As I conveyed in my previous post about entrepreneurial risk management, I have learned to be more afraid of not trying than of failure. I worry about not moving fast enough to try an idea out or start designing and coding a new feature as a prototype than about things not working out. Sometimes, however, even with the best of intentions, things don't work out for your startup; the company fails. Now, most startups I have been told run out of cash before they start to generate enough revenue to cover their expenses. In the case of Convoq/Zingdom, Christopher Herot, co-founder and CTO, was kind enough to talk to me about the demise of his latest venture and his perspectives on what could be learned from it from an U.S. East Coast point of view.

I was in fact looking for a communication platform to use at Elluminates Software for both our internal and customer meetings and had come across Convoq several years ago. Convoq had piqued my interest because the pricing was competitive and its design seemed intriguing. I went to look for the product again recently and found that Convoq's site was down. Instead, I found Christopher's post about the company being shutdown. I would have probably moved on but in reading his posting, he mentioned that "If you want to do a consumer-facing product on the East Coast, stay engaged with the community in Silicon Valley. By the time you read about something in TechCrunch it's too late."

Given that I've always started U.S. East Coast based companies, I have always felt that the bar was higher here than on the West Coast due to cultural differences. I wanted to understand Christopher's statement more, and below is an excerpt of our conversation:

Erik Levy: Can you give some background on what you have been doing lately?

Christopher Herot: Sure. Last fall I wound up a 5-year stint as CTO of a venture-backed startup in the Boston area. This year I have been doing consulting for a number of companies and most of them are on the West Coast as it turns out.

Erik Levy: Tell me about that - you mentioned in your blog post that there were issues between U.S. West Coast and East Coast in terms of engagement.

Christopher Herot: I would say the experience brought into focus the different attitudes on the two coasts. The West Coast in general will accept a higher level of risk, especially when it comes to consumer products & services.

Erik Levy: Is it the venture funding, the personnel involved, where is the risk management occurring that is different?

Christopher Herot: Not to say there aren't VCs and entrepreneurs on the east coast that will do consumer, but it's more the norm in Silicon Valley. I wouldn't lay it all on the VCs. Indeed a lot of Boston firms have been looking to other geographies to make investments in deals they couldn't find here: India, Canada, etc.

Erik Levy: How did that play out at Convoq/Zingdom?

Christopher Herot: It wasn't so much an issue for as, as we were doing a business-oriented product.

Erik Levy: Was it more an observation from something else?

Christopher Herot: It's more an issue for other companies I've seen go for funding.

Erik Levy: Do you think the velocity in, let's say Boston, is different than in Silicon Valley?

Christopher Herot: I think people throw themselves into stuff with more force [in Silicon Valley]. As an example, we experimented with a consumer version of our video conferencing product at Convoq but we saw it as a way of enticing people to buy the paid version. So the consumer version was limited in functionality and time. But that was back in 2002-2003. If we had done it more recently we would have just gone for building the user base and worried about revenue later. That's an attitude that I think caught on earlier in California.

Erik Levy: Do you want to get back into a startup or where is your mind set now?

Christopher Herot: Oh, I intend to get back into running something. Being a consultant exposes you to a lot of ideas and people, but in the end it's more satisfying to have control of the execution. So I've been out gathering ideas for a while.

Erik Levy: Is there anything else you want to talk to about your experiences with Convoq/Zingdom?

Christopher Herot: The one thing I keep in my mind is the need to talk to customers. As a technical person (CTO, etc.) it's easy to take the attitude that that's the problem for the CEO, or the Sales Department. But it's important for the people building the product to have a feel for what the customer wants and not get locked in the game of waiting for the Marketing Requirements Document and then complaining if the marketing people misread the market.

Erik Levy: That is probably true for all businesses, right; they need to understand their customers?

Christopher Herot: Yes, but it's tempting to start growing all the functional parts of the business before you have proven that you have a reproducible sales model. Then you fire the VP of Sales when the product doesn't work. Then you fire the CMO when a new Sales guy doesn't fix things. Then you get a new CEO.

Christopher Herot: I would advise people to read Four Steps to the Epiphany by Steven Blank. Nothing revolutionary in there but he brings a lot of these ideas together.

Christopher Herot: More useful to people on the East Coast is do you want to locate in the city or the burbs? Convoq was the first company I did in the burbs.

Erik Levy: What impact did that have?

Christopher Herot: I wouldn't do that again - at least not for a media or consumer-oriented company. You get a more conservative attitude on the part of employees. For instance, every time we were about to go for a new round of financing we would lose a few employees. We were never in danger of running out of cash, but people in the burbs are more likely to have a big mortgage, two kids, and another on the way. If there is uncertainty about the future they will take the first job that comes along. People in Cambridge or Boston are more likely to figure they can just move in with their parents or that their roommates will carry them for a few months.

Christopher Herot: In that way, the city is more like Silicon Valley where if your company goes belly-up you can walk across the parking lot and go work for someone else. I think you need to match the risk profile and timetable of your company to the risk profile and timetable of your employees and investors. The West Coast seems to have a lot of people who have made some money at a previous company and will live on that while they work for free at a startup. You don't see that as often in Boston. Maybe it's because people worry about their heating bill with winter coming.

Erik Levy: Was it funding that was the killer for Zingdom?

Christopher Herot: Funding was never the problem for Convoq/Zingdom. Except that at the end, the company had just been in business too long for the timetable of a VC. After 5 years or so a company either needs to take off or be put out of its misery. Companies that are internally financed can live on forever as lifestyle companies. Whether that's a good or bad thing depends on what your objectives are. I was never into the lifestyle mode.

Erik Levy: Any other experiences you would like to share?

Christopher Herot: I think it's possible to do something big and interesting on the East Coast, but the entrepreneur needs to get out of town occasionally. So I make a point to keep up with my industry friends on the West Coast.