I do quite a lot of public speaking these days, often at the events we hold with Enterprise Nation. In the “about me” section of my presentation I talk about my experiences of starting businesses. Sure, there have been a couple of successes, but like any entrepreneur I’ve had my share of failure too.

I try to end this bit with a comment about how failure should make you stronger. It’s an opportunity to learn from your mistakes.

Whenever I say that line there’s a nervous, reluctant giggle from the audience.

Because we all know that when it happens to you, it certainly doesn’t feel like an opportunity.

So what exactly have I gained from these business failures? Well the lowdown on three of them, why I think they went wrong and what I learned in the process. It’s an attempt to grow from the experience.

(One thing I want to mention to set the record straight. I haven’t failed on my own; each business I’ve been involved with has been with Henry Lewington who now owns Barracuda Digital. I’ve got him to thank for half the failure… and of course half the successes too!)

2020 Ad Sales

OK I need to confess right now. This wasn’t a business I started. Henry got this going a good six months before I joined him.

2020 Ad Sales was a simple media sales operation. We sold banner ads on websites, and took a 30% cut.

This suited both of us as we had a background in ad sales and knew most of the buyers of online media.

Believe it or not, back then it wasn’t seen as necessary to have a website! So I haven’t got a nostalgic screen grab for you to have a laugh at. A business with no website seems inconceivable these days, but back then we were in the majority.

Our first and biggest client was 2020shops.com, an ‘online-shopping arcade’.

A what? Seems like an odd idea doesn’t it! But back then no-one was really sure how folks would shop online. Best guesses were modeled on offline counterparts.

Since we had no site I’ll bring back the 90s with that of 2020shops.com.

How did we get on?

In the early days pretty well. Henry made lots of deals with all the people who were buying banner inventory at the time. When I joined I remember selling to Dell and QXL (who were big before eBay came along).

But once we’d called everyone we knew there wasn’t much to do. We’d maxed out the market. And it turns out that the market wasn’t very big.

It seems incredible now, but in the year 2000 there was only £1m spent on online advertising globally. Even if we took a big bite it was a pretty small pie.

Why did it fail?

The market was too small, and it was too expensive for advertisers.

Online advertising sales were modeled on offline, where you paid for eyeballs. This meant that banners cost around £30 per thousand page views, just like the equivalent magazines.

In reality of course the impact of seeing a banner on a website is much lower than seeing an advert in a magazine. Banners are smaller, we see more, we browse more pages. Within the space of a couple of years the market had found a more realistic rate of around £1 per thousand.

The other problem was that the results weren’t tracked, since the technology didn’t exist. Because no one knew whether it was effective, companies were reluctant to invest, and the market was slow to get going.

In the end of course it did take off – and is worth $6bn in the UK this year. These days you don’t find sales houses like ours. Online media is mostly traded between online platforms.

What did we learn?

Don’t just launch because you see a need. Research the size of the opportunity before you start up. And when scoping the potential market try to uncover three things:

1. Current size of the market
2. Current demand in the market
3. Potential for growth in the market

If all three look positive you can jump in.

The fact is that for 2020 Ad Sales the market was small and demand was limited, despite there being a huge potential for growth. Perhaps we would have made it if we’d hung around long enough.

COCO2.org

I remember teachers and lecturers talking about global warming when I was at school. In the 80s and early 90s it felt like a theory, a hunch that everyone took with a pinch of salt.

That all changed in the 00s. The evidence became unquestionable. Weather patterns changed – the science had been proved right.

Suddenly it felt like everyone wanted to ‘do something’ about global warming. So what was the response? Did we stop going on planes, leave our houses unheated, and cycle to work?

Well a few did. Some panicked, felt bad, or stuck their heads in the sand. And plenty of others decided to carry on doing the same stuff, but to start carbon offset their activities.

To these technocrats, carbon offsetting was the solution. You could carry on releasing CO2 as long as you invested in something else that was saving it.

Not one to miss a trend, we decided to jump on the CO2 offsetting bandwagon.

It turned out that ‘The Internet’ was actually a pretty big CO2 emitter. It wasn’t just your PC at home and work, there were also the servers running in a datacenter to consider.

There were even some unbelievable claims that two Google searches emitted the same amount of CO2 as boiling a kettle, although they were rapidly disproved.

Our idea was to offset the carbon emitted by websites. So we launched a service called COCO2.org.

