This was, what, 2012? Asana IPO'd last year and <i>still</i> wasn't profitable[0]. In fact, they were bleeding vast amounts of cash and went public with the statement:<p><i>We do not expect to become profitable in the near future, may never achieve profitability, and have incurred substantial net operating losses, or NOLs, during our history.</i><p>This is the price of cheap money. VC-backed competitors can simply outspend a bootstrapped company on customer acquisition, marketing, development and hiring, and cash out without the company ever actually making a profit.<p>In the current environment, a bootstrapped company should ideally be:
(a) niche (and therefore outside the traditional VC market crosshairs)
(b) profitable from day one.<p>A to-do list doesn't fit that mould at all, which this guy found out the hard way.<p>[0] <a href="https://sec.report/Document/0001193125-20-228462/" rel="nofollow">https://sec.report/Document/0001193125-20-228462/</a>
It doesn’t sound like he was on the bootstrapping koolaid as much as he thinks he was. Dude just vc’d his own company.<p>So his first conclusion doesn’t fit. You can’t play the vc game, get out vc’d, then conclude that bootstrapped can’t compete. Well I guess you can, but you shouldn’t!<p>It’s entirely possible there were enough people who liked Flow and didn’t need mobile and native apps for Flow to have been the Basecamp of his dreams. We/he don’t know because he didn’t try for it.<p>Edit: looks like he’s a vc now. Can’t help but wonder if instead of horribly misinterpreting his own story, he’s intentionally misrepresenting the conclusion. Frighten bootstrappers in to getting in touch to sell or take on funding.
The whole thread really boils down to missing this key point from 37 Signals:<p>| <i>5. Spend less than they make</i><p>Had they done that, they could survived long enough to find their niche. But throwing out multiples of your revenue out of your own pocket means you're on borrowed time.
> 4. Every developer in the world wakes up thinking “I should build a to-do list app” and people love jumping between productivity apps and workflows. There is no moat in productivity—avoid it if you can.<p>This was the elephant in the room so am glad he acknowledged it. Just seemed like an inherently foolish thing to base a business on and then to toil on it for 12 years...
<i>The best product doesn’t always win, and product is not a longterm competitive advantage.</i><p>I have trouble swallowing this one. He decided to compete on product, but instead spent more of their limited resources on other things.<p><i>We started burning money on ads and hiring sales people</i><p><i>In order to stay competitive, we had underinvested in our engineering team due to cash constraints and stretched them across mobile, desktop, and web.</i><p><i>We started to get an endless stream of bug reports from our customers.</i><p><i>Our clients were unreliable and had syncing issues</i><p>This smells to me like neglected product and over-stretched developers. Chasing new features instead of building solid foundations by selecting the most important ones and getting them right first.<p>As a customer, as soon as I see something like "sync issues" that's a dealbreaker. If I can't trust your product to keep my data safe, I'll stop using it.<p>It does look like they eventually figured that out:<p><i>We had to hit pause and spend years — literally years — rewriting all of our clients</i><p>But by then the competition had decisively out-producted them:<p><i>One day recently, I looked at Asana and it slapped me in the face:<p>It’s better.</i>
Wow, one twitter thread worth reading.<p>I think this is one of the reasons that sincerely the browser should be normalised, have a consistent API across all platforms (including performance characteristics, and native things like movement, sound, etc) and continuously improved, it just evens so much the playing field - by extension it would allow people to actually build novel and interesting ways to use a computer instead of figuring out how to build the same goddamned buttons across platforms. You can't just outcompete the deepness of some pockets when you have to juggle turds across so many layers.<p>I never tried flow, I did use Asana and liked it compared to whatever else was there, I think it's a good product, although they might be a bit overboard on the rainbow confetti scale, but I still think all of these platforms sincerely lack an approach to digital organisation, they all still behave like their paper based flows/ideas.<p>Millions upon millions of $ plus human hours, spent on making a todo app working across platforms. It's a waste of human and societal potential.
