Top 10 Mistakes I Made In My Life

Top Mistakes

The end of the year is a good time to reflect and learn. I’ve made many mistakes in my life. Some were more penalizing than others, and some may have cost me my company or set back years of my efforts.

Fortunately, because I also did a few things correctly, I ended up okay. But these mistakes are valuable lessons for me today, and likely for new entrepreneurs who want to maneuver the crazy startup/life jungle.

Interestingly, as I look through the list below, I realized one of the common themes in the mistakes below relate to caring too much about what other people think but not following what made sense to me. Good advice is golden, but following bad advice or mere pure pressure may be detrimental for an entrepreneur.

Here is list my top 10 mistakes in life as an entrepreneur.

10) Listen to MBA students from Anderson School to write a 60 page business plan

When I started my first technology startup as an undergrad at UCLA, I looked towards some students at the Anderson business school for some mentorship. To an undergrad student interested in business, MBA students were like masters of the universe, and we believed in everything they said. They advised that I create a very robust business plan that factored in all the MBA training they were receiving.

This whole process took more than 4 months of valuable startup execution time, especially when our plans keep changing. When the business plan was already 55 pages long, one of the MBA students said, “you still missed a section on listing out and describing the 5 Risk.” That was another one week.

At the end of the day, once I finally proudly displayed my 60 page bullet proof business plan to a Venture Capitalist, she annoying told me, “Oh we don’t look at anything beyond a presentation deck or a 1-page executive summary.” That crushed me.

Lesson Learned: just because someone is successful in their own rights doesn’t mean they are the expert at what you are doing. MBA students are generally smart individuals who worked mostly entry-level at big corporations like Consulting or Investment Banking Firms. Their achievements of being there is highly respectable, but often they don’t know a lot about how the startup world works.

Your divorce lawyer uncle is not a corporate lawyer. Don’t mistaken success to true relevant expertise.

9) Spent too much time making my first business “look legit”

Similar to the mistake above, when I started my very first business (not tech startup) first year in college, I was enthralled with the idea of having my own business.

I spent a lot of time figuring out legal options, website stuff, logos and business cards – basically the things that made me look like a “legitimate business.”

I did that for a couple months, and I felt great about it. However, I later realized I didn’t spend any time making my business actually more valuable. My ego probably got in the way (you know, like giving people a business card with a fancy logo that says you are CEO of your company), but since my business didn’t have true value or content, eventually all that was trashed as I moved on to other ideas, logos, websites and concepts.

Lesson Learned: many of the most successful companies came about as hobby projects that didn’t have any business structure before they got traction. Instead of making your business “look” legit, it is much better to focus on your product or talking to customers to ensure that they would actually buy your service once it is ready.

8) Trying too hard to fit into my business fraternity

Continue reading Top 10 Mistakes I Made In My Life

A CEO’s account of how his Startup Failed (RewardMe)

Startup Fail

A post that will cost me $13,000 (regarding how I lost $1 Million in Funding)

This post has been long overdue.

Partially it was because I felt rather embarrassed about the unfulfilling results of my startup Rewardme, and partially it was because I had been so busy growing my new business on Gamification Framework in the past few years. Also, I wanted something to clear with a major Silicon Valley Law Firm that we had a detrimental history with before sharing my experiences too publicly, but it became clear that this would take too long and I have given up (in fact, writing this post would cost me at least $13,000 because of that).

But alas, the lessons from my failures could possibly benefit thousands of entrepreneurs out there, so I’m taking the bold step forward to share what happened from my viewpoint as well as some lessons learned during the process (for an account from my life-long friend and former CMO Jun, click here).

An overview of RewardMe

I was running RewardMe from 2010 to the end of 2012. It was generally bringing gamification into the offline retail/restaurant market through a digital loyalty program. Nowadays there are quite many of these companies, but we were the very first in the market if you didn’t count FourSquare’s “Mayorship” system.

Our product metrics were great (actually 10x more than our competitors based on what they published on their press releases), customers loved us, we were covered by large media sites including Forbes and Business Insider. Towards the end of our reign, we closed a $1.5M deal with a big chain store that would allow us to deploy our product nationwide. We were also attracting many of the biggest chains, getting multiple meetings with top executives from Carls Jr, Subway, Swarvoski, and many more.

