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Attention, overachievers: Don’t fear failure. It could be the key to success.
If you’re taking risks in life, you’re bound to fall flat on your face now and then, and as every successful business owner can attest to, mistakes are part of the game. The smartest among us learn how to become wiser from our failures.
So instead of talking to more success stories, for this installment of our Entrepreneurship 101 series, we decided to talk to five entrepreneurs who launched business ventures that failed. While it took them a while to see the upside of these failures, they shared with us the biggest lesson they learned and how it’s helping them (and can help you) today.
Because they’re incorporating these lessons into their new projects, they’re showing just how quickly failures can become new success. So, we’ll laud them for their wisdom, humor and insight, and thank them for learning the hard way … so we don’t have to.
“Put someone clearly in charge.”
The Entrepreneur: Jacqueline Hughes
Formerly: Co-founder of Bridge the City
Currently: An independent consultant
Her Company: Jacqueline was frustrated by how difficult it was to synchronize her social calendar with that of her friends—even though their plans were often the same. It would be so easy, she thought, to create a service that allows friends to share their schedules in a snap. So she and a partner, along with two more entrepreneurs they recruited, decided to found such a site themselves. They launched Bridge the City in April 2010 with funding out of their own savings accounts.
Where She Went Wrong: While each member of the four-person team saw the value in a synchronized calendar system, they disagreed when it came to how to proceed. Should they build the complete product off the bat, or build a more scaled-down version and develop it according to user feedback? Because each member of the team was a cofounder, everyone’s opinions held equal weight. When no one stepped up to make a final decision, their product literally got stalled at the bargaining table.
In hindsight, Jacqueline sees that the disagreement among her team stemmed from the lack of having a clear leader. “Maybe I was supposed to be that person, and didn’t step up,” she admits.
How She’s Applying That Lesson Now: Jacqueline chose to leave the struggling company (the project never made it past beta), but not without a new perspective. She put her founder hat aside and now works as a PR and event consultant for startups, and even began her own Startup Week in Austin. After her experience with Bridge the City, she avoids getting involved in organizations without a clear power structure. Now she’s loving her new role and has made major changes in her approach to taking charge: “When I work with teams of people, I try and make sure that all roles and expectations are clear from the beginning,” she says. “It’s important to communicate clearly and to put it in writing.”
“Your founding team should represent varied skill sets.”
The Entrepreneur: Alex Rosemblat
Formerly: Tech company co-founder and CEO
Currently: Product Marketing Manager at VKernel
His Company: Fresh out of MIT Sloan business school, Alex, a junior developer, and his friend, a senior developer, started building a data-aggregating program that would allow companies to digitize hard copies of files so they could search for them on the computer instead of in filing cabinets. The two men put their personal savings into the project and at first it seemed promising. They encountered only enthusiasm from prospective customers and investors.
Where He Went Wrong: After a year and a half of painstaking product development, their program was still more abstract than concrete. They realized that as two technical guys, they didn’t have the necessary experience in marketing to turn feedback from prospective customers into actionable insight, or to convince potential clients that they needed the software. Alex had taken on the marketing role himself since they didn’t have the funds to hire another staff member, but he was constantly distracted by the technical development of his product. Once they started asking the tough questions (“Would you pay $5,000 for this? No? How about $3,000?”), they realized that the product as they had created it was untenable. Since it took them 18 self-financed months to pinpoint the issue, they ran out of money and had to dissolve the company.
How He’s Applying That Lesson Now: Alex decided that he had to broaden his skill set, and chose his current position in marketing based on what it could teach him for his next venture. While he has no immediate plans for another venture, he’s accumulating knowledge with the intent to begin again down the road. “There’s a reason companies have departments,” Alex says. “Every skill is important, and if you’re missing one, you’re missing a piece of what you need to run a business.”
“Make sure your business is self-sustaining.”
The Entrepreneur: Thursday Bram
Formerly: Founder and CEO of Marketing101
Currently: Consultant and Owner of Hyper Modern Consulting
Her Company: Thursday founded her web design and marketing company when she was still an undergrad at the University of Tulsa, bringing in friends to design and code while taking on a supervisory role herself. They were almost immediately inundated with work, and they stayed in business for nearly six months.
