Tag Archives: Licensario

The mistakes that killed my startup

28 אוג

Not too many times you hear about startup failures though most of them fail. Mine failed and I decided to enlist all the mistakes I made that led to my startup failure. It’s not easy to write such a post, but I think that we, in the startup/entrepreneurship industry, should embrace failure and learn from it.

So, here’s the list, in no particular order:


  • Our first round of funding was a convertible note with impossible maturity date terms. Convertible note is a double edged sword. You should use it wisely and have a clear vision of what happens when maturity date comes knocking on your door.
  • Joined an accelerator program too soon. As a first time entrepreneur, your point of view about accelerators is shaped by what you hear in the media. And you usually read about Y Combinator, 500 startups and alikes. You end up believing accelerators are a magic pill for startups. If you don't have a prototype, not sure about the market you're in or still haven't talked to potential customers, most likely that an accelerator program won't help you.
  • Should have continued working at our day job until we get to a first version with some traction. Quitting your day job too soon lays a huge financial burden on your company and forces you to look for money and waste precious time. In the early days you should speak to your potential customers, not investors.
  • Focused too much on funding instead of acquiring customers.
  • Trying to raise money solely on vision can maybe lead to a pre-seed/seed round but not to an A round. We got addicted to the vision, we forgot about the numbers.
  • After we got funded, we didn't spend enough money. At some point this wasn't a mistake. But there were times that we should've pulled the marketing lever and didn't.
  • When we did spend money it was only on coding hands.
  • We incorporated way too soon. Incorporation comes with costs that you shouldn't have. Focus on your customers and the problem you're solving. Nothing else matters in the early days.
  • Not understanding the size of your market. And not just the total size of the market, that's an easy one, but the addressable market. How much money can your company make in a best/worst case scenario? You should answer this question regardless to investors because you need to know if your company is a fundable startup or a lifestyle business.


  • We built too many features. We felt it made the product awesome. The truth was that it confused our customers. Focus is an important aspect of product management.
  • Being too much engineer-ish in our thinking. We were able to acquire a few customers pretty fast, but we were afraid to on board more customers because we felt the product is not ready yet. The truth was that the customers who already used the product were really happy with it. Don't wait for a perfect product in order to sell. Perfect will never happen.
  • Didn't invest enough in turning Licensario into a low/no touch sell. Every customer that wanted to start using Licensario took too many resources out of our already too busy engineers.
  • We fell in love in the core idea of Licensario and were afraid to change. With this much love to your baby, you sometimes can't see that he's really ugly and a plastic surgery is a must. Today.
  • Educating the market is an expensive and risky play. In the beginning you should fall into categories people know so it'll be easy for them to compare you to things they already know. We spent too much time educating, telling the world we're a completely new breed.
  • Not investing enough in ROI design. By ROI design I mean letting the user know exactly what he gets back if he'll use your product. Users don't have patience to fully understand and read how awesome your product is. You need to show them, not tell. The best thing you can do is show them the amount of money they save/gain by using your product.
  • We didn't charge most of our customers. For some reason we always felt that we shouldn't piss them off with charging them. At least until all of their feature requests are live. If you feel this way, that's a huge red flag. Either your product isn't providing enough value, and you're afraid that adding payments will make your customers leave, or you don't appreciate your product enough and how it solves the problem it intended to solve.
  • We outsourced some core features. Even though both Igor (my co-founder) and I are programmers, we wanted to move faster and we outsourced some parts of our product. It was a bad decision that cost us time and money. If you have to outsource, never never never outsource anything that's core to your business.
  • We didn't invest enough in analytics in the early days. You should know the KPIs (Key Performance Indicators) that matter to your business from the get-go and track them from the beginning.
  • We didn't fail fast enough. Each experiment we conducted took too much time.
  • We didn't experiment enough.


  • We did only direct sales for too long.
  • We had the false thinking that to do marketing we need a huge budget. It took us too much time to understand that we can do awesome things without spending a dime (other than the time of our engineers).
  • Our messaging was too broad. At the beginning, we thought we should target the whole world. We were afraid that we'll miss a customer if our messaging won't be broad enough to catch everyone: SaaS/mobile/desktop/web/ROR/PHP/Pascal developers, executives, marketers… We wanted to catch them all. Guess what happened? We didn't catch anyone. Our bounce rate was so high that Google Analytics was too embarrassed to show it…
  • Not using social media as we should have. A lot of people will argue about the effectiveness of social media on B2B companies, but IMHO, social networks are free marketing and an awesome way to reach out to influencers in your space, and it's just foolishness not to use them. You just need to use them the right way.
  • We tried channels before we got to product/market fit. In the early days, founders should do sales. If you can't sell your product, no one will be able to.
  • Our sales model was too "enterprisy" on one hand and the price was too low on the other. It made no sense. The price of the sale and the sale cycle length must be aligned.


