Keep the baby, toss the bathwater: Four lessons from failed ventures
“Many of the character traits we seek in early stage ventures, such as tenacity, fortitude, outsize ambition and drive, can constrain an entrepreneur's ability or willingness to truly step back” and acknowledge the limits of a particular strategy, says Jim Dugan, CEO of Chicago-based venture-capital firm OCA Ventures. “Introspection is easier said than done.”
But failure doesn't have to be the end of the road. Startup gurus believe that many tech ventures fail due to poorly calibrated business models, not inept people or even lackluster technology. The solution, called a pivot, is the entrepreneurial equivalent of visiting the chiropractor to crack your back. Tweak your product and redirect your sales strategy. Then that tangled path will straighten ahead.
That's not to say the process isn't agonizing. BodyShopBids founder Brad Weisberg, 33, knows that firsthand. In January 2012, he raised $1 million for his startup. He created an app that allowed drivers to photograph damage to their cars, then to solicit repair bids from rival body shops. Never heard of BodyShopBids? Turns out it was destined for the junkyard. Even though the app functioned well, the company had trouble building business: Even its most enthusiastic customers didn't get in car wrecks that often, and most people who do turn first to their insurers rather than approach body shops directly. A desperate $300,000 marketing push yielded little fruit, and by summer 2012, Mr. Weisberg was ready to throw in the towel.
It wasn't a decision he made lightly. “I knew that continuing didn't make sense, but it wasn't easy to let go,” he recalls. “This was my idea, something I had obsessed about for years. It was hard to say, all of a sudden, 'You know what? I'm scrapping this.' “
I knew that continuing didn't make sense, but it wasn't easy to let go.
— Brad Weisberg
“It worked out,” Mr. Weisberg says. “But it was hard.”
THE PROCESS BEGINS
Mr. Weisberg's experience dovetails with an observation made time and again by more seasoned entrepreneurs. “You've built something and worked on it for six months or a year, and it's not getting the traction you think it should. That doesn't mean there's not an entirely different market where you can thrive,” says Terry Howerton, CEO of Chicago tech incubator TechNexus.
“The challenge,” he adds, “is to be just as open-minded during the execution phase as you were during the creation phase.”
Of course, the more progress you made during the first incarnation of your business, the more painful the pivot. But those who have gone before say that there are some key questions to ask before redirecting a concept.