My Startup Failed. 5 Lessons Learned

My Startup Failed. 5 Lessons Learned

This is a quicky but it packs a punch. I stumbled across an article written by someone who’d just officially killed his startup. His story speaks volumes.

You’ve got to go read his post here. You can sense the pain in his words.

Below are 5 lessons to take away from this with my commentary on each.

1. “Amazon (who was our payment processor) suspended our account for not complying with money transfer issues.”

Know the rules of the services you use. Play by them.

To be honest, I’m still kind of excited they took the chance and launched the thing. I can picture another scenario where they waited months to ship out of stress to get the amazon stuff just right.

That would have solved this problem, but likely created others.

2. “People really didn’t really LIKE anything about our product.”

This is an amazing moment — to hear the feedback, have the realization and admit it to yourself.

Can you picture it? You put time and money and blood into making a thing. It’s all you’ve seen for MONTHS and the the resounding feedback is: I don’t like it.

Are you ready for that kind of experience? Work on it.

This wasn’t feedback telling HIM that HE was an idiot. It’s not personal. Try not to take it that way when you end up in this scenario.

3. “They were trying to support the artist, so saving a few dollars didn’t excite them.”

This was a built in blind spot. It happens more often than you think.

When you hear it for the first time coming from the mouth of your audience it’s a DUH! moment… how could I have been blind to that!?

Ideas that feel right to you create tunnel vision — you can’t see the corollaries even though it’s the FIRST THING the audience thinks in many situations.

This is one reason why release early, iterate often has become the mantra. Get it out, get the feedback, assume you have blind spots.

Come to your business ready to learn from the audience.

(By the way, I have to say, if this stuff is resonating with you I highly recommend the course I just put together in Fizzle about the mindset tweaks you need to make as an entrepreneur. Get it for a buck here).

4. “We should have packed it up early right then, but we felt like we had already gone too far to quit.”

Ugh. I so feel for this guy. This is human nature: to chase after the bits you’ve spent and try to get the value out of them even though you ALREADY KNOW IT WON’T WORK.

Spend $500 with a designer, get two weeks in, realize they’re bad…

But we’re emotional about the money we’ve already spent. INSTEAD of cutting the losses, taking it on the chin like a big boy/girl and making the hard and true decision, we chase after that initial $500 and end up paying more time and money to get a sub-par return.

I heard someone say a while back: an entrepreneur is someone who makes hard decisions. When it comes, acknowledge it, evaluate, make your best call and pull the trigger.

5. “Although our company did not succeed … we all learned more in the past year than we had in college.”

There’s the moral of the story, folks. Sound cheezy? Maybe it’s because you haven’t been there. Because this is true.

8 out of 10 new businesses fail in the first 18 months (source). That means you’ve got a 20% chance of success with your new venture.

My question is: what are the chances for your second time around? What about your third?

They get better.

Look at things this way, with a longer term view. Listen to your business, learn from it. Take it out back and put it out of it’s misery if necessary.

And welcome the experience, because it’s setting you up with deeper insight, more conviction and better odds for the next time.

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  • Greg Sargent

    The most interesting thing about his article is the very last line: “Hit me up on twitter! I just got on there. “

    • Chase Reeves

      HA! totally.

  • Stephen Anthony

    Awesome as always. Thanks

    • sam

      That’s right

  • Lewis LaLanne – NoteTakingNerd

    I have a mentor by the name of Eben Pagan who has taught me three very important lessons about start ups . . .

    Profit Generating Mindset #1: Bootstrapping Is The Way To Go

    Pulling yourself up by your bootstraps is an old expression that means lifting yourself from nothing to something with your own effort, resources, and resourcefulness.

    In this context of starting a business, Eben feels it’s better to bootstrap than to go out and borrow a bunch of money for a new untested idea. What most people don’t know or don’t like to acknowledge, is the reality that most businesses and products don’t work. Most of them die either quick, or slow deaths.

    So when you’re spending someone else’s money, you’re gambling with it unless you’ve first proven your concept via your own research, sweat, and money.

