TechCrunch reported the end of ProtectMyPhotos, a backup service that competes with Mozy (my service of choice), a few weeks ago.   David posted today another candid interview with an entrepreneur — in this case ProtectMyPhotos founder Cliff Shaw — who is refreshingly open about what went wrong.  A few nuggets I found interesting:

• Be passionate. “We were bored with backup … an idea that put us to sleep.”  It’s impossible to run a small start-up well if you’re bored.
• Know your market.  “On paper, ProtectMyPhotos looked like a slam dunk … People may care - but do they care enough to part with their money?”  Mozy and Carbonite seem to have cracked this code, but, for whatever reason, ProtectMyPhotos couldn’t.  First, know that there is a market.  Then, make sure you know how to serve it.
• Build-in viral.  “ProtectMyPhotos had no way to promote itself to the friends and family of its members.”  If you’re trying to stay small and limit marketing spend, enabling your users to promote the service for you is essential.  Even if you have sizable marketing budget, viral should be part of your core strategy influencing not just into your marketing plan, but your product design.

Cliff offered some specific numbers.  They launched in October, 2006, went through $280,000, and earned 4,400 customers.  They also kept very small - 2 founders and a part-time developer - which Cliff took pride in.

“From the outside, with a 2 person team, we made ProtectMyPhotos look like a heavily-funded market leader.”

While I agree with his suggestion to “fail quickly,” I have to wonder whether the business would have been better able to compete with a slightly larger team and more money.  He says “we could’ve lost $2.8 million” but it would seem they also could have sold for $76 million. 

In the end, I think it’s about balance.  You don’t need to raise VC, but you need the right team, funding, and strategy to create the right product at the right time for the right market. 

Easier said than done.  Luckily, when guys like Cliff share their insights about failure, we can all learn a bit and have a better chance of being successful ourselves.

I was able to attend the Potomac Officers Club event last week which, contrary to what a lot of people assume based on the name, has nothing to do with the military.  It’s a CXO-only networking group that brings in notable speakers every month for a meeting at the Ritz in Tysons.  Most speakers are business-focused, as the POC has hosted Jack Welch, Charles Schwab, and Bob Johnson.

The November event did have a military slant, however, and featured Lieutenant General John F. Sattler, Director for Strategic Plans and Policy, J-5, The Joint Staff.  General Sattler is very close to the activities going on in Iraq and Afghanistan.  He gave the room of about 80 executives an overview of what is happening right now in those places, and how it relates to the U.S. strategy to fight terrorism.  It was an engaging discussion, and refreshing to hear information and personal opinion directly from military personnel with direct knowledge of and experience with the situation.

My dad and both grandfathers were in the Navy, and I have a ton of respect for our military and those who serve.  I also find the military culture to be fascinating, and often relevant to how businesses operate — but not always in clear ways.  I wrote down a few quotes from General Sattler that I found particularly interesting (may not be word-for-word).

On the importance of finding strong leaders:

“We’re always asking, ‘where’s Spartacus?’  If you put a lion in front of a flock of lambs, you’ll fear those lambs.  But put a lamb in front of a pride of lions, and you’ll beat those lions everyday.”

When asked if a change in the administration will be disruptive to the current military strategy, General Sattler said this about following a leader:

“In my 36 year career, I’ve been through multiple administrations.  The Commander in Chief is the Commander in Chief.  As long as the order is moral and legal, I’m going to follow it.  I’m not supposed to have a personal bias.  If I have a personal, I’m going to resign.”

My favorite quote of the day, which I find relevant to any organization structure, was:

“Responsibility minus authority and resources equals failure.”

Derek Scruggs, founder and CEO of The Enthusiast Group, gives a candid interview to David at Colorado Startups.  His company just decided to shut down after working for a couple of years to create a series of niche social networks targeting outdoor enthusiasts with sites like Your Cycling and Your Running. 

With web businesses hot again and huge acquisitions grabbing headlines, it’s good to get a dose of reality.  Most startups (web or otherwise) fail.  Not surprisingly, when they do, most of the founders don’t feel like talking about it publicly.  Derek’s willingness to share his experience is valuable for any would-be entrepreneur, but it’s particularly relevant for anyone considering launching a web-based business.