Lessons Learnt From Well Known Business Failures
On the 18th of July 2020, Ylemer hosted another one of its ‘Inspire, We Inspire’ roundtable event. This time around, we invited Dr. Gerry Brady, founder of BOOM Economics and Finance, to join us as our guest speaker. Gerry brought an exciting topic ‘Lessons learnt from Well Known Business Failures’ to discuss at the roundtable. And here’s a recapped of the Gerry‘s presentation:
Failure is everywhere
As a startup founder, you must be open to accepting that failure is evident and may come sooner or later. Hence, stressing over not facing any failure is a farfetched approach. What’s important is to make sure that you are ready to face that failure and take timely actions against it. Gerry mentioned that failure is not only restricted to businesses or startups. It may come in any form and size and hit you even when you are living your best life. Look at how Coronavirus has transformed how people used to lead their lives and how businesses have lost their operations and now resorting to ways that they never thought would be possible to adopt.
In continuance to this, the event started with Gerry presenting some insightful statistics about marriages, divorce rates, fertility failure and wealth failure across different countries. He mentioned that first-time marriages in Australia have a chance to fail by 30%. Whereas, second-time marriages in Australia have double the failure rate than first-time marriages.
Similarly, he talked about how the world’s wealth is concentrated among the wealthiest, and the poor are getting poorer day by day. See how the USA’s income inequality shows a stark contrast between their most affluent and struggling class of people.
Business failure rates
After setting up the stage for the presentation, Gerry came around business failures and how it’s important to note that as a startup founder, failure is something which cannot be ignored. It is that one thing which is bound to come at some point in time and as a startup founder, how can you deal with it.
Gerry discussed the graph below, depicting the five-year survival rates for new businesses in Australia. It’s quite clear to see that more than 50% of new startups end up failing and lose their track towards success within a year from its inauguration. However, he kept emphasizing that failure is a stepping stone towards real success and allows us to look back at our mistakes and take necessary precautions for the future.
Famous business failures
Dr Gerry Brady talked about some of the well-known business failures that today stand as multi-billion dollar companies. Let’s take a look at them.
Bill Gates — Traf-O-Data then Microsoft
Before Bill Gates’ successful attempt at the Microsoft, he failed at what was then known as Traf-O-Data. Traf-O-Data was his first company made for the objective of providing raw traffic data reports to traffic engineers for optimizing traffic and bringing an end to road congestion.
However, the machine that was made for the above cause failed in its testing phase at a local county and could not grow into a successful business. But this did not stop Bill Gates to keep going for what is now known as Microsoft, a trillion-dollar company.
Jeff Bezos — Amazon’s zShops
Something similar happened with Amazon back in September 1999 when Jeff Bezos launched zShops. The idea behind zShops was quite similar to that of eBay, to build a platform where all sorts of online sellers can auction their products through their own online storefront. His idea failed miserably, so much so that Jeff Bezos used to joke that the only customers who had ever visited a zShop are his parents and himself. However, he never gave up and through his perseverance made Amazon to what it is today, another billion-dollar company.
Steve Jobs — Apple
We all might agree for Steve Jobs as the guru of entrepreneurs. A man who created best-sellers such as iPod, iPad, iPhone and MacBook. But many people do not know that Steve had a massive failure back in the 80s’ that got him sacked at Apple. It was his works on Lisa, remember? Of course not. Even though known as a technical marvel back then became a project that wasted millions of dollars in its development. The first-ever graphical user interface (GUI) computer was priced at $9,995 US in 1983 was considered a total flop sales-wise. The company was only able to sell ten thousand units in a span of two years, and we are not surprised why.
Twelve years later, when Steve rejoined Apple as an interim CEO, he came back with its smashing iMac. Imagine what would have happened if Steve stopped pursuing his dream to create a company that would live for a generation or two. How different our world would have been now?
Gerry’s take on failure
Nearing the end of the presentation, Gerry shared one of his failures back in 1994 where his company was offered for an all-over Australian distributorship by a major mobile phone manufacturer in Taiwan. When he took that offer to the board of his company, he got feedback that concluded the offer as being crazy. The board believed mobile phones were too expensive and nobody will ever use them. He recalled the event as the biggest miss to become the largest distributor of mobile phones in Australia.
He also advised having as many interactions with the market as possible. You have to work super hard to know what the market wants from you and to build relationships. Test market your product. Don’t overestimate your offering. There’s a significant disparity in what you may perceive in the value that you have to offer versus what the customer sees in you.
What can you learn from failures?
- Small failures are okay. Don’t worry too much about them, as you have already seen that failure is everywhere. But what’s important is to protect your business from being hit by a big failure which will most probably take you towards your downfall.
- Setting unrealistic goals will only cause frustration. Start with small goals and work up the ladder one step at a time. Have many small goals and do your absolute best to achieve them
- Always have plan B and even plan C. If you have thought it through to plan C then you know what you’re doing and have defined failure way early in your strategy, and you’ll probably survive.
- Perseverance is key. You must deliver the utmost determination and work really hard to achieve more and don’t give up on failures.
- You must have full knowledge of your cash flows and costs. Keep a record of your regular cash flows and make sure what your daily expenses are. Many people lose track of their revenue, and that’s another way to lead to failure.
- Try to start a business that has no competition. If that’s not possible, then figure out what is that one thing which makes your offering unique and try to engineer your business away from your competitors.
The event was a great success and thoroughly engaging. Participants have a good discussion of how to fail fast, how do we recognise real failure, does having a fixed view lead to success, when adversity comes, how do you face it, etc. Some shared their stories of failures and despair but everyone motivated each other to keep ongoing. Because at the end of the day, this is what we are here to do at Ylemer, providing the support that we need to build a global entrepreneurial ecosystem that supports sustainable development.
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Sadia Mehfooz Khan
Chief Copywriter | Ylemer