My Favourite Failure: We built cool stuff but it didn’t solve problems - Kim Little

0:00Let me tell you a story. Four German friends met at university. One of their mates was a CTO at a small company who was stunned by the serious lack of process for recruitment or payroll and absolutely no software. in sight. It was so inefficient. This inspired the friends to found Personio. Since then, they've built it into an$8.5 billion company, Europe's biggest in the space. Not bad for a bunch of students, huh? The reason they've got so big is they solve a big problem for business leaders. They make tedious, time-consuming HR processes easy, so you can focus on more important things. Their software handles stuff like booking time off, of course, but also includes joined up experiences for hiring, onboarding, offboarding, reporting, you name it, they do it.

0:43So if you're leading a small or medium sized business and want to spend less time and effort on HR admin, then book a demo at personio.com forward slash secret leaders. That's personio.com forward slash secret leaders. There's a link in the show notes. Obviously, I felt, you know, like a failure at the time. That just seemed like an extraordinarily a large amount of money, even though in startup land it obviously isn't when launching a proper product. But it seemed like a lot. And I guess it felt like a failure. And looking back, it was as if we'd been sort of dreaming. Kim Little is a co-founder and CEO of the Moments of Space, a successful meditation app.

1:29But about 10 years ago, he was in a very different space. He was living in Australia, having co-founded a semantic-driven products company. Yeah, we're going to get on to what that means, don't worry. And things did not work out. He put$400 ,000 Australian dollars of his own money into it. They launched a series of cool-sounding products, but never really got anywhere. We're here to learn what went wrong.

1:59the thing is to understand this venture you need to understand the core technology they built first a vector database or what's called a semantic word space is the ability to represent content in in our case in up to 200 dimensions so if you think in what we would consider a two-dimensional space, the word Apple and pair would be close to each other because they have a relationship. So now if you want to put in the word iPhone, which has a relationship to Apple, but not to pair in a two dimensional space, you can't achieve that. But if you make a third dimension, then Apple and iPhone can be near each other.

2:38In the first dimension, Apple and pair can be near each other. And that's how now how really AI works in a way is it's creating all these dimensions of meaning between things. So we took the contents of Wikipedia and indexed that into a vector database, which effectively represented the contents in 200 dimensional word space, a bit like I'm describing. So obviously, words like job and career will be close to each other, or visa and credit card could be one versus visa and immigration. And that's how, in a sense, It's kind of the basis of AI. Obviously, AI has gone like through the roof. So we made this technology, which we thought was great and cool.

3:22And it was. And then we just thought, well, how can we build applications on top of it? Looking back now with the launch of ChatGBT and all of that, it's kind of quite, actually, we were quite on it back then, but we didn't really know what we were doing. Kim and his co-founders were all software engineers. So they had that side buttoned up. But without much of a sense of product or marketing, they ended up building stuff they just thought was cool. We built like a bunch of applications, all with a build it and they will come kind of mentality. So, yeah, the first one we built was effectively a newsreader that aggregated different news sources and then attempted to give you the news that was most interesting to you.

4:06And it would like learn about what you read and what you liked and what you didn't like. There's a whole bunch of those out there now. We built one called Celeb Tweety, which indexed all the tweets of the celebrities on Twitter. It would then analyze your social media feeds and tell you which celebrity you were most like. And we tried to build a sort of bit of a celebrity portal around that. None of these things kind of really worked or got much traction. We then sort of pivoted the first product, which was called Enlightened, into the sports industry. we managed to um get a partnership with an ex-Australian cricketer or a couple of cricketers we then sort of pivoted into sports news and aggregating that and then learning what you like what you don't like and that was called Starspoon um and then the second to last was we made a like social actually as we went more into the sports industry uh in Australia we learned that a lot of professional sportsmen will kind of go out late at night, get drunk, and then say something they shouldn't on social media, and then create all kinds of backlash.

