PlayCafe closed founder concludes 10 big failure lessons

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Introduction: Mark Goldenson, founder of internet video game website PlayCafe, wrote a summary of ten lessons of his failure to start a business Mark Goldenson. The following are the main contents of the article:

1.5 ago, I started the Internet video game website with co-founder David Naigue (Dev Nag), PlayCafe, and we are ambitious to run a game show where everyone is involved and highly interactive. Players can watch our programs, answer questions, win bonuses, building teams, chatting in real time and running their own games is a huge project, despite the high level of player involvement--the average user can watch a 87-minute show per game, and 40% of users will revisit it in a week--but the user size is still small. We may resume operation, but for now, we have decided to suspend the operation of the website and return the remaining funds to investors.

Here's what we know about past experiences and lessons and how to improve next time, I feel like there are many entrepreneurs who are afraid to talk about their failures and lose an important learning opportunity, and I hope you get help from our lessons.

1, first look for quick money

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

Money is more valuable than investment advice or networking. Next time, we will focus on expanding the network of investors to target those who are willing to make rapid investments in the early stages of the enterprise, even if they are not famous. Having three meetings with investors can be a long time to say that your network is not big enough. In addition, less-known investments will give you more time. For example, investor David Shen David Shen A comprehensive assessment of our website, 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-name investors will naturally come to the door.

2, do not do their own content

Producing high-quality content on a daily basis is an extremely difficult task, especially for real-time content. In television, for example, studios focus on production content, and television networks are responsible for playing the model because television production and playback are arduous tasks. David and I both realised that we were completely new to content manufacturing, but we certainly thought it was easy to find a beautiful woman to play with a friend in front of a camera, but it turned out we were wrong, and that content was not something we could afford.

Take "American Idol" for example, even the rich resources of the program will often make mistakes, such as sound failure, host or contestant talk knot, camera angle is wrong, and so on. Besides, they don't have to deal with Dos attacks, server downtime, customer support, and so on.

So I suggest that entrepreneurs or investors who are interested in content production should think twice. Content making is harder than technology development. No content producer on YouTube can make 1.65 billion dollars 1% ($ 1.65 billion is the amount Google buys from 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 paid advertising by effect has reduced the number of ineffective advertising in the market. So the main, if not the only, reason for making content is that you do it purely for hobbies.

3. Make trade-offs 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 complex and stable, but it is doomed to be unsuccessful in an industry based on innovation and entertainment.

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

But the exception is that your product is a specific task for users, such as the failure of ebay will cause huge losses to users, and Twitter errors will only be a joke. Ebay must be cautious because 1.3 million of companies rely on the stability of their services, so there is no mistake.

4. Time is money.

Paul Graham, a well-known angel investor, Paul Graham that good entrepreneurs are stingy with their resources. I have a bad habit, I like to bargain for fun. For example, to save 100 of dollars in wireless internet, I would spend 3 hours bargaining. This is a waste of time relative to the size of our financing. Bargaining for a little penny is actually ignoring the real value of time.

Time is more valuable than money, because you cannot melt into time. David had suggested a price for our time. You can calculate your working hours in terms of salary, residual financing or total corporate value. We are worth 50 dollars per hour. If I had to spend 5 hours negotiating a bargain, I would have to cut at least 250 dollars. And as your financing grows, so does the price of your time.

5, marketing is not trivial

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

Like content making, I now don't think of marketing as 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 layman can easily control.

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

The next time we start a business, we will be able to make enough money to hire a marketing expert at the beginning of our venture.

6, control and calculation of user access costs

We initially thought of marketing as a very creative activity: making promotional videos, launching marketing campaigns, and so on. This idea is only partly true, and the best marketing should be controllable and accurate. If you figure out exactly what the cost of getting a new user is and you take control of the process, you'll know how much money and income you need, so you can turn vague guesses into clear mathematical formulas.

Before you find a marketing expert, you can use the AdWords keyword tool to start your own marketing, which will tell 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 at google. Yahoo has a similar tool. An ideal keyword the number of searches per month should be more than 10,000 times, put the keyword ads can not more than three competitors, and it and your site has a higher relevance.

In addition, I will not advertise in PR companies, CPM (cost per thousand), billboards, TV/radio. We had 5000 dollars for a promoter, and after no effect, he said we would have to pay another 5000 dollars to see the effect.

7, attach importance to your partner

The two disadvantages of a partnership are that the partner reacts slowly 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 of relationships, teach you how to marketing, help you find potential competitors, to become your potential acquirers.

Because we too believe in our own strength, the result of the neglect of some partners. They later said that if we had forged closer relationships with them and proved our worth, maybe they would have bought us.

We also learned that informal partnerships can be established with just a little time. Meeting the decision makers of the partners as soon as possible, 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 build a more robust relationship.

8. Do not underestimate expenditure

Although I suspect that more financing may lead to different endings, more money will always allow us to try more strategies. We made a detailed financial plan, but I underestimated the cost. The next time we start a business, we'll be better able to calculate the actual cost and get a little bit more money, so we can avoid refinancing when we're short of money.

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

9. Negotiations to be left behind

The most useful advice I ever got came from Bill Trenchard, founder of LiveOps, who said: "Always stay behind."

As a founder or CEO, almost everything you do is about negotiation: contact with investors, hire employees, sign cooperation agreements, and so on. The best way to convince a negotiator is to show that you have a lot of options in a clear or implied way, and that two choices are enough.

10, easier

Most frustrating of all, David and I know a lot about the theory. We have all worked 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, namely, that these statements are purely clichés.

The latest lesson for me is easier. Silicon Valley is full of advice, but like a surgeon who has only theoretical knowledge and never had 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 running on your ideas, not financing too much and not financing too little. The best answer to these questions is to adapt to local conditions. Advice is not as easy to execute as code, but like map coordinates, you need skills and references to understand. I hope that our experience will help us and you closer to success.