Where She Went Wrong: The undergrads struggled to manage their time as work flooded in. Because this was a first venture for everyone involved, they were unable to estimate how much time and resources were needed for each assignment. As they got sidelined by details and infrastructure (like recreating a contacts page for every website that came across their plate), the team over-promised and under-delivered, and after six months, dissolved the company after growing frustrated with their inability to keep up with the demand.
How She’s Applying That Lesson Now: Thursday founded her current venture, Hyper Modern Consulting, which helps websites with their marketing strategies, in a way that would accommodate growth. To keep from getting stuck with repetitive tasks that sunk her first company, Thursday implemented templates and checklists to streamline the workload with each new project. She managed to make her work so sustainable that she has even branched out into side projects.
“Make what you do scalable,” advises Thursday. “If you’re starting from scratch every time you build a new project—whether you’re providing services or products to your clients—you’ll wind up burning out.”
“Protect yourself before your company.”
Formerly: Founder and CEO of Sarah Shaw Handbags
Currently: Founder and CEO of Entreprenette
The Entrepreneur: In 1997, former costume designer Sarah Shaw began selling her self-designed handbags at Hollywood movie studios, out of the back of her car. By the next year, she was calling stores to sell her bags, and with the addition of a NYC-based rep, sales grew to $500,000 in a year. Her line was placed in high-end department stores (like Bloomingdale’s and Bendel’s), and her bags were featured in movies like “Legally Blonde” and “Ocean’s 11.” But the company still wasn’t profitable, and when 9/11 hit, she lost her funding overnight. Sarah had already sunk everything she owned into the company; on the verge of bankruptcy, she had no choice but to hang up her bag aspirations.
Where She Went Wrong: While there’s nothing she could have done about 9/11, Sarah quickly realized she made a colossal mistake in founding her company: She had trademarked the company under her own name, and because her investors still owned the company, they also owned her name. That meant that she could actually be sued for any future profits made under the business name Sarah Shaw. She had also used the company’s lawyer as her personal lawyer, and he didn’t defend her personal interests as carefully as an outside attorney might have.
How She’s Applying That Lesson Now: For her next venture, a coaching site for other would-be entrepreneurs called Entreprenette, Sarah made sure to hire separate legal representation for herself and her company. She recommends that anyone starting her own outfit file a trademark under her own personal name, then license it to her company for a low fee. Every move in regards to the trademark should be officially recorded in writing, and overseen by a lawyer. “Have your own attorney who looks out for your best interests. Your company’s attorney will ultimately look out for the company,” she says, “and your interests aren’t necessarily aligned.”
“Make sure your personal life can accommodate your business.”
Formerly: Owner of Anklebiters, the Atlanta children’s store
Currently: Owner of Anklebiters, the online children’s store
Her Company: A toy expert and mother of two, in 2007, Tara had grand plans to open a play space and coffee house to entertain families. After a year and a half of planning and searching in vain for investors to fund her project, she scaled down her vision to a more manageable boutique toy store that she could finance herself by taking out a second mortgage on her home. But even that turned out to be more than she could handle.
Where She Went Wrong: When her third child arrived as Anklebiters opened, Tara found herself being pulled in two very different directions: Her brand-new store needed her undivided attention, but so did her brand-new baby. Through a series of unfortunate events—the store flooding, deceptive landlords and an embezzling employee—she found that her family resented the store’s demands on her time. On top of that, sales were stagnant.
What’s the Best Money Lesson You’ve Learned?
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How She’s Applying That Lesson Now: Tara chose to close the store after only a year and half and shift her full attention to her family. A year later, she relaunched Anklebiters as an online-only store. Today, her company is manageable and relatively autonomous, with markedly lower overhead and distance from her personal life. With steady sales and lower costs, she can now afford to operate the website while paying the debt she and her husband took on to finance the store. Most of all, she has time to give her family what they need without conflict or guilt. Tara would give the following tips to any entrepreneur who wants balance between her business and personal life: get a business loan, hire help and make sure your family is supportive. “I underestimated the pull of family when I started out,” Tara explains. “A business can only be as big as you have time for.”
More on Entrepreneurship:
Forgive us for the shameless plug, but don’t you want to hear Alexa’s tips for starting your own company?
Are you surprised that one of the Rent the Runway co-founders was working in finance before she started the company?
The ladies of BluePrintCleanse turned raw food into a thriving New York business.