    Profit Generating Mindset #2: Make It Prove Itself Small Before You Ever Go Big

    If you want the recipe for how most people get their ass handed to them when starting a business, here it is: Throw all the money you have, all the money you can get from anyone who will lend to you, and put it all on what you “feel” can’t possibly fail.

    This is bass ackwards. This is gambling. This is the what 95% of people who start a business do.

    The way you know a business works is to take one of your products and try to sell it to one customer and see if they buy it. If they do, sell another one to another customer. Then refine your strategy so that you put yourself in front of more of your perfect prospects and offer what you sell to them.

    If you try to sell this product one-on-one to the perfect prospect for it and they don’t buy, you’ll learn something. You’ll find you’ve got to change your approach and if changing your approach as many times as is feasible doesn’t work, you’ll have come to the conclusion that no one wants from you what you thought they would and you’ll only be out your effort and what little money you spent to test your concept.

    The path to progress and profit is to make it work on a small scale consistently. And only after you’ve cracked the code is when you shove big money across the table at this venture.

    Profit Generating Mindset #3: “80+% of What I Try Will Fail”

    At first glance that doesn’t seem like a very encouraging mantra to repeat to yourself, does it?

    And the truth is, 80% is a generous number. It’s probably going to be higher than that. It will most definitely be higher if you don’t keep these mindsets here close to your heart.

    Eben sees himself as an optimist in the long term. He believes that if he consistently keeps doing things that make him more valuable to his fellow man, building on what he’s learned from his mistakes, that more and more success will come to him.

    But he sees himself as pessimist in the short term. He accepts the 80/20 universal law that dictates that most things, 9 out of 10, he tries out aren’t going to pan out the way he wanted them to.

    He knows that if he keeps taking right-action swings at the opportunity, the big money home runs will accumulate based on what he continues to learn from the failures and carry him through all the strike outs.

    All the action he takes will allow him to crack the code on some crucial steps, systems, products, niches, and methodologies that prove to be profitable over the long haul that never would’ve been realized had he operated under the delusion that “If I do something it should work and if it doesn’t work I should quit because this business is bad, the economy is bad, the customers are bad, the money-grubbing corporations are bad, etc.”

    Most people that make a living investing in the stock market are not winners. Of the people who are winners – the top 5-15% – they make all of their money on only a few of their trades. So out of a 100 trades they made for that year, the majority of their money will have come from 5-10 trades they made where they hit it out of the park. Most of their other trades will have lost them money .

    Same thing holds true for poker – most of your winnings will have come from a
    few hands. Most of the hands you get will be garbage and if played, will actually lose you money.

    Thinking long term is something we don’t come wired with and we have to train ourselves to do with mantras like, “80% of what I try is going to fail”.

    This mindset gives you permission to be the perfect non-perfectionist. It makes it okay for you to shut down a project that’s not working and move on to the next experiment.

    I salute you Chase for bringing the wisdom to people who need the truth about what it takes to start a profitable business and I thank you for reminding me of such important lessons I can never hear too many times. :)

  • Mike Kawula

    Tons of lessons and as the quote goes, Experience is a hard teacher because she gives the test first, lesson afterwards.

    When I mentor at Leanstartup Weekends they have this awesome stick:
    Invalidate My Assumptions
    Fail Fast. Succeed Faster

    Says a lot. I had the same thing happen with #1 though it was Paypal and they wanted to “investigate” my account because it grew to fast. They held over $200,000 for 30 days and almost closed my business. Lessons learned.

    Great post and look forward to meeting you all at NMX.


    • Chase Reeves

      Cheers, Kawula!

  • Marianne

    I can so relate to this poor guy! My husband and I have had a few start up fails that we probably dragged on far too long. In fact our first business was going to be sooo amazing that we got into debt for it before it even launched and when it launched no one wanted it – in hindsight it seems so obvious! Especially that we didn’t do any market research.

    I’ve also had a blog fail and although it’s been years since we’ve been starting and failing, starting and failing, I think we’re finally starting to get the hang of things and learning INCREDIBLE lessons along the way.

