From an entrepreneur who’s worked with 100s of founders, some who’ve attained massive success, others who’ve returned to the 9 to 5 grind.
As a full-time entrepreneur (and serial founder) with countless friends, clients, and peers in the startup space, there’s one thing I’ve learned: We’re all hiding something.
That might sound strange, deceptive, or dishonest, but I’m not talking about burying critical operational shortcomings from investors a la Theranos saga. I’m simply referring to the various pitfalls, mistakes, disappointments, and surprises we encounter but don’t necessarily publicize along the business-building path. It makes sense: Strangers aren’t entitled to our every misstep or failure, and sharing them with the world isn’t necessarily a top priority for founders who are trying to solve these issues in real-time.
So we wait. Years. Or at least, I did, before confessing my biggest entrepreneurial failures — including the 6-figure loss that I’d hidden away from friends, family, and former colleagues until I was “ready” to come clean. Today, I’m sharing 7 surprising confessions (that are a few years delayed) from a handful of current and former entrepreneurs in my circle.
You know those people who are always chipper, positive, and exude an heir of confidence each time they enter a room? That’s Emma and Matthew. As we sat down to brunch for the first time since the pandemic, we caught up on everything from wedding plans to buying houses, travel, and the fact that their entire order system was down, since their industry had been blacklisted by the only payment processor that had ever accepted them. They casually sprinkled in the fact that they were losing thousands this week, and more as we spoke…
In case they couldn’t see the shock on my flushed face, I instantly asked how in the world they were functioning so normally, all smiles and rainbows?
If you’d asked me, I would have bet money their business was booming better than ever, not a hiccup in sight. In fact, I’m not the only one they were fooling: Emma mentioned that they had a string of interviews and live promotions lined up for the coming week, where they planned on promoting their products as if nothing was wrong. To heighten the stakes further, they were in the middle of a large crowdfunding raise, so the public perception of their brand wasn’t insignificant.
In fact, that’s partly why they were functioning per normal: They knew the payment processor issue was bad, but they figured spooking all their potential clients, decimating hundreds of thousands of virtual first impressions, and compromising their crowdfunding campaign wasn’t the smartest move.
Even though they were in a giant bind, unable to accept a single payment, and were paying a lawyer $8k to attempt to get the decision reversed, they proceeded optimistically. If worse came to worst and they couldn’t get things sorted out, they’d simply start over with a new (less controversial) product, and attempt to rebuild from there — despite the 5-figure’s worth of inventory they were funding in storage and production.
The takeaway: Entrepreneurs and salespeople show you what they want you to see — and that may be far from the full story.
Takeaway #2: Instinctual entrepreneurs like Emma and Matthew can’t be deterred by even the greatest setbacks, and perhaps that unfailing optimism is what’s gotten them their success so far.
Aftermath: They managed to find an alternate payment processor, and their company has continued to grow steadily. They also successfully raised double their crowdfunding goal, so they have plenty of runway, should a similar (costly) obstacle arise!
Most of us have probably heard the phrase “just ship it” in conjunction with some motivating startup-geared advice about getting your product out there, in front of customers sooner rather than later. Sometimes, however, physically shipping a product can become more costly — or more trouble — than it’s worth — even if you have a loyal customer base of both stores and individuals. Such was the case for Abbie and her homemade toffee business…
Abbie’s toffee started out as a small side hobby catered towards local events, neighbors, and the subsequent word-of-mouth growth. Soon enough, however, Abbie started receiving toffee orders from all over the country; the demand was so high that she successfully got into major stores and gift shops, including the Plaza Hotel in New York!
Two selling points made her toffee stand out:
- It was produced in small batches, at her home kitchen with impeccable quality control, a sprinkle of confectionary creativity, and an eye for detail
- Since her toffee was often purchased as a gift, she knew packaging was important — and she went all out! She spared no effort — nor expense — creating eye-catching packaging that called her toffee boxes off store shelves and into shoppers’ carts.
As Abbie grew her business through the seasons, a few pesky challenges came up — and they didn’t diminish as the years went on — let’s call them the 3 S’s:
- Seasonality: Abbie’s toffee business was pretty seasonal, and a majority of sales centered around certain holidays and events. While the seasonality was predictable, the rest of the year wasn’t, and sporadic sales made the business incredibly volatile. Thus, purchasing ingredients, shipping to stores, and managing B2B sell-through expectations became incredibly challenging.
- Shipping: Shipping was the biggest cost eating into Abbie’s margin, and despite selling a decent number of B2C orders, the individual shipping on low-volume purchases made big profits a rarity.
