The Ultimate Failures that Killed My Last Startup

The Attempt

It was July 2008. We had just signed all the docs to close the sale of ParentsClick to Lifetime Television, their first digital acquisition. Our flagship products, MothersClick (a social network for moms) and Mom Blog Network (the largest mom blogger network at the time), along with FathersClick, and our nationwide network of parenting sites, were now part of the largest TV network for women, Lifetime Television.

To us, this acquisition was a match made in heaven. With our technology and online network for moms, combined with Lifetime’s massive TV reach, we thought we had an unstoppable, winning combination. Little did I know, we were completely wrong.

We didn’t know it, but at the time of our acquisition, in 2008, Lifetime Television was simultaneously in the process of acquiring Project Runway from Bravo TV. Our acquirers had a different end game in mind for us. They knew Bravo TV didn’t leverage their website for the TV show, and Lifetime figured they could crush it connecting Project Runway with an engaging online social network for Project Runway fans.

During the fall of 2008, we opened Lifetime’s new office in San Francisco. We found a wonderful space in Potrero Hill, with huge windows, opening up to a beautiful view of the Bay Bridge in the distance. The following year, Zynga would open a small office, across the hall from us, around the corner from Zynga’s first office. By 2010, they would lease almost the entirety of our building and would make numerous offers for our space—the most premier space in the entire building.

It was during the opening of our new office in 2008 that Lifetime told us about our first project post acquisition: the Project Runway community website, to be powered by our infrastructure.

This was awesome. Being the CTO, and now a Director of Technology for Lifetime Television, I was stoked to put our infrastructure to the works. 100,000s of page views an hour we had to be ready for, being able to withstand super-spiky TV traffic. A tech guy’s dream come true.

And then, on a beautiful day in late November, an email came across our inboxes: Stop. Change of plans..

What Went Wrong

Huh? We were full steam ahead, contractors and developers hired, and now a change of plans?

We didn’t know, but a legal battle was ensuing over the rights of Project Runway between NBC Universal, Bravo, and Lifetime. So, we stopped the work we were doing. We were told we now needed to build a different community site, one for every Lifetime TV show, not just Project Runway.

But something about the change didn’t feel right. It felt like we were trying to jam a square peg into a round hole. It wasn’t made to fit like that. Or rather, we hadn’t planned that, we couldn’t turn on a dime and deliver something in 6 weeks, could we?

Turns out, it didn’t have to make sense. Our acquisition contract and earnout stipulated that we repurpose our infrastructure for any and all of Lifetime’s needs. It never said it had to make sense.

That Christmas, we still weren’t done pivoting all of the Project Runway work for the generic Lifetime community. I still remember working on Christmas day through New Years. It was a miserable holiday to say the least.

I was working even harder than when we were a startup. I didn’t know that was possible. But this time, I couldn’t see the results or understand Lifetime’s strategy. This was crazy. And what about our the websites Lifetime had acquired? 6 months after our acquisition and our flagship products, MothersClick and Mom Blog Network, were left largely untouched. 6 months. That’s an eternity in the online world.

We were so busy attending to Lifetime’s own community needs, our communities were languishing. And finally, sometime in early 2009, Lifetime had noticed. We had finished the Lifetime community website. The Project Runway acquisition was still up in the air, and now we had the bandwidth to focus on finally combining Lifetime’s forces with ParentsClick.

We knew what needed to be done.

We had no idea that Lifetime thought they knew too. Lifetime didn’t like our plans to improve the branding of MothersClick. I remember them distinctly saying “can we do less pink and blue? Maybe appeal to a wider audience than moms, like women in general?”

Our site was built for moms. Our network, for parents. Wasn’t that large and focused enough? We would kill our brand. Our messaging would be mixed. A site for moms, but also women? So we kicked off numerous brainstorm sessions with the team at Lifetime. In San Francisco, in NYC, and weekly over the phone.

So much planning. Brainstorming. Back and forth. It was wearing me out. And why? I never really understood.

Eventually I did. Lifetime was afraid of failure. No one wanted to take responsibility. How do you solve that? Hold meetings. Lots of them. Then there is no one to blame.

Halfway through 2009, we launched the new MothersClick. From at technical standpoint, it was faster and leaner than ever. We were finally running Drupal 6 and editing and managing content was a breeze. But from a consumer point of view, it was a complete mess. It looked and navigated like a magazine for women. But it didn’t speak to the true nature of the content: a site for moms, by moms.

It didn’t feel right.

We had alienated our users for months working on other projects, and now we spring on them a completely redesigned site that takes away the very essence of what was working, to appeal to a larger audience of women?

Lessons Learned

An overnight success? How about an overnight failure that was a year in the making.

The first failure.

But that was only the beginning.

Soon after that launch, Project Runway came to Lifetime TV. And Lifetime TV merged with A&E Television. It was late summer 2009, more than a year after our acquistion. And we were to start once again on the Project Runway community site. We finished it later that fall and launched it to mediocre, fanfare at best. Not the smashing success like everyone hoped for.

The second failure.

From late 2009 to early 2010, we finally focused 100% on MothersClick and Mom Blog Network. For the former, we simplified the site, improved the messaging, and made it feel more like a mom-site again. It helped a little, but it was too late. The damage was done.

This 2nd redesign of a site didn’t do anything to move the needle. Our community was gone. The internet had shifted: Facebook and mobile were booming and our approach was antique. We were too busy with our heads down on other projects to notice the trend.

The third failure.

Design by committee failure at its best. Hundreds of thousands dollars, gone. Numerous contracting agencies fired and bridges burned. Developers quit.

My pride and joy for nearly 5 years was now a hunk of junk.

To top it off, our earnout and bonuses were tied to success product launches for our flagship products, successful communities built, and a flourishing team. We had none of that. And it wasn’t because we couldn’t. It’s because we listened all too closely to our bosses at Lifetime and didn’t stand ground on what we believed. So we lost nearly all of our earn out.

The fourth failure.

We fought it. But after 2.5 years since acquisition, the fight within me was gone. We had built a wonderful company, small, but wonderful. Had sold it to a billion dollar company. And watched it crumbled, failure after failure, from within. So I quit my role as Director of Technology in 2011 and moved to Detroit and I’ve never looked back.

The burning lessons learned are still fresh in my memory. Keepsakes that I’m passing on to the startup companies I’ve invested in and mentor.

The words "fail faster" hang above my desk at work.

Story By

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Ted Serbinski

Ted Serbinski is a Partner at Detroit Venture Partners, where he leads investments in early stage software startups. He is widely regarded as one of the most influential, emerging venture technology partners in the Midwest and a key player leading the startup renaissance in Detroit. Previously, he was co-founder and CTO of ParentsClick, acquired by Lifetime Television. Ted is an internationally recognized web architect that has been building websites for 15+ years, including 8 years as a lead, open source developer, for Drupal. Ted earned a Bachelors of Science in Computer Engineering from Cornell University. Ted currently blogs about being both a founder and a VC, sharing his insights on his 52 Startup Lessons website.

15 Minutes Until Padlock

The Attempt

In early 2001, I walked into an all-company meeting at ePrize completely battered and exhausted. Fifteen minutes prior to the meeting I had to prepare my remarks for the fact that the company I had founded in 1999 – my baby – would close its doors. We had secured venture funding from a longstanding, stable investor. However, with the dot com bubble burst, this capitalist decided to get out of venture deals altogether; in addition, anything “e-“ was shunned, along with Pets.com. Our VC pulled the plug and I was left scrambling. Negotiations got hostile and there wasn’t a contingency plan. After a whirlwind mad dash we brought on new investment and the wire went through 15 minutes in advance of this meeting.

What Went Wrong

Preparing myself to speak to a group of 35 passionate people who had jumped on board with me was heartwrenching. Knowing I’d have to tell them that they were the first people to believe in this idea for what ePrize could be wouldn’t count for anything, since we’d have to padlock the doors. Knowing their blood, sweat, tears, and passion for what we collectively envisioned would be for naught was brutal.

Of course I was able to breathe a sigh of relief walking into that fateful meeting in 2001, but that 15-minute interval before it was an inspiration for how I’d lead the company for the next many years. Watching that second-hand tick on changed the way I do business, since I knew I never wanted to have to sweat like that ever again.

