https://www.defmacro.org/2017/01/18/why-rethinkdb-failed.htm…
The above link provides quite an open admission of why they failed as a business.
I think we can learn a few points when evaluating such companies/industries in the future.
Key points I gathered, rather, how I understood:
- Developer tools companies get very low multiple of annual revenue compared to B2B technology companies
- Supply outstrips demand for Developer tools, and drives the prices down to zero.
- Number of leads to sale is terrible in Developer tools companies compared to B2B
- Product need not be perfect for developers to start using it. So any complaints from them can be eventually fixed, if there is enough demand for the product. It is important to see whether the company is able to grow the customers, than to focus on the flaws of the products and assume that the company won’t do well (Zoom comes to mind).
- Users are interested in how a product would solve their business problems, not whether the tool is rich and perfect.
- Business experience of the founder has got a very big role in their identifying the missing parts of the company expertise, understanding the needs of the market, and timely steering of the company towards that.
46 Likes
Thanks Fooled, to my somewhat surprise it was very interesting, well written and an insightful read. It was also short and easy to read. The author and founder really tried to figure out where they went wrong and why the company failed. Here’s the link again: https://www.defmacro.org/2017/01/18/why-rethinkdb-failed.htm…
In the end he decided was that his company had been trying to get the product perfect before releasing it while other competitors were releasing a product when people needed and wanted it, and fixed the problems (if any) later. So the author says that his company was always 3 years behind in releasing their perfect product, which they were very proud of, while the other companies had concentrated in getting all the customers. He concluded that in business success it is getting the customers, not having the perfect product, that wins out. (There’s a lot more in the short article, but that seems to have been a key point).
It could almost have been written about two companies (competitors) much discussed on our board, one whose new product is still not in general availability after three years, and the other company that released three years ago. The first company got all of a total of 37 new paying customers last quarter, the second got about 10,000 new paying customers in the same quarter. (Not a misprint! Each of those zeros belongs there!) So there is a lot in that short article that we can learn from.
Saul
74 Likes