03 Jul Learning Failing Fast The Hard Way
What Is Failing Fast?
Simply put, failing fast means you find out right away that your idea, concept, new product is a dud, so you can either stop what you are doing or make some serious corrections. But failing really means failing, and it generally means giving up earlier in the process. It’s a good thing, and something like 90% of tech companies I run into ignore. Tech guys hold fast to their concept way beyond when it was time to give up. I know, I am one of these guys.
Start-ups Need To Fail Faster
Deep into Brad Feld’s book “Do More Faster”, there is a short chapter on failing fast for start-ups. What his writer, because it was written by other entrepreneurs, is saying is find out right away if the product or service you are creating is going to make it or not make it financially. Trust me, this is a definite area I have completely failed at, and I have followed around other people’s failing ideas like a pig stuck in the mud. A lot of this is because of a lack of experience. All that corporate experience I have gained over the years do not count, because what you need for a start-up is not what you need for a corporate gig.
Failing Even Bigger And Slower
But I think failing fast is not just a concept for start-ups. In most big companies they have made failing slow an art form. To be 80% more efficient corporations should stop wasting their time with concepts that failing earlier. If they did this, billions would be saved. In fact, entire industries have disappeared because corporations were pursuing failing concept for years. It keeps lots of employed, but it is oh so annoying. I was talking with somebody today about a large tech company acquiring a small tech company recently. What typically happens next is complete paralysis. It’s like a big corporate giant eats the small company and then anything that resembles change become nearly impossible or so institutional that nobody wants to fail at anything. So how can you fail fast in that situation.
Smaller Means Nimbler
So this is where small start-ups have an advantage. Before blowing millions or billions, a small tech start-up can take a few small actions to end the hypocrisy and stupidity early on. They can create a prototype or barely working product and find out from customers if they are going to pay, use it or whatever they need to prove the market works. Even that may have the unintended consequence of telling the entrepreneur to go ahead with a product or service, when they should have just failed right there. Let’s say you interviewed the wrong people who told you the wrong information. Well, you still have a chance to fail early, just not as early.
Misread Market Size
Now that I know better, it is best to start with market size, not product or even customer to determine if you should stop now and fail fast. Let’s say you have created a great service that a few people love, and while you are not making any money, you know you are doing good for the world and helping people. I will give you an imaginary service, like a mobile app which gives men advice on what to do for the women in their lives and when to do it, like “buying flowers on a friday gets a 60% approval rating from women vs. Thursday”. Ok, cool app, mobile app, even runs and works and all that jazz. But then will people pay for it and how many. Sudden you add it up, wow, if I collect that 50 cents from the 1,000,000 potential real customers, and only .0001 pay, then wow I will have made $5000 on this venture in total. Well, just fail now! It may have been cool, but trust me I have been involved with a not so profitable business for many years with no exit strategy and it sucks.
Quit, But Don’t Always Quit
I am not saying that you should quit your venture right now, I am just saying stop taking years to figure out that there is no money to be made and that you are wasting years of your life. You should just try to figure this out early on. You need to know what the total market opportunity is. In high-tech I now say when they use the words “Billions” I don’t like it. I want to hear the words “Hundreds of Billions” or “Trillions” as far as market size. Sometimes there are many reasons to stay in a business and see it through, but if you see a problem with your concept or your idea and the market does not make sense, then stop now and move on to something which can make you money and make a living.