Failed founders don't learn much (show some studies)
rolfnelson.com
rolfnelson.com
So, this past year, I've tried 3 different business ideas. Project 1: This was a 4 Hour Work Week idea. I built a contact database for every hospital in the US, I put up for sale on a yahoo store and I pointed Adsense at it. I had done Adsense testing check for demand. It failed. I thought the from my testing I should have been getting 2 to 3 sales at $150 per sale each month while spending $100 a month on Adsense. I didn't get a single sale in 3 months. So, I lost a grand for the whole project. No big deal. I learned a lot.
Project 2: Social cute site. It was a reddit clone for cute pics (cats, dogs, etc...). I shut it down after 3 months, because I couldn't take looking at cute kittens that much. But, I took that code base and what I learned from it to start http://newsley.com .
What I've learned in each one has been invaluable. The argument of whether or not we should try to build a startup to succeed or fail is rather moot, I think. No one builds a startup to fail. But, after having failed at 2 business ideas, I still think it was very worth while. Ultimately whether my success rate ends up being %25 or %29 or even %5. It doesn't really matter to me, because I'm going to keep working at this until I do succeed, and I'm enjoying the process.
I spent $100 on Adsense advertising over the course of a month, which got me around two hundred clicks on the front page, 50 or so clicks on the price page, and 6 email addresses. So, after doing that, I scraped the initial hospital contact list from several different sources, and I paid $500 to have a team of people in India verify each address individually. I then threw the address list up on Yahoo stores for a few months in February through May.
I think that a big part of the reason that I didn't make any sales was because of the economy. I don't think that people were buying much of anything this past winter. Why else didn't it work? I'm not sure. But, after 3 months, I decided to stop paying for the upkeep and take everything down.
Someone could setups the following experiment to test it: after you build the product, split the traffic with most going to the product buy page, but with some percentage going to the original testing page that only collects email addresses. When a person gives you an email, immediately auto-reply with a link to the buy page.
In this way you can compare the effectiveness of demand testing at the cost of some sales (because you make some of your potential customers jump through more hoops). But if I went a couple of months without a sale I would try it just to see if my demand testing worked at all.
Unfortunately, my second time out I didn't encounter the same issues (probably because I learned from them) so the new issues we encountered we couldn't draw on what we learned to solve them anyway. Learned a ton that time too, so now I have experience with twice as many reasons for failure. I won't repeat those, but hopefully can draw on some of them when approaching future challenges.
The odds do go up each time. I lucked out and my very first company was successful (9 years and counting), but the next few endeavours weren't, even though the one was gaining traction (costs were rising faster than profits, didn't see the obvious ways of reversing that trend until too late), and the other was technically superior to other solutions out there (weak sales/marketing side, since the other two seemed to gain traction too easily, I took those things for granted that time out).
Now I'm doing my homework big time before leaping into the next venture, and setting more modest goals short term and stretching out my definition of success. Basically, I'm working on a 10-year plan on a music career with milestones along the way. I know it takes time and perseverance in this industry (as with any), but I do have a wealth of previous business experience to draw from and that is already helping in several ways. I don't believe we don't learn because I know I have.
Well yeah. If you don't think you'll succeed then you're doing it wrong.
With all due respect to the author, I don't think you'll tease anything about the value of different kinds of experience out of a bunch of random stats. You can get great experience at a job, or as a founder, or even not working at all. The value you get is serendipitous—you won't know it until the opportunity strikes, and then you need to seize the opportunity.
Every minute you spend sitting around running numbers to try to maximize the value of your experience is one less minute invested in yourself.
I can think of at least two people - Henry Ford and Walt Disney whose success came after a long string of failures. And that's just the cream of the crop.
The first fifth is about his failures. His failed animation and film companies. The entire 633 page book is about one man's obsession (with the biz ops help of his brother) with bringing reality to fantasy and fantasy to reality.
It may not seem to be your typical startup-type book but it's all about entrepreneurship, failure, and pushing the limits of technology and enthusiasm.
"But for all Walt's continuing assurances of improvement, and for all his genuine desire to make outstanding films, the Alice movies, even with Iwerks's contributions, were only slightly better than routine" p.86
"In creating a world of his own from scratch, Walt Disney demonstrated, more fully and forcefully than ever before in his work, man's potential mastery, which has always been the inherent metaphor of animation." p. 275
I got "lucky" with my first startup and didn't too great with the next two. So, I'm headed the wrong way. On the other hand, it might indicate that once you succeed, you might try to stretch out with a more outlandish idea because you're overconfident, or not quite so desperate as the first time.