Sunday, May 10, 2015

The Story of Our Failed Startup: Company Structure

This post is part of my story on our failed startup Camargus.

In my previous posts, I've been talking about how we failed at developing and marketing our product. But there were some other, more fundamental issues.

Let’s rewind to the start of Camargus. I co-founded the company with two other parties that were instrumental in the creation of the video stitching technology. We split the equity in three equal parts. My partners were not interested in running the company with me on a day-to-day basis. Their post-founding involvement took the form of company meetings and coaching sessions. My partners were senior and very experienced in their respective domains. But soon Camargus' issues were progressing outside of their comfort zone, from creating and showcasing new technology to developing a product and customers.

We took aboard consultants with the intention of building a more diverse team to tackle the latter. As these consultants were making considerable contributions and were eager to commit themselves full-time, we got into fundamental discussions on how to proceed equity-wise. Unfortunately, we had not foreseen to allocate equity to this end.

People sometimes call non-committed shareholders dead weight, and it’s why startups implement vesting schemes. We had 66% dead weight and no vesting. I don’t mean to marginalize the contributions my partners have made in creating Camargus’ technology. In fact it was huge. But it was not possible to reconcile their interests with the company moving forward.

In the following post, I'll talk about the next phase of the company: taking on investors.

Tuesday, April 7, 2015

The Story of Our Failed Startup: Finding New Customers

This post is part of my story on our failed startup Camargus.

In the previous post, I explained how we were trying to transform our eye-catching video technology into a product. We managed to sell a prototype to our first customer Fletcher and it ended up being used by ESPN. Despite successful try-outs, our product did not have enough added value to justify a follow-up sale. We were struggling with an issue shared with many other startups: product/market fit.

After a while the relationship with Fletcher cooled down. We were not making huge leaps forward in terms of taking our technology to the next level in terms of image quality. To acquire customers beyond Fletcher, we had to develop a new value proposition that would appeal to other leads. Here's what we came up with. We didn't formulate our value proposition based around the product. Instead, we packaged our prototype into a distribution agreement: buy a demo system and get exclusive rights to distribute future products in your region. The demo system was supposed to be used for trials with regional leads, rather than reselling.

Our proposition resonated with a production company we met on a trade show. They had plans to expand their business toward innovative products in broadcasting. It was a sizable deal, again worth more than $100K. Our distribution partner would eventually discover the same difficulty of finding customers. They were set on trying to cash in on their newly signed distribution deal by reselling the prototype, even though we had indicated this was not its purpose. They began questioning the viability of our "product". The technical issues with our prototype also didn't help. The relationship was going sour, and there were no alternative qualified leads for our distribution concept.

Again, we were misleading ourselves and others in thinking that there was product market fit. Our hope was that by putting our tech into the hands of others, they would tell us what the end-user needs. But guess what? Distributors are not interested to develop the product for you. The bottom line is that we should have kept our focus on end-customers and end-users. The distribution deal did buy us some time and revenue, but it didn't solve the main issue: product/market fit.

Saturday, March 7, 2015

The Story of Our Failed Startup: The Product

This post is the first part of my story on our failed startup Camargus.

Camargus' technology was born out of a university research lab. We had built a fancy multi-camera system that featured a high quality stitching algorithm to create seamless, panoramic videos in real-time. The image quality was sufficient to be mistaken for a professional camera. People were really impressed by our compelling digital pan&zoom effect. This was possible thanks to an array of cameras which together produced an order of magnitude more pixels than regular HD. We dubbed the pan&zoom effect “virtual camera”, i.e. a software-generated camera which enabled you to look around inside video just like in a 3D video game.

Our virtual camera concept: a panoramic camera array continuously captures a wide-angle view of the entire field, in which you can freely look around using a virtual camera. Either live or in replay mode. 

You could think of so many applications where this kind of tech would be of value, which made it hard to focus and to start developing a real product. This became a lot easier when got noticed by a leading, high-end sports broadcasting service provider called Fletcher. They saw the benefit of panoramic video for sports analysis, in particular in American football. Fletcher ordered a prototype that would be used by a world-renowned broadcaster (ESPN) in paid-for trials during the upcoming NFL season (2010). Our unique selling point: we record the entire field continuously so that you never miss anything. You can replay anything and anywhere using the virtual camera.

It seemed like we were on to something. Fletcher and ESPN wanted to use our prototype to capture revealing shots of contested situations, and even reverse the referee's decision (which actually happened in one of the first trials). But eventually it turned out the frequency of catching something unique was really low. There were just so many regular cameras available already. And there were technical concerns: the video quality was also too far off compared to production cameras and there was an insatiable demand for more digital zoom power. So despite a reasonably successful trial, we were not able to renew the deal for next season.

A setback, but we were still optimistic. We were doing some broadcasting trade shows and our demo would attract leads like a magnet, including leading broadcast executives. Yet we couldn’t quite figure out how to close a new deal. Not everyone is like Fletcher, able to spend $100K’s to build a high risk prototype. But what motived Fletcher exactly? Their dollars did not necessarily represent product value but rather marketing value. More precisely, the trials with ESPN would add to their reputation as a high-tech innovator, regardless of the outcome. It turned out that there are not that many companies like Fletcher.

We had enough confidence to take a leap of faith and invest in a productized version of the ESPN prototype. More time and money went into development. I mean, ESPN had used our shit, right? Fletcher suggested adding more features, and improving image quality and zoom power. They were pulling us to build the ultimate sports analysis tool. But it made us blind for the underlying issue, namely that the product idea was deeply flawed. It did not capture anything of interest compared to the existing camera infrastructure. Could we save ourselves by just making the prototype "better"? And would we sell more than a few units a year then? Probably not. Building a better sports analysis tool (mousetrap?) would have hardly made any waves in the broadcasting industry. It's not disruptive.

There were plenty of ideas to go beyond just sports analysis. One of them was to turn our prototype in a "one-man" broadcasting solution as an alternative to big budget field production. But despite good efforts, we were not able to make it happen. There were technical challenges requiring more R&D, more money. Another hurdle was pricing. We had locked ourselves into the high-end price range. Our bill-of-materials per unit was so high that we couldn't offer a lower price to address a less demanding audience. So we got stuck in a limbo between market segments: not good enough for the high-end, too costly for mid-level or low-end.

So to summarize, we didn't hit a homerun with the first incarnation of our product and we just got lost after that. It's a common issue among startups: product/market fit. I wouldn't go as far to saying that this killed us, but Camargus was also struggling with other problems. I'll get to that in the following posts.

Friday, March 6, 2015

What We Did Right at Our Failed Startup: Not Much

I enjoy reading retrospectives on failed startups. I can easily relate to them because I’ve experienced a decent amount of failure during my experience as a startup founder. I felt it was time to share my story so that others might learn from it. I know I have.

Camargus was founded in 2010 and went under three years later. Despite a sizable round of funding, it went belly up pretty fast over the course of its final year. This was not caused by a particular person or due to carelessness, but rather due by a culmination of misguided decisions over the years, even the ones made from the start. As founder and developer-turned-CEO, I was the central figure and therefore perhaps the most responsible.

I’m going to write my story over a series of posts, each one highlighting a specific aspect (read: failure) such as product, marketing, company structure, etc. In retrospect, it is actually funny: I can’t recall many things that we did right. To keep focus on the lessons learned, I will leave out the names of involved parties wherever possible. Enjoy the following posts!