Ten lessons of a CEO's failure to start a business

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playcafe.com, 3 months after the announcement, was officially closed, and founder Mark Goldenson wrote a lengthy open letter summarizing 10 lessons he had learned from his failure, a valuable asset for those who are doing pioneering work on the internet and will be starting a business.

1. Get venture capital as soon as possible

Find quick money.

Mark says they are fortunate to know some of the most powerful venture capitalists in Silicon Valley. But it turned out to be no good. Because such VCs have a lot of projects to choose from, they usually don't want to intervene prematurely, preferring to wait until the risk is minimized. But for entrepreneurs, money is more valuable than advice and networking.

Mark believes that if there is a chance to start over, they will focus on less well-known venture capitalists, seeking to invest in the early stages of the project. He said, you have to remember that if you meet three times later, still can not set down, then not your project is not good, is that you find the wrong person. From another point of view, if your project is in good shape, you don't have to look for big-name venture capitalists and they will come to you.

2. Do not do content

Content businesses suck.

Providing valuable content to visitors every day is an extremely difficult task.

At the same time doing good content and excellent site performance, it seems feasible, but in fact difficult to do. In the United States, for example, the three major television networks, they are only responsible for the spread of the program, most of the broadcast programs are outsourced. The reason is that "production content" and "dissemination of content" is two different things, but also very difficult, so it is best to carry out the division of labor.

' We know we're new to content production, but we think it's enough to find a pretty girl in front of the camera and give the audience a problem, ' says Mark. It turns out we were wrong to make quality content that is beyond our means.

Think back to "American Idol", a television program with the highest ratings in the United States, with almost unlimited resources. But still, the program will continue to make mistakes in the live broadcast. This is enough to explain the difficulty of making content. What's more, in addition to content, we have to worry about server downtime, attacks, site upgrades, customer complaints, and so on.

I suggest that any entrepreneur or investor should think twice before choosing the direction of content creation. Take the content of this road, compared to the road of technology, difficult to a large order of magnitude. YouTube's founder sold the site to Google at a price of 1.65 billion dollars, but YouTube content providers, who want to earn even 1% of that number through the show, are unlikely. Also, digital video technology DVR and Web sharing downloads will reduce your revenue and drive away any advertiser.

Perhaps the main and only reason to take the "productive content" path is that you really like to do it, not to make money.

3. Speed vs stability

Know as to value speed vs. stability.

Do you want a Web site with good performance, slow development, or a poorly performing, but fast-growing site? How would you choose?

In our original scenario, PlayCafe is a fairly complex web site. The complexity of both content and technology takes up a lot of development time and ultimately hurts us. Every aspect of the site, we want to do it well and stable. (This is not surprising, as is the nature of human beings.) Unfortunately, the pace of our actions has thus become slow, and in an industry based on novelty and entertainment, this is fatal.

There is a metaphor that I like: If a novice is allowed to take two steps at a time, he can beat the chess master. (A chess novice can defeat a master if moving twice each round.)

Rapid development often increases software error and instability, and if you are a perfectionist, you will feel offended. But I agree with Reid Hoffman that when the first version of the website is released, if you look at it without being embarrassed, it means you have too much time to develop. (If you are review your A/t feel embarrassment, you spent too more than time on it.)

With one exception, if your product is used to accomplish a particular task, the above statement is not tenable. For example, ebay's shopping features and Twitter's messaging function must be kept in a stable and easy to use. The development of this function is slow, precisely because there are a large number of users to use it, so can not be anxious. You have to do this function right.

4. Cherish every Minute

Set A dollar value on your time.

I have a bad habit of looking for cheap goods, so I often bargain with others. In order to reduce the wireless internet bill by 100 dollars, I can spend 3 hours to negotiate. My mistake was to overlook the value of time. Compared to the investment we get, it's not worth the time.

Time is more important than money, because you can't earn more time. (arguably more valuable than

Because can ' t raise more time.

5. Marketing is important

Marketing requires constant expertise.

The main reason for the failure of PlayCafe is sales. Other aspects of the work, we actually do is not bad, that is, sales do not, always can not attract enough visitors. I later realized that marketing is not a novice in the spare time, I can figure out, but the need for senior, experienced professionals.

The internet is a super saturated area, and successful marketing can create and attract "differentiated needs", which is a bit too difficult for amateurs. Next time, we will raise some more money and hire a marketing expert as soon as possible.

The exception is that the product itself is very touching, the user from the heart to identify with you, support you. When you do not need to do marketing, users will take the initiative to help you promote, pull new visitors. However, even such products, marketing can accelerate its growth.

6. Accurate estimation of the cost of developing users

Control and calculate your user acquisition costs.

The initial opening of the site, our idea is naïve, that is to take some fun video, organize interesting games, make some attractive prizes, so that the site can be promoted.

