Thoughts On Failure From Entrepreneurs Who Have Been There
Three out of four startups fail, according to the Wall Street Journal, but failure is one thing startup communities in Silicon Valley and beyond don’t seem to talk about.
I’ve interviewed a ton of entrepreneurs over the last few years, some of whom succeeded, and some of whom failed miserably. The stories of failed startups are more interesting, in many cases. You can learn a lot from failure.
You should regard your own failures as learning experiences, of course, but when you have the opportunity to learn from the failure of others, you should most certainly take it.
Entrepreneurs Ryan Freeze, Barry Maher, and Hugh Taylor were kind enough to share with me some lessons they’ve learned from past failures:
Ryan Freeze is founder and managing partner of Joint Retail Ventures, LLC. He’s been doing Web stuff since 1995, and his current focus is “changing how customers relate to retail environments and leveling the playing field for small business operators and the national brands who take the human element out of the transaction.”
I’ve been an entrepreneur all my life. In fact, this is my twentieth year of attempting to change business for good by executing my own ideas. It is an absolute fact that you will meet with much more failure than success by the strictest definition. The important thing to do is change your outlook and view “failure” as a trial, and realize there’s always something to be learned and used in future attempts.
People like to say that they were “under capitalized,” “didn’t have the resources,” or even “the market wasn’t ready.” None of that is really accurate. The two ingredients to success are effort and energy. Those who never give up and believe in what they’re doing will succeed.
Failure is such a terminal statement and I feel that it’s very misleading. The inability to adapt and align your beliefs with that of your audience can lead to poor performance. If this lingers for too long, you can be run right out of business.
I have attempted to create a ton of businesses without fanfare—a free CRM product, a collective brand for insurance agents to strengthen market position, and years ago a free pay phone subsidized by short audio advertisements. I place the failure point squarely on me in that I didn’t stick with the business models long enough to reach pivotal traction. All of the ideas were good—they were always met with interest. I simply didn’t invest enough effort and energy to make them succeed.
That would be my advice to any entrepreneur. When you give rise to an idea you must get behind it. Foster it and move it forward through perspiration. Success doesn’t just happen. Success is made, and your determination is a decision.
Times will be tough in the beginning. That doesn’t mean it’s time to quit. You simply have to change your approach. Afford yourself the appropriate time after your regular job or during your off time. If you don’t find it worth investing in, who else will?
Barry Maher is an author, speaker, and consultant whose clients include ABC, Canon, HP, IBM, Verizon, Wells Fargo, and more. His books include Filling the Glass, which has been cited as “[One of] The Seven Essential Popular Business Books” by Today’s Librarian, along with The Seven Habits of Highly Effective People and The One Minute Manager.
I’ve been involved in a number of startups, both as a founder and a consultant. And yes, I’ve probably learned more from the two failures than any of the successful ones. The five top lessons I’ve learned all begin with the word “don’t.”
1) DON’T overpay for office space or luxurious appointments that have absolutely no impact on customers. I’ve watched companies whose customers never see their offices waste hundreds of thousands of dollars in precious capital remodeling old warehouses and buying the latest and coolest office furniture, when they should have been developing their business in a garage someplace.
2) DON’T eat your seed corn. This year’s profit isn’t all profit. Much of it should be plowed back into the business. Make sure you have a cash reserve for when times get tough again. And they will, sooner or later.
3) DON’T overpay for “expert” leadership. When you decide to bring in help to run the business, don’t be overly impressed by big-name experience and huge salaries listed on their resume. First check them out in every way you can to make sure the person is everything they claim to be. (If so, why did their last employer let such a wonder escape?) And even if they are, will that expertise translate to your business? A highly successful executive at Boeing or Johnson & Johnson may crash and burn working in a startup without the kind of resources they’re used to. It’s not necessarily the same skill set.
4) DON’T wait too long to begin hiring good people. Operating on a shoestring (and a broken one at that) in my first company, I originally had to do everything myself. The thrift that made it possible for me to survive and then thrive in the beginning quickly became a hindrance when I delayed hiring people who could do any number of specific tasks easier, cheaper and far better than I could.
5) DON’T forget that it’s all about the customer, not about the entrepreneur, the product or the company. Which means finding out about the customer is far more important than explaining that deal of a lifetime you’d like him to believe you’re offering.
Hugh Taylor is the president of Taylor Communications and author of The Life Reset: Overcoming Setbacks in Work and Life.
Before I started my business, I was working as a script development executive in the television industry. The work was fun, in a creative sense, but it was not the right career for me. I didn’t enjoy dealing with all the greedy psychopaths who held power in that industry or calling crime victims to buy their life story rights. “Hi, it’s Hugh Taylor from Edgar Scherick Associates. I’m really sorry that your kid got murdered but we can make a movie about it and you’ll get $50,000—plus, Erik Estrada can play you…”
I decided to move on, though I wasn’t quite sure what I would do. I had some money but no responsibilities of family and so forth, so it was an ideal time to get into a business of my own. I think I made some very basic mistakes in the beginning with the best of intentions. I had always been interested in photography, so I thought it would make sense to get into a business where I could leverage that skill set and passion.
Starting a business based on something I enjoyed was a sound idea, in theory.
I made a number of mistakes, however, and had to suffer some pretty punishing experiences to realize what I had done wrong. Some of my mistakes were technical in nature. Others were more personal. Both were bad.
In technical terms, I misjudged how difficult it would be to achieve profitability in a business that was at once capital intensive, labor intensive, and subjective from the customers’ perspective: I was taking old photos and paying people to restore them using digital technology. I had problems managing the time required to do an acceptable retouch job. Marketing was not a problem. I was able to nail the value proposition and get a lot of business, which was unprofitable to execute. I thought I would make the process more efficient as volume grew. This was also an error in judgment.
I expanded the business and got more into commercial service, such as printing graphics for department stores. This was profitable, but my limited management skills got in the way. This is what I mean by personal errors. I was confusing who I thought I was with who I really was. I was a very good marketer and salesman—I knew how to position my company and get clients—but I had a horrible time managing the process of getting the work done. I was not a good manager or leader. I was caught up in a Harvard MBA personal myth that I was some sort of hot shot business executive… which I wasn’t. It was a painful myth to let go of, but it had to happen.
I merged with another graphics company after a few years and things got even worse. We eventually went out of business after 9/11. Business just went ice cold and everything stopped. It was for the best, despite being a stressful experience to go through.
In the new merged company, I learned about web site development and marketing of technology products. This is now what I do for a living. Difficult as the failure was, it gave me a chance for a fresh start. I did find something that I was very good at, which is writing about complex technology for the business reader. I now do this kind of work for Microsoft, Google, SAP, AMD and many others. This is what I was meant to be doing.