Bill Barnett at Stanford comments how so many startup pundits fail to learn when observing failures. Indeed, not only are the lessons learned often lost, but also the opportunity to use others' failures as one of the fastest sources of actionable information.
Unfortunately, most observers skip the logic part. It is mentally easier to jump to the “obvious” conclusion: If the business failed, the business model must be wrong. Full stop. You can easily tell when this skip happens. The person will name an example as if it were a reason. Is online grocery delivery a viable model? No: Webvan. Is internet search a viable business? No: Alta Vista.
These examples are data, not logical reasoning.
Wannabe investors and startup advisors are particularly villainous here, often heard retorting loudly against future billionaires in this way.
John Mullins has a more constructive approach to analyzing these failures. He separates them into analogs and antilogs:
There are companies before you who have done something like you want to do that you can copy from, and others who have also done something similar, but that you choose not to copy from. These are your analogs and antilogs respectively. The process of going from Plan A to a plan that will work is to begin with these.
For instance, when Steve Jobs of Apple decided to get into the music business that eventually completely changed Apple as a company, he had a whole range of analogs and antilogs he could refer to. Sony Walkman had sold over 300 million portable music players, so he knew there was a demand for portable music. Also, people were (illegally) downloading music from Napster, so he knew that they were open to downloading music online (as opposed to buying CDs). Jobs also had a key antilog, which was Rio, the first mp3 player that had a terrible interface and was rather clunky.
Not only does this mean you have a plethora of data available to analyse and learn from, but it also points you to better sources and advisors.
You'd be surprised how many of these founders are happy to share lessons learned from their failures with you, and how much faster this can be than talking to customers or running your own experiments at first.
Talk to 10 customers and run a few experiments, and you could still be barking up the wrong tree in the wrong forest. Talk to a founder who's been-there-done-that, and you'll be more like a bloodhound on the scent.
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