I was recently privy to an internally published post-mordem of a SaaS company that shut its doors after multiple years of development and many rounds of angel funding. Their failure is truly a gift to anxious entrepreneurs out there who believe they are sitting on the next billion-dollar idea.
While I can’t reveal some of the proprietary details of the company or its specific issues, I can tell you some of the important lessons they learned.
LISTEN TO YOUR CLIENTS
I say this as a twelve year web developer: do not let developers drive the priorities of your web app.
The product team in this case wanted to build a private social networking site. They spent way too much time building out functionality that will always pail in comparison to what Facebook or LinkedIn can deliver.
Their clients had REAL needs. Needs that seemed to be “one-offs”. The company didn’t see an opportunity to drive a business from these needs. So they continued building out a Facebook killer. What a mistake.
Saddest of all, they had potential for large (paying!) opportunities if they would just latch on tighter to their clients and listen to their needs. They purged friends and friends of friends for opportunities and churned through each relationship. To their clients, their company looked like a small child showing a sketch and asking the dad if the picture is a masterpiece. Of course, says daddy, but I’m not gonna hang it over the fireplace.
DON’T GO LIVE UNTIL YOU’RE READY
While I am religious about agile and iterative development, there is something to be said for putting out a complete message when you go public. Can you imagine if Apple released the iPhone 1 but it couldn’t make a call? A lot of companies confuse Agile iterations with production releases. Don’t rush the project into Beta until you’ve fully explored your ideas.


