Three years ago, I sold my startup because I was an idiot
Three years ago today, I sold the assets forming Feed Digest to Informer Technologies, Inc. It has since been rebranded to Feed Informer but is still operating mostly as it was.
I made a nice amount of money from it and I don't regret the sale, but, ultimately, I was dumb for letting Feed Digest to get to a position where it was better to sell than not. I need to go into some background for you to see why.
The genesis of Feed Digest
Feed Digest was a pioneer in "serious" RSS (and Atom!) feed manipulation and syndication services. It wasn't the first, but it was the first to seriously try to capitalize on the idea rather than offer these services as an "extra" on something else.
Users included NASA, the Smithsonian Institute, MIT, and, most importantly, the Denver Post, one of America's top 10 daily newspapers, who used Feed Digest widgets all over their site. About 250 million "digests" were being served per month by mid 2007 and from the outside, it looked like a promising business.
Feed Digest spawned from a side project called RSS Digest whose main goal was to take my Delicious links and automatically put them onto my blog. After hundreds of others though it was a great idea, I started to take donations (several thousand dollars in a few months - not bad for 2005!) and let people use the tool too. From this, enough promise was shown that I decided to "go pro" and a month before launch, Kelly Smith structured a deal for Curious Office to make an angel investment in my idea (for this gamble on his part, I will always be grateful).
A popular service, headed by a business dunce
The nascent business had a problem though - me. Though I'd been working for myself for 7 years before launching Feed Digest, it would be an understatement to say I was naïve about the concerns of "running a business." Feed Digest's pricing was ridiculously low (even the biggest "enterprise" customer was only paying $200 a month - most users were $25-50 a YEAR) and while it was in profit from the third week and had a flood of customers throughout, it was only making several thousand dollars a month after 2 years. Enough to keep it going as a "job" for me, but not a serious business that warranted further investment.
As with most webapps, a lot of hope was put into developing an all-magical "version 2" and I made good progress with it. In 2006 I got an e-mail from Michael Arrington who wanted to write about Feed Digest for TechCrunch (yes, one of the biggest and most influential tech blogs in the world). Being a closet perfectionist, I asked if I could hold until the magical version 2 was released. A crazy mistake. Michael has been kind enough to follow me on Twitter and occasionally throw a comment my way in the years since, I hope I can make up for my stupidity by giving him a good story one day ;-)
Service was always a massive deal for me. What I lacked in business acumen, I made up for by delivering the best service I could. Every e-mail got a response within hours, every criticism either resolved or accepted gracefully. I forget the exact numbers but in well over 1000 transactions there were certainly fewer than 5 refunds ever requested (and all were given). Users genuinely loved the service.
Service is only one leg of the stool in any business, and without a serious idea of how to grow the business it was destined to stay small fry unless someone else took notice. In mid 2007, I got a terse e-mail from a Russian guy asking if I wanted to sell Feed Digest and, if I did, his company would be interested in buying it. Negotiations were quick and my angel investors - who were supportive, but a little forlorn over my inability to drive it as a "real" business - gave the thumbs up, since the number mentioned ensure they'd get a healthy return on their investment. The deal was sealed by the end of July 2007 (no big story here, both sides did due diligence on each other and a good escrow was used) and the money hit my bank account in mid August.
It wasn't a lot of money. Well, it was for me. It wasn't a million dollar acquisition, but certainly more than most of the population will earn in a couple of years. A low six figure sale. For something merely making "a living" and keeping me up all hours of the night, I think it was a good deal. It turned into some healthy savings, a wedding, a car, and a chunk of the house we live in now, so I can't complain.
The contract I signed with the buyer meant that I was contractually obliged to defend them against any third party claims over patents, copyrights, and the like, for three years, ending July 30, 2010. Today, then, is truly the day all ties with the service are severed. It's the final period on the last page of the book.
What I've learned since
A benefit of having some savings is that I've been free to do mostly whatever I like since then. I've tried a lot of crazy ideas, got into pro blogging (with Ruby Inside), read a ton of books, worked on open source, and devoted a lot of time to learning and experimenting with business. I've got to know a lot of people in business and get a feel for how things really work, if just at a high level.
One finding is that many people running startups are no smarter than I was when I started Feed Digest. The difference, though, between me and the successful founders are that they are good at delegating responsibilities for areas they're not strong at, whereas I took a strong DIY approach, building not only the technology, but keeping books, design, marketing, and so forth. Not only that, but I wasn't brave enough to charge a sensible rate for the product and didn't understand that I should define my market rather than sell $11.99 annual accounts to people adding widgets to their personal homepages.
I've not become a Donald Trump, but I can now see what I was doing wrong and how I could have turned Feed Digest into a "serious" business (where "serious", at my kindergarten level, means enough revenue and growth to scale to multiple employees and make serious inroads to enterprise deployments of our services).
Not quite the end
Despite my Feed Digest story ending, it has caused me to reflect. I've written about the business side of things here, but the technical opportunities have changed significantly since early 2005 too. Building a Feed Digest style service now is incredibly easy.
Making something seriously powerful and sellable at an enterprise level is no longer prohibitively expensive, just dependent on having the right know how. Which.. I have. I've been building feed processing and manipulation systems in the background for other projects (such as coder.io) in the interim. This has only just made me think: am I crazy for not getting back into the feed processing and manipulation industry again?
So, I'm investigating it - slowly. I know what I'm doing tech side. I have enough contacts now to get things rolling. And I have a lot more grace and life experience to actually ask for help and be brave in making business decisions than the 23 year old me ever did. The industry is still small but, importantly, still growing (Superfeedr is a notable new player) and still considered important by the right people behind the scenes.
Should I get back to what I know and build a "serious" high quality product or service on my existing knowledge base? Honestly, I don't know, but it's going to be interesting trying to find out. After three years, it no longer feels like an unethical thing to consider.
Added: I want to take this opportunity to thank Marshall Kirkpatrick - now of ReadWriteWeb - who championed Feed Digest quite a lot in its early days. He is easily the most RSS-obsessed person I know this side of Dave Winer.