How to Successfully Fail at Launching a Startup
There are so many pieces written about what to do and what not to do when launching a startup business. Really, you just need to begin experiencing it and figure it out along the way. No amount of reading or planning can fully prepare you for real-life scenarios.
Anyone can do it. The process will be difficult, but any process worth undertaking involves difficult work. That is makes the reward so much sweeter. Plus, if you’re committed to solving problems while working through the unknown, the process immediately becomes less difficult. If starting a business was easy, everyone would do it.
The key is to fail fast. There are many articles against this mantra, but I still like it. While failure isn’t often desirable, it is better than inaction.
Many people choose to focus on outcomes in their lives rather than processes. These people become concerned about avoiding failure and achieving success rather than maintaining focus on what truly matters: the experience.
Failure and success are relative. They are dictated by your standards alone. At the end of my life, I won’t be thinking of how I failed or succeeded, but rather the experiences I had or didn’t have. If you’ve been thinking about making a leap, just do it. Today has never looked better.
My goal today is to inspire you through a “process-based” story of my own to make your next big move. It’s possible to create memorable experiences by putting very little on the line. Within this story, I’ve cited various resources and tools I used along the way that helped me to fail with success. I hope these will spark ideas in your own journey. This is my story about my most successful failure.
“Failure is the opportunity to begin again more successfully” Henry Ford
The end of Spring was approaching. I was working a full time job at a large online marketing company. I had just taken over my largest corporate account which came with new and exciting responsibilities. This was all well and good, but despite what society (and my parents) would deem a great job with more than a livable salary, I wanted more out of life.
There was something missing intrinsically that couldn’t be fulfilled with the standard nine to five. I wanted my own schedule — not a schedule dictated by a company or a boss. Instead of trading my time for money, I wanted to find a way to earn my time back. Therefore, I filled my free time by formulating possible alternatives that might allow me such a lifestyle. I found myself even listening more attentively to the conversations around me. When friends brought up pain points or life problems that they had experienced, I thought, “How can I solve that problem?” Keeping this frame of mind allowed for my initial discovery.
One day my lovely mom was complaining (in the sweetest possible way, might I add) about our family storage facility. About how it’s sketchy in the first place and it’s just too much work to drive to and from the facility, spending the day hauling belongings back and forth. Plus, she didn’t even know what all was in there exactly. It sounded like a problem – a problem I might be able to help with.
Thus, the “ah ha” moment manifested itself. Dallas/Fort Worth residents needed a more convenient storage solution.
The brainstorming began immediately. I made a note in my phone and hopped on my computer to flesh out the idea. We would target middle to upper class professionals with discretionary income and minimal closet/storage space in highly urbanized residences. Clients cloud schedule an appointment, and we’d pick up, store and re-deliver their items at their request. Additionally, we’d build a website that allows people to see what they have in storage (so they wouldn’t forget) and request pickups and deliveries at the click of a button. I thought I had it all figured out.
Sounds great, right? Well, for some reason I was in such a hurry to get out of my nine to five and into my dream life that I put the entire project at risk. If the company was going to exist, I thought, we needed cash flow coming in as soon as possible. Therefore, we needed proof of concept quickly. It just so happened that moving day at our local university campus was a month away – the exact time of year when there was a high storage demand for the out-of-state students. I decided to apply the same solution to a different market: the college student market.
As I would later find out, the market you know might not be the market that needs you (or the space might already be cornered).
Regardless, the choice was made, my foundation was built and it was mid-April so time was short. Planning and execution had to be quick… four weeks quick.
I was hitting the ground running with no real research or data to go off of. Just a bunch of assumptions. How could anything go wrong? Although I had chosen the college market as my “proof of concept” market, I still wanted to test my initial assumptions by finding out more about the urban professional market. I needed research.
As I was doing some preliminary investigation on my target market, I ran into the classic entrepreneurial encounter — the idea had been done already. Companies like BoxBee, MakeSpace and BoxButler were way ahead of me. I read articles about each raising millions of dollars in seed funding for branded trucks, high quality storage facilities and skilled employees for engineering and moving. I was immediately let down. Disappointed might be an understatement. Of course it’s been done, I thought.
