Million Dollar Ideas That Failed

My Startup Failed and It's All My Fault

What I learned in my first startup failure and how you can determine if and when to cut your losses.

Let's be honest: I know why you're here.

You're excited to hear another startup failure story from someone whose dreams have crashed and burned before them, even better to hear it was all their fault (what a poor, pathetic loser of an entrepreneur they must be), and you can't wait to use this example as an excuse to justify your own entrepreneurial self-doubt or shortcomings.

Don't worry; I meant what I said in the title, and I will deliver.

I'll even offer some helpful takeaways that you may be able to apply to your own current startup or other future ventures down the line.

I'm going to break this down into the more technical section (the what), the more analytical section (the why), the aftermath (what's next?), and the takeaways (what you can learn and apply to your own situation).

First, let's get into "the what"

In order to understand this startup failure story, or likely any other, you'll need to understand a bit about the company, the objective, and the particular startup journey in particular.

Just like Usher said in his famous song 'Confessions Part II':

"If I'm gonna tell it, then I gotta tell it all"

My first startup began out of desperation, in all honesty.

I was at the beginning of my investment banking career — my first job out of college — and my goal from day one was to build a ready-to-launch startup in my downtime (haha…as if that existed), so I could take my few years of experience, handsome bonus savings, and jump ship into the land of self-employed startup millionairedom.

In other words, when it came to figuring out my first startup idea, I was reaching.

I think that's how many first-time entrepreneurs obsessed with startups and entrepreneurship go about their first venture. They scrape the ground, desperately clawing away, hoping to stumble upon the idea that promises a pot of gold at the end of the entrepreneurial rainbow.

By doing this, they may even set themselves up to fail.

That's the hard part about startups. You can't just want to build a startup and go do it; you have to want to make an impact, bring a necessary creation into the world, or solve a problem. Startups are kind of a strange pursuit in the first place, because what does that even mean? You want to build a successful brand new company from nothing into millions or billions of dollars? Yeah, kind of like every other aspirational or money-hungry person on the planet? Join the club — you'll only be 8-billionth in line.

That pretty much uncovers mistake #1: I tried to build something "cool".

I had been a part of other startups before, but this was the first time I was venturing out on my own, risking all my time, my career, and every dime I had painstakingly earned and saved in the prior three years. This was also the first time I had to think up the idea, which subsequently meant the outcome (failure or success), was pretty much all my fault…(though it gets worse — this outcome really was my fault…you'll see).

The curse of business school:

When I learned about startups and venture capital in business school, it seemed like tech products and apps were the one and only proven road to riches. Now, this obviously isn't true — I could probably name off (or at least Google search and identify) dozens of startups that have attained massive success selling physical products or services, but at the time, tech and apps were the "sexy new thing", so I too bought into the hype.

When your top three business role models are Mark Zuckerberg, Steve Jobs, and Evan Spiegel, it's easy to get sucked into the mindset that it's their way or the highway…but what about founders like Sara Blakely of Spanx? Or these days, I hate to say it, but even Kylie Jenner (Kylie Cosmetics) or the other entrepreneurial Kardashians (Kim's KKW Beauty and Skims, Khloe's Good American, Kourtney's Poosh…), for that matter…

Or the Scrubdaddy guy from Shark Tank? He was one of their top success stories and his little sunflower-head-shaped sponges have been in the As-Seen-On-TV section of most every Bed Bath & Beyond.

Why couldn't I have wanted to be like them? They actually solved a problem.

Sara Blakely: Women always feel like they look fat; let's help them look and feel better. Enter Spanx, currently valued at over $1 Billion.

Scrub Daddy: Most people hate cleaning, and most sponges kind of suck…let's make a better sponge. And let's make it in a cute, funny shape while we're at it to make cleaning a bit more "fun"…Well, as of 2019, Scrub Daddy was over $209 Million in sales.

In fact, if you look at any or all of the 10 best-selling Shark Tank products from CNBC's 2019 list, you'll see that NONE of them are high-tech gadgets or apps. And these are products that have done millions — actually hundreds of millions in sales.

