My response to Quora question "What are your biggest regrets when starting a company?"

Biggest Regret:  Spending too much money on paid online marketing without enough capital to do so.  

Lesson Learned: Don’t confuse “market-testing” ad spend with “searching for scalable marketing channel” ad spend.

In June 2012, we were halfway through the DreamIt Ventures accelerator program, and we began market-testing Dejamor.com.  We deployed seed money from DreamIt on Facebook Ads.  Eight weeks later we had 100 customers and acquisition cost metrics trending in the right direction.  After our “TechCrunch Initiation” in August, we were hungry for more growth and decided to double down on various paid marketing channels. 

Here’s the problem: Searching for a scalable, repeatable paid marketing channel is like drilling for oil.  It costs money to send to setup rigs on suspected oil wells. You spend money to setup a rig and tap the ground.  Most of the time you find nothing.  Every once in a while you find a pocket of oil. Alas, oil pockets – like marketing channels – can be deep or they can be shallow.  If you hit a shallow pocket, you’ll spend more money to repeat the steps above.  If you hit a deep pocket, you’ll spend more money to setup more rigs. Overall, this process takes considerable time, money, and effort.   

If you’re unable to spend large amounts of capital (i.e., sustainably spend ~$5k to $10k per month), you’re most likely wasting your time barring exceptional circumstances. (Yes, you can get lucky on your first drill site, but don’t count on it.)  It’s not just about the money.  Searching for oil takes large amounts of time and mental energy.  Managing ad spend, drafting new ad units, and reviewing analytics to gauge success, are but a few tasks that will eat up your time. Worse still, the amount of time you spend is roughly the same whether you’re deploying $500 or $5,000 in ad spend.  Because your time is too precious, $500 in monthly ad spend will unlikely yield an attractive return on investment for your time. Seriously, do the math. [1] 

All told, we failed to find a scalable, repeatable marketing channel after spending tens of thousands of dollars. It was a big bet that didn’t payout.  And it burns even more knowing that much of that money was from my personal savings. Yet, even as I write this, my mind tries to justify that it was “good and necessary” to learn what marketing channels would 

work.  Beware this alluring logic.

So what could I have done differently? I could have focused more on contacting bloggers to talk about our product.  I could have paid for an internal blogger to generate more SEO-friendly posts. I could have hired employees to reduce burnout among overwhelmed teammates.  Or I could have kept my money to elongate my personal runway… 

[1] In case you’re curious about the math, here’s a scenario: