failure

Warning: Watch Out for Startup Roadkill

By Mark Evans in Startups 1 Comment Tags: , ,

When it comes to startups, I’m a glass half-full person.

To me, every startup has the potential to be successful, although it does depend on a combination of their ability to execute, some luck, and being in the right place at the right time.

Although I don’t want to burst anyone’s bubble, here’s another reality: For all the enthusiasm and entrepreneurial bullishness, there’s going to be a lot of startup “roadkill”. Maybe not over the next few months but it’ll happen, and it ain’t going to be a pretty.

It goes against the grain for an entrepreneur or startup to talk about the possibility or even admit their startup is struggling, but starting any business is a high-risk proposition. Not everyone is going to succeed, no matter how good their idea, how hard they work, or how much money they raise.

Startups are going to flounder and fail because their products don’t resonate, there is too much competition, there’s a lack of execution, the wrong people are hired, too many strategic mistakes are made, etc.

As much as we celebrate every seed financing and collectively cheer when a startup is acquired, it is also important to be prepared for bad news. Startups will flame out, burn through capital or attract no customers – some of these failures will be high-profile, while most of them will quietly shut their doors. It’s the way of the world for startups.

At the end of the day, there will be plenty of failures, lost dreams, frustrated entrepreneurs and disappointed investors. The thing to remember is failure is a part of the startup landscape. It happens. Rather than wallowing in our failure, we need to learn from it so that the next startup doesn’t fall victim to the same mistakes.

Now, it’s your turn to provide some thoughts.

The Sad and Positive Side of Startup Failures

By Mark Evans in Startups 8 Comments Tags: , , ,

As the Canadian startup landscape becomes increasingly active and entrepreneurs get more bullish about their prospects for success, it’s important to remember startups are also high-risk propositions. It means there are far more failures than successes.

I was reminded of this reality yesterday when Thoora announced it will be shutting down on Dec. 15. It will be a sad day for Thoora’s employees who have fought the good fight during its “crazy journey”. For people who sit in the glass-half-full camp, Thoora has provided many people with invaluable experience that, hopefully, they will benefit from down the road.

In Canada, we tend to treat failure as a bad thing when, in fact, there are many positives. Instead of whispering about a startup not making it, we need to see failure as an important part of the startup ecosystem. Not every startup is going to be wildly or even mildly successful or purchased by Google, Facebook, et al. In the real world, many startups don’t make it for a variety of reasons.

It is, however, disappointing when a startup fails because the ecosystem operates on boundless optimism about what’s possible. It is difficult, if not impossible, to be an entrepreneur if you don’t believe you’ll be successful. This is why it’s sad to see startups shut their doors.

Over the next few years, there will be lots of failures such as Thoora. With the thousands of startups now be created, many of them will work hard but gain little or no traction. This is the dark side of current startup euphoria.

At the same time, life goes on. As someone who worked for two startups that weren’t successful in attracting many users or revenue, I can honestly say the experience gained was invaluable. Now when I work with startups to jump-start their digital marketing efforts, I tap many of the lessons from my startup experience that will, hopefully, play a small part in helping them be successful.

The Two Big Reasons Why Start-Ups Fail

By Mark Evans in Startups No Comments Tags: , ,

FailureAccording to a study by the Startup Genome Report, most start-ups fail due to premature scaling. In simple terms, they try to grow too fast, spend money on the wrong things, hire too many people, etc.

This may have some truth but from personal experience in working for and with start-ups, there are two bigger and more fundamental reasons why most start-ups fail:

1. Their idea or vision isn’t compelling, interesting or fills a void or need.

2. Their usability of their Web sites is terrible, making it difficult, if not impossible, for time-strapped consumers to understand the service, let alone embrace it.

It’s a devastating one-two punch that leaves many start-ups doomed from the beginning, regardless of how well they scale or manage their money.

Much like it takes little time to tell whether you’re going to click with someone on a date, you can tell fairly quickly whether a start-up has any chance of success based on their idea and usability.

Let’s take a look at these two key ingredients:

The idea: At the end of the day, a great idea is going to make or break a start-up. You can layer on whatever you want such as excellent public relations and social media programs or a beautiful design but if the underlying service doesn’t meet a need, void or delight a user, the chances of it winning over enough consumers to create a business are bleak. It’s the old adage that “You can put lipstick on a pig, but it’s still a pig”.

Too many start-ups get excited about creating a feature rather than a service. What they’re offering is interesting but not interesting enough to get enough people on board. That siad, you would be surprised to see how many entrepreneurs fall so deeply in love with their idea that they forget about whether it has enough substance to be compelling to other people.

Usability: Assuming the core idea has some potential, too many start-ups doom themselves with bad messaging, navigation and design. It means that even if someone found the service to have some appeal, their ability to try it out is under-mined by confusing language, un-intuitive navigation and weak calls to action.

The truth is most Web users are lazy. They want things to be easy, user-friendly and not involve a lot of work. As a result, an online service has to be totally accessible and a snap to grasp, otherwise users will quickly move on to the next service or thing that catches their eye. Some good examples of companies that pass the “get” test with flying colours are MailChimp, Freshbooks and DropBox. In takes seconds to know what they offer, and what people should do next after visiting their sites.

From where I sit, the idea and usability set the stage for failure or success before premature scaling. Many start-ups don’t even get the chance to prematurely scale because they’ve already failed.