The belief that tech products and apps are the only startup ideas ripe for success or worthy of multi-million or even billion-dollar valuations is ridiculous, narrow-minded, and wrong. It's just stupid.

But it's also the picture the media paints for us.

Remember when Evan Spiegel's Snapchat went public back in 2017, making him worth $4.2 BILLION dollars at the time…with a "B"? Well, did you know Snapchat still hasn't had one fully profitable year as of my writing this?

Is that really success? Make something cool, trendy, high-tech — an app, maybe — and the user base will come, venture capital will pour in, and you'll be rich and famous. Don't worry about profit, you can always come back to that later.

NO.

WRONG.

I'm sorry, but that's just WRONG.

You SHOULD worry about profit.

In what world are we living where the profit, also known as the money the startup actually clears (revenue minus expenses) doesn't matter?

Who CARES if you built an app with a million users if you have no current or future plans to monetize it or achieve profitability?

Sorry to get on my soapbox here, but this is the thing that disturbs me so much about business. As someone who runs my own businesses, works with CEOs and founding teams on their early-stage (usually pre-VC) startups, and who teaches and coaches hundreds of aspiring entrepreneurs every year, this is the misconception that pervades and poisons the industry and the minds of young aspiring future founders.

Sorry guys; hate to break it to you, but profit does matter. Monetization matters. It doesn't have to be today, but it has to be someday. And it shouldn't be one of those "build it and they'll come", figure it out later kind of strategies. Monetization should be at the forefront of the mind of every aspiring founder from day one and if it's not, you're doing yourself, your company, your investors, and the startup industry in general a disservice.

We CANNOT continue to permeate and promote this idea that positive financial returns don't matter to startups. That's just not true and it really isn't helping anyone.

So, back to my failure story:

I kind of fell into their trap.

Okay, I totally fell into their trap…but it wasn't because I wanted to. I was desperate, remember?

Once I finally had what I believed to be an idea worth pursuing, I hunkered down and poured my heart, soul, and bank account directly into it…

Monetization? What's that. We can build an app. We can cultivate a user base. We can get company sponsors, B2B (business-to-business) partners, and generate earnings through ad revenue (because Google Adsense really had the potential to turn my fledgling idea into a million-dollar platform…ha…haha).

Oh, to be young and dumb. I mean don't get me wrong, this wasn't my only mistake or even my only startup failure really, but this one is just especially embarrassing due to the extreme naivety that allowed me to believe we were actually going somewhere…

I've had other business failures; be it a product, a marketing campaign, an entire tech platform, etc., that have pretty much tanked. However, there was always a reason or even a combination of underlying reasons and it was never solely my fault . Sure, I may have signed off on the decisions that led to those disappointments and failures, but there were factors out of my control, things that had been misrepresented, and failures on the part of others that make accepting the outcome much easier and less personal.

However this one? Nope, it was mostly all me.

A bit about the product, just so you know what we're talking about here:

It was a user-generated content platform that had elements of gamification, and from a legal perspective, it was actually considered a "sweepstakes".

You may not be aware, but there's a myriad of legalities that separate a "sweepstakes" from a "competition" from a "contest" from an illegal lottery. There's an entire division of law dedicated to this: Sweepstakes Law.

In fact, the laws surrounding sweepstakes vary widely by state and by country, complicating this business even more and providing the justification (really, the necessity) to hire a highly-specialized sweepstakes lawyer…to the tune of $540 an hour.

I told you it gets worse.

Now, in addition to the exorbitant and ongoing tech costs (we'll get into this later), I had an expensive sweepstakes lawyer on the payroll, alongside our more generic (and unnecessary) corporate lawyer, and I still didn't have an ounce of proof of concept to justify the spending at all…sound like a problem yet?

I will give myself a little pat on the back for one thing though: I did think about monetization.

I even had our tech team build in features to enable immediate monetization from both our B2B partners and our B2C (business-to-consumer) users.