- Summer: Apparently, toffee melts in the summer heat — and in certain parts of the country that remain significantly warm. This left Abbie with two options: Add some cooler or ice to the packages or stop selling in certain months or to certain states. Since her margins were already so slim and shipping costs so high, the ice or cooler option wasn’t financially viable. Instead, she had to settle for option #2, which ended up foreshadowing the demise of her entire toffee venture.
The takeaway: Your competitive advantage may be your undoing. Abbie’s small batches and elaborate packaging were largely to blame for her slim margins, which were the cause of her demise (coupled with the 3 S’s).
Takeaway #2: Though it’s your business, you may have to accommodate factors far outside your control. Abbie couldn’t control the summer heat or seasonality, and despite healthy demand, these factors were her downfall.
Aftermath: Abbie operated the business for about four years, but by the end, trying to overcome the same three obstacles for a pittance of profit — and having to stay up all night making toffee on tight deadlines — ended up taking the joy out of the venture. Abbie still makes toffee locally and for friends and family, but she’s banished shipping from her list of battles to fight.
These days it seems everybody and their bother has some type of “ad agency”; the difference with Nancy, however, is that her boutique advertising and video production company is legit: She’s done ads for the SuperBowl, worked with A-list celebrities, and regularly produces content for Hollywood behemoths. I’m not saying all that to invalidate those with smaller, newer, or niche-er agencies; I’m saying this to illustrate the truly flabbergasting nature of Nancy’s confession.
Apparently, in creative fields like advertising and video production, clients have final sign-off — including the option to reject a final project (and apparently neglect to pay, too). Nancy confessed that she regularly goes into debt funding production upfront — to the tune of multiple 5-figures (and occasionally even 6!). It’s a gamble she feels she has to take since most clients won’t pay for everything upfront…
In one case, a major client (a huge public company in the entertainment space) contested a final deliverable and refused to pay. Nancy revealed that she “had to cut [her] losses and walk away to lower-profile, higher-success-rate clients on smaller projects to recoup [her] losses”.
The takeaway: Just because an entrepreneur appears successful by their client list or high-profile work, it doesn’t mean they have all their financial ducks in a row the whole way through.
Aftermath: Nancy is still operating her company, but she’s opted for more agreeable clients with smaller budgets (that also limit her own personal risk).
Have you ever wondered what it would be like to sit around in pajamas all day, while thousands of orders for tens of thousands of dollars (per day) roll into your business? Can you imagine doing so with little to no marketing effort or ad spend? Tom did just that.
Initially, Tom tasked his mom with stitching up a product to solve an issue that was plaguing his house. Her solution worked well but looked kind of ridiculous — hilariously so. As Tom shared his funny-looking invention with friends, social media, and the internet, interest and unsolicited media coverage began to mount. Before he knew it, Tom and his product were splashed across a handful of giant media headlines, and his sales literally skyrocketed overnight. With each piece of hilarious press and TV appearance, his sales spiked (and then tapered).
Tom’s confession? He got lucky. Seriously — and he knows it. He also admits that he hasn’t been able to re-engineer that level of stratospheric success in that business (or any other) since its initial heyday when the novelty of his invention triggered tens of thousands of impulsive sales.
The takeaway: Viral press can work, but you can’t count on it — and you can’t stay “viral” forever.
Aftermath: Tom is still running the business, but he’s branched out into a handful of other related products — though, in his focus for utility over hilarity, he’s yet to see another viral smash hit.
I first met Maya and Ben at a farmers’ market, where they stood behind a folding table, serving up samples of their unique treats to a welcoming audience. Between their extroverted and charismatic personalities and their sleek, yet hip, trendy packaging, they were making a killing at that farmers’ market. They also made a decent amount selling their products wholesale to a handful of brick-and-mortar stores. How do I know? Because I ended up working with them on a financial model, pitch deck, and 6-figure capital raise.
After pitching the investor, he had one suggestion: Go “all in” on digital sales, since it’s more scalable than the farmers’ markets, and the profit margins online will far exceed their B2B wholesale orders to brick-and-mortar stores.
Maya and Ben assumed — per the investor’s suggestion — that chasing digital sales meant investing in paid traffic — lots of it. To their disappointed surprise, selling their unique and tasty treats online through ads proved more difficult than they’d expected…
Fortuitously, they met a team that specialized in SEO content — something they were already focusing on inadvertently by blogging about the many benefits of their products. Soon enough, the SEO-driven sales eclipsed all their other revenue streams combined and became their primary engine for growth. Why? Because they had an inexpensive product that was highly searchable and in an exploding market…i.e. a ton of interested customers already seeking them out.