Lessons Learned

Not only did we build a reservoir tank of confidence in our vision and abilities going forward, but more importantly, this incident led me to build the business in manageable chunks and always allow for a contingency plan. Sometimes, Plan A isn’t what you thought it would be – and that’s ok. If you’re prepared adequately in advance for the potential need for a Plan B, it isn’t as alarming to go with it. Avoiding the scramble is only possible with careful thought processes and action plans before you’re in crisis mode. Utilize times of “a plateau” when things are going well to figure out the ways you can reinvent and preemptively solve problems – even before they arise.

Now, ePrize has hundreds of employees, grown from that first core group of people I all knew by first name (along with their families). When you think of what’s to come, remember that it’s never a linear journey. Relish in the bumps along the way – they’re what make you a great, resilient leader – but be ready for them to make sure they don’t ruin the trip entirely.

Story By

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Josh Linkner

Josh is CEO and Managing Partner of Detroit Venture Partners and the New York Times Bestselling author of Disciplined Dreaming: A Proven System to Drive Breakthrough Creativity. He is the Founder of ePrize, the largest interactive promotion agency in the world providing digital marketing services for 74 of the top 100 brands. Josh is also a Berklee-trained professional jazz guitarist performing regularly in jazz clubs throughout the United States.

We’ve Made It! Right?

The Attempt

Go Big! That was our mindset from the beginning. We had some great success as a startup. Some of our first clients were national firms with international exposure. We were working with Black Enterprise Magazine, Inc. Magazine, Buick, Pepsi, and the American Cancer Society to name a few. We were a mobile marketing company on the rise. Our company, Victory Mobile, started in 2009 with a strong buzz and momentum, and we looked to leverage this early success and shoot for the stars.

What Went Wrong

After you get one big client, you automatically begin to think, “This is easy.” Our sales pitch started out with the big names. “We’ve worked with this company and that company and you know, this other company.” It sounded great at the time, but for some reason it wasn’t working. Although our big contracts did come around once per year for services, we hit a wall. We were unable to get more clients and at the time, did not understand why.

Lessons Learned

So what really happened? Here’s what I’ve deduced. We didn’t pinpoint how we obtained our earlier clients. The initial success felt good, but our analysis after the fact was lacking. If we had taken a closer look, we would have noticed how our relationship with the firms mattered more than a proposal or cold call.

We were aiming for the stars when our focus should have been elsewhere. We were a small company with high hopes and a taste of success. But we were based in Detroit and had no Detroit-based clients. We were a small company looking for big clients that we couldn’t handle at the time. This stubbornness cost us months of disappointing sales. After banging our heads on the wall trying this sales technique and this marketing tool, we decided to change our focus and diversify.

So here’s what we’ve learned:

1. Be willing to change your focus and diversify if you hit a wall

We decided to change our focus from national firms to local companies. This allowed us to see our customers face-to-face, build stronger relationships with our clients, and more directly market to potential customers on a daily basis.

We also diversified our product base in response to our client’s needs. We went from a “Mobile Marketing Company” to a “Branding, Digital Marketing, and Communications Firm.” Working with our clients more directly, we discovered all of their true needs and were able to meet their demands.

2. Know how to get your customers

Our customers were always satisfied with the service we provided, but we found out it was the relationships we built over the years, not necessarily the services. The idea: know why your customers choose you and stay with you.

3. Referrals are the way to go. (In our industry)

We’re in the services industry and for all the marketing that we do, our best acquisition strategy has never compared to a happy client telling their friends and fellow business owners about our great work. Almost all of our business is referral based now and we don’t mind. The business is consistent and we love it. My suggestion: Do great work and ask for the referral. Keep it simple and see your business grow.

Story By

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Marcus Burrell

Marcus Burrell is the COO of Victory Mobile LLC and In The Black Suites LLC. He oversees the daily operations and growth of both firms. He also owns The Ultra 1 Consulting Group, and The Ultra 1 Holdings Group. Mr. Burrell holds his Series 7 and 66 securities licenses. He recently held the position of Assistant Vice President of Business Banking at Chase Bank, Detroit Main Branch. He has also earned his bachelor’s degree from the University of Michigan, in Economics.