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.