This is a pretty hypocrite thread. The guy is successful, has a lot of money. He starts a company thinking that because he has the best product he is going to win the market. Things don't go as planned. Blame the VC and competitors for it.<p>First, his company was VC founded. He poured 10M in the company that's very close to having raised 10M<p>Second, you dont go out of business because someone created a competing offers<p>Last, he his a successful guy, it is difficult to go openly on Twitter and says "I failed because we were not good enough" it is easier to follow the trend of our time saying that VC is evil.
This in an incredibly valuable Twitter thread. As an entrepreneur, you have to decide very carefully about the market you want to conquer. Or, in the words of Sun Tzu: "If a battle can't be won, don't fight it." - For companies backed by big VCs, money basically does not exist. They can spend ten dollars to earn one as long as the story of building a leading brand can be told. Vanity metrics play an important role here. The primary target is to go public to cash out. There is _no way_ winning against such a player if you're not backed the same way.
One glaring issue I see, is the <i>12 years</i> part. And I don't mean in the simple banging-head-against-wall versus know-when-to-quit sense. Even if the sunk cost was zero, once decades start passing, even the slowest and most bureaucratic dinosaur will be able to catch up with you. In my opinion he needed to move on to some new adjacent product or aspect of the market where he could have an advantage again. Not just piling on features that those competitors could do too.
The things about SaaS is that it is as easy to do for others as it is for us. So if we think that something was sort of easy to build and get loads of money for, then competition is inevitable. There are a few ways to survive the competition:<p>1) Do something that you have special experience or skills in so that not so many people could copy it if they wanted to. Maybe you know lots about the financial markets or aerospace.<p>2) Go into a specific market that the General Practioners (especially the Unicorns) are less likely to target. For example, UK Healthcare or German Finance, which could be super-targetted at the niche and provide a lot of value for money, even over a relatively small number of customers. Some finance software houses only have double-digit customer numbers but very high markups.<p>3) In some cases, solve a problem in a novel way that once people get hooked into it, they cannot directly compare you to the competition. If it looks just like a t-card task system, it is easy to compare. If you give the entities different names and have a workflow that solves the problem in a roundabout way, maybe people won't know that they could swap to Asana.<p>4) Add lots of integrations and make it really sticky with people's other systems. Many customers today will literally choose a supplier based on whether they offer a Salesforce integration or not (even if it doesn't make logical sense for your product!)<p>5) If you really want to go big, you have to go early, well and fast! AOL and Yahoo might have gone early but not necessarily well or fast. AirBnB went early, fairly well and fast. It sounds like Flow did not necessarily go very early, went fairly well but could not go fast enough.
Once you get past the David vs Goliath ethos, we are left with "I had invested millions of dollars, without even realizing it" and "my CFO was freaking out" was a big part of the problem. What was omitted was, "and I didn't listen to any of them". I also liked how everyone else was drinking the cool-aid but thinking you're going to make a billion dollars on your to-do app isn't.
Well, it's worth noting that there are a ton of hugely successful project management platforms launched after Asana - Bitrix24, Monday, Clickup, Notion, Airtable and so on. Asana did not crush other players.
Since neither Flow nor Asana are innovative ideas for a startup, they basically ended up competing in a zero-sum game trying to out spend each other in marketing and features.<p>That is why innovation and finding a niche with loyal users are key ingredients for startups. But in SV, you can keep pumping money onto a mediocre ideas/products round after round and increase it's valuation. Basically drying out the competition (our author in this case) and pushing their products down the market throat using sheer force powered by marketing and developers VC supplied capital.
Taking this at face value, it feels like a VC market is not a particularly efficient way to produce value for the general public. Success is way more contingent on how long a company can shoulder losses for rather than how good the product is. Similar situations seem to be happening with rideshare apps: although there is some innovation, right now it feels like they're all hanging on by their nails and hoping for their competitors to run out of money.