In fact, I had our team build in ALL the features…and that only exacerbated the problem.

It was really cool, actually. Here's what you could do:

Users could post content (pictures, videos, text, music, etc.)
Users could interact with content in a new and different way…(still keeping things vague, at the request of my minority partner, who now owns 50% of the IP after buying me out later on)
We had a proprietary algorithm that would display content in a certain way (again, blame the vagueness on my partner…sorry)
B2C users could pay to get promoted across the app in a way that no other social platform offers. That was one potential revenue stream.
B2C or B2B users could pay to promote a charity or non-profit of their choice, and others could even donate more to this nonprofit by clicking the little charity button icon…or at least I think they could; that may have been a functionality we were still working on…
B2B users (companies) could pay to be the app's sponsor for a day, week, or month. Based on the amount they paid, their company would be featured and linked at the top of every page of the app. This was actually pretty cool, and if the app actually got traction or built up an active and engaged userbase (with detailed user demographic data), this could have been very valuable to companies and a great potential B2B revenue stream.
ALL users could and would make money, based on how they interacted with content on the app and the result of those interactions…I know that doesn't fully make sense, but just think of it like a social platform where you could also get paid…

Honestly, as I'm recounting it in my head, it still sounds pretty cool to me and almost gives me a tinge of regret at my decisions resulting in the final outcome…

But then the financial reality, technical headache, and marketing beast of an uphill battle we faced remind me why I made the decision I did.

And why it was the right decision then and is still the right decision now.

Now that you kind of understand "the what", let's talk about why we failed.

We built something awesome…why did we fail?

The first thing you should know here is that I was not the technical coder behind this tech app. I didn't write a line of code then and I still don't…okay, maybe I've written a line or two for practice, but it's definitely not my expertise.

Here's how our team was comprised:

Me (the brains?, the hiring manager, the QA analyst, the tech liaison, the marketing strategist, the monetization planner, and many more I can't think of right now)
My silent partner (a 5% equity holder who contributed a bit to the idea and initial business development, but was minimally involved throughout most of the process)
My silent investor (we did take on a small amount of friends-and-family investment from someone who simply believed in me and our team…I always felt nervous and guilty accepting outside investment and to this day, I don't prefer or seek it out)
My regular lawyer (the one who charged us $275 an hour to draft up a contract I could have downloaded for free on LegalZoom…gotta love those lawyers)
My specialized lawyer (the sweepstakes lawyer who charged $540 an hour, required a $10k retainer up front, and was absolutely necessary to ensure we weren't breaking any one of the fifty million laws you may accidentally encroach upon when creating anything skimming the surface of the sweepstakes or contest space…I'd say he was pretty necessary and totally worth it, even just for the peace of mind and CYA (cover your a**))
My tech team (This is where most of the money went…and by most, I mean like 99%. These guys were necessary since I definitely wasn't the coding genius, but I wish I had been warned of the bottomless pit of spending we were so blindly and eagerly walking into…)

Before I tell you exactly why we failed, a quick aside:

This is a story that I've contemplated telling many times. I know it's interesting. I know it's unique. I know that it could be helpful, maybe even inspiring, or at the very least comforting, for some other hopeful aspiring entrepreneurs out there…

However, this is really a hard one to write.

This is actually a story that, if I let myself really sit back and think, stew on what happened, I could cry. I almost do, just thinking about the missed opportunity that I just couldn't make happen and the guilt I feel towards that investor.

This is a story that I'll never forget, but I always try to. I don't talk about it much. I've never told most of my friends the details. It's just too shameful. Too personal. Too much of exactly what the naysayers would want to hear…and in this case, they'd be right. I failed. I can't even really say "we" failed since so much of this and the ultimate decision to shut it down was all me.

My point here is simply that when someone opens up and tells you their failure story — especially a startup failure, that they put their heart and soul and money into, a venture that they may have risked their entire career or life's work for, you should be kind. You should be gentle. You should be grateful.

