Every entrepreneur has a failure story like this. About 12 years ago, I founded a startup called ExitEvent. I was in the early stages, but the idea was solid: Create a multi-sided marketplace for the startup ecosystem.
I had already started two successful companies, one of which I was still running. The ExitEvent idea wasn’t a new one. It was something that I had been building and reshaping for years, waiting for the right moment when all the pieces came together to turn it into a scalable business.
When that moment happened, I knew exactly where to go. I brought the idea to a potential partner, an organization that would be a perfect initial backer. The head of that organization got it immediately. Or at least I thought they did.
What happened next is a story about business failure, but also about how to turn failure into success. Yes, failure can be a good thing. And while a lot of people talk about learning from failure, they never tell you how to do it. Here’s my story about a failed business deal and how I acted on the lessons I learned.
When failure seems to come out of nowhere
Over the next few months, the strategic partner and I hammered out a deal framework, and I built the infrastructure for the marketplace.
When I arrived at the final negotiation session, with the deal paperwork in hand, the mood was different and there were new people in the room. My stomach immediately sank to my shoes. I knew right away.
“Not again. Not this one,” I said to myself.
But yes, again. And yes, this one.
This one that I spent way too much time on. This one for which I had put my existing business at risk, going so far as to turn down new business, because my time would be taken up by this new, shiny thing.
I got told the partnership deal wasn’t going to happen. I got told what could happen would be a marketing partnership, and one that would only serve the best interests of the partner while I scratched out revenue on my own.
It was not the first time this happened to me. But this time, I finally figured out how to turn a slammed door into an “open window.” How? I came up with a three-step process that I still follow today with every failure to not only salvage and learn from mistakes but also to use that failure as a stepping stone to success. Here’s how it plays out.
Step 1: Maintain your belief in your idea.
I’m not trying to convince you that belief in your idea is 99 percent of the key to success. It isn’t. It’s more like 1 percent. Maybe less.
But that belief is mandatory, because when big fails happen, your faith in your idea will be shaken to the ground.
You need to get your head back into the place it was before the failure. You’re not going to succeed by executing someone else’s interpretation of your idea. If someone doesn’t understand your idea, don’t let them change it to fit their mold.
Sure, you can trim your plans to get started or customize to get a proof-of-concept to market. What you can’t do is give up on what could have been. You have to be able to accept rejection and walk away.
I strongly believed that ExitEvent wasn’t intended to be a marketing machine, so I never pursued the marketing partnership they were offering.
Step 2: Learn where you went wrong.
To learn from your own mistakes, you’ll want to look at three key features:
- Your product
- Your pitch
- Your market
First, to learn what’s wrong with your product, rewind to where you were before you got off your original path, and compare your product then with your product now.
What happened to me was my own fault. To get the partner excited, ExitEvent became too much like what already existed, enough so that the partner could absorb it as a turnkey solution of their own.
It became easy for them to get into a mindset of, “We’ll either build it ourselves or buy a cheaper carbon copy.” All that “extra stuff” I was proposing was new and unique and, thus, risky.
I had erred in picking a partner that was easy to sell into, and I molded my original product to work for them. But, if ExitEvent was going to work as intended, I needed to lean into that new, unique, and risky stuff.
And pursue a different kind of business partner.
Second, learn what’s wrong with your pitch. To do this, I took myself out of my partner’s mindset, so to speak, and put myself in their customers’ mindset. I realized that as my product evolved into something that would suit the partner, my pitch did too. And then I decided that I needed to market against the very people I was trying to partner with.
For example, let’s say you’ve developed a version of Coca-Cola that’s actually healthy for you. It looks, smells, and drinks like Coke, but it’s as harmless as water and also full of vitamins. (Congratulations. You’re rich now.)
But do you take your invention to the Coca-Cola corporation and tell them you can make Coke healthier? If they have any business sense at all, they will disappear you before you leave the building.
No. You take them on. You become the anti-them.
Third, learn what’s wrong with the market. Every good product is a new and elegant solution to a long-time embedded problem. The lesson that this failure hammered home was that every incumbent in the market is going to fight that solution until that solution becomes inevitable.
Your solution becomes inevitable only if you attack the problem the way the market views it. The winner is the startup that changes the most customer minds the quickest.
Step 3: Open the window.
I took my learnings and picked two new and completely different targets.
The first target was my original partner’s customers. To them, I marketed hard against the status quo. That worked, because it played on the very flaws with the partner that they needed my solution to fix.
The second target was an organization kind of like my original partner, but one that didn’t need my solution, because they were already doing fine without it. For now. I didn’t sell to them, but I let them know ExitEvent existed, and that I was open to whatever kind of marketing partnership they felt could benefit them.
This strategy proved two things:
I didn’t need a business partner to make my solution possible, I needed their customers. And if my solution was credible, I could get them myself.
The very marketing partnership that the original partner dangled was legit, as long as the deal was not something that would wind up changing my original idea.
The second target, a bigger organization, acquired ExitEvent three years later.
The idea behind ExitEvent wasn’t just an idea, it was a mission. When you have a mission and you believe in it, the idea behind it never dies. You can’t fail. No matter how many doors get slammed shut.