Having non-technical founders who failed to even outsource their project is an enormous red flag. Nobody there knew how to make the product a reality and if it is you who is doing 100% of the work, then you obviously deserve 100% of the equity. "Having an idea" is not worth equity.<p>If you thought the idea was great, there was an obvious golden opportunity for you, none of the people there are going to make this into a product, but you can. If the idea was bad, getting paid in equity means getting paid in something worthless.<p>The only situation where it is reasonable to deal with such a totally defunct organization is if they pay you <i>a lot</i> of money. And if there is a single missed payment you stop any work until you are paid.
Like many, I also had an experience like this in my younger days: obviously unfit product, early prototype made by bottom-of-the-barrel contractors, co-founders who can't code, no salary, no users.<p>I got lucky, and spent only a few months while not working that hard.<p>But at the same time, this quote hits home:<p>>I was doing a startup. I was executing, and for the first time in my professional life I wasn’t insulated from the results. I didn’t achieve my destiny of great things, but I’d built something.
Currently at a startup that did the same thing wrt having their app built overseas. Protip: don't. Endless bullshit, excruciating trying to get <i>anything</i> out of them. We ended up with an app just like this guy's, locked aspect ratio and all.<p>If I find another startup whose product is an app, and they can't find a local developer to write that app, I'm running. Why outsource your core product!?
This article reminded me of the time a guy wanted to pitch his startup idea for me to develop. He wanted me to sign an NDA before telling me, as the idea was so great that I would obviously steal it, which I refused.<p>So all he would tell me is that it was “the next Twitter”, and from what I could gather, he would retain the majority of the equity and I would do all of the work, while he lobbed ideas at me from on high.<p>I passed on it, but only because the red flags were extremely obvious. I could certainly see a situation where I might have been sucked into something more subtly exploitative.
Oof. Sorry. Missed in this story because Jacob is in Europe/UK is that this level of absolute incompetence in a launch team is, in my experience, extra common on that side of the pond.<p>There are of course some fantastic startups launched out of the UK and Europe. Spotify, Deepmind and Raspberry Pi come to mind. But, as a rule on the investment side, I'm always super skeptical. Inevitably cap tables are worse, investors have a very different view of their roles than they do in US or Asia, and there's so much less startup infrastructure than in SV or say Singapore or Shanghai that it's a very different world. Ironically, it's self-feeding -- investors think startups are shitty business, they charge more, high quality founders head for greener pastures -- rinse and repeat.
I’ve been running an outsourcing business for a while and can confirm - 99% of people paying for development have no idea what they are doing and how to sell it. They are destined for failure unless the outsourcing team builds a product that is 3x better than a competitor with 100x funding.<p>Success stories I’ve seen always involved extremely active customer. They become part of the team, helping devs to build good product. Also it always took much more time and money. If you think you can build marketable product with fix-cost-scope contract - think twice.
Rather than being a cautionary tale, I actually think this is the kind of misadventure that everybody should have. You learn so much about the real world from a failed startup where nothing is done right (at least I did). Your early 20s are the perfect time to do it with little risk. Lots of painful memories I laugh at later. Highly recommended.
An additional red flag - if your company lists "being SEIS registered" as a point of traction, run a mile. Literally every newly registered UK company can get this by spending 60 minutes filling out a form that says "my company is risky, I intend to raise money from VCs".
"Marketplace startups are often considered the hardest software startups to build, because you have to create two markets at once. They work best with frequent and inexpensive transactions (from which you can reasonably take a 20% cut)"<p>2 sided markets get started by buying one side of the market. This is why this model is very expensive to bootstrap. You typically start by offering free or very discounted services to the consumers and pay the difference to the producers until you have captured the consumers and the producers pay you for transactions. All the while you have to mitigate disintermediation, so that producers can't bypass you to access the consumers outside of your market platform.
In the later part of my career, I’ve had all sorts of “opportunities” to be a “technical cofounder” or a “CTO” (which was barely a glorified overworked tech lead).<p>My motto is “FYPM”:
<a href="https://youtu.be/3XGAmPRxV48?si=zSXRVQibvli1QTk1" rel="nofollow">https://youtu.be/3XGAmPRxV48?si=zSXRVQibvli1QTk1</a><p><i>Cash</i> not illiquid equity at my market rate:<p>“You’re getting in on the ground floor of something huge.”<p>“We can’t offer big salaries yet, but the upside potential is enormous.”<p>“You’ll have massive impact here — way more than at a big company.”<p>“We’re looking for people who are mission-driven, not just here for the money.”<p>“Everyone is making sacrifices right now.”<p>“Once we close the next funding round, we’ll revisit compensation.”<p>“The real reward is in the equity, not the salary.”