No one is entitled to this story. It was a private company, and aside from the investors and founding team, no one really needs or necessarily deserves to hear this story.

However, I know these are the stories that we all need to be telling more.

Seriously.

I know there are so many more founders out there, just like me, who've had early failures. Even late failures. In fact, failures after successes. That's what we want to hear! That gives people like me, who risked it all and failed, the encouragement to know we're not alone and the support to feel backed by a community of like-minded, aspiring entrepreneurs who are also pushing a boulder up a hill on an unlikely journey to eventual (hopeful) success.

In other words, you're welcome.

Now back to why we failed:

It's pretty simple actually: we failed because I quit.

I cut the cord.

I decided we failed before we actually had to.

But let me explain the why behind the why:

The project in total was looking to cost around $100k…before also building the mobile-only app version (which would be another $80k). That meant that legal fees plus the website desktop version of the project alone were already putting me 6-figures in the hole.

Most of that was my own money, by the way. While I did take on a bit from a friends-and-family investor, I was not willing to risk their money over my own, so I always put in the vast majority of funding and would still consider this startup to be more than 90% bootstrapped by me.

This friends-and-family investor had medium-sized pockets for an early-stage seed round investment; they would have been willing to put in another $100k or so if needed, but I would not let them risk that. Not once I realized the pitfalls of the entire project.

The idea itself was actually a good one. Unfortunately, the convoluted sweepstakes legalities and the inconsistent and potentially changing and evolving state-by-state sweepstakes laws made the entire project very tricky and risky from a legal point of view.

We even had to incorporate in Nevada, under a private representative, as if that didn't seem sketchy enough.

(That's just because we wanted to incorporate in a state where we knew the premise would be legal, so Nevada was our best bet; plus their tax structure was also favorable. The whole private representative stuff was mostly because at the time we incorporated this business, I was still working for a big finance firm, so it could have popped up as problematic to have my name tied to this new sweepstakes startup out of Nevada…you decide how that looks.)

That said, it wasn't the legal intricacies and risks that made us fail…or quit; whatever you want to call it.

It wasn't the idea itself; similar business models had been done successfully many times over, and we had studied everything from addictive gamification to user engagement incentives to the monetization strategies that usually worked for these types of apps to build a compelling B2C product and a bulletproof business strategy around it…

I'm never going to trash the initial idea or the business model. They weren't bad, and in the right capacity, with the right delivery, the right marketing strategy, the appropriate funding, and the right team, they are doable and could work. The perfect storm of these factors could even result in the next billion-dollar unicorn startup; who knows.

I just knew that it wouldn't be ours.

It wouldn't be ours for these very reasons:

Tech Team: We had an outsourced tech team for a tech product. Our business was an app, but we paid our tech team on a milestone, project-by-project basis. They were not full-time, they were not a part of our marketing or strategy team, and they were not interwoven or emotionally invested in the success of our app. Big mistake. You can hire an outsourced tech team and be successful; I've done it multiple times for other businesses that have achieved success, but these have not been tech apps, whose primary functionality hinged on the proper coding behind an algorithm that we, it's founders, didn't fundamentally understand. This was a problem. A crippling, business-killing problem. This was actually the biggest problem and the primary reason we didn't succeed. If I decided, right now, I was going to revisit this idea and dedicate the rest of my life to seeing this business to success, the first thing I would do is bring on a technical expert as a core member of the founding team. They would be full-time, and they would have significant equity.
Core Team: We didn't have the three things we needed. We didn't have deep technical expertise. We didn't have digital marketing expertise. We barely understood Adsense or the fact that relying on Adsense alone is not a great business model for anyone or any startup…We just weren't skilled in the right areas. We were learning as we went, but that made it even scarier. This idea was good and possibly could have been successful with the right strategy and execution. However, the right strategy and execution required a team with the skills and experience we simply didn't have. We brought a wooden stick to a sword fight, and it wasn't going in our favor…
Funding: We needed more money, but we weren't (I wasn't) willing to risk more of my own savings or to allow the friends-and-family investor to risk more of theirs. I could have sought out real investors or those with expertise and connections in this realm of startups (social networks, tech apps, user-generated content platforms, sweepstakes, etc.), but I didn't believe in the success potential enough to ask for what I felt we needed . I think this idea could have had wings, and perhaps with tens of millions of dollars to throw at the right influencers as early adopters, who could also promote it to their fan base, it could have done well. Heck, it probably would have…maybe. However, even if that did happen — if we did get that $50 Million of funding and used a good chunk of it for successful influencer marketing — things still would have come to a head in one of two ways. The flaws in the technology (the bugs that our core team couldn't identify or solve) would have popped up, and this would have exposed the primary weakness of our core team. Even with the right amount of funding and successful marketing, our outsourced technical team and the inadequate expertise (or technical experience) of our core team would have reared their ugly heads and gotten us kicked out altogether…In other words, I was the wrong person for the job. I was the wrong person for this startup, and I knew it. I was the person who would have been fired by our outside investors, only to be replaced with the right Zuckerberg-esque prodigy…so, I played offense: I fired myself first.

