Why Decoding Stories of Failure is Important to Succeed?

A team of fresh graduates started an entrance preparation institute with a small amount of investment. However, the venture could not progress further due to the earthquake in 2015 and some problems in team management. Later, when they decided to regroup and rework, others in the market had made strong footholds. Eventually, they had to drop the idea.

The same team then came up with a business idea of online shopping. They launched an online shopping portal and started trading activities. Problems in maintaining regular supply of goods and delivery mechanism led them to give up this venture too.

What we know today are just the stories of a bunch of successful ventures. But there are many others who went bust and never explained their reasons for failures. When a giant airline like the Delta Airlines or General Motor which had presence in 157 countries had to go through bankruptcies, it's obvious that business failure is a huge possibility everywhere. The downfall of Lehman Brothers in 2008 or the downfall of Kingfisher Airlines in 2012 is a testament that success today may not ensure success in the future. Auto Raja, the auto rickshaw aggregator in Chennai or Frankly.me that allowed micro video blogging or askme.com, a search engine, failed because of their inability to achieve sustainable product market fit.  

Businesses are all about risk and return. In many cases, startups fail due to the lack of capital. Some young startups fail due to the lack professionalism, experiences and strong management. Some fail because they are short-sighted. Some are attracted to immediate profits than long-term sustainability. Some don’t research at all. Bhetincha.com should have assessed why Askme.com had to shut down. 

In the context of Nepal, there is a cultural reason as well. Nepali youths are culturally indoctrinated towards focusing on jobs rather than pursuing innovative ventures that involve risks. One wouldn’t dare to take further risks even if he/she starts up a venture. Failure is imminent in such cases. 

In any case, every startup failure provides some lessons which are generally ignored. Weren’t organic online ventures available in Kathmandu earlier but where are they now? We barely care, and what we only learn is how the online payment system eSewa or the shopping portal Sastodeal made such  huge leaps.

Back in 2005, young school kids started a registered newspaper in Biratnagar targeting the same age group. Although it sustained for six months, it had to shut down later. That same team started notebook production in 2011, which actually survived longer but could not sustain for too long. Their each failure can be a crucial insight for someone else. But no case analyses are available to know why or how those ventures were compelled to shut down. 

Shafiu Hussain, co-founder of TaxiMonger, shared in a talk show seven lessons he learnt from his seven failed startups. A venture starter at the age of 10, he has explained reasons that drove his startup failures - from underestimating competitor to failing to communicate to customers. In one instance, he reasoned that it is important to get down to the field and make your hands dirty to push your business. Bikash Barai, co-founder at Fire Compass, accepts that 90 percent startups actually shut down at an early stage.

Today, there are a number of trainings and seminars on entrepreneurship. Academic business courses, whether BBA or MBA, where entrepreneurship is a course subject for a whole semester, hardly dig down reasons contributing to the failure of a certain startup. They are taught about Ali Baba, Flipkart, Facebook and Apple, but stories of local young minds who could not sustain their newspaper publication are never told. 

If only money or an innovative idea would have been enough for a startup to succeed, things wouldn’t have been the same. That is why it is important to discuss failures of startups. By gaining insights into someone’s failure, startups may learn how to sustain. 

Marc Andreessen, an American entrepreneur, explains 49 percent of the startups fail because there isn't any market need while 23 percent fail because of poor marketing. Seventeen percent startups fail after running out of cash. There are other reasons as well like failure to scale up, absence of business model, difficulty in product realization, poor product quality, irreconcilable differences within the team and investors, absence of focus and dependency upon third party. A crucial element that leads to failure of startups in Nepali society is because their enthusiasm fades sooner than expected. 

For a country whose data on business registration is staggering with a daily registration of 35 companies (according to the records provided by the Office of Company Registrar), it is equally critical for Nepali startup aspirants to make sense out of the cases of failures too. A vegetable vendor who had to sell his shop or an ailing bakery shop nearing shutdown or a dying local tech company has more important lesson to teach than the success story of Zuckerberg or Flipkart. Zuckerberg's or Flipkart’s stories are hardly a reflection of our societal behaviours or challenges that our entrepreneurs face.  What we face locally as opportunities, challenges and threats will come out from the experiences of those vegetable vendors, bakery owners and tech companies. We celebrate success and the victors and try to learn from them only. But, we ignore the failed ones who are also a source of understanding how things could have been done differently. 

Only when do we realise the reasons behind failure, causes of success would be more meaningful.

Published in New Business Age of 2018 January

http://www.newbusinessage.com/MagazineArticles/view/2012