Lookery's lessons learned though labour's lost

Scott Rafer blogs on his lessons learned from Lookery's demise:

Coulda-Shoulda #1. We exposed ourselves to a huge single point of failure called Facebook. I’ve ranted for years about how bad an idea it is for startups to be mobile-carrier dependent. In retrospect, there is no difference between Verizon Wireless and Facebook in this context. To succeed in that kind of environment requires any number of resources. One of them is clearly significant outside financing, which we’d explicitly chosen to do without. We could have and should have used the proceeds of the convertible note to get out from under Facebook’s thumb rather to invest further in the Facebook Platform.

Coulda-Shoulda #2. Predictably and reasonably, Facebook acted in their own interest rather than ours. Their Summer 2008 redesign supported Facebook’s goals elegantly but hurt our publishers and us in ways that became clear just weeks after we’d raised another ~$2M. At this point, we made a mistake endemic to startup people. We followed our natural inclination as problem solvers rather than getting out while the getting was good. If we’d sold the ad network the minute we understood that we could no longer make it successful, we would have saved a couple hundred thousand dollars in working capital. Plus, the ad network would have fetched three to five times its low-six figure sale price less than 60 days later. That’s a million dollar mistake I made in a very short period of time. I should understand sunk costs better than this.

Coulda-Shoulda #3. Once we sold the ad network, I fell into a bad old habit — persuading my team to build something before the market was ready for it.... .... Lookery’s Profile SaaS/universal cookie mechanism is far more economic and effective than cookie exchange systems in a world where ad media and targeting data are separate commodities. That world is a year or more in the future.

As Scott notes in hindsight:

.....there are three key moments at which a different and defensible decision might have made all the difference. In chronological order, the sins Lookery committed under my leadership were continuing our dependency on a large partner (March 2008), not knowing when to cut bait on a failing asset (September 2008), and building ahead of the market (December 2008). I and we made any number of other mistakes, but all the rest were correctable.

This is a gentleman's post from a chap who clearly has some integrity, and kudos for writing it. To be fair, cutting bait is a damned hard thing to predict and time, and the whole essence of entrepreneurialism is to build ahead of the market, so I think (iii) above is beating ones self too hard with hindsight. The strategic point is well made, and it equally well applies to people building stuff now on Twitter's API.

There is another lesson I take away from all this though - there will always be people willing to fund these businesses (looking at those lining up to fund Twitter API based based startups it seems thaey forget nothing and remember nothing, as it were...) So, would Lookery have been better off to grab a lump of outside money to give them runway to change the model after it was clear Facebook was a dead end? Another year or two of sitting pretty wouldn't have hurt right now methinks.