Instead of giving up right there and then, I began to look in a more positive light. First, there’s proof of concept — it’s evident that this is a solution that people find worthy of purchase. Second, I noticed that we would be (at least for the time being) differentiated through geography. These rivals only participated in large urban markets in the Northeast (NYC) and the West coast (San Francisco). No one in the South had truly established themselves.
As I found out later, this was probably for good reason considering the South isn’t struggling for space like NYE and SF. In turn, the pain point of the consumer and thus the overall value proposition of the company were weaker. Also, in this day and age, if we’re still betting on geography, we’re going to need a special case in mind. Again – didn’t learn that ’till afterwards.
Full steam ahead, I took the proof of concept and geographical differentiation as worthy of continuation and continued my research. I figured it was important to justify that market demand actually existed in my area and that I wasn’t approaching the business off of assumptions like the success of other businesses way up north.
I developed a few marketing objectives and turned those into research questions that might help me determine if I was solving a problem. Initially, I built the survey with Survey Monkey, which I then sent to a few friends who I believed might encompass my target market. I also pushed the link to my social networks… which to no surprise, didn’t give me nearly the scale that I had hoped for. I must have received upwards of three responses. Great, what’s next?
Then I discovered Google Consumer Surveys… which was awesome. It’s a fantastic tool for research at scale. You can restrict the survey geographically and apply other demographic filters to reach a relevant audience. I thought it was perfect. The catch: you need money. Before I spent mine, I needed to understand how it works:
The cost model of GCS is structured as a pay per question multiplied by the number of people you want to reach (50 people x 2 questions = $100). I figured a sample of 100 people could give me a statistically significant number. That said, the more money you plan on investing in the long-run, the more people you probably want to reach.
(I ended up spending ~$50 for this service. Search “google consumer survey coupon” for a $100 discount code. Essentially, the survey then becomes free if you want to reach 100 people with one question; this discount seems to change from $50 – 100 depending on the day).
I actually liked the incentives that the cost structure put in place. Respondents like short questionnaires and researchers want relevant data while not breaking the bank. It forced me to spend a good amount of time developing research objectives and questions that meet those objectives. Originally, I started with twenty or so questions and was able to cut it down to three objectives and four questions.
Three days later, I had my results in. Each question received a hundred responses from women living in Texas:
- RO1: To determine if women desire more closet space.
- Are you satisfied with your closet space currently?
- Yes (52%)
- No (48%)
- Is there space in your closet that is being taken up by seasonal items (clothes, shoes, equipment), that you’d like to reclaim?
- Yes (71%)
- No (29%)
- Are you satisfied with your closet space currently?
- RO2: To determine what women do when their closet space is full.
- What do you do when your closet space is full?
- Organize (44%)
- Sell, Throw/Give Away (43%)
- Storage (13%)
- What do you do when your closet space is full?
- RO3: To determine if women would pay for an alternative method of storage.
- If you could have an infinitely larger closet, how much would you pay per month?
- $0 (44%)
- $10 – $20 (40%)
- $20 – $30 (10%)
- $30 – $40 (3%)
- $40+ (3%)
- If you could have an infinitely larger closet, how much would you pay per month?
Okay, so I learned that for the most part, women were satisfied with their closet space (Of course, my initial reaction was that I felt skeptical of this data point).
I learned that unnecessary items are taking up space in their closets and that women want to reclaim that space (great news!).
I learned storage is perhaps one of the last actions women take when their closet is full (I chose to believe that was because they didn’t know about my potentially “game-changing” service).
Finally, the vast majority of women wouldn’t pay for the price range we had in mind (that’s okay, I thought, it will just be a niche service).
Obviously I wanted to remain positive, but to a certain extent the data didn’t lie.
The survey was a great start to understand the space quantitatively, but I needed qualitative inputs as well. Maybe the survey was wrong, I thought. I needed input from wiser and more experienced entrepreneurs, teachers and friends (why I didn’t go straight to the end-consumer here, I’m still not sure). I didn’t know what I was doing and needed help. Help from people.
