Rebroadcast: Publish date – January 1st, 2020
Original broadcast: Publish date – December 12th, 2018
Failure has long been embraced by entrepreneurial minds, and some of the most successful inventors, businessmen, and creators credit their ultimate triumphs with their ability to endure repeated failure. As startup founders, musicians, podcast hosts, and self proclaimed “jacks of all trades” we’re no strangers to failure.
In this episode, we take a stroll back to our very first attempts at venture creation, starting with our college days of trying to launch an affiliate marketing platform called AdLobby. We discuss the massive mistakes we made as first time entrepreneurs, including selling our car to pay for engineers that we couldn’t even speak to. We also talk about the next two business we tried to start, and how we almost got into the top accelerator in the world after recruiting an MIT technical co-founder.
With each of our failures, however, we were able to leverage the experience to not only avoid making the same mistakes again, but even turned them into lucrative job opportunities with other tech startups in both Boston and New York City. Tune in to learn how you can start looking at failure differently, and what you can do to position it as a positive experience to others.
We leave you with this quote:
I have not failed. I’ve just found 10,000 ways that won’t work.” -Thomas Edison
0:37 Vadim: Today we’re going to be talking about some of the failures we’ve had in our lives, of which there are plenty.
0:51 We talk about this a lot on our show – that you can’t succeed unless you try, try, and try again. And some of the biggest learning experiences that we’ve had were from our failures. Most ideas we tried failed completely.
1:05 In last week’s episode, Praful talked about how Thomas Edison was only able to succeed because he was willing to fail. There are countless examples of this.
1:33 Sergei: We definitely wouldn’t be able to make money in business if we didn’t try a bunch of other ideas that didn’t work.
2:00 Vadim: You do also need wins in order to move forward, and we certainly had some of those along the way. But we’re going to tell you stories about 3 businesses we tried to start earlier on in our careers when we knew nothing about startups, and what we learned and how we were able to apply that to future businesses and to get good jobs.
2:40 Sergei: The first business we’re going to talk about is AdLobby.com. You won’t find it online unless you search on web archives in 2006.
3:00 The idea for this website came from a guy we heard about in the UK who started a website called The Million Dollar Home Page where he would sell 1 pixel for $1 on a website with 1 million pixels to make $1 million dollars.
3:23 The website went viral and he did end up making $1M
3:51 We decided to start something around advertising too and the insight we had is that everyone has some sort of real estate/personal space online, like profiles even if they don’t have a website, and why not let them make money by putting links of brands on their profiles.
4:50 Not knowing any engineers and not being able to code, we went around our university, Bentley, to find someone who could build it for us. We ended up meeting a guy who knew some engineers who decided to take the project on.
6:20 We sold our car for $5K to pay for this project even though the guy offered to build the app for free or a much lower cost in exchange for equity. We didn’t want to give up a piece of the company and so we said no.
6:50 In hindsight, we should have taken the deal. We would have saved a bunch of money and had a cofounder who was equally as invested in the business. In the end of the day, if the business was going to fail, which ultimately it did, we would have 100% of 0, which is 0.
7:10 We also learned how not to manage engineering talent. We weren’t hands on enough. The 3 month project ended up turning into a 10 month project. We didn’t manage the engineers because the consultant that we paid managed them, and we didn’t talk to him enough to keep control of the specifications of the project.
7:50 We should have also been actively testing with beta users while the product was being built.
8:30 In the end the product didn’t work well enough and we had to shut it down.
8:45 We also didn’t do nearly enough sales. We were building a marketplace with users and brands, and all the while we should have been cold calling every day signing up brands and also getting a growing list of users so that when we launched the product we would have traction right away.
9:00 We did get some brands interested and got a bunch of friends to sign up once the product was finished. But it wasn’t enough.
9:30 Because of this it was easy to run out of steam and give up because we didn’t have enough customers.
10:00 Sergei: There is a silver lining. I did get my first sales job at a startup shortly after graduating only because of that experience doing some sales for my own startup.
10:30 Vadim: This is why we always say, when you build something out of nothing, even if it’s not ultimately successful, other people see that as a valuable skill.
