Featured, Op-Pieces, Startups

We need more bona fide failures

Why is failure important?

Failure is really hard. It is the platter of humble pie you didn’t order. Unequivocal evidence that we got it wrong on some level. Admitting failure makes us fallible. Mortal.

Failure is also a damn good teacher. It helps us course-correct and learn from mistakes. It forces us to stop and think. Regardless of your perspective on failure, everyone agrees that they live their lives doing their best to avoid failure. For most people, their best simply means never trying bold, new things. Fear, embarrassment, and intolerance of failure drives their learning underground and hinders innovation. However, for a select few it means a lifelong commitment to experimentation and learning. For these people who have broken through the pain threshold, failure is indeed an opportunity to begin again, this time more intelligently.

Henry Ford on Failure
Henry Ford on Failure

Why don’t more people talk about failure? If you’re drawn to this story, you probably have an opinion on the reason behind the dearth of stories on startup failure. The most common one I hear is that African societies are too inhibited in their outlook and there’s a stigma attached to failure and those who fail. As far as rationalisations go, it’s compelling and mostly true. Perhaps that’s why the focus is now on getting people to tell their stories.

It’s bollocks.

You can’t convincingly write about what you know so little of. I am reminded of the furore that accompanied Ashley Cole’s autobiography, My Defence, shortly after his departure from Arsenal to Chelsea FC. His old teammate, Jens lehmann, had this to say:

“I do not understand why young players write books. I do not know why a player at 25 wants to tell me all about their big experiences. When I consider the age I am now, I would have a lot to tell people. But it seems to be an English habit to come out with books that nobody needs.”

The precocious Ashley Cole
The precocious Ashley Cole

There is clearly some animosity(towards Ashley and perhaps all English people) but his reasoning is fundamentally sound.

What is failure?

“A thinker sees his own actions as experiments and questions–as attempts to find out something. Success and failure are for him answers above all.” 
― Friedrich Nietzsche

Failure is simply unmet objectives. A startup’s overarching objective is to search for a repeatable and scalable business model. The rest is details. Fundraising, hiring, competitive strategy, and every other thing you know about startups is secondary.

Failure has various flavours but I am only interested in four states of failure.

  1. Failure to launch
  2. Failure to deliver
  3. Failure to monetise
  4. Failure to remain relevant

Failure to launch is the startup graveyard. Here lies the stealth startup. I hear time and time again that the main reason for this is lack of funding. While funding remains a significant hurdle, its impact decreases each year as Moore’s Law reaches beyond semiconductors into all areas of technology and computing. I call this brand of failure fake failure simply because I do not believe anyone – save for those in the most remote recesses of the continent – should be failing at this point. 

Starting a business never gets any easier even if it is cheaper
Starting a business never gets any easier even if it is cheaper

Not to oversimplify, there are several other impediments to product launches including weak project management and perfectionism. I have written earlier about project management failures and the inability of non-technical teams working with remote developers to create basic requirements documents. This leads to feature creep Perfectionism only serves to delay launch as teams strive for perfect products. Entrepreneurs spend years perfecting their products and reading about their markets, about entrepreneurship, and about other entrepreneurs when they should be out there executing. Perfectionism without market feedback exacerbates the negative impact of the Pareto principle in your startup. You spend 80% of your time fine-tuning silly stuff that no one cares about.

The Trivial Many vs. The Vital Few
The Trivial Many vs. The Vital Few

That said, lack of funding is still fingered as the main culprit for failure to launch. If you have a real opportunity and require access to investors, try out PushandStart. It’s an equity-based crowdfunding platform for African startups.

Failure to deliver typically crystallises post-launch and is the first single point of failure in execution. It happens when entrepreneurs realise they cannot provide the service they sold customers on. For example you have built a social network for Ikoyi Club members but you failed to attain the scale which would have triggered positive network effects. Or perhaps you’ve created a Subscription Video On Demand (SVOD) platform for Yoruba action movies but you are unable to license any original content. Or you launched an online  storefront/marketplace for the Lagos High Street that has become a ghost town because you cannot sign up vendors.