I recall having an overwhelming sense of desire to meet with as many people as possible just so I could pick their brain and widen my perspective. I believed that the input of others could reduce my risk while improving my chances of sustainability. I probably had coffee with someone different every day. I quickly found that people love ideas and inherently want to help you. Ideas get people excited. The decision to be open about the idea was the best decision I made throughout this whole journey. Remember, if you’re choosing to keep a secret, no one can get excited or care about your idea.
I told my idea to a few friends with solid startup experience. Everyone I spoke to had different reactions and differing feedback. It was awesome, but also extremely difficult because often the feedback received would come through as conflicting. Regardless, many of my meetings with friends, professors, and business people resulted in radical shifts in effort from one focus to another which definitely helped to keep me in line.
One professor asked me about expertise: what was the unfair advantage that I had in this field that might qualify me to run such a business. In fact… I had none. I knew nothing about storage; just a desire to get a company up and running. There was a missing piece to the puzzle. I needed a partner.
That’s where Zach came in. We were great friends throughout college and remained very much in touch after graduation. Zach is the CEO of a very respectable values-based venture in Fort Worth. This was exactly the kind of person I needed. I saw Zach at a bar and we began to chat. One thing led to another and I told him about the idea.
The more we talked, the more excited he got. We removed ourselves from the party and escaped onto the empty rooftop to discuss further. Right then and there he loved the idea so much that he wanted to help make it a reality. We agreed to become partners in the effort – we’d figure out the ownership at a later time.
The only challenge that he made sure I was aware of was that he already had a huge commitment in place: a start-up of his own. This was his baby, and it needed his attention. We decided to move forward with the understanding that Zach’s time might be limited, which otherwise could have a valuable impact during this stage of conceptualization and implementation.
With the little time he had, Zach immediately brought to the table experience, connections and resources. In fact, he’s solely responsible for a lot of the resources cited in this post. His existing business was in the moving services industry and his expertise was supply-chain oriented. He offset everything I was lacking in terms of strategy, and execution, making him the perfect partner in this venture.
I had a partner, but we still remained skeptical of my idea and our strategy. We continued to seek advice from others to “de-risk” the venture.
Zach introduced me to a place called Tech Fort Worth (a non-profit startup accelerator and incubator). Zach had office space here, and the organization was a critical factor in helping get his business off the ground quickly.
One afternoon I attended a happy hour. The event consisted of thirty or so established business owners and inspiring entrepreneurs. It was so exciting and there was a ton of energy in the space. The event functioned more or less as a speed dating event — quick introductions followed by your elevator pitch. At first, mine was incredibly sloppy. It was pretty embarrassing. I hadn’t prepared for this at all. However, after about three or four introductions (and a couple drinks) it began to take shape and the conversations become more meaningful and to the point.
A couple conversations stood out from that night. One group in particular was ranting about how entrepreneurs are misled by thinking they need a website/developer. They were advocates of hiring “architects”.
Architects? As in people who design the construction of buildings? This concept sounded strange to me and in turn got me really interested. I recall looking up as much as I could about architecting for success. It a nutshell, it involves a technical professional analyzing the needs of all the stakeholders and functions in a business. Then based on those needs, help build or oversee the building of a business platform that allows for growth. It takes into account what technologies to use and the back-end of things, not just the consumer-facing website. It was great to know, but really, I didn’t need a website or an architect at all (again, too bad I didn’t find this out until after). All in all, the architect strategy seemed interesting, but I needed to launch sooner than the expected lead times that come with undertaking that sort of project.
Perhaps the most valuable feedback I received was from sitting down with a professor. He introduced me to the concept of developing strategic partnerships — partnering with companies that share a similar target market. The idea here being that as a business, you want to best serve your customers. Since there are other businesses out there that are already serving your customer and fit into their lifestyle solutions, they might recommend your business as well. The partners in turn provide organic leads for one another.
I determined that my strategic partners would be movers, interior designers, real estate developers, membership clubs, downtown/loft apartment complexes, and maybe even personal chefs. I’d form relationships with any and all companies that might have input or access into the home of my target market. For me, this was a new idea, but I now consider it a necessary step towards thinking about and establishing a business.