I had this pop up in my twitter feed independently.<p>When I went to go look at it's basically a lite version of something like Jira. Far less featured, maybe not targetted as much at software development.<p>In competitive sales analyses (easy to find) it completely loses... far less features, integration, etc.. and yet quite a bit more expensive. It's base starting price is quite expensive compared to the competition (not just vs Jira).<p>It seems like the product had a lot of things they could have done to improve it and they just didn't execute very well.<p>It's a weird product area.. I kind of hate Jira, but I also kind of hate every other project management software I've ever used.<p>It seems like they came at it from the "we're expert UI/designer" types as opposed to project management/development experts. Maybe they cut down their features and kept it too simple out of a sense of design purity.<p>It also sounds like he had success in other areas that were easier and didn't stress his business management skills, but this product did and he didn't listen to his business partners or seek out better managers to help make the right decision. Perhaps he was blinded by his previous success.<p>It's an interesting read. As an engineer I would have been very very skeptical to join a team working in this area because my gut feeling would just be bad due to how many products have failed or been mediocre in this product space.
And now even Asana isn't doing that awesome.<p>Good this story is shared. Running a startup is one of the toughest things you can do, it requires balls of steel and virtues of Buddha/Hitler and still luck will be the deciding factor. You need to do everything right a single misstep can kill your company.
I want to point out that Asana CEO meeting OP for coffee and basically starting a competition is one of the healthiest and most amazing things I have ever read/heard about. The market was a game. Amazing, and something you only read about happening in startup land.
One thing 37Signals is very good at is limiting the scope of what they're trying to accomplish and market those limitations as a strength. Instead of doing that, it sounds like they tried to compete directly on features against competition that could outspend them.
One aspect of bootstrapping I imagine is the "fail-fast" principle. If you can't compete while spending less than your revenue you should take it as a sign that your current business is not "boot-strappable".<p>Doesn't sound like he bootstrapped.
For people tired of scrolling Twitter thread here is the link in blog format.<p><a href="https://mythreadreader.com/awilkinson/1376985854229504007" rel="nofollow">https://mythreadreader.com/awilkinson/1376985854229504007</a>
You are comparing your profit versus Asana revenue. After all these years, does Asana is profitable? If it doesn't I think they didn't win either. You both have lose.
We're in a competitive SAAS market, raised no money, don't do marketing, work exclusively on the product, and offer good customer support. Our competitors raised > 100 million dollars, and daily we get customers from them. And we are not named Jason or DHH; our blog posts usually get 100 views...<p>We just reached $1M in ARR.<p>Yes, it is all possible; their problem is they tried to compete directly on the same terms, you can't outspend a VC-backed business.
This thread is missing a link to the actual product, so here it is:
<a href="https://www.getflow.com/" rel="nofollow">https://www.getflow.com/</a><p>They launched a new version last fall:
<a href="https://www.getflow.com/blog/flow-x-is-launching-in-september" rel="nofollow">https://www.getflow.com/blog/flow-x-is-launching-in-septembe...</a>
I feel this guys pain. I too did the same thing with a startup, only at a <i>much</i> smaller scale.<p>Failure, sometimes, really is the only way to learn.
As the founder of Toodledo this really resonated with me. When I launched my todo site it was just me and Remember the Milk. I had one of the first iOS todo apps in the store and I rode that wave. Grew to 7 employees. Then came Reminders and Flow and Asana and Wonderlist and Things and Todoist and ...
That thread made it click for me what his, my own, and other company problems were. We usually don't know why a product is a product, because acknowledging it would make its effect disappear. Thank you, I get this perfectly now.
What is implied but not specifically stated in his lessons learned is that selling your time while also selling a product is VERY difficult to pull off.<p>Fried/DHH eventually turned into a product company to focus solely on Basecamp, and I think the Ruby on Rails thing also makes their case entirely off the table for basis of comparison for why your consulting business could generate some quick and easy extra cash from a saas product build by the billable employees on the bench.
I can't stand using Asana. The search sucks, the organization sucks, you can never find what you're looking for, the UI has some of the worst SNR I've ever see. I hate that I'm forced to use it, and that it's being used as a horrible ticket management platform.<p>VC money is a hell of a drug.
I kept reading for 3 minutes and still couldn't get a grasp on what kind of "agency" he was talking about. Real estate agency? Literary agency? Travel agency? Can anyone who finished reading tell me?
I don't know the guy. And I might be wrong, but I think this guy is selfish, arrogant and the I only listen to myself type. Not a great formula for a running a startup.