In October of 2008 I launched a company called SocialDreamium LLC. I started out doing social web consulting work and used the revenues from that to fund the development of our first product. I recruited a co-founder and development team in December 2008 and we “broke ground” on our product just before the New Year.

Now in late-May 2009 we’ve decided to shut down SocialDreamium and move on. What did we get out of the business? A much better understanding of the social web landscape and significant entrepreneurial lessons learned. As much as I don’t like writing this post, it’s extremely valuable for all of you who are, or will be, in the same boat. The startup road is a narrow and rough one to travel along, my only hope is that you will be smart enough to learn from my mistakes. We weren’t just unlucky, we screwed somethings up; below are many (but not all) of the top lessons I learned from the 8 months we devoted to SocialDreamium.

Project Management Is Not Fluff

This is an area where I’ve probably learned the most. When I started out with SocialDreamium I thought that this project would be completely different from any large project that I’ve managed at work. I thought that the PM style I execute at work was much different than the style required on a startup. Dumb. Project management is project management, and it is important for startups because at the core it’s about getting things done. Execution and using resources appropriately is the name of the game.

Deadlines became a large issue for SocialDreamium and a good project plan helps to manage risk. It helps keep open and responsible communication between team members and have a clear understanding of who is accountable for what. With a good project plan you will keep costs lower (mostly time) and work more effectively because of the plans inherent ability to prioritize your work. I will now take more time to plan and document the goals of each step. Milestones and deliverables to hit those milestones are critically important.

How to Handle A Miss

When starting up you better love mistakes because you’re going to make many of them, the key is learning from them. I made the mistake of not handling misses appropriately during the early stages of SocialDreamium and it hurt us in the long run. Because our team had such a steep learning curve in the early days we missed a few of our expected development deadlines. When these misses happened I got caught up in the details… Who was supposed to do this design? Why wasn’t this bug fixed? What do I need to do to help fix the issue? These were all good questions but not the one I should have been asking.

The question to ask yourself when you have a ‘miss’, is why. And, you ask yourself that question 5 times to get to the root cause. Say it with me now… Why, why, why, why, why? By asking why 5 times you’ll get to the root cause and be able to eliminate the cause of the miss. As you eliminate causes of misses you become efficient, quick, and a powerful team. Next time I’ll ask why much more often.

Communication Strategies

At SocialDreamium, even right off the bat, we were a global company. I was based in Milwaukee and my co-founder @davidabrahams was in Australia, along with our development team. Startups are difficult enough without this kind of geographic challenge. However, it worked in our favor because I did all my work on SocialDreamium after 6pm which is 9am the next day in Sydney.

Communication became an issue in my lack of schedule and consistency. Because both Dave and I had full time jobs outside of SocialDreamium it sometimes had to take a back seat, and this introduced variability into our communication schedule. I’ve now learned that having a consistent and scheduled communication strategy is super important. Until you get to the point that you’re talking everyday (and obsessed to the point you don’t want to talk about anything else) you should keep a strict schedule. Usually, if you’re making good progress 2 email conversations a week should suffice. However, email alone is not enough. You need to have another channel for daily updates. We used Basecamp for our project planning and communication and I would highly recommend that product, but like anything you have to use it to find the value from it.

Be Realistic About Team Core Competencies

Our team of developers was pretty strong. They could diagnose an issue fairly well and act on a solution. Where our team lacked skill was design. We could make things work but making them look pretty was tough for us. To be competitive and drive user adoption, interface design is mission critical. I should have spent more time researching (free material) on UI and layout.

To solve this issue before you have it, recruit appropriately. You wouldn’t hire college grads to consult CEO’s (or maybe you would) so don’t expect that you can do the design if you don’t have design skills. Make sure that you understand the needs of the business and product before you build your team. Another way to put this is, build your team around your product, not your product around your team.

Know Your Product and What Goes Into It

I didn’t understand the technology that was going into SocialDreamium. I still don’t. We decided to build REACH our flagship (but never launched) product in Microsoft .NET. Everything I read about .NET lead me to believe that it was old and that finding talented “social web-ish” developers would be difficult. I was reassured that there is a large development community for .NET and because .NET web development was our teams core competency we were in a good spot. To be honest with you, I still don’t know what the right answer to this was.

What I did learn is that if I’m going to try and start a company where we build houses, I better understand the wood, the brick and the morter. I need to understand what it takes to build a damn house even if I’m not the contractor. It’s absolutely my responsibility to understand the resources that are going to go into my product and business. I don’t expect to be a developer, but I sure do need to understand our information architecture and how one language over the other will affect speed of development, scalability, and anything else that will affect our business processes.

Can you really compete?

Don’t just make a 10/20/30 pitch listing your competition and think that that is enough. It’s not even close. This mistake, I think, is the largest one that Dave and I made in the process of starting SocialDreamium. We knew who our competitors were at the point of launch but we failed to think about who else might be our future competitors. We also failed to analyze if it was actually possible to accomplish what our competitors could accomplish with the resources we had. Startups compete with giants like Microsoft and yes, even Google all the time but sometimes you have to realistically look at the likelihood for success when your “out-resourced”.

