Entrepreneurship and Resilience
Knowing when to pivot and when to persevere.
Pivoting
Today, YouTube is one of the largest video platforms in the world with over 2 billion users and a yearly revenue surpassing $15 billion. This hasn’t always been the case. When YouTube initially launched on Valentine’s day in 2005 as a dating site where people could upload videos of themselves to meet potential partners, the online platform got no traction. In fact, the newly launched dating site received so little traffic that the three founders, Jawed Karim, Steve Chen and Chad Hurley began offering women $20 to upload videos of themselves to the platform. In light of their underwhelming launch, the founders decided to adapt their company’s strategy when they noticed that some users began uploading all sorts of random video content to YouTube — entirely unrelated to dating. Instead of limiting themselves to dating videos, the three founders redesigned YouTube and repositioned it as a general video hosting platform open to all kinds of user-generated content. Manifestly, there was an unmet market need in terms of easily accessing videos on the internet for free. After the pivot in strategy, YouTube skyrocketed, seeing tremendous growth in its user base, monthly active users and uploaded content before being acquired by Google in 2006 for $1.65 billion.
The early stages in YouTube’s history underline the importance of customer development. Had the founders taken the time to run some initial experiments or customer conversations, they likely would have come to the conclusion that there was no customer demand for a video-based dating website. This would have seen them circumvent the initial lack of traction by building a product that customers did want to use. That being said, the founders’ ability to critically and objectively assess their business and its meagre performance is what led them to create one of the most successful online platforms in the world. Although they did not engage in any elaborate customer experiments, they were able to accurately analyse their users’ online behaviours and adapt their platform accordingly.
In this case, resilience played an important role. After the initial lack of traction, abandoning the project would have been understandable and even justified considering the data showing no promise of future improvements — let alone success. Without this perseverance, the dating site would have failed, with the revised platform — YouTube as we know it today — never coming to fruition. Hence, resilience in the face of adversity is an indispensable trait for entrepreneurs to possess. Even more so, when guided by the process of validated learning which Eric Ries describes as “the process of demonstrating empirically that a team has discovered valuable truths about a startup’s present and future business prospects” in his book The Lean Startup. Thus, allowing the founding team to effectively focus their efforts on the most pressing issues. Whilst customer development techniques serve as powerful tools to mitigate risk, they do not completely eliminate it. Therefore, it is of interest to continually measure the performance of different aspects of the business.
Resilience and Perseverance
Resilience and failure tolerance are highly admirable traits that successful entrepreneurs always seem to display. Many would argue that it is a major contributor to their continued success. Whilst the previous example outlined the role resilience plays in the context of a struggling, but still operational business, failure tolerance is equally as important to the entrepreneur who must deal with personal setbacks after the firm’s insolvency.
For instance, Mark Cuban — the owner of the Dallas Mavericks and serial entrepreneur featured on Shark Tank– was fired from several jobs at a young age and failed at his first couple of business ventures. Despite these early setbacks in his career, Cuban went on to sell two companies he founded in the 1990s, Microsolutions and Broadcast.com, to CompuServe and Yahoo! respectively, making him a billionaire in the process. Mark Cuban’s ability to tolerate the early setbacks in his career without being deterred is arguably the main reason for his affluence.
By the same token, Bill Gates, nowadays best known for co-founding Microsoft and setting up the Bill & Melinda Gates Foundation, equally had to deal with career setbacks — especially early on. In 1970, at the age of 17, Bill Gates co-founded Traf-o-Data with his friend, Paul Allen. The company served as a cheaper, more efficient alternative for government institutions to monitor and analyse traffic data. Although the company saw some early success and remained operational for several years, the co-founders were eventually driven out of business when several US states began offering the same service for free. While Traf-o-Data’s mediocre performance is often perceived as a failure, it laid the foundation work for Allen and Gates to found Microsoft in 1975 and become a pioneer in the computer industry. According to Allen, without the time the two founders spent learning through trial and error at their traffic startup, Microsoft may never have come to fruition. Traf-o-Data equipped Gates and Allen with both the technical expertise and business skills they required to spearhead Microsoft to an international, profitable, multi-billion-dollar business.
There are countless such examples of entrepreneurs who have misfired several times in their careers before hitting the bullseye on a particular project or business venture. In truth, many successful ventures are built on failed projects. One can argue that failure is indispensable to success, so long as the entrepreneur’s determination to carry on by learning from each failure outweighs his/her discouragement.
“Success is stumbling from failure to failure with no loss of enthusiasm.”— Winston Churchill
‘Failure’ Is Good
Failure tolerance is crucial when it is weighed up in light of the specific situation and the wider context the startup finds itself in. Persevering in a scenario during which the business should be pivoting is futile and will lead to guaranteed failure. Therefore, rigorous customer development, guided by validated learning and good judgment must accompany said resilience. Being resilient during the arduous phases that each startup inevitably goes through is paramount — both for the entrepreneur and the wider founding team. Additionally, demonstrating this resilience after a venture has already failed is equivalent in importance, although it is frequently disregarded. “On its surface, failure is bad; something to be avoided, and many studies continue to focus on the factors leading to business survival and success rather than failure” (Cardon et. al, 2011). However, in the absence of failure one cannot learn.
“Winners are not afraid of losing. But losers are. Failure is part of the process of success. People who avoid failure also avoid success.” — Robert T. Kiyosaki
The most disruptive startups and entrepreneurs are often glorified for their success, whereas it is their failure — and their ability to learn from said failure — that truly enabled their success. Failure cannot be perceived as an antonym for success, but a natural part of the journey towards it. While one must develop resilience toward the burden of perceived failure, failure itself should not be feared or stigmatised, but grasped as an opportunity to develop oneself and one’s business.
