November 9th, 2009
MioWorks closes doors but leaves with valuable startup lessons in hand
It’s unfortunate to see Portland and Silicon Forest startups suffer shutdowns, be it at the hands of the economy or otherwise. But on the upside, it’s alway good to see the execs taking lessons away from their efforts. And even better when they share them with the rest of us.
Mike Berkley provided some insights he learned after SplashCast shut down. And now, with the the shuttering of MioWorks—a people-centric project and customer relationship management app that also happened to speak Spanish—David Abramowski the former CEO of MioWorks has shared some tips based on what he learned during the journey, in the hopes that other entrepreneurs don’t make similar mistakes.
So how did we get here from there, so quickly? When 2009 kicked off, MioWorks was an up-and-coming part of the Portland startup community. They sponsored Ignite Portland 5. They hosted Portland Lunch 2.0. They were profiled in The Oregonian as one of the tech entrepreneurs able to defy the recession. And they jumped in to help Open Source Bridge come to fruition.
Now, less than a year later, the company has helped customers migrate to other services and MioWorks has completely closed up shop.
How’d that happen? Well, David was kind enough to share some of his thoughts on what went wrong and where MioWorks made mistakes.
Here are his top three observations:
1. Don’t assume you know your market.
Before we started any development on MioWorks we started with the numbers. Days of research on the small and medium business segment helped us to pick several segments that we thought were going to just love our solution. Our final analysis gave us a comprehensive list of industry codes to target along with some great numbers to use in funding presentations. Unfortunately we really didn’t know our market. We didn’t understand what made Lawyers & Accountants actually purchase things. We didn’t know what influenced them and what triggered their behaviors. Once we realized that we targeted an audience we had little domain expertise with, it was a bit too late. Our competitors were lawyers and accountants who could talk the talk and walk the walk. It created a barrier to entry that was hard to overcome. So our first lesson learned is to really know your market. Not just who they are, but what they do – how they do it – and why they buy things. I’d say it’s best to focus on a market you have been involved with or know inside and out. That will give you a big advantage.
2. Don’t build a product without a partnership strategy.
Very quickly we learned the overwhelming cost of awareness in the small business market segment. A single advertisement in a magazine was $5,000. Direct mail campaigns would cost around $1 per company you touched with a single postcard. Press releases were worthless without a PR agency pushing your agenda and those cost anywhere from $3,000 to $10,000 per month. The fact that we were an “out of our own pocket” startup, we were constrained with what we could do. What would have helped us was a targeted partner strategy. The right partner could have provided us access to an audience at a fraction of the cost of trying to carve our own ice cube from the middle of a glacier. Going forward, I will always make sure I have a strategic partner or two that can help open doors, get attention and give you a little bit extra credibility. Lesson learned here is that going it alone is a lonely venture!
3. Listen to the VCs and target, target target.
I spent a lot of time (too much!) talking to VCs to see if there was opportunity for external financing. Although I had great conversations the conversations ended up in the same spot. The VCs wanted to see traction in a specific market segment. They also wanted to see how the team could really target in and win a beach-head. Somewhat related to my first lesson, but this was the reality check that we ignored. As a team we let our “research” guide us instead of our street smarts. The big numbers of the SMB marketplace gave us the false confidence that we would have a fast ramp to success. The lesson learned here is that you actually listen to what is being said. Don’t apply your own filter to it. The biggest lesson, don’t fund raise – sell. That’s right. Use your time to sell your product, generate revenue and prove your business model.
Upside to the downside
It’s always hard to see good ideas failing to gain the traction they need to survive. But I’m always thankful when folks share what they’ve learned. Hopefully, it will help some other entrepreneurs in their pursuits.
No definitive word on David’s next venture, but word around the campfire is that there’s something in the works.