I love this story. Why? Because it is the story of so many startups. I was so perplexed in the mid-90's when the dot com "boom" had started by people who wanted to do a "startup" but had no idea what that meant. Like the author, people with a feeling of Destiny that they would be some leader of something that everyone talked about. I had the same beliefs when I left Sun where clearly I would never be "famous" but by starting a company that became big? Sure anyone could do that. And in fact, a peer at Sun for whom I felt was not particularly qualified at anything, had gone on to a startup which had then gone public and made millions! And if he could do it, well it was guaranteed for me, right? Yeah, no.<p>At the other end of my career and looking back it becomes possible to see things that you missed on the journey, the role of luck, the difference between talking hard and working hard, and the critical importance of the people involved. A million monkeys with a million typewriters won't eventually create Shakespeare's works, they will waste a lot of resources and create a bunch trash. I also discovered that there are people who, when they speak, you really <i>want</i> to believe what they are saying. Being able to step back and say "what's the foundation here? Why should I believe this?" can be very difficult.
This is the classic dead-end startup story from beginning to end. It checks all the boxes:<p>- 3 non-technical cofounders<p>- Flurry of activity for everything other than acquiring customers<p>- Attempt to outsource development followed by disappointment<p>- Relentless scope creep<p>- Zero go to market plan, just an incessant belief that more features in the app will solve all problems<p>There is also one less obvious point that is buried in the article:<p>> Simultaneously, my underpaid mid-level consultancy role passed me up for promotion again. I wanted out, double-time.<p>I did volunteer mentoring for a while. Few people went all-in on unpaid startup jobs as their primary role, but many were tempted to do it as side projects. They always believe it’s less risky. The risk they don’t see is that it distracts them from their main job, either slowing career growth or risking a PIP or layoff.<p>The common thread I kept coming back to was this: Ignore the side projects. Focus on career growth at your day job. Put your primary energy into growing your career or finding a job where you can.<p>Something about the side hustle continues to lure people into thinking it’s a way out, until they burn themselves out and sabotage their day job while doing it.
I get it, why a young ambitious 20-something would be sucked into this.<p>Sometimes you just need to make your own mistakes to learn, even if you read / hear from others that you shouldn't do that thing.<p>C'est la vie.
I've worked with many startups and many VCs. The best VCs are investing in <i>the team</i>, not the product idea. The idea itself is basically nothing. It can get blown up in an instant and require a pivot. But the investor wants to know that the money they're giving out is going to people actually recognizing that and capable of successfully switching gears.<p>They're investing in people, not some singular half-baked idea that very likely goes nowhere.<p>In this case it sounds like both the idea was bad, and the team was bad.
Very surprising that well-designed contracts (with well-designed exit clauses among other issues) aren't at the top of the 'ten red flags' list. This isn't just a problem with tech startups - business partners down the ages have been burning each other with flimsy contractual agreements and 'trust me buddy' rationales when questioned about the contracts.<p>This is one of the best use cases for LLMs by the way - they can often explain contracts to you, or find flaws in contracts. Try pasting one of those long-winded click-through contracts from Apple etc. into any LLM and see if they can help you decipher the terms - then do this with your startup's hiring contract. Also, watch 'The Social Network' and pay attention to things like stock-split clauses and so on.<p>Some claim the world is split between those who understand compound interest and those who don't but I think it's understanding contract law that matters more.
This isn't so much about the Author's story but the space. He is correct that marketplaces are hell, and especially auto repair market places. I was one of the several devs that went through trying to make Openbay work (a US based market place for auto repair). We actually did have service providers signed up and we did have a way to acquire customers who wanted auto repair. So you had the illusion of product market fit - but the problem is that it's really really hard to get people to actually click "buy this brake job" and then, more importantly, they have no reason to come back to your app because 1) you don't need brake jobs all that often and 2) they can just go back to the service provider. And many shops are happy to still take phone calls as their default way of booking work.<p>The reason the company existed is the rich founder was upset that a shop wanted to charge him a fortune to get his BMW M5 repaired. He wanted better quotes. So we built a marketplace to get better quotes. But that's not what real customers want (because most people have Toyotas not M5s). And also we didn't do the customer development / research to understand how repair shops work. You want to know how my repair shop manages their repair schedule? They have a paper calendar and write down your phone number and the job. sure there are better ways to manage the work - but this paper mechanism has worked for them for years and why change it? And you know what - I go back to the shop all the time because I trust them. Ultimately people tend to have a fairly personal relationship with their local mechanic. You can build a leadgen product but the ultimate relationship is between the customer and the repair provider.<p>TLDR - everyone should understand the lean startup. /working backwards model and relentlessly focus on the customer.
