Like most people, entrepreneurs are not quick to talk about their failures. But stories of failed companies offer valuable lessons for other entrepreneurs.
Take Andy Crestodina, founder and strategic director of Orbit Media Studios. In 2004, he noticed the rising trend of digital signage. More of his clients were asking for animation to feature on digital signs. Crestodina decided to build a tool for advertisers to create their own digital sign ads. But it turned out to be pretty complex. He needed hundreds of ad templates, thousands of stock photos, a few very complicated legal agreements, and a lot of people to build and manage networks.
He raised a small amount of money and formed LocalScreen. With a business plan written and sales forecasts predicted, he began to spend money. LocalScreen contracted Orbit Media Studios to start building the platform and the templates. He negotiated a deal with Getty to license thousands of stock photos that would be available in the templates. He hired an attorney to draft up the agreements between LocalScreen and the signage networks, and another deal to sub-license the photos from Getty. Many of these needs were one-time expenses but he found himself quickly burning through the cash on hand. That was just the first six months.
Ultimately, the platform was successfully built. But when it came to recruiting clients as fast as the company needed, LocalScreen was at a loss. The immediate success he had hoped for proved elusive. He finally realized that it would take more than five years to adapt to the current trends and achieve a steady rate of growth. Unfortunately, he had neither the funds nor the energy to continue. LocalScreen ceased to exist -- though Orbit Media Studios remains a thriving company demanding Crestodina's full attention.
Then there's Michael Farah, founder and CEO of Culture, The Yogurt Society. He has spoken publicly about his failed frozen yogurt company, Berry Chill. His story is not so sweet: His investors did the unthinkable and pulled his line of credit.
"When you sign a lease and then your investment money is taken away, it doesn't make for good business," says Farah. "You can go over and over what you would have done differently … you can always come up with a million things you could have done better. But that's not the point."
Farah's recommendation? "Go and talk to people who have failed and who have succeeded. Talk to folks and ask questions. Find a mentor. Perhaps I would have secured my company properly, or made sure that an investor could not do what ours did to us. You don't have to re-invent the wheel. Talk to people."
Eight months later, Farah launched Culture, The Yogurt Society, and its handy dandy Truck Finder makes for very sweet mobile goodness when you need a FroYo fix.
Crestodina and Farah have shared the stories of their failures without reservation, whenever asked, or sometimes without even being prompted for them. Crestodina adds, "If you don't have failures in life, you probably aren't trying enough things. Accomplishments are proportional to attempts. If you're not open about your failures, you're probably not getting as much value out of them as you could. Feedback from others and a humble respect for your own limitations are critical in finding your next venture and possible success."
Jill Salzman is currently growing her third entrepreneurial venture, The Founding Moms, the world’s first and only kid-friendly collective of monthly meetups for mom entrepreneurs. Having built two successful companies, she launched The Founding Moms to connect mom entrepreneurs around the globe with one another.In her spare time, Jill enjoys kloofing, traveling to small towns, and erasing her daughters’ crayon artwork from the kitchen walls.