The direction of the venture was beginning to come into form and I had some next steps developed. I was going to create a website and begin to spread the word to strategic partners and students. In order to spread the word effectively, we were going to need to come up with a company name.
Talking to experienced individuals was incredibly insightful, but they’d always ask what the company was called. I remember my partner and I started with code names, just to get as far as we could in the planning process without going through the inevitable pain of having to come up with a name.
Alas, the time had come. We needed to start building consumer facing products. This would require spending that we didn’t want to have to re-visit. We faced the beast head-on with a long Monday night and many cups of coffee in front of a giant whiteboard. We spitballed a ton of potential name ideas.
We knew we wanted to communicate a next generation storage service — not your grandfathers storage company. We continued around the same themes: space, boxes, closets, vaults, clouds, sky, spare, safe. It got late fast, and eventually we went home empty-handed with only a bunch of words on a board to show for it.
While we were in the car the next evening on our way to our daily after-work meeting, the idea come to fruition: CloudBoxd. When we arrived back at the office, we wrote the new name on the board in red marker. We stared at it a while, nodded our heads, and felt relieved that the process was over.
That said, neither of us are big fans of the name to this day. It just doesn’t at all follow the standard conventions of a good business name.
Whatever — we now had a name. We could proceed with building client facing products. Except… we needed a logo. A visual representation of what our company stood for. Plus, if it looked visually appealing, perhaps it could offset the mediocre name we had chosen.
I spent a couple days working on some design concepts, but found it wasn’t moving at the pace I was hoping for. It was taking away time which could and should have been spent elsewhere.
That’s when I found 99designs.com. For those not familiar, 99designs is a marketplace of graphic designers from around the world that compete to “qualify” and “win” your design contest. I was able to enlist over 30 designers with 229 designs in less than one weeks time (check out the CloudBoxd brief here). Since I was attempting to bootstrap the operation, this was one of my bigger mistakes from an investments perspective. However, given the expedited delivery time and how it turned out aesthetically, I was ultimately happy with the decision.
Here’s the final product:
Okay, great. I had my brand name and brand logo ready to be spread thoughout the world. Things were moving in the right direction.
Side Note #1: If you’re interested in using 99designs, I believe a lot of the success of this service comes from 1) the initial brief and 2) on-going feedback (check my brief out, here). The more detailed you make the brief and communicate your vision in the beginning, the more artists you’ll attract and the less feedback you’ll have to provide on the tail-end. Regardless, provide feedback on a consistent basis. They’re fast, and if you’re spending a lot of money, you’re going to want as many qualified entrants as possible. Once it’s all said and done, make sure to ask for the lot of file types – it doesn’t cost you anything extra. You’ll get .jpg files but ask for .png, .psd and .ai. That way you have the work that’s completed and you can edit as the need arises if you have access to adobe illustrator.
Side Note #2: Colors and fonts are important, so pick your brand colors (hex#) as well as the font name and # – you want consistency and this allows for easy communication between vendors for marketing materials (shirts, cards, etc). You can find good free font template downloads at datfont.com. Filter down to a style that works for you. Also, I’ve found that if you go through Tim Ferris’s affiliate URL, you’ll save $100 (click here).
Now that I had the logo, I could finally input it into the website. I used Wix to host and create the site, but I researched and tried out a few different website builders that led to dead ends. At the time, I found Wix to be the most intuitive, but mainly stayed for the shopping cart/check-out process functionality and the mobile friendly optimization. Wix also comes with additional tools they call “widgets” that are both free and paid. I integrated “123 Form Builder” for my check-out process that’s initially free, but lacked the number of fields that we believed was necessary for an online check-out. I ended up paying for the premium service here.
NOTE: This blog you’re reading right now is hosted by WordPress, which houses 22% of all the sites on the web. It’s greatness and I love it. It has a larger learning curve <link to old post>, but comes with some great robust SEO functionalities and is optimal for bloggers.
