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January 19, 2011

Lessons Learned after a Startup Acquisition

EditMe Online Collaboration Software Really excited to post that EditMe, the startup I’ve been working on, has been been acquired. You can read all about it
on our blog.  For this post, I wanted to write about  five lessons I
think we’ve learned throughout this process. If you’re a superstar, or
have a success story, don’t bother reading – you’ll probably find this
post trivial. 

This one’s for the dreamers, the wanna-be’s, the unheard-of entrepreneurs – toiling away in obscurity, driven by your vision & passion. I’m with you. I am you.

5. “Fuck the naysayers ’cause they don’t mean a thing”

I spend a lot of time meeting with other entrepreneurs and successful startup folks. In retrospect, this was one of the smartest things I could do. I learned a lot just by listening to people talk about their challenges and how they overcame them. Many, like John Prendergast, Brian Balfour, and David Cancel, were kind enough to spend real time thinking about EditMe and offering constructive criticism that made a positive impact on the business. But, for every one of those great encounters, I had several encounters with “experts” (aka cynical jerks) where I was fed a steady stream of negative crap about how EditMe was wrong, or past its time, or priced wrong, or not valuable to anyone, or just plain stupid, and that there was no hope of success.

There are no such things as “experts.” There are only those that have had success, emerging stars that haven’t succeed quite yet, and cynical d-bags that know they don’t have the brains or guts to succeed and want to drag you down to their level. Listen to those who’ve had success, and partner up or hire the emerging stars – but avoid those cynics at all costs, lest you find yourself actually believing them.

4. Invest in your core value – outsource the rest.

I always thought that Cash would be the most scarce commodity in a startup, especially a bootstrapped startup like EditMe. It’s true that you’ll always feel constrained by lack of capital in a startup. But the one commodity that becomes even more scarce (i.e. valuable), is time. Time to get stuff done, time spent doing the real things that you want to do, time spent with family & friends . . . you’ll wish you simply had more time. The insidious part is in the early stages of startup life, you know how much money you (don’t) have, but don’t really understand how much time you (won’t) have until the startup gains some momentum.  With each new product release, or customer acquisition milestone, there’s more things to do, more users or customers to support, and more stuff won’t get done unless you do it yourself.

Free up your time by outsourcing as much as you can. At first, you’ll feel it’s a “waste of money” to outsource menial bookkeeping tasks that you could clearly do yourself. Or, you’ll wonder why paying for a 3rd party service to manage email delivery inside your social media app makes any sense when you could just build it yourself. But as the company or product achieves even the slightest bit of scale/momentum – you’ll be glad you’re spending your time on building your secret sauce, and not the ancillary services required to keep the operation afloat. At the end of the day, the value in your product or company is not about how well you’ve been able to send “password reminder” emails.

3. Automate yourself out of a job – then redefine your job.

Early on, start investing in ways to streamline the stuff that needs to be done, and automate as much as humanly possible. This will help conserve your most precious commodity (time).  You can use Google Mail’s “Canned Responses” to automate the most common tech support replies. You can hack MailChimp’s Email Marketing Autoresponder capability to build a poor man’s artificial intelligence to communicate with customers.  Use Amazon Mechanical Turk to outsource deactivating obsolete user accounts. Use a wiki to keep detailed notes on steps required to accomplish tasks that need to be done on an infrequent schedule so that you can quickly recall and get them done without having to waste time remembering how it gets done.

String together enough of these “automations” and you’ve got yourself a pseudo-employee – a collection of scripts, canned responses, templates, and rote memory that do some job function “good enough” so that you can free up your time to tackle new and more important challenges.

2. Mine customers for information – there’s gold there.

The most important exception to the “Cynics Rule” are those that pay you money. Remember those folks, the customers? They have every right to tell you how much you suck, or are just plain stupid. In fact, you want to setup a relationship between you and your early customers where this dialog is fostered, even expected of them. The importance of listening to customers is discussed in great detail, and much better than I can relate, by the Lean Startup guys like Eric Ries, Sean Ellis, Dave McClure, and others.

Short version of this story – do what ever it takes to get a candid, truthful dialog between you and your customers. That’s where the answers are to most all of the questions you’ll face early on. Questions like: is this product valuable? Where do I find people to buy this thing? How should I message it and market it? And, if you find yourself giving excuses about not wanting to talk to customers because “they don’t get it,” then slap yourself hard across the face – you’ve started to believe your own BS. You need the type of reality check that only listening to customers can provide.

1. Execute. Execute. Execute.

The perfect antidote to startup anxiety, including the cynic-fatigue, is a steady, consistent stream of achievements within all core aspects of your emerging startup , from customer development, product development, customer acquisition, awareness/PR (if you’re at that stage), etc. After one of the most prominent Boston-based VCs who focuses on innovative web companies looked me square in the eye and told me his candid opinion that “Honestly, I don’t see how a social bookmarking service like EditMe can possibly be innovative.” I was left reeling. Set aside the fact he didn’t think we were all that special – we weren’t even a social bookmarking service. Somewhere along the line, I had completely fucked up the entire presentation of our product and company. All startups have low moments like this. Just keep your head down and keep working on the most important problem in your startup until you fix it well enough that it drops down the list of important problems and is replaced by something else.

There’s no such thing as a silver bullet. You’ll need to release several features to address one user experience problem, or run a series of A/B landing pages to fix a broken user acquisition funnel. But know that every thing you ship that is meant to address a problem brings you one step closer to actually solving it. There is nothing to be gained by standing flat on your feet and hoping everything turns out for the best.

A Call to Arms

I’m not a genius. I’m not an expert. I’ve been lucky enough to have two “base hits” – first with Embarc, and just recently at EditMe. I’m not rich and won’t be retiring to go on speaking tours anytime soon. I’d write a book, but nobody would buy it. So, take these lessons learned in the spirit with which they’ve been given. Think I’m full of shit? I want to hear from you in the comments below. But until then – stop reading and get back to executing.

Matthew Mamet
does digital marketing and customer development at SaaS startups. He’s a
serial entrepreneur and major advocate of the Lean Startup movement
here in Boston. You can find other great original content about the
local tech and innovation scene on his blog
Internet Tech Boston.  You can also follow Matthew on Twitter (@msmamet) by clicking here.