A friend just got laid-off from a start-up cloud company that’s well on its way to stalling out. The budget intended to launch the product was spent, development costs swelled, management is in a panic, money is running out.

I am sharing this story because I know many in the SiliconANGLE community have an entrepreneurial bent or work at start-ups. It can be hard to see failure coming, but it points to a requirement for brutal honesty and sometimes painful self-awareness at new businesses.

The reason for the pending stall-out is simple: After nearly three years in development and months after the planned release data, the product — a cloud-based business app — has yet to appear.

I am not sure if this is the number one cause of failed start-ups, but missing your ship date is certainly near the top. There are worse things that can happen, but most of them are immediately fatal. The company that can’t ship tends to linger.

And the longer it lingers the worse things become. The layoffs, the lies, the search for new investment, the depression — each takes its toll. The good people leave and the people who are remain — founders and hangers-on — slide into finger-pointing and recrimination.

We need money now!

The big screw-up is caused by the desire/need/imperative to book revenue as quickly as possible. This leads to planning based upon selecting as the ship date the earliest moment after it can no longer be conclusively proven the product won’t be ready.

Part of this is also the disconnect between executives who don’t recognize when they are being lied to, development managers who don’t know they are lying (sometimes) and overly optimistic developers merely trying to hold onto their jobs (and options) by painting the most optimistic picture possible.

I have personally been involved in conference calls where I had to be the bad guy because the CTO had been telling us for three months that the product was two weeks away from a beta release.

And while the product wasn’t shipping, the business plan was being amended to cover for the delay, staff was being paid to work on documentation for non-existent product, testers were being kept on hold, would-be partners grew angry and checks kept being cut.

New money was always a week or two away, but unlike the product, sometimes the money showed up and we contractors got paid. Until that sad day when the money stopped and even the developers were sent home. The product, as far as I know, was never finished and the company still owes my little group thousands of dollars.

Toward the end, we were simply trying to support the fundraising and keep the balls in the air. We never really expected to see that final check and it dutifully never appeared. This was a case of good folks, many of whom I still like, simply being in way over their heads. But if I could get my hands on that CTO…

A better idea

I’ve begun to think that nothing should happen on the marketing front — at small start-ups, anyway — until the product is ready for beta testing and maybe 90 days from general release.

At that point, you have something to show people, including the marketing, sales and support people you need to hire. Your magic “must have” killer feature must be complete. You have a reasonable expectation of a more-or-less on-time product launch.

This probably would slow to road to $$$ just a bit, but would, I’d hope, lessen the probability of becoming another start-up with good ideas, half-finished code, former employees and very angry investors.

We all expect start-ups to fail. For all kinds of reasons. And some will try to develop products they simply can’t build before the money runs out. But having that happen after the press releases have gone out and the beta accounts promised to potential customers is an embarrassment to be avoided.

As a great man said, “Shipping is also a product feature.”

photo credit: TheeErin via photopin cc