The 2 issues were future unexpected competitors and being out resourced.

1. Our future competitor that was unexpected was Seesmic. They developed the Seesmic Desktop and I was honestly blown away. It was so much better than Tweetdeck (another known competitor) and it literally took the wind from our sales. They were extremely well funded, already had tons of press, and the launch was enormous. Their feature set match ours so closely that it was scary and it was our own fault for not being able to get something out sooner in order to compete.
2. Being out-resourced will always be an issue for startups. But in order to overcome this issue you need to make up for it in some other way. A new revenue model, a feature set that is extremely innovative, or a marketing campaign that can change the game (GoDaddy).

Be Honest with Your Passion

This is a lesson I learned without making a mistake. You have to ask yourself, why am I getting into this industry? Having passion for the industry allows you to understand it, grow within it, and be innovative and competitive. I love studying why and how people communicate. I enjoy trying out all the newest tools to do so, and I love taking one form of communication (Twitter) and translating that into other forms (in person).

When we started SocialDreamium our goal was to create a tool that allowed startup community managers to grow groups of people around a cause or a brand better than anything they’d ever used. We loved talking about how people use Twitter and Facebook and blogs to reach people and engage them. We had a solid understanding of the space and where it needed to go. We created a product POC that was killer and that could’ve been a game changer. Our issue was not our passion for the space, our issues lie in the above lessons learned.

I hope that you’ve learned something from my mistakes. Learning from others experiences is so important in entrepreneurship. Here is another great example of a startup post mortem that you can learn from. Don’t stop learning, and don’t stop daring to make mistakes.

image via PieterMusterd

Today, I’m announcing my plans to close SocialDreamium, LLC.

This decision, which came about over the last month or so, was a challenging and complex one. Either way, I’ll tell you that this decision revolved primarily around money, competition, vision, and team: maybe the most critical factors of a successful startup.

SocialDreamium was attempting to compete is one of the most crowded spaces on the web at the time. We were building a social media application that would aggregate Twitter, Facebook, and other popular networks. Sound familiar? There are many companies with significant funding and resources who are developing similar applications so it became very difficult for us to see a successful path through that market. Our team was strong but faced many challenges of communication and execution. In short, for us to really drive a lot of users to our product over some of the other startups in the space was like trying to put out a fire with a squirt gun.

Overall, I’ve come out of this experience with significant lessons learned that I definitely plan to share in detail over the coming weeks. Our team was able to complete the version one development of our product, REACH, but as we were coming to the finish we said to ourselves, “This won’t compete, do we really want to open this up to the world?” My plan is to blog about these lessons learned to help me institutionalize them so that I don’t make them again in the future. I hope that you’ll follow my RSS to get the details and benefit from my mistakes. A few of the mistakes I’ll share are:

• Not focusing on traditional project management
• Implementing corrective action, managing misses
• Communication strategies & plan
• Understanding team core competencies
• Know your products & the tech
• Be realistic with your competition
• Having passion

Personally, I’m not even close to done. My hunt for the dream has only just begun and my eyes are wide open for the right project or opportunity. As you may have read, I opened The Renliv Group to manage different ventures. Right now I’ll continue business consulting for companies looking to improve their social web presence and internet marketing effectiveness. I continually learn from the people I work with and I want to help others with those goals. You all followed the progress of LibraryForLaos.org and watched us raise over $1800 and fund 5 reading programs for children in rural Laos. This was one of the most rewarding projects I’ve ever worked on and I’m excited to be able to help with projects like this with the time I’ll now have. Giving something back and helping others definitely puts the dream in action.

I want to thank two people specifically for their support and advice along the way. Daniel Debow, the CEO of Rypple, has been a sudo adviser to me through this process. He not only was one of the people who inspired me to launch SocialDreamium in the first place, he also provided guidance along the way. His experience and friendship will surely continue to be an asset to me as I continue the search. Also, Ross Kimbarovsky, CEO of crowdSPRING, has continually supported my ideas and excitement. He forced me to hash out ideas for the product and find clarity in its goal. Ross provided challenging feedback for how to handle the “startup at night” lifestyle and why its important to look at the big picture. To both of you, thanks guys.

And last but not least, I have to say that David Abrahams my co-founder and head developer of REACH was awesome to work with. It’s disappointing that nothing ‘publicly’ tangible came of SocialDreamium but the experience for me was phenomenal, I learned a ton from Dave. He has got to be one of the easiest guys to work with and I’m certain that if I was based in Sydney or if he was here in the Midwest the outcome would have been different. Cheers buddy.

More to come…

Don’t quit. Don’t panic. Don’t give up. Press on and be a finisher. Do the work God has called you to do, and see what happens when you reach for the things that are ahead.
Many of life’s failures are people who did not realize how close they were to success when they gave up.
Thomas Edison