We decided that going door-to-door was not the way to scale (I still believe in this today, even after seeing the traction of the top leaders in the industry who dumped tens of millions with only thousands of paying stores), but it’s to go through the big hurdle of closing large chains early and deploying nationwide quickly (since chains and mom-and-pops alike like to follow other chains, but not the other way around). That would give us a strong barrier to entry, as when our competitors realized they need to go after chains, we would be one year ahead and compounding our traction there.

Runway is Everything

We however, did not raise a lot of money. We raised a bit over $1M to get to where we were when our competitors at the time already raised over $10M. I wish I had knew more about my own Octalysis Framework and the 8 Core Drives at the time, but since we did not come out of a famous incubator or had a celebrity startup team, fundraising was particularly difficult (so I guess a lesson here is: join a famous incubator if you can. It would increase your fundraising hype regardless how great you can get your company to become. The equity taken is peanuts when compared to decreased chances of dying).

Because of our stellar results mentioned above, the investment/VC community was impressed with our execution, but liked the door-to-door model better because it produced “predictable growth” such as “next week, 30 more mom-and-pops will signup.” They told us that just because VPs of gigantic chains are taking 3rd meetings with us does not mean they will sign a deal with us, which was a fair statement.

So towards the end of our runway, we finally closed a $1.5 Million revenue deal with a large national chain brand, thinking it would get us our next round of funding. The big problem is, this two-year contract would at least take 6 months to implement and revenue collection had to come later.

Most investors became interested and wanted to talk more immediately, but then got to a point where they still wanted to see “predictable growth” and would like to see the second and third big deal come in before they wanted to commit. To take some personal responsibility, perhaps I just wasn’t being a great salesperson and just didn’t close the deal (now I understand it as – I didn’t use any Black Hat Gamification/Motivation Techniques that drive urgency, but merely used White Hat Techniques that makes people feel good and trust me, but no urgency to act).

During this time of fundraising, I was also heavily distracted because of a devastating issue that escalated from some work a “Top Silicon Valley Law Firm” did for us (we can just call them GD). Even though I believe initially it was an honest mistake, instead of spending more time on fundraising, I was stressfully dealing with the IRS day in and day out for many months. To be fair, I know many entrepreneurs who have had a great experience working with this firm, but according to my own experiences and especially how they dealt with it afterwards, I cannot recommend any entrepreneur I care about to work with them (email me if you want details – I’m scared.) Lesson here? Don’t take every sentence as truth just because it came out of a prestigious firm – especially if you are on a “startup deferred payment plan.” Double check and use common sense.

At the same time, when we still had a few months of runway left, we realized how VCs liked the predictable mom-and-pop growth, but we didn’t think door-to-door was scalable (in fact we were rejecting small stores reaching out to us since we only had very limited resources and needed to focus on supporting the chain stores). We started to setup the first self-serve freemium program in our industry, hoping to capture our daily inbound leads. 

At this point, we were at the end of our runway, and since we (or rather, I) couldn’t raise our Series A with the traction we had, we were in big trouble. Our existing investors however, were very excited and impressed about our progress and execution, so they committed a lot more money to get us to the place where we can close those other big chain stores that are excited to sign-on but still waiting on the bureaucracy. Literally, our current investors were at the point of, “Hey, what was the wiring information you gave me last time? I can’t find it anymore but I’ll wire you the money as soon as I get it!”

However, this is when the Big Burnout happened in our company.

The (Anti) Climatical Fall of RewardMe

Continue reading A CEO’s account of how his Startup Failed (RewardMe)

A Call for Guest Authors

Guest Author image of Uncle Sam's famous poster

This is a call for writers to author guest posts that focus on motivational design and Octalysis analyses.

As you’ll see on Wednesday’s post from Steven Egan, we’re looking for authors that are just as excited and thorough at understanding the intricacies of good human-focused design and want to share this knowledge with the world.

If you are interested in authoring a post or sharing your Level 1 Octalysis certificate analysis, get in touch with me at yukai@yukaichou.com

Why I am helping Captain Up as their Behavioral Scientist

Captain Up Gamification

So some of you might know that I recently started to get involved with Captain Up as their Behavioral Scientist, which is mostly a fancy title for an Advisory position to help them become more successful.

I thought this would be a good opportunity to explain why I decided to take on this role.

Why Captain Up

Many of you know that I have been using Captain Up’s platform on my own site for a long time now. At the beginning I was looking for a variety of Gamification platforms to experiment and research on, and most of them either required too much setup know-how (I am not a programmer), or is very limited in what can be customized.