    I believe my current blog is finally “the one” and my husband’s current business may finally the “the one” too! One of the biggest lessons learned: test the waters first and spend as little money as possible in the beginning. That’s what we’re doing now. I’ve also never quit my FT job along the way. And we’re agile now too.

    I like that he says the his lessons are invaluable. They really are. We would like to encourage our son to spend money on starting a business instead of going to college (of course that decision is ultimately up to him) but i think he will learn far more this way. I know I did and I did both.

  • Skaled

    Wow what a difficult experience to go through, but one that is so common for early stage startups. Good for him to have the guts to share his failure with an audience! Routing for him and his team on the next big idea, which they’ll be able to apply all of these lessons towards.

  • Bob Harper

    I dig this post so hard! That is where I am at right now. I have failed plenty of times and learned a ton. Now my odds of success are high. It is so painful in the moment. Thanks Chase. Great stuff.

  • Jason Love

    I currently have around 5 sites all in different markets because I have a hard time letting go of the idea I can make it with this many sites. I realize now it isn’t feasible, so with every business or product I create an exit strategy. How do I close the doors and leave a site in a way that feels good. Closure is important.

  • Brandon Eley

    Someone should’ve read The Lean Startup methinks…

    • Chase Reeves

      That’s maybe a little too easy to say, Brandon. Sounds kind of like a “neener neener.” (which I doubt you intended).

      But I want to respond to add a little color. I absolutely know what you mean; the ideas in that book are *killer.*

      But those ideas, when applied correctly, can lead to this kind of scenario. In fact, those ideas are *meant* to lead to this… just quicker, and hopefully with less emotional shrapnel.

      You’re right, we could all do well to learn more (and the lean startup is such a great place to start). But this guy earned a much better grasp of the concepts in the book than anyone who’s merely read it.

  • jimmy

    Very Right.

  • Omar Zenhom

    Love what you did here. So much to be discussed. Thanks for the share and insights. A punch it packed, indeed.

  • Will Lenzen Jr

    Wow, this is so good. I’ve found that it’s so easy to feel like you’re the only one going through the pain and struggles and crap – but as soon as you get out of your head and push through, start talking to people and focus on something other than yourself – the journey gets a tiny bit better. One of the best ways to learn is by going through the fire. One of the best ways to make it through the fire is to know who to turn to.

    Love this post. Good dose of truth. :) Thanks Chase!

  • rickg

    So earlier this year we shuttered the second of back-to-back 5 year startups.
    That’s a decade ladies ‘n gentlemen. 10 fucking years of fighting. Of not cutting loses, and living in delusion when the signs were there.

    Pay attention to the signs. You don’t get extra credit for wanting or hoping more than the next entrepreneur.

    Attaboys are not a currency that can be exchanged when your wife leaves you or the IRS wants its piece.

    And guess what, third time isn’t necessarily the charm. It’ll let you know if I succeed on my latest “bigger-better-faster” idea. It looks very promising, but so did the others.

    For anyone thinking they’re smarter then the 8 outta 10 mentioned in the list above, but only on their first startup, reread this article every time you’re in the bathroom taking a shit.
    That’s an appropriate place for every entrepreneur to re-evaluate his latest world-beater.

    THX Fizzle for providing your insights this year. Rock on 2014.

    Rick G

  • mavtrevor

    It is important to know when to throw in the towels. Sometimes we feel we can still push it further believing our extra trial could make the difference.

    It is great you have shared your experience for others like us to learn from. Promoting the wrong products will only waste your time and efforts.

  • Kat Tan

    gah.. even if I haven’t gone full on (though I think I have after investing so much on my project) I feel the sting..

    so to add to lessons learned aka failures – i thought that after picking up some speed with work I would hire an assistant and I did. one month after realized I can’t actually afford it at the moment and it wasn’t really helping because of lack of clarity on my infant project, I had to be honest and let go even when she seemed to be the best person to work with and she really believed in what I was doing. so yes, back to work table for me.

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