Why failure is a good teacher?
That is what we are talk about in our new podcast. In this episode, we are addressing 4 key drivers for failure that we learned when we started our company. So if you are interested in learning from our failures, listen into the podcast.
- Align expectations before founding
- Premature scaling
- Broken founding team
- No product market fit
- Align expectations before founding
The key to founding a business is the team. Easy said but we often forgot the human part: spending time with your partners, knowing what are the objectives and needs, of each individual, to achieve a certain goal. Only full alignment will give you a good chance to succeed in business. A lot also depends on how long the team has worked together. When we first started our company (Evergrain), we had already worked together for 10 years. It was therefore easier
for us as most of the alignment had happened in the years before.
A few years later we learned the hard way the importance to align ahead of starting a new venture. Whilst there was a good market opportunity and an experienced team in place we forgot to align our expectations and what good looks like. In hindsight, we should have invested much more into the relationship ahead of starting a new partnership.
“Make sure that you align your expectations, talk about that, put it down on a paper what is important to you.”
- Premature scaling
Raising money, starting a business and having people liking what you do is not an easy task. First of all, you have to figure out what product you want to sell (discovery), then you have to validate that product, we must be confident the go to market strategy is working (efficient). Only when you have real evidence of traction in the market, it makes sense to start scaling your business. Avoid premature scaling (focusing on one dimensión of the business and advancing it out of sync with the rest of the operation”). In Evergrain we were lucky and we hit the nail on the head with our product market fit and it worked out very well. For us one of the learnings was, being cautious with hiring too soon too many specialists before having a critical size that you can reasonably well expect to cover these costs. Secondly having not raised enough money to get through “the valley of death”. And last but not least, be agile in the first phase of setting up your business and adjust your model as soon as possible.
- Broken founding team
The biggest reason for failure is a broken founding team. A lot of it comes back to point; 1. Alignment of expectations. Besides alignment, it is further important to cover some key competencies in your team.- Commercial, see the opportunities follow the path of growth and make things
happen. - The operator, a hands on problem solver that keeps the operations up and running
while crawling, walking and running at the same time. - The visionary, always calibrating the direction and making sure to keep an eye on
the product as a whole.
“While undoubtedly the most famous, Steve Jobs was not the only founder of Apple.
It took the collective efforts of the team Jobs, Steve Wozniak, and Ron Wayne to get
Apple off the ground.”
- Commercial, see the opportunities follow the path of growth and make things
- No product market fit
“When a great team meets a lousy market, market wins. When a lousy team meets a great market, market wins. When a great team meets a great market, something special happens.” “If you address a market that really wants your product — if the dogs are eating the dog food — then you can screw up almost everything in the company and you will succeed. Conversely, if you’re really good at execution but the dogs don’t want to eat the dog food, you have no chance of winning.” Andy Rachleff The Quote of Andy Rachleff describes the product market fit issue very well. Be
realistic and you need to define and test your value proposition. And then only once proven do you move on to your growth hypothesis.
Sources:
1 https://www.forbes.com/sites/forbescoachescouncil/2017/09/19/why-founder-investor-vision-alignment-iscrucial/?sh=3245ade8227f 1
2 https://www.duetpartners.com/why-is-premature-scaling-still-the-biggest-startup-killer/
3 https://foundr.com/articles/leadership/founding-team
4 Episode Nr. 16 with Andries De Groen