The idea is not wrong, but the best marketing strategy must be precise and controllable, not so rough and variable. If you know the cost of developing a new user, you know how much money and income you need, you can control the whole process, and you can use mathematical formulas instead of guesswork and assumptions.

Google's AdWords keyword tool, is a very good starting point. It will tell you the number of times and traffic estimates for each search. You can advertise for a specific search. The ideal target, is more than 10,000 times a month search, has sold no more than 3 ad ads, and your site has strong relevance to the search term.

For example, "game TV shows" has 12,000 searches a month, and 7 of the advertised ads have been sold, while "2008 game

The show "has 14,800 searches a month, and only 1 ads are sold." The correlation between the two searches is almost equal, so the latter is a better choice so that you can get visitors more cheaply. Your first visitors are usually the most expensive, each need 10-20 of dollars in development costs, and later as the site brand growth and word-of-mouth effect, the cost of developing users will be down.

One mistake we made was to invest too much money in PR companies, web ads and traditional media ads. Once, we spent 5000 dollars and asked for a promotion expert, but in the end it didn't work out, and the man claimed it would take 5000 dollars to make it work. ...... Later, I will try to only put money on the basis of accurate data marketing methods.

7. Early partnership

Form partner relationships Early, Evan if informal.

Partnering with other companies usually does not have a noticeable effect in the short term, and this relationship is not under your control. But in the long run it does have some potential advantages. Each partner will bring you more channels of contact with the outside world, richer marketing tools, help you find potential competitors, and may even become the person who buys you.

Because we are too confident to prioritize development partners, we have missed the opportunity to develop a closer relationship with networks such as CBS, FremantleMedia and GSN. They later said that if there was more cooperation and a better understanding of our value, we might buy us money.

One thing I've learned is that informal relationships are sometimes useful and can be built without spending a lot of time. A simple visit to the decision makers of other companies helps to develop the relationship and goodwill between the two sides.

8. You always underestimate spending.

The plan costs conservatively and err on the side of raising too.

I really think that if we had more money, our outcome would be different, because we could try more strategies. Although we have made a very detailed budget, but still greatly underestimated the expenditure. Next time, we will know more about the actual cost of the real situation, and then do the budget, and in raising money, the amount must exceed the budget amount. This also helps to save you time without rushing to the next round of financing.

Although the first draft of the budget must be outrageous, it's still useful and you're not wasting your time. It helps you to have a rough estimate of every aspect of your business, whether your business model is more sane than crazy, or crazier than sane.

9. No negotiation without alternative

The key to negotiating is has options.

One of the most useful individual suggestions I have heard is this: "Always keep a variety of choices." "(Synch have options.)

As the founder and CEO, everything I do is almost always a negotiation. The choice of risk investors is to negotiate, hire employees to negotiate, sign a commercial agreement to negotiate, pay suppliers to negotiate, and even talk about technical issues within the company is also a negotiation. The best way to make the other person obey is to express or imply that you have a variety of options, not necessarily to talk to him. Choose not more, two is enough. If you have only one way to go, you must not talk to the other side, you will be repaired. (maximally

At the mercy of a lone option are a recipe for getting screwed.)

My experience with the negotiations is:

* The more decision makers are involved in the negotiations, the more the whole matter will be worth negotiating.

* If you hear someone say "This is non-negotiable" and can't say why, it means you should talk to his superiors.

* Politely suggest to each other that you have more patience than they do.

* Salespeople are often more likely to be persuaded because they are more sociable and have a link between income and sales.

10. Easier

Knowing isn ' t enough.

You know what's frustrating for me?

That's nine of the above, most of which I knew before I started my business, but eventually I cropper on them. I had been working for 10 years in a start-up company (although it was the first time as CEO) before I founded PlayCafe. If I had seen these words two years ago, my thoughts would have been the same as many of you now think: "It's the same old thing, nothing new." ”

For me, the truly new experience is that I have painfully experienced the gap between knowing and doing. In this part of the Silicon Valley, you'll be given advice everywhere, but like a surgeon, you won't learn to operate without the axe. I think that there must be a lot of first-hand experience, you realize that the reality is so complex, full of unexpected things. A lot of people would say, "only when you have trouble will you understand what I mean." "Yes, knowledge comes from accumulation, and experience is traded at high cost."

There are all kinds of conflicting suggestions, like some people say "to learn more about the needs of their customers," while others say "stay on your own needs"; some say "don't raise too Much", while others say "don't raise too little." Which view is correct? Maybe it depends on different situations and there is no uniform answer.

Other people's advice is not as secure as software code. They are more like coordinates on a map, you have to be trained and can help you with reference. I hope that my failure will bring me (and you) closer to success.

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