Foreground, L - R: Kenoma Agbamu, Tomi Davies, me. Background: Africa-in-China team (the eventual winners) led by Vimbayi Kajese
LeanStartupMachine Lagos Foreground, L – R: Kenoma Agbamu, Tomi Davies, me. Background: Africa-in-China team (the eventual winners) led by Vimbayi Kajese

Why We Need Stories About Failure

People who fail at the point of delivering on their value proposition have already engaged the market and there is significant learning from that experience for veterans and newbies alike. They have learnt about accounting, competition, strategy, hiring, management, selling, and of course rejection and the various ways of dealing with it. And all this learning wasn’t gleaned from the pages of a book, rather it came from taking action, from learning by doing, from getting their hands dirty.

In my role as a mentor for LeanStartupMachine Lagos, I had the privilege of working with a number of remarkable individuals. The LeanStartupMachine process forces teams to build experiments continuously,  validating and invalidating assumptions as they carry out these experiments. Teams learn to pivot their solution – sometimes even the problem – toward a true customer pain. One of the teams had the idea of working on a Uber-esque platform that would use an innovative pricing mechanism to fix fares. Lean Startup encourages entrepreneurs to test their riskiest assumptions first. In my estimation (and I might be wrong), the order of risk is:

  1. Will drivers be willing to sign up to use the service
  2. Do these drivers use smartphones?
  3. Is it possible to [legally]run commercial transport services with private cars?
  4. Will customers be willing to use unregistered vehicles for transportation or deliveries? ❶
  5. Will people understand and embrace the innovative pricing mechanism?

❶ Experiments were run for this assumption

As you can see despite all their experiments,  they only tested the fourth most important assumption. It should be interesting to see how they fare, wouldn’t you agree? Best case scenario – they disabuse me of my pre-conceived notions. Worst case? The world keeps spinning like nothing happened; another startup that built something no one wants to use. Either way, I will learn something.

Entrepreneurs who fail to deliver, monetise or stay relevant have stories that are so much more valuable than the stories of fake failures. These stories provide us with a schema to interpret our world and understand the struggle. The help improve the filter with which we evaluate advice, signalling what is recommended but impractical (like hiring only A-list players) and what is not-recommended but effective (like getting in bed with predatory investors in order to bring your idea to fruition). Fortunately or unfortunately, the people who get to this stage and fail are too few.

In my next post, I look at the two remaining failure states – failing to monetise, and failing to remain relevant. If you have an opinion about anything I have said so far, leave me a comment.

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Finance guy, volunteer teacher, unsigned blogger, and high functioning recluse. Interested in business strategy, new ideas and capital formation.

3 Comments

  1. Thanks Nwachukwu for writing this piece. We all need to hear more bonafide failures. Even better for us to personally embrace them.

    Back in 2011, after returning to Nigeria to partake in the NYSC, I started a mobile vehicle diagnostic service in Abuja with two cofounders. Our service involved responding to calls from clients and mechanics to diagnose vehicle issues with an OBD2 scanner and provide guidance with a charge of N3000

    We distributed flyers at the varius markets and shopping complexes and also tried convincing mechanics to work with us for a N500 commission.

    The business sounded good and started smoothly but only lasted 5 months. We all disbanded and I returned back to the US now working in telecoms industry. Nevertheless I learnt more about engaging the nigerian consumer than I ever thought was possible.

    I'm eager to return to attempt another startup. I just need to take the leap.

    1. Sounds interesting. What curtailed the entrepreneurial adventure in your case? Was it caused by your departure or was there something fundamentally wrong with the model? I would love to hear more.

      1. A little bit of both. The mobile model meant we spent more time in transit than doing actual work. A static model would have been more effective.

        Our initial strategy involved building relationships with mechanics offering referrals along with commissions. Consider 70% of our initial clients came from customers responding to our flyers and a little word of mouth compared to 30% from the mechanics. Despite spending 90% of our efforts courting mechanics. Focusing on vehicle owners more would have been a better use of resources.

        Though the poor response from the mechanics might have more to do with culture. Spending time at different mechanic yards, we noticed they used other services located in close proximity quite frequently. e.g rethreading worn out bolts. Custom gasket fabrication, battery testing and charging. The call for service model might have been too alien. Whereas vehicle owners that mostly have no trust for mechanics were more willing to adopt it.

        The time spent and legwork at the mechanics though did allow us build a filter on what skills each possesed from following how they troubleshoot issues and delivered results. That was a dataset that would have been of value to customers because at the end of the day, they don't want diagnostics alone but resolution.

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