Overall, it ended up looking pretty professional (in my personal opinion). As of today, I’m not paying to host the domain so unfortunately it’s dead and buried at the moment, but I was able to capture the screenshot below:
Apart from the logo design and website, my partner and I also used a few different online solutions to project manage. I’ve detailed each below. These included:
- Asana, a tool for organizing projects and holding people accountable to deadlines (Trello also works well).
- Google Docs to share changes (strategy/planning documents, website content, Q&A). This was a huge time-saver and productivity tool for us considering these documents required collaboration.
- Customized emails and signatures, which linked to our homepage and social networks (search “how to create customized email address for X email platform”). It works great for all businesses as another source of referral traffic to your site.
Here’s an example of how mine turned out (each icon is linked to the site or our social networks):
- Another tool we used was Google Voice. This was incredibly easy to set up and I’d definitely recommend this tool if you business needs a phone number. You can make customized phone numbers that redirect to your own cell phone (plus, if it rings through yours it can redirect to other team members as well). Pick a number with a trustworthy area code. Additionally, look into making your seven-digit number a word that your clients can remember easily upon first read. We ended up using (720) 600 BOXD
- In order to accept payments, I ordered Square online for free and it showed up in the mail no more than a week later. You can also buy this direct from retailers like Apple (I believe) if you don’t want to wait. Once I got it, I put through a test order of $1 to ensure the account was credited properly. I set up a meeting with my local bank and asked if I could set up a new checking account for “budgeting purposes”. They followed through and sent me another card that would operate as my business card. This would be my unofficial company bank account that would be connected to Square and leveraged for any reinvestment purchases.
After I had accumulated the raw materials that I considered necessary for next steps (detailed investigation/research, meeting amazing people, and building a trustworthy online presence) it was time to go out into the real world and make things happen. I needed a place to store people’s stuff.
I developed my pitch and began making my way around the storage facilities in the area. My spiel involved a partnership opportunity — I would help improve occupancy rates while developing a custom solution for their customers that would help differentiate their facility from competitors. I was ready to execute.
Many of the receptionists were caught off guard – this wasn’t a conversation they were used to having. Responses ranged from simply “not interested” to “I don’t think that idea will work” to “people don’t trust the internet”. Not surprising, the latter came from an older gentleman, but I thanked him for his time and moved on, not wanting to waste any more of mine. Along the way I received three or so positive responses — there was interest.
Eventually, I came back and followed-up with one of the first establishments I visited: A1 Self Storage. It wasn’t anything special in terms of amenities, but the owner was particularly nice, gracious and an absolute pleasure to talk to so I knew it was a good fit. A1 didn’t have the economies of scale that a Public Storage could provide regionally, but I knew keeping it local and partnering with A1 was best for boot strapping initially. The unit cost me $50/month, with the ability to shift into other units if the business grew.
Everything was falling into place, but somewhat delayed. We were behind schedule. We originally had planned for a three week marketing campaign. We were down to three days. The word needed to be spread, and fast.
I got most of my marketing materials at Staples. My campaign was going to be old school – paper fliers left on car windshields. Again, the digital marketer in me showed itself as I was wanted to determine attribution. I came up with a coupon code strategy that would be placed on the fliers. Clients would input their coupon online. I would offer 10% off upon redemption in return for identifying which “consumer segment” was renewing. I could also determine which flier placements had the strongest return. I came up with a five letter code, with each letter standing for a unique variable:
- P = Fliers (my marketing campaign)
- C/B = Color vs. Black & White
- H = Hood of Car
- I/O = In-state vs. Out-of-state license plates
- F/N/L/C = name of the parking lot
My theory was that 1) colored fliers placed on 2) out-of-state cars in the 3) freshman lot would perform best. The first and third variables were implemented to serve as placeholders in case I wanted to run campaigns in the future.
Some of my very generous friends helped me flood the freshmen lot with these things (sorry, Freshmen!). If I may say so myself, we probably had 100% Share of Voice in that lot. Looking back, I spent way too much time on trying to develop an attribution methodology. I should have focused more on aesthetics over attribution. Oh and guess what – not one person used the “online codes.”