5:18So actually, we made a platform that would monitor people's tweets and posts, and actually moderate them, and hold them in a moderation system before they went out, with the idea being to prevent athletes saying things they shouldn't late at night and that was called uh starshell and then the final product and the crazy thing was we decided to build like five different products simultaneously uh was called kudos chat search for skype and back then skype was like really big but the search capability within it wasn't wasn't very good and also if you were using it for business there was no like enterprise-wide search so we actually uh made a product that would index or your Skype chat history, and we had a business version.

6:04And actually, at the time, it was before Microsoft bought Skype. We were featured on the Skype App Store. But then Microsoft acquired Skype, and they shut down the App Store. And that was the end of one of our products. As Kim would tell you, that's a lot of products. Too many products. Focus is so important in startups, and ideally building something that solves a real problem. To be fair, their Skype idea was actually doing that before the Microsoft acquisition, but that was too little, too late because of their cash position. My two co-founders and I, we'd hung on for dear life, of course. It was our dream.

6:43Let's go and build something cool and create a startup and make lots of money. And so you hold on really, really tightly and you don't want to let go. And we'd all kind of devoted everything to this. They'd left their jobs. They were sweating away on small salaries and so forth. So there were just a number of what we actually had within the Star Spoon product. We had some influencers recommending content on their own social media channels. And we thought we might find a way to create this affiliate revenue. and then we discovered that uh the metric the metric system was like double counting all the impressions and the views coming into the site so we thought this celebrity had brought you know 250 000 visitors and we thought oh right we can monetize this and then suddenly we discovered that it had all been double counted uh through some technical error and in actual fact it was half that and so suddenly that just like fell away and we realized it just it was there wasn't enough ability to make money there using uh even a even a decent celebrity so i suppose it was all these things sort of falling falling away and realizing we really didn't have anything there we thought we had something in starspin and we didn't we thought we had something in starshell and we didn't and then could us chat search and we didn't and then we were in a position where when we were trying to raise money having to say to investors that you know the runway only had three months on it and then suddenly it was like just a chicken and egg No one wanted to invest in a company that had such small runway.

8:20So, yeah, we actually ended up going go-karting that day. We decided, right, that's it. And then we went off and we went go-karting on the Sunshine Coast. And it kind of felt liberated afterwards in a way. Like you just hold on tight and then you let go and go, OK. Before they went go-karting, one of Kim's co-founders turned to him and said, I think we should call it a day. So what did Kim learn from those years of toil? There should be a degree for starting startups. It's such a science and there are so many things. There are just so many different facets that you have to understand from engineering to product to audience to positioning to marketing to investment.

9:04And the fact is you're just never going to know all of that. But the issue is you don't have any money. So you can't hire people. Well, first of all, you probably don't know you need these people. And then if you're lucky enough or get to a point in your life where you do know you need them, you need the money to hire them. But it's, you'll hear the stories of, you know, two guys in a garage built some product and it was worth a billion, you know, billion dollars or a billion pounds. But startups are a science and product development is a science and marketing and channels and acquisition and custom acquisition is all a science.

9:41And it all requires absolute experts. So we were good on the engineering, but we just weren't good on anything else. So I think it's just, it takes a long time and a lot of experience to understand, particularly as like a CEO, which is I'm lucky enough to now be all those facets and everything has to be singing. You know, your engineering team has to be singing. Your product development has to be on it. Your marketing team has to be on it. And, you know, it's a big, it's like a ship full of people. Everyone's got to be doing the right thing in the right way all together to make it happen. Unless you're just very, very lucky like these stories.

10:21But otherwise it's, you know, it's a slow, hard grind. And you just need so many different expertises to pull it off. was the lesson I learned or have now feel I know now. Failing is tough on the ego. It hurts. So rebuilding your confidence is arguably the next great challenge. It took a number of years. I returned to sort of ordinary employment and I let go of the start-up way and I returned to ordinary life. So I didn't really get back on the saddle. You know, I was quite, my dreams had been deflated. I'd realized how difficult it was, how naive I'd been, how much money I spent. And so I suppose I let it go.

11:11I let it go. And actually, it was so many years of hitting into this sort of meditation problem that I found the courage to give it a go again because of just how hard it was. I knew it was going to be, how much money it was going to cost, and so on.

11:57I'll see you next time.