Aside from a clean conscience, we listed you our directory of super-clean businesses.

And we also gave you a little badge for your site so you could showcase your green credentials.

How did we get on?

It depends how you measure it.

We saw rapid organic growth. Within 6 months we had over 300,000 web pages with our badge on, all linking to us. Most of the Liberal Democrat MPs’ websites were signed up.

But we weren’t making any money. In actual fact our revenues barely scraped over £1k per month.

Not only were we spending more than half our revenue in actual offsetting fees, more than 99% of the sites with our badge on had never paid us a penny.

Why did it fail?

In our haste to go live, we didn’t set up a secure way that subscribers could display our badge without paying us a fee. All website owners saw an opportunity to say something positive about themselves, for free.

What did we learn?

We failed to understand the key benefit of our service.

We thought that people would want to pay because that would get them into our directory. But they didn’t give two hoots about it. The badge was what they were looking for.

We didn’t bother to ask website owners about the service before we launched. If we had understood the benefits from their point of view, we’d have made the badge impossible to use without paying.

This is a classic problem for any business. We all get obsessed over features, rather than considering the benefits they unlock for our customers.

You need to continually ask for feedback from potential customers and use that to shape your product. This applies from the very start, when you’re at the light bulb moment. And it goes all the way through to an established product.

If you know what benefits the customer is looking for, you’ll know what features to include. But if you’re always just focusing on features without considering the benefits, your decisions will be poor.

They next time you’re writing about what you do, as yourself the question: ‘so what?’ The stuff that comes after ‘so what’ is the benefit. Make sure it’s something the customer actually wants.

Mobisite

For years I attended seminars on digital marketing where the presenter would claim that ‘this would be the year of the mobile’.

The same promise had been made when we’d all been knocking around with a Nokia 8210, trying to top-score on snake.

But in 2007 something happened that made this statement more believable than ever before.

It was the launch of the iPhone.

For the first time, here was a mobile phone with a user experience to rival that of a desktop computer. It was a device that people wanted to spend as much time with as possible.

After the launch of the iPhone, there was an even bigger twist to the tale. It was called the App Store. A revolution in how we could interact with services through our phones.

It wasn’t just about the mobile web any more. It was about applications, built by anyone, that users could install on their phones.

For brands this meant a fundamental change. If your customers want to be on their phones, marketers know that you have to make your product available on a phone.

Up and down the land a simple phrase was heard in boardrooms. “We need an app”.

We saw the business opportunity just like thousands of others. And something else fell into my lap. After a couple of years of watching I was lucky enough to backorder mobisite.co.uk.

It was all the motivation we needed to create an agency that created mobile apps and sites.

Our focus was on small businesses, those who thought they couldn’t afford an app or a decent mobile site. Using templates and early WYSIWYG app building techniques we were able to deliver decent functionality for far less than most others were quoting.

How did we get on?

Actually pretty well.

Due to the domain and some expertise (I come from a digital agency background after all) we were able to rank in the top three for many ‘mobile website’ related queries. It brought low volume but high quality leads.

Because our story was so compelling – consumers wanted brands to interact with them on their mobile – we got good PR. That included coverage in the Guardian, amongst other places.

At its height we had over 10 projects on the go, with 2 developers and monthly billings of over £10k.

Why did it fail?

There were two basic reasons.
1. A lack of focus. Everyone on the team was also working in another business (the digital agency). So whatever projects were on the go were balanced with other demands on our time
2. A lack of expertise. We had beginners’ knowledge of the market and the technology. Both developers were entry level.

What did we learn?

If you want to be successful at something, you have to prioritise it. Winning comes through doing fewer things, but doing them better. We couldn’t give up the day job.

And that’s not just a question of time, but it’s a question of money too. You need to invest in better people, processes and tools. A ‘make-do’ approach only gets you so far.

I hope that helps

Well I don’t know about you but I found some catharsis in telling these stories.

I can recall some tough market conditions coupled with poor decision-making. A lot of hard work came to nothing. Or what felt like nothing.

To find an explanation for failure, to discover a reason why things wrong is a truly valuable experience. I won’t make the same mistakes again, or at least I’ll know what the warning signs are.

The next time I reach that point in my presentation when I say that failure makes us strong, something we can learn from, now at least it’s something I totally believe. And I hope you will too.

Have you had a business fall apart? Would you share what you learned? Please leave us a comment below.