You heard me. I fired myself, so the VCs didn't have to…or wouldn't get to, really.

I could probably identify flaws in our marketing strategy, shortfalls of our monetization plan, and ways in which competition would have been the straw that broke our startup's back, but those wouldn't truly be the primary reasons we failed. They were part of the reason I quit.

I knew our marketing strategy needed money. LOTS of money. Deep pockets like no one I knew had…or no one I was willing to ask. But this actually comes back to funding. Marketing itself wasn't the problem; funding to rev up that marketing engine was.

Competition may have been a problem, but again, with enough money to strategically outshine our competitors, this alone was not enough to make me call it when I did.

It was really me.

When I realized ongoing tech maintenance was going to be another $20k/year minimum, even if not a single person used the site, that was a bit disconcerting. But if I truly believed I could grow this thing into a highly-trafficked site with great engagement, which people loved, and monetize both B2B and B2C like we'd planned, these simple operating costs shouldn't have scared me away…

It really all came down to my belief or lack thereof in myself.

I just knew I wasn't the best person for the job. And that was a hard thing to admit.

That didn't have to mean the end. I could have tried to hire someone else as an operator, a CTO (chief technology officer), or even the day-to-day CEO…but when I looked at the amount of money required, coupled with the shortcomings of our core team, I just couldn't make sense of trying to construct a brand-new team around this flailing idea.

We had a fully-functional website. We had working payment gateways. Technically, I could have launched it right then and there…

But I got scared.

That's the truth.

I got scared that I was about to throw every dime that I (and my kind, supportive friends-and-family investor) had at something that I knew, from day one was a bit of a lost cause.

I knew it was a lost cause the way we set it up, coming from us. I also knew that resurrecting it into the success it maybe had the potential to be would take risking tens of millions of dollars, a very public stage for success (or still very likely failure), and possibly burning more bridges than I'd like to count, depending on the outcome.

It wasn't worth it. I wanted to quit…so we did.

We were planning out and gearing up our marketing strategy. I had just done the last round of QA to make sure the site was working 100% perfectly…which by the way, unless you have a passion for testing and re-testing websites, was a special kind of torture like I had never known.

We had just ordered our company branded Popsockets to put on the back of our phones, so we could be walking advertisements and plan to tell everyone we met and encountered in public places all about our amazing brand new site…

In fact, I'm slightly embarrassed to admit it, but up until a few months ago, I still had the company Popsocket on my phone. I guess I ordered enough extra that I just decided to use them each time I got a new phone or phone case. My latest phone case has a built-in Popsocket and cardholder, or else I'm certain I would have put one of the last remaining company Popsockets on this phone case as well…

Just a nice little reminder of failure, staring me in the face at my desk, in the car, at the mall, everywhere I go…maybe it's better that it's not on my current phone?

