The Class of 2010 at Harvard Business School is the class that launched a thousand tech startups – or so it seems to me, a member of that class. Birchbox, Plated, Baublebar, Blue Apron, and countless others you may or may not have heard of, all came from that class.
We graduated at the tail end of the recession, with hiring freezes at consulting firms, private equity shops, and investment banks – the usual careers of choice for MBAs. Facebook hadn’t yet gone public, and while a few people were looking at Google and other Silicon Valley companies as alternatives, the wave of migration from New York to San Francisco hadn’t yet begun in earnest. So, many people launched companies – particularly tech-enabled, low-inventory companies.
Starting Up in Jamaica
I moved back to Jamaica in June 2010, and was bitten by the startup bug too. I loved books and reading and writing so I decided to launch a Caribbean version of the Huffington Post, focused on thought pieces from Caribbean writers. I got a friend and former colleague to join in with me – he provided passive capital, while I created the website on WordPress, found designers in Argentina to create a logo, reached out to potential writers on Twitter, edited their submissions, found images to match, and published. I also published pieces I wrote myself. In a few short months, we grew from zero to dozens of writers. We participated in the Jamaica Blog Awards. I got a call from the US Embassy asking us to cover an event at the Kingston waterfront. I was becoming a full-blown journalist!
I worked all day in corporate strategy at GraceKennedy, and worked all night on our online magazine. After a few months, I started to burn out. I needed to figure out how to monetize the magazine so that I could hire someone to help me.
I bought the HBS case study on The Huffington Post and found that they made most of their money at the time from online advertising. I created an online ad package and set up a meeting with a potential buyer, who was also an investor in small companies, a fellow MBA, and a friend.
He encouraged me to think about my time invested in terms of opportunity cost and expected returns. In his view, an online magazine would barely break even in Jamaica. My investment of time could get much bigger returns if I focused on a startup idea that could actually make money, instead of a passion project. As a Harvard MBA, I was potentially wasting the large investment made in my education.
His advice took the wind out of my sails. I was already burning out, and with this meeting, I decided to close everything down. I sent an email to all the writers and called it a day. He was right in one sense. It makes a lot of sense to understand the upside potential before investing blood, sweat and tears into a startup. On the other hand, I look at Tyrone Wilson of eMedia Interactive today – who started an online magazine a few years before I did. He grew his company through sheer persistence and built a strong team of advisors around him for guidance. What would my startup have become if I hadn’t given up?
The 5 key lessons from my startup failure are:
- Build a team from the beginning. Understand what you’re good at, and get 1-2 co-founders in the door who can support you with the things you’re not good at. A psychometric test can help you figure out your strengths, see my top 5 here.
- Understand how you’ll generate revenues from the beginning, and the timeline to generating those revenues. Start with projections that are as realistic as you can make them, while understanding that projections very rarely turn out to be accurate.
- Understand the potential upside of your company by analyzing the industry and the other players in the space, and deciding whether its worth your investment of time. Does this industry support companies that have made $1 million? $100 million? How long does it take other companies to get there? What choices will you have to make in order to get there? Is it worth it?
- Document your answers to the questions above and start building a business case. It doesn’t have to be long – start at 2-3 pages, and build your way to a full business plan as you do more research.
- Invest in mindset training and performance coaching if you can, to ensure you can make it through the everyday ups and downs until you get to revenue positive. Books and podcasts can help a lot here as well. As CEO of the Branson Centre, I have a mindset coach, a business coach and a mentor. It takes a village!