5 Crucial Lessons From Experience With a Failed Startup

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I went into my first startup thinking exactly what every other founder thinks:

“This is the best idea anyone has ever had. There’s no way we can fail.”

After less than a year working full-time with my co-founder on the business, it seems that I was wrong. We did fail. We failed so fast that some of my friends may not yet know that I ran a failed business. Maybe I’ll tell them eventually.

People inevitably ask why we failed. I tell them the truth because there is no point in doing otherwise. I have nothing to hide. We could blame it on the market, but that is a cop-out. You don’t learn from cop-outs.

So let me be clear at the very beginning.

I, Zak Kann — CTO and co-founder of 6C Solutions, first of his name, developer of SaaS, writer of sass, scientist of data — made mistakes.

So did my co-founder, for that matter. It turns out that first-time founders make mistakes. I haven’t yet been a second-time founder, but I would bet good money that they make mistakes as well.

But that’s okay. I failed more times in a year than I had in my entire adult life. And I learned from those business failures.

So, what did I learn?


1. Ideas Are Worthless

I guarantee that you have great ideas.

Do you know who else has great ideas: Here’s a short list: that neighbor you hate, your most successful friend, your least successful friend, your barber, Bill Gates, everyone you know, everyone you don’t know, and Kanye West.

What do all of those people have in common? They are all humans. That’s maybe the only thing they all have in common—because ideas are everywhere.

Ideas are as plentiful as grains of sand. Sure, some people make money packaging and selling sand. But nobody ever made a living selling handfuls of sand at the beach.

Ever heard the saying that a good salesperson could sell sand in the desert?

Maybe that makes them a good salesperson, but it makes them a horrible entrepreneur.

At 6C Solutions, we had a great idea, and we severely overestimated how much that mattered.


2. Liars Lie (So Do Your Friends, Your Family, and—Yes—You)

We did what any startup blog will tell you to do. We went out to validate the idea. We started with people we knew because they were easy to find.

We tried to follow all of the best problem interview guidelines. Sure, we stumbled on more than a few of them, but we eventually figured it out. We kept the questions open-ended. We used the five “whys.” We didn’t talk about our solution. We asked about previous behavior instead of hypotheticals.

We did everything right, didn’t we?

Wrong.

When it comes to validation, everyone lies. Your friends and family will lie to be supportive. You will lie to keep your idea alive. Strangers are the most sincere, but only if you don’t let your own lies spread to them.

First, we were lying to ourselves about how neutral we were being in the interviews. We guided the conversation. We brought up problems and asked if they resonated.

Not surprisingly, the problems we explicitly mentioned showed up more often in the results.

Second, we were lying to ourselves about the results. We were far too liberal with our categorization of pain points.

Minor annoyances became pain points. One-time issues became pain points. Your boss mentioned alarms in a meeting two years ago? I guess alarms are a pain point for you.

The result was that we believed we had found common problems, when in fact there was often no evidence that these problems were important enough for the companies to spend their valuable time and money on them.

Third, we were lying to ourselves about whether we were even talking to the right people. We had a hard time getting in touch with people with decision-making power.

Our contacts mostly worked in entry-to-midlevel positions. We used cold contacts, content marketing, and even paid interviews to round out our numbers, but even those were mostly getting people too low in the organization to ever approve anything but the smallest of purchases.

But that was fine, we said. We can use these interviews as a starting point. When we get to the big dogs, we’ll have a better understanding of the market and hopefully some warm introductions.

But understanding the people that work for the customer is not understanding the customer.

We needed to talk to people with buying power, but they didn’t need to talk to us.


3. Revenue Makes You a Business, Learning Makes You a Success

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We did have a couple of clients. And we built cool features to get them excited. But they never got excited.

Looking back, we built far too much. We devoted a ridiculous amount of time to trying to get those couple of clients to engage more with our platform. But the reasons they weren’t engaged had nothing to do with a lack of cool features.

We could have built everything they’d ever dreamed of and they still wouldn’t have had a reason to become engaged, because we were building for their desires instead of their needs.

Nobody uses a startup product because they want to. They use it because they have to.

Startup products are ugly. They are buggy. They are not for people that have time to give in to their desires. They are for people that have a need so strong that a terrible app is still 100x better than nothing.

So what were their real needs? To this day, I’m not sure that I know. But I do know that they weren’t a good early customer for us because — whatever their need was — our product wasn’t made to solve it.


4. Be Prepared to Pivot

When is a pivot not a pivot?

A pivot is not a pivot when it’s really a new beginning.

This is the story of a 2020 startup, so you must have expected these words: Covid-19 hit us hard.

More precisely, Covid-19 combined with plummeting oil prices. Does anyone else remember when those went negative? We certainly do because our clients were in ethanol.

Ethanol plants were shutting down left and right, leaving us with no real traction in a rapidly shrinking market. So we expanded outward. We knew what markets we wanted to hit next, and we started contacting people in those plants.

We hadn’t planned to move into other markets until we had case studies in ethanol. That was no longer an option. Sadly, this wasn’t even our biggest handicap.

On top of everything I mentioned in previous sections, plants knew that winter was coming. I’m not talking Chicago winter. I’m talking about the fact that Covid-19 and the accompanying recession made major capital expenditures in 2020 a riskier move than opening a nail salon in Castle Black.

Even though it had such potential in the beginning, the ending was not looking good. But enough about Game of Thrones.

As much as we tried, we just weren’t ready for any of these new markets. And they weren’t ready to spend money on anything without definite and immediate returns.

Small pivots hadn’t saved us, so we needed to consider a bigger one. My co-founder and I talked about all sorts of other options. I could list several of them here. But they were just ideas. And untested ideas aren’t even worth space they would take up in this article.

Then came the big question. Was this even a pivot anymore? We were talking about leaving our target market. We were talking about tackling new problems that needed new solutions.

Anything we brought with would become a monument to sunk cost and technical debt. And that’s not what you want in a pivot.

A pivot is a new beginning with a headstart. You maintain position or momentum. We no longer had either. What we had was baggage.

Calling it a new beginning gave us a chance to reevaluate everything. With all we’d learned about ourselves and about running a business, my co-founder and I were ready to plan our future once again.


5. Don’t Fear Endings

I was ready to dive right back into the startup ocean. My co-founder was in a different position. His near-term plans involved contracting work to build up his nest egg before a new venture.

We also have different methods of finding and building a passion for a project. He needs to discover his passion through immersion in a field or a problem.

The spark of my passion comes from a few key long-term drivers. This is because my keystone is the platonic ideal of the future world and my place in it.

Our paths of passion discovery and our risk tolerance made it clear that we were not going to take the next steps together. This was not a decision we took lightly.

People often compare co-founders parting ways to divorce. I’ve been through a divorce. This didn’t feel like a divorce. There were no hurt feelings. We weren’t doing this out of spite. We simply recognized that our paths forward were different.


Build, Measure, Learn, Repeat

In summary, my failed startup taught me five major lessons.

  1. The idea is not the core source of value in a business
  2. The worst enemy of validation is self-delusion. The second worst enemy is your friends’ good intentions.
  3. All that matters in a startup is what actionable lessons you are learning. Everything else is vanity.
  4. You need to be prepared to pivot. But you also need to be prepared to throw off your baggage and start over.
  5. Endings are fine (GoT season 8 aside). Don’t rush into them, but don’t be afraid to embrace them when they come.

There are thousands of smaller lessons I learned, from offshore contractor management practices to the best way to set up the lanes in a CRM, but those are stories for another day.

Time to start writing the next chapter.

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