Anyhow, we were just about to start the marketing spend when I had my come-to-whatever religion or higher power you believe in moment and pulled the plug.

I had been feeling uneasy about this for months…maybe the better part of a year at that point.

I had spent years on this project. Since I started working with the lawyers and tech team while I still worked full-time in finance, it had officially been more than two years since I had begun the project. Actually, it had taken the tech team, alone, more than 19 months to complete the website.

Now that I was a full-time "entrepreneur" — whatever that meant — was I really going to pull the plug and quit the one and only thing that made me an entrepreneur?

Then what would I be?

Just nothing? Nobody? A failure? A quitter? Jobless?

I didn't even know.

But I knew I could quit, cut my losses, and pre-emptively "fail" now, strategically and on my own terms, or I could keep going down with the ship I knew was suffering a big gaping hole (a hole that nobody else on board wanted to acknowledge or admit), and fail later…along with everyone else involved.

The longer I waited, the more we spent, and the farther along we got, I knew it would only get worse. The longer the delay, the more expensive and more long-term and negative the effects of the failure would ultimately be.

So, that's exactly what I did.

I told my minority partner (the 5% equity holder) and my friends-and-family investor the truth about what I was thinking, how I was feeling, and why I believed cutting our losses was the best option at the time…

And one of them agreed. Kind of.

The minority partner still had hope, but he also didn't want to look in the face of reality and see just how long and expensive of a road we had before us. He was an eternal optimist, which is fine, but in this case, he simply wasn't being pragmatic.

However, I gave him an option. If he wanted to put in the required funding, then sure, I would play along further and we could run this thing all the way into the ground, along with his additional investment…

He declined.

Okay, then…if he couldn't even stomach a bit of financial risk, it definitely didn't make sense for me to further risk my career, my remaining savings, and my investor's best interest and limited funds when I knew I saw the writing on the wall.

It wasn't smart, it wasn't strategic, and I simply couldn't do it. It felt irresponsible.

When you get that far down the line in the entrepreneurial journey, it almost feels like you're on a fast-moving train, speeding towards something unknown (likely bad, but you're never 100% sure), and it's moving too fast to jump off.

But that's actually the fallacy in these situations.

If you can peer out the side window, stick your head out of that train and see the steep canyon it's about to fall off, or in some cases the other train going the wrong way at lightning speed on your tracks, bolting your way for a head-on collision, there's still time to jump off!

You SHOULD jump off. NOW. As in RIGHT NOW.

There's really no more time to contemplate. No, you can't go talk to the conductor and see if he can veer off to the side a little bit so both trains don't collide. No, you can't try, yourself, to redirect the train and do a little U-turn to avoid that 90-degree canyon dive down.

There's no more problem-solving here. There's no talking your way out of it. There's simply jumping. And jumping quickly. If you can push a few friends and other passengers out the windows before you jump, maybe you can save them too…but whatever you do, you need to act NOW.

That's honestly exactly how I felt and how I still feel about my decision to cut my losses with that first startup.

Don't get me wrong; I wanted it to work. I wanted to believe in it. We had a cool app. We had a viable business model. We had an interesting idea…But sometimes the risks and required sacrifices outweigh all that.

Sometimes the problem isn't that you know too little; it's that you know too much.

Sometimes you know so much that it all becomes so scary and you're too afraid to make the call you know you should. That's exactly how I felt.

But sometimes you have to ask yourself if you're simply throwing good money, or time, after bad.

I've looked at founders like Adora Cheung (Homejoy, a Y-Combinator graduate) or the Quirky guys, or even Elizabeth Holmes of Theranos, all of whom failed massively and publicly, and felt somehow inferior to them. I felt as if because I didn't raise millions of dollars, seek out venture capital, or go through Y Combinator with my startup failure, it almost didn't count. Because I didn't fail as well as they did, I wasn't really an entrepreneur.

That's honestly what I believed…for a long time.

