The mantra of learning from failure is so ubiquitous in the start-up world that it’s almost deteriorated to a cliche. And while learning from failure is something that is often talked about as a concept, not many people have the guts and humility to get up on stage to share with other business founders what has gone wrong and what lessons they have taken away from it. Phil Morle, the CEO of the recently closed down start-up incubator and consultancy Pollenizer decided to ‘eat his own dog food’ and share his experience with the audience at the StartUp conference at CeBIT Australia.
“I’m a big advocate of flearn - that is learning through controlled failure,” said Morle. “After all nobody is here to start a company and fail.”
Finding a value proposition is relatively easy...
Pollenizer started at a time in Australia when it was really difficult to start a business, let alone get funding. “It became our mission to empower anybody to start a company,” reflected Morle. And that value proposition stood the test of time, however the business model changed over the years.
“We set up Pollenizer as a venture studio, because nine years ago no one wanted to start a company. It was simply considered too risky,” said Morle. “That’s why we hired people that were deployed to run start-ups. The issue with that model was that founders were not vested in the success of the company and were looking to us to make critical decisions as de facto CEOs.” That’s when the company changed to an incubator model by making staff redundant and hiring them back into the start-ups on a smaller salary, but with more equity. When this model proved unsustainable Pollenizer transformed again into a managed incubator.
...the trouble starts when you need to a build business model around your value proposition
Pollenizers changing business models show how hard it is to grow something substantial. “There were some problems we just couldn’t solve over nine years,” said Morle, including:
Cost structure (the people problem): “We wanted to have the very best people on the team, train them to coach other people and run managed incubators across the world. Doing this costs a ton of money.”
Customer relationships (the commoditisation problem): “Part of our work with big companies included a core set of content and materials that we needed to be monetiseable. This was in direct conflict with what our customers needed the content to be. They wanted to commoditise it and give it away for free. Pitching that idea to our biggest partners was one of the worst days of my life.”
7 lessons learned
Summing up his presentation, Morle shared seven lessons with startup founders to help them guide their decisions:
- Product/market fit is not precise nor permanent, it’s a moment in time that will come and go.
- Emotional labour is a necessary force against the impossibility of a new venture. Starting a company is against the force of physics. You have to do it because you love it. It’s what gets the whole thing over the hill.
- A start-up broken at foundation cannot be fixed. This means that you need to select and structure your partnerships very carefully. Going fifty-fifty into a business with a friend won’t work if one of the owners works a lot harder than the owner.
- Doing wins arguments. Avoid long discussions about ideas. Test different approaches and figure out what’s working.
- Habit drives traction. The reality is that no one comes to work every day bursting with motivation and new ideas. You need to have a process in place to move the needle every day.
- Learning is more powerful than knowing. If you think you know you assume the world hasn’t changed.
- “Why” persists but “how" is fluid. The why was what drove and motivated the team at Pollenizer, the how was never that important.
Useful resources for start-ups
When Pollenizer wrapped up business all content was released under a creative commons license on Startup Science. The website gives start-up founders open source access to useful toolkits around setting up and growing a business.
Upperstory is a free tool to help business owners reduce the risk in their decision making by testing, learning and validating through experimentation.