The takeaway: Sometimes — despite what an investor or supposed “expert” might say — going the obvious or conventional route might leave you barking up the wrong tree. In Maya and Ben’s case, they achieved the most success when they went places their customers were already looking for them.
Aftermath: Maya and Ben have mostly phased out the not-so-scalable farmers’ markets and have limited their wholesale practice; instead, they’ve more than tripled down on SEO, and their sales are largely passive (and growing).
Have you ever seen one of your friends or former colleagues jet-setting around the world, partying like a rockstar, and bragging about their 5-star accommodations and 6-figure earnings (just that month)? You’re probably thinking this person’s an influencer, right? Not in Lily’s case.
Lily took the same traditional route I did: We went to business school together, both got jobs on Wall Street, and made healthy 6-figure incomes starting in our early 20s. However, I left to gamble my bursting savings account on my first failed startup before eventually finding my footing (I think — though I suppose we’ve never really “found it” fully). Lily, on the other hand, stayed the “straight and narrow” even into her late twenties — years after most of us “risk takers” had left.
Then, the pandemic hit, and with the social distractions removed from her day-to-day work life, she began to see her job in a different light: She realized she was spending as few as four hours “working” most days, which often consisted of sending a few emails or crafting a client report for her boss. She felt bored, uninspired, and even underpaid (her perspective morphed by her circle of older Wall Street veterans, crypto millionaires, and the random rich socialites she met across the New York nightlife scene).
With her privileged, successful, older circle of supporters urging her on, she started taking some big, risky bets on alternative asset classes, very early stage crypto coins, etc. And some of it paid off (hence the $100k in 30 days she boasted on social media the month she quit her 9 to 5). Taken by the uptick in her accounts, Lily felt brazen enough to quit her job, watch her investments continue to soar, and build a financial blogging business on the side…
Unfortunately, a big chunk of those alternative assets tanked, then flatlined, and she was left with zero passive income (or any income at all). Traction for the brand-new financial blogging venture was also a lot slower than expected, and after spending six months jet-setting around the world on her now-dwindling savings, she started to worry that maybe she made a mistake quitting when she did. Further, she’d have to explain to a future employer what she’d been doing for the past 6 months — and her party, travel, and modeling-themed social media spilled the beans in a not-so-favorable way…
The takeaway: Quitting a prestigious, well-paying job is a big deal — and not one that should be meaningfully swayed or accelerated by one month of crypto gains. Lily is well aware that she had more than enough time to attempt her blogging hustle on the side, while keeping that boring job and its not-so-boring paycheck (and maintaining spotless continuity on her resume).
Aftermath: Lily had the 6-month sabbatical of her life — and she just accepted a new job that should be a little more exciting than her previous one. She did, however, take a 30% pay cut and agree to move to an expensive location, where she may not have the freedom or flexibility to pursue a side gig — at least until she gets settled.
You’ve probably heard that “fear of failure” often holds people back from entrepreneurship. In Gina’s case, there was a very different fear keeping her in it — even when she was blatantly failing, flailing, and unsure if or how she would ever earn a fraction of the money she’d made at her old 9 to 5.
Gina had been an overachiever all her life, and that carried through college, business school, and her grueling job. The job paid generously, but it was far from “easy money” for Gina. She was intimidated by her bosses, reamed for even minor mistakes, afraid to ask questions, and nervously anticipating a surprise firing on any given day.
Gina didn’t get fired; she quit — and she quit with a product halfway built and a solid business plan in hand. Nonetheless, in the months to follow, that venture failed — as so many do. Gina lost most of her savings, her one and only 9 to 5 escape plan, and the confidence that she could earn a living as her own boss. Despite being at her career “low”, one fear kept Gina forging ahead to build another business: Her fear of returning to the PTSD-inducing work environment her prior job bred.
Gina was definitely afraid of entrepreneurial failure — especially since she’d already experienced it. But she was more afraid of the 9 to 5 she’d quit. Gina flitted from planned venture to venture, pushing through failures, simply because she was running from an even bigger fear. That PTSD-inducing career made the entrepreneurial path seem a lot more palatable, even if it would be riddled with years more of failure, barely making ends meet, and progressing at a salted snail’s pace.
Gina confessed that if she’d worked in an easier industry, she probably would have kept her 9 to 5 job, even to this day (alongside other ventures).
The takeaway: Entrepreneurship isn’t so scary if you have a bigger fear to run from. Sometimes, it all comes down to reframing and prioritizing. Failure is scary, but a toxic workplace like Gina’s might be scarier.
Aftermath: Gina has since built a handful of small digital companies, alongside a library of monetized digital content and has become a respected authority in her chosen niche. You’ve probably heard of her, you just don’t realize it.