  • Our first hire was an engineer. Again, too much focus on features instead of letting people know we exist.
  • We made compromises with our first hires because it was important for us to stay lean. Eventually, we had to let them go. If you can't afford good people, don't hire. It will cost you more to hire the wrong people.
  • We didn't split the equity equally between the founders.
  • We didn't sit in the same office. This led to poor communication between the team members. Sitting at the same office is not a must. You have great tools like Sqwiggle to help you manage remote work. But it was just not right for our team. You should know what’s best for your team and if you see that work just doesn’t get done when everyone works from home, stop that and see if an office works better.


The following personal mistakes didn’t necessarily bring to Licensario’s failure, but they are things that I feel I should’ve done better:

  • I should have worked less hours.
  • I should have slept more.
  • I should have said "no" much more.
  • I should have answered more questions on Quora, Tweet more, write more blogs and generally be a more social CEO.
  • I should have asked for help than going at it alone.
  • I should have started younger.

Even though I wish that this post will help entrepreneurs avoid these mistakes, I still believe that the only way to learn is by making mistakes. You have to get burned in order to know that there's fire out there.

And me? I hope to make a whole new set of mistakes :).

I’d love to hear what mistakes you’ve done along the way in the comments.

Thanks for reading and feel free to share.

Software piracy – are we all thieves?

20 פבר

I'll start by saying yes. Most of us. But it's not really our fault.

First of all, for all you bleeding hearts out there, do you really want to tell me you never used a pirated copy of a software because paying 50$ for a single use seemed way too much? You never downloaded an MP3 of a song you really liked because you didn't want to pay for the whole CD? Downloaded the episode you missed of your favorite series? Or maybe just jail braked your iPhone/iPad/PS/Wii…? You probably see where I'm going with it. We've all been there. And yeah, this makes us thieves. While we're paying for anything that we can feel, somehow it looks OK for us to steal something that's virtual but maybe took much more time and effort to produce than the tangible goods we're used to buy.

I say it's not our fault. If you don't mind I'll focus on the software industry but it's the same in the music industry, movies industry, mobile apps, etc.

For years now software publishers have made everything they can to keep us away from paying them. Long registration forms, giving away our payment credentials to yet another publisher,  serial numbers, selecting the right version and it goes on and on. And, on top of that, the irrational price that has no proportion to how we're going to use the software. Why should I pay a backup utility 50$ when I'll probably use it once in a few months? It's not like I'm sitting all day long backing things up and then restoring them…

So, publishers saw that we just don't pay for their software however we do use it. This fact made them come to the amazing conclusion that we use illegal copies. And what did they do next? Started spending tones of money on the best copy protection, bullet proof, can't be pirated licensing. But guess what? That didn't work. So they started looking for other places to bring money from. From affiliate programs to toolbars to ads and what not. Making money from everything they can install on the user's machine except of their own software. The installed software became a channel for the user's machine.

Even though we're at the 21st century and SaaS is becoming really popular we still barely see software publishers that understood that to get users buying your products you need to be nice to them. We, at Licensario, offer a different approach. We think that software publishers should stop wasting resources to find new ways to say NO to users. Instead, we say, go ahead and say YES to your users. What do I mean by that? I started this post by saying that publishers made it really hard for us to pay. It's time to ease the process. Make it dead simple to pay. Be nice to your users. Offer them flexible payment plans. Offer subscriptions. Offer payments for usage (pay-per-use). Don't let your users go wandering in a website for the suitable version, do it in-app. License your features or at least make it simple for the user to understand what she's paying for. Use micro payments. And don't ask them for their credit card. Users should have one account for all software content – across platforms.

This model works. Guaranteed. Apple already proved it with their app store. SaaS has proven it.

We will not stop piracy. Neither do SOPA and PIPA. I wonder if anyone can. But it's definitely possible to raise the buy rate. If buy rates are higher in the gaming world where people are willing to pay for virtual goods such as swords or the best sheep in town why can't it be with software? Software publishers should treat their features as virtual goods and people will pay for them when they need them the most. Just give them the option and be kind. You'll be surprised on users' willingness to pay:

Public opinion strongly favors intellectual property (IP) rights: seven PC users in 10 support paying innovators for their creations to promote more technology advances.

I added a poll at the end. Maybe it will shed some more light of what makes it easier for people to pay for software, apps or any digital content. I'll appreciate if you'll answer it.

If you like this post I'll appreciate if you'll like or follow Licensario.