The waiting game had begun. Every phone call, text message and email that came through my phone was felt with such anticipation as I waited for my first customer. Then one day it just happened. A student had seen my flier, checked out the company website and passed along our number to his mother. She called wanting to know pricing — always a good sign from a potential client. There was actually an intent to purchase from my service.
She asked if she could pay over the phone.
Not once had I considered the notion that a customer might call and ask if they could pay in advance, over the phone. I figured clients would either just 1) purchase from the website or 2) I could swipe their card during face-to-face pick-ups and re-deliveries.
It turns out I was wrong — but the starts aligned. I was home, and Square was right by my bedside. I fumbled through this process, putting the phone on speaker so I could see the app and read through the steps to complete a transaction. It worked. I just had my first paying customer – and she actually paid in advance without ever seeing the real product or service. I believed the website developed a sense of trust in our business.
I acquired two more customers that week. I netted over a $10:1 ROAS (return on advertising spend) just from passing out some cheap fliers. Time had run out, but I had enough customers for our test market during move out day which allowed me to re-coup much of my initial investment.
Move-out day was here and I was on my way for our first client pick-up. His name was Mason. He was a really nice guy from California and needed his stuff stored for the summer. I helped him move everything into our truck (which I last minute scrambled together and borrowed from a friend). As I entered the dorm rooms I saw how outmatched I was. The major players of the industry were fleets of workers with huge trucks. Their marketing material was all over the dorm halls.
Despite these guys being the “major players” I read their value proposition from one of their fliers that was posted near an elevator. The more I read, the more there wasn’t anything that stood out to me that our business couldn’t offer. I felt a sense of accomplishment knowing that with just a little more time and improved marketing strategy, the business could compete with the big boys. Plus, their price was over twice ours, which meant I was charging to little and that there was room for greater profitability.
After everything was packed away in the truck, I won’t forget what Mason said to me: “Hey man, you made this whole thing really easy. Thanks.” I was immediately moved knowing I was able to make someones life just a little bit easier. “No problem, that’s what we’re here for,” I said. That was a cool moment for me. I remember when I re-delivered his belongings at the end of the summer, his mother was there. She thanked me and said “we’ll see you same time, next year”. Although I might not be there, it was inspiring knowing that not only did they trust me, but they would totally do it again next year.
The student move-out day had come to a close. Everything was safely stored and I was ready for the summer. The next couple of months, I attempted a few pivots to find the right market for the business according to my initial assumptions (urban market), but nothing stuck. The summer ended and I returned my customer’s belongings safe and sound.
Over that summer, I constantly pondered the future of the business. Who was our market? Was this really what I wanted to do?
Eventually, the business slowly fizzled out from lack of direction. There were definitely ways that the business could have survived, but I learned a lot about business and myself during this short time, which I’ll explain shortly. Overall, I have to say it was a great experience.
If I had to do it all again today, here’s what I would do:
- Build the audience before building the product.
- Develop mock-ups of the idea in a powerpoint presentation. This would include the value proposition and pictures of what the website might allow them to do.
- Go to my potential markets and show them the concept: pick-ups and re-deliveries of your stuff.
- Get their feedback. If they liked it, tailor the product based on the feedback. If it’s not for them, find a new market and start again.
My biggest mistake was never really finding the end-consumer or determining that this service was something people really needed. The student market was merely a test for us to get our footing and start generating cash. I had proof of concept through other geographical markets, but never found a market that wanted the product, nor put much effort into survival/pivoting.
The biggest lesson I learned personally was that my standards were set too low. I was aiming for the sky when I should have been aiming for space. I wasn’t trying to be the best in the world at something. I was just trying to create a small business. The thrill, risk and reward were too low to justify continuing.
“You can fail at what you don’t want. So you might as well take a chance at doing what you love.” Jim Carrey
This whole experience was accomplished within one month. There’s a lot you can do when you commit and set your mind to a project – even if you know nothing about it going in. Keep in mind, I did all of this with a full time job, so you have no excuses!
Don’t spend (too much) money. Start up fast. Fail quickly. Meet people. Gain new experiences. Have fun. Tell people what you learned.
That’s how I believe you can successfully fail at launching a startup. And who knows, maybe you’ll make your dream a reality.