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Failure to launch

Monday, 4 July 2011 | By Alexandra Cain
Failure. It’s the thing that entrepreneurs fear the most, a perennial threat to livelihood that lurks in the background of every decision and wrong turn.


Recent figures released by credit reporting agency Dun & Bradstreet show the number of businesses that fail remains at historically high levels.


A total of 2,340 enterprises fell over in the March quarter of this year, on the back of 10,039 business failures in 2010, when the number of enterprises that went to the wall jumped by 23 per cent.


But is a business failure really such a bad thing? In the US there is much more acceptance of business failures and there is an understanding that entrepreneurs can learn a lot from having one, if not more, of their projects fail to fly.


One of the US’s most famous presidents, Abraham Lincoln, survived numerous failed businesses and botched attempts at entering Congress before finally achieving success.


We spoke to three business people who walked away from a venture before going on to bigger and better things as a result of what they learned from their experiences – and how they managed to dust themselves off to try again.


Justin Kan


US serial entrepreneur Justin Kan, one of the pioneers of the “lifecasting” phenomenon has first-hand experience about what you can learn from making mistakes in business.


One of his first ventures was an early version of his existing business, Justin.tv.


He says: “We started Justin.tv in 2006 as our own reality show, with the idea of carrying a camera around 24/7 and trying to do entertaining things.


“We worked really hard to get the technology right and when we launched we got tons of press on the Today Show and MTV and other shows.


“After we got all this coverage people were going to the site, but they weren’t staying to watch.”


Kan sought some initial feedback from viewers and learned some hard lessons.


“We found out we were pretty boring to watch,” he says. We’re really engineers and we’d failed to make an entertaining show.


“But we also learned that there were a lot of other people out there who wanted to make their own shows.”


He took that feedback on board and turned Justin.tv into a platform where anyone can broadcast.


“We now have more than 30 million unique visitors a month and several million people have created their own channel on the site,” he says.


That wasn’t Kan’s only experience with a failed business idea. He also started Kiko, a calendar that could be used with Gmail, when he was straight out of college.


“We were students, so we didn’t have a lot of appointments and no real use for a calendar, so we didn’t know how to build a good one and it didn’t get any traction,” he says.


“Two months later Google came out with its own calendar and killed the business, but we eventually sold the software and the site on eBay for $258,100, which wasn’t a bad result.”


Dean McEvoy


Dean McEvoy is the founder of group buying site Spreets, which he sold to Yahoo7! in January this year for $40 million.


He also experienced trying times before he cracked the big time.


After buying and then selling a landmark Sydney pub, The Roxbury in Glebe, McEvoy came up with a concept for an internet business called Booking Angel.


The idea was that restaurants would pay a small fee for bookings made through the site.


“The site got some traction and I ended up in the US crashing on friends’ couches looking for investors,” he says.

“But the problem with Booking Angel was that restaurants would only pay when they got a reservation and they were only getting a few extra reservations a day. I knew that if I could generate a lot more traffic for them that they would pay a lot more.


“Then I found out about a business that was doing exactly what I wanted to do. That business was Groupon.


“So I spoke to the guys at (tech incubator) Pollenizer about what I’d learned and we set up Spreets.


“Booking Angel is still alive and making reservations, although no-one’s really driving it – but it’s still my baby and I’ll find it hard to let it go, which is one of the biggest problems business owners have, knowing when it’s time to let go of an idea.”


Amanda Falconer


One business owner who didn’t have the problem of walking away from a failed initiative is Amanda Falconer.


As she explained: “In my late 20s I had a business making pyjamas and bathrobes and started selling through David Jones and boutiques and doing reader offers with ACP Magazines (publisher of Cleo and Cosmopolitan).


“Then Cosmo asked me to do a Valentine’s Day offer for some men’s boxer shorts. I didn’t understand the complexities of boxer shorts and they were a disaster, badly cut with a terrible design.


“I had loads of boxers left on my hands and Vinnies ended up inheriting a whole lot of badly shaped Valentine’s Day boxers that year.”


That experience and a couple of other bad decisions prompted Falconer to do some serious introspection about the future of the enterprise.


“I was managing everything about the business and I knew that if I wanted to go to the next level I would have to employ staff and expand what I was doing because I didn’t even have enough time to step away from the business to do a business plan.”


So she decided to fold the business and go back to full time employment.


Since then she has again braved the start-up world, establishing the Sydney Small Business Centre, a source of advice for small business owners.


Falconer says in her experience “if a business has a problem, nine times out of ten it’s a marketing problem.


“Usually the business owner is so involved in the business they can’t stand back and see what needs to be done to solve their problems. Usually they need to get outside assistance to help them over this hurdle,” she says.


She has some advice to entrepreneurs who might be struggling to recover from a business failure.


“My biggest thing was thinking I wasn’t good enough – that’s what held me back. But I knew more than I gave myself credit for,” she says.


“It’s also important to stick to your knitting – work out what you’re good at and stick to it. Don’t take every piece of work that walks through the door.


“It’s OK to turn away some business because it will allow you to focus on what you’re good at, which will ultimately drive the success of the business,” she advises.