Are You Allergic to Failure?

Business pitfalls to watch for

“Fail fast” is a common mantra in Startup circles and even large companies looking to drive new revenue through innovation. Failing fast is a good thing, but some failure is nothing but a pitfall to avoid. Here’s how to tell the difference.

When Failure leads to growth:

Shock value aside, “failing fast” works & it’s a good thing… when it’s applied as a scientific process. A scientific process where you, as the innovator, have 1. a hypothesis about a problem and how to solve it and 2. you develop a test to see if people have enough need to buy your solution. If the results don't match your hypothesis, your “failure” is meaningful. Now you have data to work with. If the results DO match your hypothesis you have made a discovery.

When Failure leads to death:

Everpix was the world’s best photo startup. It died from a series of failures that are pitfalls to avoid. To Everpix’s credit they saw the writing on the wall and took steps to gracefully walk away and actively worked to do right by their team and their customers:

They attempted to keep the team together in an acqui-hire, they worked to sell off its technology (none of users’ photos or personal data were transferred as part of any sale) in order to cover the costs of closing Everpix including the cost of roughly $200,000 to refund Everpix’s customers, allow customers to download their data, and pay employees their full salaries.

Here are 5 pitfalls to avoid:

While Everpix was led by highly intelligent, talented people who were solving a problem that they had a personal understanding of - Everpix still died. These questions may help you avoid the same fate:

1. Are you doing the “right things right”? Doing the right things wrong, or the wrong things right makes no difference in the outcome — your initiative will die on the vine. Therefore it is important to prove what the right things to do are + to focus on doing those things right. Everpix had great software, it was fast, the design was clean, the service was simple to use — they were doing things right, but were they doing the right things? In the end they couldn't attract enough paying customers to keep them afloat.
2. Are you focused on Customers? Focus on customers and you get closer to opening wallets. Is every portion of the company aligned in this goal or solely in making a cool product? The two are not one in the same. In Everpix’s case they had a cool product, but instead of balancing that with building a customer base, they looked to raise money that would allow them to build an even cooler product.
3. Are you focused on Revenue? When Everpix did hire a Marketing specialist they appeared to have focused on how to create a better pitch for investors. Remember where your revenue is ultimately coming from: customers. Investment is debt for the entrepreneur that is paid off through revenue generated from… customers. Not more investors… customers.
4. Are you focused on ROI? Money is a scarce resource, especially to a startup. Significant expenses should be looked at as an investment. Everpix’s expenses show a high burn rate. Questionably high - particularly in areas such as office rent and legal fees. Unless it’s part of your services to end customers, these expenses are necessary-only-to-a-point — they do not contribute value to the end customer. Any unnecessary amount spent in areas not contributing value to the end customer is money right out the window.
5. Are you okay with being messy? Everpix was an obsession of perfection. Here’s the trouble with perfection that successful entrepreneurs understand- no plan ever survives contact with the real world, you must adapt to whatever circumstances are at hand. In Everpix’s case they needed to obsess over revenue growth then they would have been better positioned not only to get investment, but better able to build a sustainable business. They're energies obsessing in perfection would have been better spent on optimization. Instead they abandoned releasing a potentially surefire way to boost revenue growth simply because it was “sort of ugly” — something they could have optimized later. The development to optimize this could have been paid for by the new revenues coming in if they had released it anyway.

Everpix closed it’s doors because they learned from their failures too late to reverse course. It is important to think of failure as a spectrum. Doing so allows you to learn from failure by getting past our society’s “blame game”. Although there are many many things that can go wrong, failure tends to fall into 3 categories: those that are preventable, those that are related to complexity and those that are intelligent.

Which type of failure are you allergic to? Tweet me @StacieAndrews

Author:

Stacie Andrews, CMTO and President of ProvadoMarketing.com

I work with Founders and CEOs to design state-of-the-art go to market solutions. My unique blend of business innovation methodologies, marketing and technology expertise is highly valued by companies to accelerate their growth.

* This article was inspired by my work with the Wasabi Ventures Academy whose focus is on Early Stage Startups. The opinions here are my own and do not necessarily reflect those of Wasabi Ventures.