escaping the Technosphere – To a degree, it didn’t matter how many posts we got on TechCrunch, LifeHacker or Scoble; we would still be stuck in the same Technosphere duking it out with Google, 30Boxes and everyone else. You can make a nice living just pimping your wares in the technosphere (which is what I’m attempting with SlimTimer) but if you ever want to gain any real traction as an online calendar service you have to target the cubicle dwellers and their Outlook calendars that only exist outside the sphere. Techie users are fickle, transient and demanding. You can spend all of your time implementing ATOM feeds and hCalendar export and never be the better for it. We didn’t have a plan for how to go mainstream, which, in hindsight, was a prerequisite for our success.

I would add one more thing: know when to stop. If you’ve been pouring money into something and it’s just not happening, not finishing, not there… its always “just” this or “only” that and if the issues keep shifting (even if it’s FOR A GOOD REASON) then you might need to swallow the loss of your investment and regain control of the direction of the company. We recently did this too.

So in summary:

1. Buidling the product /= gaining revenue from it.
2. Be cashflow positive. Earn more than you spend. Live within your means.
3. Work on the main idea, not on all the “great” (but peripheral) ideas
4. Do not hack in things badly, they will cost dearly you later
5. Build and release incrementally (3.1, 3.2, 3.3… 4.0)
6. Launch with the features that are complete, don’t forever delay the launch for “still to come” features
7. Business is where the money is, not the technosphere – have a plan to reach the cubicle dwellers in companies
8. Know when to stop going down a wrong path. Stop wasting money and accept the loss.
9. Find a way to charge for your product because this produces realism. If no one buys it… then no one is buying it, there is no future… you can then change products, diversify, cutback and try again. If they are buying, then keep on keeping on.

These are the strategies to keep out of the deadpool.

Kilo is currently for sale on eBay. 40,000 monthly visitors… being sold for $50k.