For entrepreneurs, it means they should test and re-test their idea. Does it resonate with people enough to seriously explore it? Does it fill a need or void? Is a service or a feature? Then, the focus has to be on making the service accessible enough so enough people will take it for a test-drive and, hopefully, become users.

For more thoughts on the Startup Genome Report, check out John Cook on GeekWire.

As well, a good read is Rob Walling’s blog post on the importance of start-ups being able to find a way to convince consumers to give you more money than what it costs to acquire them.

Some Startups Should Be Allowed to Die

By Mark Evans in Social Media, Startups No Comments Tags: , ,

Dead endThe first startup I joined, Blanketware, lasted five years, which is a lifetime in the scheme of things. Looking back, the company, which developed natural-language navigation technology to make it easy for people to do things online, should have been allowed to die after a couple of years when it became apparent that success was proving elusive.

But startups are difficult “lovers” to give up on after all the time, effort and money invested. As much as it is becomes obvious an idea has failed to resonate, entrepreneurs also believe there are better things around the corner.

While optimism reigns eternal, it’s not always a positive thing if it means keep something alive that should respectfully die.

This reality struck home with the news that Sprouter, the social network for entrepreneurs, was not closing its doors on Aug. 3 as it previously announced. Instead, “a few of the potential parties that have come forward offering to keep the service going”.

While this is obviously encouraging news for Sprouters’ founders and investors, you wonder if its possible resuscitation is a good thing. After all, Sprouter struggled to find a way to make money despite building a strong brand. At the end of the day, if a company can’t make money, it shouldn’t exist so people and money can move on to things with better prospects.

To paraphrase the Clash, the conundrum now facing Sprouter  is deciding whether it “should it should stay or should it go now”. If it stays, it means pulling in enough money to give it time to discover a business model. If it decides to go now, it means calling it a day, and moving on. Either way, it’s a difficult decision.

While we like to celebrate the successes of startups – the acquisitions, the large investment rounds, etc. – there aren’t a lot of stories that put the spotlight on failures unless they are spectacular. As I mentioned in a recent Globe & Mail column, there is as much to learn from failure as success.

Sprouter is a rare instance in which a startup’s failure captured a lot of attention. But its struggles are just a tip of the iceberg when you consider the high fatality rate of startups.

Why Social Media Programs Fail

By Mark Evans in Social Media 4 Comments Tags: , ,

There is no lack of focus on social media success stories, even though we keep talking about the same ones (e.g. Old Spice, Dell, Starbucks, Dunkin’ Donuts, etc.) over and over again.

But what about social media failure? There’s little attention paid to campaigns and programs that drop the ball, blow up or, frankly, are a waste of time and money. The thing about failure is it shouldn’t be shoved into the corner and alone. Failure needs to be scrutinized, explored and studied so we can understand how to create successful efforts.

Here are some of the leading reasons why success can be so elusive:

1. Unrealistic expectations: Like anything new and exciting, many companies have completely unrealistic goals about what social media can achieve. It can’t turn good products into good, it can’t transform your brand overnight, and it can’t turn bad customer service into stellar customer service. By setting the bar way too high, companies set themselves up for disappointment.

2. A failure to execute: There’s a lot of talk about social media but far too often not a lot of walk. Everyone gets excited about social media strategic and tactical plans but when it comes to actually implementing them, the ball gets drops. This usually happens after the novelty of social media wears off. It stops being exciting, and start to become a daily grind. Let’s be honest, social media on a day-to-day basis is hard work with little glamour, which explains why execution can be so challenging.

3. A lack of transparency: It is impossible to reinvent yourself on social media. A company can’t suddenly embrace a new identity. Instead, it needs to use social media to gradually change how it does business and deals with customers. But at the same time, it has to be true to itself.

4. Too much of a focus on sales: Social media not about the hard sell; it’s a soft sell environment. There is lots of talk about how Dell has sold several million dollars of products on Twitter but people forget that Dell’s total revenue is more than $50 billion, which makes its social media sales a drop in the bucket. Companies that try use overtly social media to drive sales as opposed to provide value-added information about their products/services or engage with customers will fail.

5. Un-social goals such as boosting Twitter followers or Facebook “Likes”: Social media isn’t a numbers game; it’s a platform to build relationships and your brand, and encourage conversations with existing and potential customers, employees, suppliers, etc. Getting lots of followers or “Likes” is a dividend of having an engaged social media program.

6. Too much attention paid to creating something to go viral: It is difficult, if not impossible, to create something that will go viral on social media. Something that goes viral has as much to do with luck and being in the right place at the right time as it is about great content and creativity.

7. Trying to be all things to all people: This is otherwise known as the “shotgun approach” in which a company embraces lots of social media tools to establish an extensive presence. What often happens is they spread themselves too thin and, as a result, do everyone in a mediocre way. A better approach is doing fewer things but doing those things as well as you can.

8. The lack of a corporate champion. Since social media is a relatively new corporate activity, it is important to have someone within the organization who can lead the charge every day. This is someone who believes in the potential of social media at a time when there is more focus on return on investment.

9. Bad or not enough content: There is lot of focus on the tools but content is still king, and that includes social media. Without a steady supply of content (blog posts, tweets, updates, video, photos, contests, etc.), it is difficult to engage consumers a regular basis. That being said, content is not easy to create but it can be a great investment.

10. A lack of social media talent to operate programs: The tools let you do lots of different and interesting things but people use and power them. Without good and experienced talent, social media efforts can be for naught.

Note: This post originally appeared on the Sysomos blog.

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