10:45 We actually talked about this topic on an episode of Mind Love, that if you want to change careers, try doing so by building something of your own. Then you can say you can do the same for another company.
11:15 Sergei: The next business idea that we had a few years later was a coffee subscription service where you could sign up online and automatically get coffee delivered to your door every month.
12:10 Vadim: The name of this company was TastyRoast, and the first thing that we did was to build a website, even though we didn’t know how to at that time. What we should have done is validate the concept first with customers.
13:20 Sergei: We ended up spending 3 months building this website.
13:46 Again though there is a bit of a silver lining. By forcing ourselves to learn WordPress we now could build a website for any idea we had. As an example, Vadim built the website for The Mentors in 1 to 2 days.
14:05 We also learned about drop shipping which allows you to not hold inventory by having your supplier ship directly to your customer. The mistake there is that by doing drop-shipping we increased our costs, which made the coffee more expensive than what you could get at the store. This made it more difficult to get customers.
15:30 We also made the big mistake of thinking if we build it the customers will come. We should have been figuring out our marketing funnel that whole time.
16:00 Vadim: We also should have partnered with or gotten advisors with experience in ecommerce.
17:00 It also helped us launch future companies, and made us better at working with other engineers.
17:38 Sergei: The final business that didn’t work out but that we learned a lot from is Meetlie. We tried launching this business while still at our finance jobs after participating in a Startup Weekend Hackathon.
18:15 At that competition we met an MIT engineer who ended up being interested enough in the project to continue working with us after the program.
18:28 The product would help people host office hours to offer their advice to people on topics like accounting, finance, law etc. At first for free but then they could charge for it.
18:50 Because we had some interested users we decided to apply to the competitive accelerator, TechStars and we got chosen as the top 25 applicants for a final selection of 10 teams.
19:30 Unfortunately we ended up pivoting a bit and subsequently not getting into the program, which taught us an important lesson.
19:49 The day we didn’t get in, that technical cofounder decided to quit. So we learned that he was primarily motivated on working on it because we were getting traction on getting into this program, and not because he wanted to work on the business.
20:25 Our biggest takeaways here were about how to vet a potential cofounder. Even though he’s a great guy and has gone on to work on some fantastic things, we realized after the fact that we just didn’t have mutual trust with this person.
20:39 Trust is one of the most important components of a cofounder relationship.
20:45 One red flag is that when we were applying to this program he scrutinized every word on the application, which was really our job to fill out. That should have showed us a lack of trust.
21:00 Also, because he was a strong hardware engineer and not as strong as a software engineer, we didn’t trust him to do his work effectively.
21:30 Vadim: we also learned that it’s important to create an appropriate decision making structure in a company. During one of our meetings with him he mentioned that he wants us to make every decision together, which just slows things down too much.
21:33 We should have clarified that we would make the final decisions on important aspects of the business. This is something that we made very clear with future co-founders.
22:05 A democratic process doesn’t work well in a business because sometimes you have to make difficult decisions that not everyone agrees with and you don’t want decision paralysis.
22:30 Sergei: part of the decision making process outline should include times you would confer on certain decisions, that you won’t just go and make them in a vacuum, but you do need to have one ultimate decision maker.
22:49 Vadim: There were some benefits of starting this business. This was the first time we really worked directly with an engineer, which taught us how to work with engineers more effectively. We also learned how to pitch investors.
23:25 We also were able to leverage this experience in our resumes to get future jobs.
23:41 Sergei: This also reinforced to us that we need to focus more on customer acquisition because we got further with this idea only because we talked to more customers, and we should have done even more of that.
23:51 We encourage you to try any business idea, whether it’s simple or revolutionary, because you’ll learn from every experience and since most first time businesses don’t work out, the sooner you start the sooner you’ll get to that ultimate success.
24:30 Vadim: the other nice thing, the more you try and fail, the more you get a thick skin and get desensitized to failure where it doesn’t bother you quite as much anymore.
24:40 What’s consistent with everyone we’ve interviewed, is that they keep on pushing.