Hey {{ subscriber.first_name }},
This is the first of a 2-part series covering things I learned from success and failure.
As a reminder, you're receiving this email because you signed up on my site. If you'd prefer not to receive emails from me again, click here to unsubscribe.
What I’ve Learned from Success and Failure
There’s an ongoing debate in the startup-o-sphere about whether you learn more from your success, more from your failures, or the same amount from both. Some even argue that you don’t learn anything from failure because “failure is not an option.”
My experience has been that someone who doesn’t learn from success and failure isn’t trying hard enough. I’ve learned an enormous amount from both. And although I don’t have room in this essay to expound upon every lesson, I’m going to cover a handful of takeaways from two specific turning points in my journey as an entrepreneur.
What I Learned from Failure
Several years ago, circa 2005, I had a brilliant idea for a website. Imagine Digg for Personal Finance News. Think about it; it’s genius. Dazzling, off the charts success waited in the wings.
Until it turned into a miserable failure.
The problem was that the idea is terrible. I was young and naive and following the social media crowd, thinking that anything in that niche would take off like a rocket.
Another problem was the name: Flogz.com. It’s too painful to utter in public. Almost as bad as using a word like startup-o-sphere in a serious essay.
You might dismiss the idea as a bit of impulsive craziness from a newbie entrepreneur, but I hear ideas like it every week through my blog and from people who contact me after reading my book.
I believe, with genuine sincerity, that the naivety of entrepreneurship never dies, it just passes from one generation to the next. Sometimes this naivety of what can and can’t be done leads to great companies like Microsoft and Google. The other 99.99999999% of the time it leads to terrible ideas like Flogz.com. Or govWorks.
So after six months spending every moment of my spare time building, launching, marketing and nurturing Flogz, I closed it down. The idea wasn’t viable, at least not for me.
But though it was a complete failure, I learned a few invaluable lessons that became foundational in my approach to entrepreneurship.
Lesson #1: Solve a Problem
When I was spreading the word about Flogz I received the same question from several bloggers whom I contacted: “Why would someone use your site?”
I had a well-written answer to this question, but deep down I knew something was amiss. The problem was that I was searching for a nameless, faceless customer who supposedly had this need for aggregated personal finance news. But I didn’t know a single person in real life who had any interest in using the site. This should have been a red flag.
Only in hindsight did I realize that the single biggest reason Flogz failed was because I was solving a problem that no one had. Or, at least, a problem that wasn’t painful enough for someone to change their web surfing habits to frequent a new website.
Lesson #2: Know How to Reach Your Customers
The second largest reason Flogz failed is because I didn’t know how to reach potential customers. Who were my customers, anyway? Anyone interested in personal finance, of course. This answer should have been my second red flag.
While my initial research had turned up many personal finance blogs and websites, I didn’t spend enough time dissecting the real state of the market. Most of these blogs had tiny readerships, and the larger ones were constantly hounded by people trying to get their website mentioned.
Without knowing anyone in the niche it was preposterous to think I could build traffic through bloggers, even in the days when this was a viable marketing strategy.
Advertising was also a bust. For one, it was expensive. For another, how much sense does it make to pay for advertising to bring people to your website with the hope that they’ll click on your ads? It’s a no-win situation.
That pretty much summed up my marketing plan at the time. While I did work on SEO and posted our stories to the handful of social news sites that existed, nothing I did brought any kind of scalable traffic, and the traffic that showed up didn’t stick.
Lesson #3: Know Your Revenue Model (and Advertising Doesn’t Count)
Advertising. The revenue model for websites with 100 million page views, and those that haven’t found a real way to make money.
Flogz was doomed from the start in this respect. Although I’d found that Google AdSense ads paid higher in personal finance than in many other niches, once I had enough traffic to extrapolate my earnings I found I would need a ridiculous number of page views to make “quit my job” money (my goal at the time).
Facebook, Twitter, and Google all began without revenue models and each found one while burning through millions in venture capital. If you have millions in venture capital to burn through, by all means start without a revenue model. For the rest of us, know how your going to make money from the start. And advertising doesn’t count.
Lesson #4: Humility
We all make mistakes. We make bad decisions, come up with stupid ideas, and spend hundreds of hours over six months chasing something that has no prayer of succeeding. This was a great lesson to learn early in my career.
Lesson #5: Entrepreneurial Persistence
Along with humility came the lesson of entrepreneurial persistence. This lesson was that I shouldn’t follow a single idea into the ground, but should accept early warning signs and shut things down while I still had motivation left to pursue my next idea.
Learning to deal with the failure and disappointment of hundreds of hours in sunk costs, and picking myself up to attack my next idea has been a key reason I remain an entrepreneur today.
Stay tuned for part 2, titled "What I Learned from Success." Back at you in two weeks.
Rob