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Startups: Year 2

Fred Wilson posted today about Michael Bloomberg’s talk at the Web 2.0 Summit.

The third year is when things start to work, you get customers, you start hiring quickly. The business ramps. But the second year is tough. Really tough. Everyone starts doubting you and if you stop and think, you can start doubting yourself.

I commented, which will be today’s post:

Year 2 was Year 3 for ChiliSoft (it went faster than usual). For Mission Research it was right on schedule–Year 3. When we first released GiftWorks it was like we held a big party and sent people to the wrong address: nobody showed up. 

The product wasn’t ready–it wasn’t really feature complete. The company was largely unknown, and we were selling to a lagging, skeptical market that didn’t like to spend money: we had no credibility. 

So one by one we worked with prospects and learned from them. Gave the product away mostly, just to get feedback, build credibility, and build a better product. 

Nine months later, we had 250 “customers”, though few had paid, and released the second version. 6 months later we had something like 1500 customers. Today it’s something over 8,000 active (nonprofits). 

What you do during year 2 is what makes or breaks you. It’s the year you need to listen, refine, listen, refine, rinse and repeat, and hopefully build enough runway so you don’t tank it. 

I can’t really remember how hard it was–there’s likely something very human about that suppression, because here I am entering year 2…

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