Last week I was asked about the lessons learned from growing businesses that failed. At the time it felt like a loaded question but after probing, the person asking the question was curious about why you would do it again.
When I closed my first business I wrote a letter to those who followed the journey that contained 11 reflections.
Each one is born from an experience that came about through a painful lesson or surprising revelation. And in a startup, it’s sometimes difficult to tell one from the other!
In any case, these reflections-turned-mantras are how I answered the question and have held true regardless of the business model and industry I’ve been involved in since.
1. Have conviction around your vision
Conviction is infectious and it can capture the imagination of the staunchest critics.
I’ve also come to learn that conviction and urgency are not only related, they provide entrepreneurs with a potent force multiplier effect.
And you can easily tell the level of conviction in an entrepreneur. It’s when they’re dog tired and at the far edge of sustained fatigue and they spring to life when they’re asked questions about their venture. They can’t help but be excited and that excitement is fuelled by conviction.
2. Always surround yourself with outstanding people
While this sounds obvious, few of us get hiring right every time so I put this thought into action in two ways.
First, by always asking myself if I would work for the candidate if the tables were turned. If yes, keep talking. If no, call it.
Second, I always start any working relationship, no matter how good I think the person is on paper or how excited I am about their potential to add value to the team with a paid audition.
Telling the truth matters, especially if it is unpalatable
Beyond change, there are few constant factors when you’re building a company. One of them, however, is reputation.
It’s hard to earn and easy to lose.
The way reputations are usually tested in startup comes down to how founders (and by extension their teams) respond to surprises.
And there are the daily we-can-deal-with-this-product-issue surprises and there are the holy-shit-this-could-destroy-our-business surprises.
Investors and key customers and partners don’t like surprises so if you see one brewing on the horizon, act early, tell the truth and work through it.
Taking the alternate path just isn’t worth it.
3. Industriousness, intrinsic curiosity and strong values are the most important traits
You could be the best in the world at your craft but if you don’t have these, your value is limited. I look for these traits in co-founders, future hires and investors. And not surprisingly, my friends and colleagues have these qualities in spades.
4. If people don’t see the future, build a product to convince them otherwise
I remember the look on user’s faces when they realised the potential of AirShr (think Shazam but for anything you hear on the radio). I couldn’t code. What they were experiencing was a $400 iOS prototype I had made by a freelancer in Canada.
Unifying people around an experience usually eliminates the need to interpret a story or pitch deck. It also unlocks a whole new avenue for feedback and learning.
5. Move as quickly to generating revenue as possible. Raising capital isn’t a business model
Business models can change over time but it’s a mistake to start a venture without knowing how to make money. At the very least you need hypotheses for how it is likely to play out.
Raising capital is a useful path for many ventures but as the old adage goes, revenue solves a lot of problems.
6. If an industry doesn’t feel they have a need to change, they won’t (…until it’s too late)
There is an alarming precision and inevitability with which industry disruption plays out. I wrote about those five steps a while back. And even if they conceptually know they need to change, there’s a solid chance that their romance with how money is made today will keep them anchored in position. Until it’s too late.
7. There are people who work each day to push their industry forward with a desire to innovate
Look for the resistance. They are there. They know the playbooks, the tunnels to crawl through and the ways to get stuff done. Create value for them first.
8. Invest in the fanatical lovers of your product
Reid Hoffman talked about this in episode 17 of the Masters of Scale podcast (highly recommended!). His thesis is that the true seed of scale begins with a tiny kernel of die-hard fans.
I think he’s right.
And I broke down how I do this recently in a post called Love Is All You Need.
9. Be global from day one but start small, dial in the product and proposition and then scale
I remember simultaneously selling into distinctly different geographic markets at both at AirShr and inkl.
It’s been a lot easier with inkl for a number of reasons and now it’s used in over 210 countries, sure doesn’t feel long ago that it was just available in Australia.
10. Don’t go it alone
This is probably the most important lesson of all. Building a business is hard. There are too many bases to cover yourself.
Find co-founders. Have mentors. Create value with people you love working with to spread to the load.
One last thing…
The underlying lesson, perhaps #12, is that the most important measure for an entrepreneur to monitor is their rate of learning.
The rate of learning (in my view) is proportionate to a founder’s quality of decision making. One goes up when the other goes up and the reverse is also true.
Find ways to reflect and learn that work for you. For me, that includes writing, without which I might not have been able to recall these lessons.