Start-up company PlayCafe Close founder summarizes 10 major failure lessons

Guide: PlayCafe, founder of the Internet video game website, Mark Goldenson (Mark Goldenson) has written a summary of ten lessons of his own entrepreneurial failure. The following is the main content of the article:

1.5 ago, I founded the Internet video game website PlayCafe with co-founder David Naigue (Dev Nag), and we are ambitious to run a game show that is engaging and interactive. Players can watch our shows, answer questions, win bonuses, build teams, live chat and run their own games, which is a huge project, despite the high level of player participation – the average user can watch a 87-minute program per game, and 40% of the users will visit again within a week – but the size of the user is still small. We may be back in operation, but for now we have decided to suspend the operation of the site and return the remaining funds to investors.

Here are our reflections on past experiences and lessons, and how we can improve next time, and I feel that many entrepreneurs are afraid to talk about their failures and lose an important learning opportunity, and I hope you will get help from our lessons.

　　1, first look for fast money

We were fortunate enough to meet some of the top investors, but we spent too much time negotiating on the investment terms. There are only about 30 top investors in Silicon Valley, who usually have enough investment in hand and are waiting for the risk of investment to be minimized.

Money is more valuable than investment advice or networking. Next time, we'll focus on expanding the investor network to target those who are willing to make quick investments in the early stages of the business, even if they don't have much of a reputation. Having three meetings with an investor can be a long time, indicating that your network is not big enough. In addition, lesser-known investments will give you more time. For example, the investor David Shen David Shen A comprehensive assessment of our site, and he decided to give us money only once. So, you have to find 10 investors like David Shen.

And, as long as your project is good enough, big-names investors will naturally come to the door.

　　2, do not do their own content

Producing high-quality content every day is a daunting task, especially for real-time content. In television, for example, the studios focus on production content, and television networks are responsible for playing, and the reason for this is that the production and playback of television is a very difficult task. David and I both realized that we were completely new in content manufacturing, but we thought that it was easy to find a beautiful woman to play with a netizen in front of the camera, but it turned out that we were wrong, and that this content production was not something we could afford.

In American Idol, for example, even this resource-rich program often makes mistakes, such as acoustic glitches, presenters or contestants talking knots, camera angles, and so on. And they don't have to deal with the problems we face with Dos attacks, server outages, customer support, and so on.

So I suggest that entrepreneurs or investors who want to go into content production think twice. Content production is more difficult than technology development on a heavyweight scale. None of the content makers on YouTube can make $1.65 billion in 1% (note: $1.65 billion is Google's purchase of YouTube). In addition, the popularity of digital video technology DVR and media sharing technology has reduced the revenue of content producers, and the emergence of pay-as-you-effect ads has also reduced the number of ineffective ad delivery in the market. So the main, and perhaps only, reason for making content is that you do it purely for hobbies.

　　3. Make a choice between speed and stability

Another lesson of PlayCafe's failure is that it takes too much time to develop good content and technology. We want the site to be both complex and stable, but this approach is doomed to be unsuccessful in an industry based on innovation and entertainment.

There is a metaphor I like: If you allow a novice to take two steps at a time, he can even beat the chess master. While this generally leads to bugs and Angers Perfectionists, as Hoffman, a LinkedIn co-founder, Red Hoffman, if you look back at the first version of your site without feeling ashamed, you've spent too much time on this version.

But the exception is that your product is for users to do certain tasks, such as ebay failure will cause a huge loss to users, and Twitter error will only become people's jokes. Ebay has to be cautious because there are 1.3 million of businesses that rely on the stability of its services, so it doesn't make mistakes.

　　4, Time is Money

Paul Graham, a well-known angel investor, Paul Graham that good entrepreneurs use their resources sparingly. I have a bad habit, just like bargaining for fun. For example, to save $100 in wireless internet, I would spend 3 hours bargaining. This is a waste of time relative to the scale of our financing. Bargaining for a little penny actually ignores the true value of time.

Time is more valuable than money, because you can't melt into time. David had suggested a price for our time. You can calculate your working hours according to salary, surplus financing or the total value of your company. We are worth $50 per hour. If I had to spend 5 hours negotiating a bargain, I would have to cut down at least $250. And as your financing grows, the price of your time is going up.

