I have yet to start or run a company of note. While this isn't a post about some collapse of a known business I think it is important to share my experience anyways. I run into people all the time with small business or stories of failed attempts. We all make mistakes we can learn from and I hope someone can take this post about my experience and avoid/learn from what happened to me.
I ran two small businesses, one with a co-founder and another by myself. They were two vastly different companies but had many similar reasons why they failed. I have some regrets about various parts of it but the learning experience was awesome and will help me be successful in a future venture.
Company #1 - Dime Films
Background
My first company was a web startup called Dime Films. Me and my co-founder, Jared, put together an idea to help promote and distribute independent film online. There were a lot of challenges involved money, technology, money again, promotion, and other things. We started the idea late-2005 and launched sometime around mid-2006. (This timeline coincides with YouTube launching, different ideas and I am in NO WAY comparing this to that and do not feel I could've made YouTube. Different concepts and vision.)
Here is the description from the homepage. You can also get a sense of our business model.
www.dimefilms.com is a website created to stream & distribute short films; giving filmmakers a platform to showcase their films.
You make the film, You keep the rights & You make the money.
Short films can be viewed in two ways:
1st If a film is copyrighted it will be sold as a downloadable iPod format film and can be viewed in Quicktime or on an iPod. Audience members will also be able to watch a trailer of the film for free.
2nd If a film is not copyrighted, it will be viewed as a streaming film for free and will not be sold. If at any time the film acquires copyrights it will be changed to a downloadable iPod film for purchase.
Films are separated in two categories. “Film Festival Films” and “Pre-Festival Films” this opens the site up to virtually every short film ever made. However, news clips, reality clips, and music videos are not permitted.
Where's All The Money At?!
Our number one issue in the long run was money. While I am a better programmer now, I was far from being good one but I was serviceable. The technology worked and the only issue became speed, which was a money issue as well.
We bootstrapped the entire project. We had discussions of raising money but neither of us knew how or where to begin. Our money got caught up in server costs which was expected but went faster than we expected. Uploading, converting, and then streaming videos was expensive. Again this is 2005-2006 so Amazon Web Services didn't exist yet. We wanted this process to be as automated as possible but at times I found myself converting videos on my own to save money. (We were dealing with short films so some files were enormous.) We also couldn't pay anyone else or ourselves so we both had other jobs which often becomes the "kiss of death" for a business unless the employees can transition into it. But without funding I found it to be too big of a risk.
Why It Finally Failed
Over time we came across some competitors but ultimately it failed because of us. Jared and I were living on opposite coasts (He was in LA, I was in Boston) which eventually caught up to us. We had different roles but its hard to run a business with someone when you don't see them everyday. I personally started having trouble keeping up technologically. I was trying to learn some things on fly and keep the site up to date. It was honestly overwhelming. I didn't know where to find answers to some of our issues and I was patching things as best I could. At some point I knew we would need a complete re-write of the code and because of our money issue I wasn't sure when this was going to happen.
We eventually closed it down because the server cost were just too much. The timing was pretty good just the execution was lacking in certain areas.
Lessons learned:
- You need money at some point, bootstrapping is fine if you have the money but most of the time you eventually need significant capital (significant being a relative term)
- From a developer's perspective I learned A LOT. My skill set grew but I also hit a ceiling because I didn't have support. Being a lone developer with no one (even a friend) to bounce ideas/questions off of became difficult. This is something I'll always seek out going forward plus there are a lot more resources online now.
- Our business plan was only going to be profitable based on scale and the assumption that infrastructure costs would go down. This is true for a lot of tech companies but again without funding there was little hope for this.
Company #2 - AMPED Sports
Background
A few years after Dime Films I started another company on my own called AMPED Sports (AMPED stood for Applied Mental Performance Enhancement and Development). AMPED was a sport psychology consulting business that went beyond the average one-on-one work with athletes. Sport psychology has been around for decades but has gained in popularity due to more stories in the media about pro athletes using sport psychologist or sport psychology coaches.
I have a bachelors in psychology and a master in mental health and behavioral medicine with my internship being at an athletic center. I saw a lot of opportunity in this field to grow and innovate. I figured my tech background could be beneficial as well. So late 2007 I started AMPED Sports Inc. and started doing consulting for athletic centers and individual clients. I also worked on digital content and publications.
Over the three I ran this business and hit a peak that should have pushed things forward. During this time I spoke at numerous conferences, had working deals with three different training facilities, put out two workbooks (still for sale on iTunes and at Lulu), and had a few web products that were free, including a motion analysis system. I invested 1000s of unpaid hours creating content and most of it never earned me a dime. I hustled as best as I could and still struggled. Then in late 2008 I realized that things were going south and I had to start planning to make a change in my business strategy or move on. I almost made a change but instead I moved on.
Confused Industry, Too Many Directions, Bad Ideas, or Poor Execution?
In reflecting on how AMPED Sports failed I keep going over four points, was I just in an industry with an identity problem, stretch myself too far, have bad ideas, or did I just execute poorly? I think the answer has two parts. I do not think my ideas were bad. I was certainly pushing towards the right stuff and my execution varied from good to great BUT I put myself in a situation where I was spread too thin and some of the key parts of business suffered. That's why some things were just good and not great. I also think that is why some things that could have been excellent never reached that status. The second part of this is that I think sport psychology as an industry continues to have issues with perception and so does the general public. I spent more time selling the concept and explaining what I actually did than actually doing the work. At first I didn't mind but after a while it feels tedious and mentally exhausting. (I have a lot of options on the field of sport psychology. I think there are some people doing really great work and it can be really powerful for some people but there are just a lot of issues within the field, and psychology as a whole, that started to turn me away from it.)
Why It Finally Failed
For me it failed for two reasons. After the market and housing collapse of 2008 my services were seen as an "extra" or a "luxury" (for a lack of a better word) expense. I couldn't keep enough clients on a regular schedule and two facilities I did work for shut down completely. It forced me to find an income from other sources (teaching) which then took away my time. The second reason was that the places that stayed open didn't truly believe in the work I was doing. They claimed to understand the benefit but didn't want to invest in it from a resources and promotions standpoint. It was all very frustrating.
Teaching ultimately changed the direction my career was going in and goes to go in today. I made many connections from various schools and fell back into my hobby as a 3/4-full time job, programming and technology integration. I'm very happy with the work I do now and proud of the work I did before. It just feels like an odd path to take but one that has allowed to support my family on my own which I couldn't have done 3 years ago.