My friend Andrzej Marczewski recommended Captain Up to me and since I respect his opinion I decided to give it a try.

The setup only took a few minutes, and then I spent a couple hours customizing it to create challenges and language that fits my site. I even documented my thinking process in this blogpost (as well as my upcoming book).

Too friendly and enjoyable to quit

The team at Captain Up then reached out to me and asked if I needed more support. They proactively helped me on all my questions and needs, and it actually created a lasting impression: “Wow, I would love to work with these guys at one point.”

After a while, I was ready to move on and study other Gamification platforms, but then I realized that my readers loved the current Captain Up one so much, they kept on asking for more challenges and tried to level up more. Many would say they were trying very hard to level up or reach the top of that week.

That was to some extent expected, since the design is meant for people to fall in love and stay engaged with the experience, but it nevertheless gave me great emotional encouragement, so I decided to just stick with it and use it for my blog.

Making videos for Captain Up

Eventually Captain Up asked me to make some videos to explain to people how to use their platform better, so I made a short series of Gamification Videos called the Engaging Website Design series for them.

They were made in similar style to my Beginner’s Guide to Gamification Videos, but with a strong focus on HOW to do these things via Captain Up.

It was useful because I regularly get questions from my own readers on how to use Captain Up better, so now I have a great place to refer them to.

Taking Captain Up to New Heights

Even though Captain Up is a great platform, they are still very young and still trying to cover all the amazing features that people want. Since I am using their platform and my readers all depend on Captain Up to create more enjoyable experiences, I thought I should get involved with how the product evolves and how they incorporate sound principles of my Octalysis Framework.

Because of that, when they reached out again to talk to me, we quickly reached an agreement where I would try my best to help them become a great platform and something that can implement all the Core Drives via unpredictability, meaningful choices, and social platforms.

This is an exciting journey. As my own company The Octalysis Group is growing substantially, I don’t know how long I will be able to stay committed to Captain Up, but as of now I’m looking forward to make them as successful of a company they can be. Hopefully my involvement will help turn them from a great product/platform to a great company.

 

New Slidedeck: The Professional & Spiritual Life of Yu-kai Chou

My Life Beyond Gamification

You may have noticed, I’ve been pretty open about my Christian faith on my websites and social profiles. It doesn’t mean I am asserting my own beliefs onto others, and I’m certainly not claiming that people who don’t have similar beliefs are worse people, but since this site is YukaiChou.com, I figured that Who I am (Taiwanese Third Culture Citizen), What I believe (Christian Bible), and What I do (Gamification Designer and Entrepreneur) are all topical and relevant here.

The above presentation is the most complete document of my life, where I lived, some obstacles I faced, companies I started and how I came to faith from a skeptic who used to challenge and make fun Christians. I certainly know how annoying it is to be preached upon with irrelevant circular logic and accusations of not having faith in something that just sounds ridiculous. I generally just offer my prayers when people seem to be in need, and generally they do appreciate it.

Nowadays, publicly proclaiming about one’s Christian faith is like the new walking out of the closet (though I do have a lot of empathy of the sufferings of those who do that, as well as admire their courage of doing so). You feel that people instantly start to judge you. Publicly sharing about my Christian faith has also denied me some opportunities. There have been  companies that decided not to have a partnership with my website because the author of the site states that he is a Follower of Christ. Perhaps even some of you would stop reading anymore after you see this – sometimes I switch from being in a position of being respected to needing to defend my own intelligence. I’ve been on the skeptic side – I know (I used to think a lot of the most famous Christians are all actors. That’s worse than intellectual naivety – that’s morally dishonest).

The renowned author Malcolm Gladwell recently became a devout Christian too. Chi-Hua Chien, Partner of the top VC Firm Kleiner Perkins, has been a devout Christian for many years too. Clearly there has to at least be something there right?

Anyhow, I was invited by a Christian organization to talk about my experiences, so I did a talk like that for the first time in my life, and I thought I would share it on my blog too. If it offends you (I don’t see why it would – it just talks about my own experiences), then move on to other cool stuff in gamification that I write about. But perhaps it may help a few people as they deal with failure and struggles.

I’m generally (and honestly) quite busy to make time for everyone that reaches out to me on my site for chats, but I’m happy to make time and pray for anyone if you see value to it. Also, I’ve actually really into talking about hard and challenging questions people have, even if it is rude. So feel free to shoot them over.

Alright, enough defensive writing. Stay awesome, and enjoy the slides 😉