Nearly every day, we see stories about successful entrepreneurial ventures and failed ones. Rarely do those whose ventures have failed take responsibility for that failure.
A few weeks ago, I was trying out an online resume builder, Visual CV, on behalf of a recruiter friend of mine. I became frustrated when I was unable to do what the product claimed it could do, so I reached out on Twitter to the CEO, James Clift. Very shortly thereafter, he replied and within 20 minutes of my reply back to him, we connected via email.
The first thing he did was to state unequivocally that the platform had issues and that he was about to launch a new version which would address those issues. I was intrigued. After years of rotten customer service, this was one of the few occasions when someone took responsibility.
Not only did he sort out the issues, he created two versions of the resume I was working with. I told Clift how impressed I was with his attitude. He replied by sharing some of his experiences as to why he is so willing to own his entrepreneurial missteps.
In short, his first venture failed. But he didn’t play the victim role. He learned, owned up and moved on to create a 1.5 million user business. “There is no magic bullet to building a successful company,” said Clift in a recent interview. “But I have learned a lot from my mistakes.”
Here are his tips based on his own experiences and track record of failure and success.
1. Fail upwards
Not all failure is created equally. Entrepreneurs romanticize failure. I don’t know why — because it sucks. But if you fail in the right way, it does teach you something.
Even though my previous company failed — we didn’t fail by doing the same thing for 3 years. We tried many things. We leveled up, met smart, successful people, learned how to build, how to sell and how to market. We failed positively.
Meandering along for years and slowly withering away is the worst kind of failure. If you’re not learning you’re failing negatively. There’s nothing romantic about that.
2. Create your own story
When I started my first tech company, I got caught up in the startup hype. My company went through a startup accelerator in which the end goal after 3 months was to nail a pitch and raise money. I nailed the pitch and raised money. But when reality didn’t match the vision my world fell apart.
What I didn’t do was stop to think about what I wanted. I got caught up in someone else’s narrative: raise money, change the world and build a billion dollar company. Without considering the reasons, I found myself spending more time pitching than building.
With my next business, I was deliberate about exactly what I wanted.
3. Don’t raise money too early (or at all)
My previous startup went down the path of raising money much too early. This immediately set the expectations that we would be a fast growth, scalable startup. Unfortunately, the stage we were at and the products we had did not match those criteria.
We threw out what was working to build a product with exponential growth potential, which is ultimately what killed the business.
4. Look for pull
We tried everything at my last business to kick-start growth. Some of the tactics were questionable; None of them worked. The reality was that our product needed to be sold but people weren’t buying.
Focusing on organic growth based on high demand and happy customers is a much better proposition. I taught myself the benefits of having unhappy customers who were passionate enough to email us. They helped us build our next features.
Instead of pushing your product, let the market pull it for you.
With desperation comes customization. Avoid this at all costs. Focus is the biggest weapon you have as a small company — customizing your software for different markets and use cases spreads your team too thin, dilutes your brand and demoralizes your team.
Kill anything that is outside your scope, even if it results in short-term revenue.
6. Sexiness is overrated-- Profits are underrated
A profitable business is much sexier than machine learning, artificial intelligence and mobile social local. It’s easy to get caught up in the hype of technology (I still often fall into that trap).
It’s astounding that talking about profits in a tech company is so blasphemous. Profits allow you to 1) take money off the table, 2) pay your employees more 3) invest wisely in future growth and 4) not have anyone else to answer to. We’re on the internet and your servers shouldn’t cost more than $1000 a month — where is the rest of your margin going?
Concentrate on your bottom line: profits through quality.
7. Start small
It’s ok to dream but don’t get overly caught up in it. Spend most of your time incrementally working towards that dream.
My first company hired people because we had money in the bank. Need sales? Hire a salesperson! Need users? Hire a marketing manager!
The truth is, until you at least have the hint of a process for every role, hiring people is not going to solve your problems. It’s the job of the founder to figure these things out and then hire the right people to scale.
I wholeheartedly agree with Clift. Taking responsibility is perhaps the most important attribute of a great leader. Passing the buck is a the sign of a coward. Responsibility encompasses an overall set of values and attitudes. It influences how you interact with everyone, from clients to associates to employees.
A leader sets the tone for his company. If you’re not taking responsibility verbally and through your actions, you’re not a leader.
And if you’re not walking and talking like a leader, you don’t belong in a leadership role.