Lessons From Business Failures
It’s quite refreshing to see how far along the Chicago entrepreneurial community has come in the 2.5 years since I moved here for business school (Go Booth!!!). Groupon, Grubhub, FeeFighters, SurePayroll (to name a few have) brought much needed attention/focus on the entrepreneurial vigor that exists in the ‘flyover region’. Being an entrepreneur or working for a startup no longer elicit the ‘shame, (s)he can’t get a real job’ look that I still saw on some faces a mere two years ago. It’s a badge that worn with pride (and rightfully so).
But we do ourselves a huge disservice as an entrepreneurial community if we only continue to focus on these successes without at least shedding some light on the businesses failed. We learn so much more from the graveyard of startups that never even come close to getting to reject a $6Bn offer from Google (or even a $250,000 angel investment).
As businesses spring up left right and center I believe:
1. The best lessons are learned from mistakes. Infinitely better when these mistakes aren’t yours.
2. We course correct when the path looks familiar to one we’ve seen before (or better yet read about).
So when a friend sent me this Startup School video of AirBnB’s Brian Chesky talking about the first 1000 days of his company and how they kept ‘failing’ and starting again I decided to do some more digging for some good write ups on failed startups. I found a wealth of links to some 30 odd write-ups on Business Insider and I decided to compile the ones that provided the most value.
So below are some links to what I consider the shortest and sweetest post mortems of failed startups. Some were funded. Some were bootstrapped. All are now dead and buried. I’m making some of the assumptions they made as we build Power2Switch. Seeing those mistakes lead to (death) clarify what needs to be done for us to avoid the same fate. It feels good to be able to pivot in good time to improve our chances of success. I hope the articles help you too…
Note: most of these companies are web based/software businesses but in my humble opinion the lessons are applicable to startups of all kin.
1. Simply put these guys forgot the 3 important things in the early days of your startup (they had more money than sense I guess): Customers are the most important thing, sell what they want and make more money than you spend.
2. When you get to market matters less than how much attention you pay to your customers. This article is more of a comparison between Wesabe (which launched Mint before Mint but failed) and Mint (which launched later and was acquired by Intuit last year) but the product and user interface decisions are critical for all web based businesses. I also think the name didn’t help.
3. This post mortem provides a good breakdown of how the loss of focus on the parts of the ‘company’ structure lead to failure (could be more comprehensive in my opinion)
The Devver Blog: Lessons Learned
4. Like a baby that cannot tell you what it needs but keeps crying because it needs something, startups demand attention (and nurturing and feeding). This blog discusses how you need to spend the time on the business
Pawel Brodzinski: Lessons Learned: Startup Failure Part 1
5. Simple. Concise and straight to the point analysis of why they failed: A Happy Failure Story: Lessons Learned From My First Startup
6. Like Power2Switch this business model was ‘Network effect driven’. The founder reminds us that not all good ideas are good businesses. And it’s all about the implementation:
A Startup Idea Postmortem: Proof That Good Ideas Aren’t Always Good Business
7. I actually almost applied to this company (and Power2Switch had a profile on it too). Main takeaway: they did not have a product:
How to Develop A Product Nobody Wants: The Story Of ChubbyBrain
Seyi Fabode is the CEO and founder of Power2Switch