We’re genuinely proud to be part of a company culture here at Dun & Bradstreet Credibility Corp. that cherishes success sprung from failure. Learning from our mistakes is an age-old adage, but CEO Jeff Stibel sweetened the proverbial pot by reiterating,
I’ve said this before but it bears repeating: success by failure is not an oxymoron. When you make a mistake, you’re forced to look back and find out exactly where you went wrong, and formulate a new plan for your next attempt.
Co-founders Ross Kimbarovsky and Mike Samson started working on crowdSPRING in the summer of 2006. They incorporated the company in May 2007 and launched the crowdSPRING marketplace in May 2008. Kimbarovsky and Samson are also very vocal about learning from your own, and others’ experiences, especially when it comes to raising capital. One of their suggestions is to practice your business pitch and be ready to embrace your mistakes, lots of opinions and even tough critics during this process and then learn from them if you really want to be successful. Here are excerpts from their start-up tips they gathered from their experiences:
Find the smartest people you can and persuade them to be brutally honest with you. You’ll really appreciate this later, even if you’re uncomfortable about this initially.
While we were working on the business plan in the Fall of 2006, we separately were building a complex financial model. As we started building the financial model, we realized that we needed a reality check about our thinking. And so we found a few really smart friends with very strong accounting experience and over a period of four weeks, met with them to refine our thinking. The early meetings were pretty grim. We had lots of flaws in our assumptions and had made numerous mathematical errors.
We asked our friends to be honest and to push back as hard as they could. We wanted them to challenge every line, every figure, every assumption. We wanted them to convince us why we would fail. And they tried. Very hard.
The meetings were not easy because they consumed a lot of time and energy (both ours and our friends). But after each meeting, we would retreat, correct, re-analyze, discuss among ourselves, and schedule another meeting. One of our friends was a very successful business owner and we realized that by exposing our inexperience so early in the process, we undermined our ability to persuade him to invest. But we needed his honest critique and we were prepared to live with the fact that he might decline to invest based on those early meetings (NOTE: he ended up investing!) We can confidently say that without his counsel and critique early in the process, we would not have been as prepared to meet with angel investors months later. And we might have failed miserably to raise capital.
Kimbarovsky and Samson’s decision to hear out possible critics and their ability to thicken their skin gave them the knowledge and experience that they needed to move their crowdSPRING business forward. What are some of your suggestions for raising start-up capital from your experiences? Please note: ALL failure cherished here!