　　5, marketing non-trivial

The main reason for PlayCafe failure is marketing blunder. David and I are from a company that is almost hostile to marketing, PayPal. Our efforts in SEO (Search engine Optimization) and SEM (search engine marketing) are still fruitful, but to attract users to watch real-time programs also requires ongoing, highly skilled marketing activities.

As with content, I don't think marketing is a trick that smart novices can figure out in their spare time. As the internet becomes super-saturated, marketing can create differences. And marketing is a profound knowledge, not the layman can easily manage.

But there are exceptions, especially one-to-many products that will generate new users during the use of this product. This refers not to the word of mouth, users need to advertise for you products.

The next time we start a business, we will make enough money to hire a marketing expert in the early days of our business.

　　6. Control and calculate user acquisition cost

We initially thought of marketing as an extremely creative activity: making promotional videos, initiating marketing campaigns, and so on. This idea is only partially correct, and the best marketing should be controllable and accurate. If you figure out the cost of getting a new user, and you take control of the process, you'll know how much money and income you need, so you can turn your fuzzy guess into a clear mathematical formula.

Before you find a marketing specialist, you can start your marketing with the AdWords keyword tool, which tells you how many people will search for a keyword on google. There is also a tool called Traffic estimator, which will roughly calculate the cost of buying an ad keyword in google. Yahoo also has a similar tool. An ideal keyword search should be more than 10,000 times a month, the number of competitors to run the keyword ads can not exceed three, and it is highly relevant to your site.

In addition, I will not advertise in PR company, CPM (cost per thousand), Billboard, TV/radio. We had invested $5000 for a promoter, and after nothing, he said we would have to invest another $5000 to see the effect.

　　7. Attach importance to your partner

The two disadvantages of a partnership are that partners are slow to react and you can't control them. But in addition to increasing the number of users and revenue, partners have other uses, they can expand your network, teach you how to market, help you identify potential competitors, and become your potential acquirers.

Because we too believe in their own strength, the result has neglected some partners. They later said that if we had forged a closer relationship with them and confirmed our value, maybe they would have bought us.

We also learned that it takes only a little time to establish informal partnerships. Meeting with the decision-makers of the partners, keeping in touch with them and helping them in good faith will help strengthen the relationship and goodwill of both parties. The establishment of this relationship requires foresight and perseverance, and "love before marriage" does help to build a more robust relationship.

　8. Don't underestimate spending

Although I suspect that more financing may lead us to different outcomes, more money will always allow us to try more strategies. We made a detailed financial plan at the outset, but I underestimated the cost. The next time we start a business, we'll be better able to figure out the actual cost and get a little more money, so we can avoid refinancing in the absence of money.

You can find some successful entrepreneurs to make a reference to their previous financial plans. I do not agree that the financial plan is a waste paper, because it can help you estimate the number of employees, financing size, balance of payments and so on, to determine whether your business model is crazy.

　9. Negotiations to leave behind

The most useful advice I get is from Bill Trenchard, founder of LiveOps, who says, "Always leave a Bill Trenchad."

As a founder or CEO, everything you do is almost always about negotiation: reaching out to investors, hiring people, signing cooperation agreements, and so on. The best way to persuade a negotiating opponent is to show that you have a lot of options in a clear or suggestive way, with two choices enough.

　　10, easier

The most frustrating thing is that David and I know so much about this theory. We have been working in three startups for 10 years (but have never been fully responsible before). If I had sent this theory to myself two years ago, I believe my thoughts were the same as most of you, which is a cliché.

For me, the latest lesson is easier. Silicon Valley is full of advice, but like a surgeon who has only theoretical knowledge but never underwent surgery, I think it takes a lot of hands-on experience to understand the complexities and variables of entrepreneurship.

Many useful suggestions contradict each other, such as knowing your users and operating on their own, not too much financing, and not too little financing. The best answer to these questions is local conditions. Suggestions are not as easy to execute as code, but as map coordinates, requiring skills and references to be understood. I hope that our experience will help us and you to be closer to success.

This article source: http://tech.sina.com.cn/i/2009-05-06/00263065254.shtml

Start-up company PlayCafe Close founder summarizes 10 major failure lessons