Another red flag: [phantom stocks](<a href="https://en.wikipedia.org/wiki/Phantom_stock" rel="nofollow">https://en.wikipedia.org/wiki/Phantom_stock</a>).<p>Invented a few things, implemented in product, CEO & CFO sold company from under us. Ended up with nothing.
Really cathartic read! Thanks so much for writing this. I really related to parts of this and the red flags you point out are very much the red flags I've also noticed with other startups. I almost feel like this could be "required reading" for some.
Extremely relatable. I was the first technical hire for a startup that ultimately failed last year. I did at least have a (below market) salary, and there were no outsourcing headaches, but I really did spend an inordinate amount of my time trying to perfect a product that the founders had no idea how to market. I certainly learned a lot, though it made me a little cynical about startups and the tech industry in general. Maybe in a couple more years I’ll feel more positively about the whole experience.
Liked this: "Startup pitch competitions are mostly a waste of time—validation comes from talking to users and iterating, not from impressing a judge."
So an app that would probably serve a real need fails because the team is unable to bootstrap the two-sided market. The best dev moves to a bullshit "green habits" app that doesn't suffer from such problems because... it doesn't really do much in the first place. Not the greatest outcome for the world.
“Look at the specification. It does not specify anywhere we were asked to support screen dimensions larger than iPhone 4s sized.”<p>I wonder how many outsourcing firms are going to be replaced by vibe coding. This response is pretty on par with many of the horror stories responses I've seen over the decades...
That was such a great read. And way too relatable at parts. Loved it. Makes me want to write down my startup stories one day, even if it's just for friends and family.
Can someone knowledgeable explain this part?<p>"The guy whipped out a rudimentary financial model in a few hours. Turns out it’s not that important—it’s for illustrating your runway and spending plan, not to justify an imaginary revenue number."
An incredibly good write-up. Had I been the author, I don't know if I could put ink to paper like this without bitterness and resentment burning through every page.
I'm thankful I got to experience working at very early startup as a summer intern rather than full time<p>That gave me enough info to know I'd prefer working for a big company
> The cofounders didn’t have access to the code repo<p>Get the fuck outta here. I couldn't read past that. I'm done. Thanks for the writeup. Godspeed.
I've always been surprised at the sheer amount of work that's outsourced in software/IT.<p>Even companies that had staff of developers would often outsource work that should be part of their core competency. Without fail, every time, they ended up with a bill ~an order of magnitude higher than they'd pay if they were just hiring competent staff to deliver the project.<p>In many of these cases, these same firms would then hire another (lower quality) company to maintain it for them. This typically went as expected.<p>I could never understand the rationale for a lot of these cases.<p>"The existing staff is busy"--but they could have two hours of meetings with us daily?<p>"They don't have competence in those areas"--they're already using $CLOUD and $THAT_STUFF? It often was working with existing systems?<p>"Costs"--again, see above.<p>I really could not understand the motivation. I get it for clients that had no experience in what we were sent to do or got sold on something they didn't need, but a majority surely had or could get the resources to do the projects that were done, but opted not to, for whatever reason.<p>I've seen this kind of thing fail on many occasions.<p>If it's critical for your business, (ya know, not some LLM demo or something), you need ownership, otherwise you end up with a far larger cost of ownership and piles of logistical and quality problems.<p>I genuinely can't imagine a start-up doing this. Everything I've seen is private sector companies, most ~competent companies.<p>I'll say this, the cases where I have seen success in consulting (from the perspective of the 'buyer' is those that were intimately involved with the process from the start, providing feedback and pushing back when needed and taking initiative deliberately to "on board" so they could maintain and use whatever it was they got, and typically working alongside consultants)<p>You also have to basically avoid most consulting companies. I won't name them, but it's not hard to guess.