First Steps Consulting – Startup Strategy  

It could be assumed that every successful entrepreneur is likely to be in ownership of a few failures buried in the closet.  I will often project the potential success of a new client by the number of failures that preceed him or her.  As knowledge rarely comes from a vacuum, it is actually comforting for me to see the kernels of experience juxtapositoned against painful moments of truth. 

For me, this post is a coming out of the closet with one of my early failures in an attempt to highlight some hard learned truths that others might take to heart.  This is actually a literal coming out of the closet because I pulled my box of Chandelight candles from the dark recesses of the little closet in my study. 

The Context

After graduating with my freshly minted MBA in 2003, I was offered the opportunity to take a concept that an investor developed over dinner conversations and bring it to market.   The concept was for a candle that could be placed over the electrical socket of a chandelier or sconce to allow for a romantic candelight dinner, etc.  I was offered a generous compensation package and I took the bait.

The Lessons

1. Money does not always follow good ideas:  My first mistake was taking the job.  I made the classic error of assuming that if there was money being invested the concept must have some value, and I could find a way to tease it out.  Too often innovation follows money rather than money following innovation.  I vowed from this point forward to only invest my personal resources in ideas that were game changers, and often the game changing ideas are the disruptive ones, and not the ones being readily funded. 
2. Startups are about people first, products second: With my brain awash in business models and strategy, I was too focused on the hard science of business and paid an unforgiving level of attention to the “people” who were part of the little startup.   I learned that as an entrepreneur you are constantly selling your idea both externally, but also internally to get the support of key people.  Without the foundation of a solid network of relationships with people, both internally and externally, great concepts will go nowhere.  
3. If you are doing everything yourself, you are doing something wrong: There was one point during our rapid development of a prototype when I found myself in the basement with a knife carving up candles to fit into our packaging.  The firm we were contracting with had not completed the samples quickly enough for me to show our investor, so I was taking matters into my own hands to have a sample ready for the next day.  At the time, I believed I was “bootstrapping” and showing the kind of pluck that keeps things moving.  In retrospect, I realize I was just doing the job that I should have been driving our manufacturer to do, and probably not doing a very good job of it either. A key skill set of an entrepreneur is to sheppard resources, other people’s resources, towards a concept or business.  If you find yourself doing to much of the task specific work it just means you are not doing an effective job of leveraging new resources from the initial concept.  Bootstrapping as an entrepreneur means getting other people to do the work for little or no compensation rather than just doing all the work yourself.
4. Start selling day one:  The biggest divide in the startup community exists between the innovators and the salesmen (woman).   Innovators fall in to the trap, as I did, that a period of product design and development is followed by a period of testing, and then sales.  What I learned is that sales should start from day one.  The moment you have a concept you can explain, you should try to sell it.  Get people to commit some money to a future contract.  As most salespeople will tell you, it is much easier to get a commitement than a signed contract.  The learning that comes from trying to close a sale will actually drive your product development process and lead to success.
5. Failure is sometimes preferable:  The one good thing about this experience is that is was short lived.  The entire effort, from concept all the way to our first batch of production took less than three months.   Even as our first batch of product came it, we were having trouble getting it into stores.  If something is clearly not working, then quick failure is preferable to prolonged unwavering commitment.  As I stated in the beginning, most entrepreneurs can point to past failures.  The best entrepreneurs can point to many because they had the confidence to fail quickly and the courage to try again.