The Importance of Failure: 5 Tips to Help You Succeed

Last year on New Year’s day (2014) I got fired from my job. For four months prior to my firing I had been working with three developers to launch a company on January 1st. My former boss got a wind of it and realized the company would be an indirect competitor.There are four of us founders, two developers, a marketer and designer, and me, the business guy . Two out of the four left their jobs back in September, and I was just getting ready to jump ship when I was put on the chopping block. After January 1st, I was sure that we were about to set the world on fire with our product, but boy was I wrong.What we didn’t realize at the time was that it was a complicated marketplace with a complicated flow. None the less, we worked our asses off for the six months that followed. By May 2014 we had a few clients onboarded on the demand and supply side, but zero transactions.In May, the team went to TechCrunch and hacked up a product that was a really interesting idea. We received a ton of press and a couple inquiries on purchasing the technology. We saw more validation in 3 days than we did in the six months prior. We had a decision to make; pivot or stick it out. We decided to shut down six months worth of work only to start a new endeavour. It was a gutsy move, BUT, we were all smarter this time around. There were a lot of things we learned in hindsight. Things that helped accelerate our company from concept to 10K plus monthly revenue in just under 5 months. I will share with you 5 tips that I believe are some of the most important things we learned:1. The Importance of CashThis one was very important to me in particular. We spent the last six months working and we generated $0 dollars. This time around we all agreed that revenue must be generated and everyone who uses the product has to pay. Besides the obvious, revenue does a lot of things for a startup. Convincing people to part with their money is hard. Convincing people to part with their money for a service they’ve never heard of, well, that’s an art. Revenue is a form of validation. When people are willing to pay for something it means it has a value. For founders this validation is a psychological gain, and for the business it’s life blood. Cash today will support you tomorrow.2. The Importance of ProductThis is where I believe most startups go wrong. The truth is, a lot of startups don’t offer real value. Here is what usually happens at the idea phase; Idea guy: “I have this awesome idea that’s like X for Y”, Friend 1: “That sounds awesome!” Friend 2: “Narly! You should totally do it” Friend 3: “I needed that exact thing like last week” Friend 4…. you get the point. We all tend to fall victim to confirmation bias, especially when it’s our own ideas. It’s a death trap, but that’s why I’m going to share with you an exercise that will force you to face reality. Pitch your hypothetical idea to 50 potential customers as if it were already in existence. If at least 3-5 people are willing to pay, then do it. Otherwise, go back to the drawing board.3. The Importance of Shameless MarketingBuild it and they will come is a losing strategy. Tell 1000 people and you’ll be lucky if 10 show. That’s why marketing should be your best friend, and you have to be relentless. Many people, when they first start out, are timid when it comes to talking about their business. They’ll say things like, “we’re in stealth mode”, “we’re in beta”, or “we haven’t launched”. The truth is you’re not in stealth mode you just don’t have a grasp on your business yet. Pitch your product like it’s the best thing since slice bread. If your startup provides real value you should be excited, because you’re improving people’s lives. You’re helping them solve a problem. You have to put yourself out there and start talking to people. Do things that don’t scale, such as going to events where your audience hangs out. These things will prove very valuable in the long run.4. The Importance of SimplicityWith our last company, here is how a typical conversation would go down:Rando: What do you guys do?Me: We do hyper local discounts and benefits for employees. Employers can invite employees to an exclusive marketplace, where employees can access local discounts and benefits.Rando: Like Zenefits?Me: No. More like discounts to local shops, restaurants, and other stores.Rando: Ok, like Groupon.Me: Not really, we reach out to companies to see if they want to enroll their employees into the program, and then we go to merchants and see if they want to offer a discount to the employees. So discounts are exclusive to employees only.By this point she/he had already stopped listening.Rando: Cool. Good luck.Besides the fact that my pitch needed a lot of work, it took us about 2-3 minutes to explain what it was before people understood it. Most of the time they just stopped listening and didn’t want to be bothered with. That’s a huge red flag. Your product should be so simple that a 5 year old with a credit card gets it and can make a purchase. If people don’t get it within 30 seconds they’re more than likely not going to use it. This simplicity has to resonate throughout the entire existence of your product. From pitch, to design, to user flow, to messaging. Make it easy to sign-up, take cash, and refer friends. If you’re a marketplace, make sure it’s easy for both sides to sign up and start using.5. The Importance of Good PeopleChoose your advisors carefully. This also means choosing people that your business will not outgrow. A lot of startup advisors are great in the beginning, but once the company starts growing their value diminishes. Another important aspect is trust. I’ve seen people bring on advisors solely based on industry reputation or because the company has a need in that specific moment. Whenever you’re giving equity away always make sure it’s to someone you can see in the picture for years to come.Special Thanks to Zoltan Szalas, cofounder of Croissant.You can meet Zoltan and the rest of the Croissant team at NY TechDay 4/14!