The thing is, there are probably a lot of us out there. Founders who didn't take on venture capital — possibly because we didn't want or need to. Founders who quit pre-launch or pre-revenue, but never told their story.

I didn't even tell our tech team until a couple of years later when I was already onto a different business venture and needed some tech maintenance for the website since that minority partner was finally interested in buying me out.

But getting funding isn't the badge of honor. Winning over investors, only to later lose their money through a startup failure (and on a public stage) isn't a measure of success.

Funding and everything pre-launch is just Step One; and you can do it in a big, well-known accelerator like Y Combinator or 500 Startups, or you can do it silently and alone, from your grandmother's basement. Either way, you're just as validated as an entrepreneur. You're just as much a startup story, regardless of the magnitude of funding you do or don't receive, and regardless of the outcome you experience, be that failure, mediocrity, success, or anything in between.

Now, let's talk about the aftermath…

Here's what happens when you risk your 6-figure corporate career, sink 6-figures of savings into a startup, and deem it a failure and quit:

Nothing.

Nothing really happens. Well, except maybe in my case that you feel so relieved that you aren't bleeding your and your investor's cash at an irredeemable rate, with no real or near-term hopes of a profitable return.

I felt relieved.

And that just confirmed that I had made the right decision.

It was a harder decision than you can probably imagine. It was like I had bet all my chips on this one thing, and maybe if we went another round we could still make back our losses, but I just couldn't bear the thought that we might end up even deeper in the hole.

Once I resolved in my mind to quit, I was able to take a step back and assess what had gone wrong. I was even able to congratulate myself for the few things that I felt had gone right.

Now that I had freed myself of the all-consuming prison that was my first startup (and the pressure to see it through to the end), I could finally open myself up to new ideas and opportunities.

I didn't have to be defined by that failure, especially since that failure was on my terms. In fact, I had learned and grown A LOT from that failure. I had earned my startup stripes, so to speak, and now I could attempt the next venture, with my arsenal of improved wisdom and robust and enhanced skills.

So, what was next for me?

Diving deeper into one subject-matter expertise: During that first startup journey, I began delving into and learning a lot about a particular industry. It wasn't the sweepstakes industry, but rather influencer marketing and monetized digital content. This would prove to be the basis for two of my later businesses, and to this day, I use what I've learned and experienced (both good and bad) in this arena in all of my companies and marketing efforts.
Embracing my newfound inspiration: I got pretty down and depressed during that whole "failing for two years" episode…and that negativity actually gave rise to other ideas and inspiration. I was inspired by the idea of building a community for others in the same situation. I was inspired to look into the available professional and startup networks, as well as to consider the coaching, consulting, resource-sharing, and collaboration opportunities out there for my future venture. This, too, would prove useful in multiple of my later businesses (and does to this day).
Finding a cheaper way (for next time): I would never pay a team like that for custom code at such a high price point, with such a high maintenance cost. At least not until I really had the funds to justify it and believed that team and their technology was the best or only option for the job. Since then, I've hired a few different tech teams for various products, all of which have built on simpler, faster, more accessible platforms that even I, myself can use. This was so incredibly important because this enabled me to take back some of the control surrounding my costs and my end product. Since I now understood the technology, I could get in there and make changes myself. I could also get last-minute fixes done, which would prove necessary more times than I've liked, particularly for already-launched products that have current customers and ongoing lead generation traffic. You never want to be in a bind, simply because you don't understand your own tech and your team doesn't make you a priority, especially when you're sending automated, paid traffic to the broken site.
Doing more myself: As I've kind of alluded to in the "find a cheaper way" bullet, I've also gotten a lot more hands-on. With that first startup, so much of what we were doing was so complex, technical, and over-my-head that I really couldn't contribute. I felt like my hands were tied, simply due to my lack of necessary skills (or fundamental understanding of our technology). With every subsequent business. I've been as hands-on as I could, and I still am. I'm talking about everything from drafting ads to building sales pages to writing email marketing content to setting up each and every tech automation, to integrating every plugin and payment system. I do it all. Or at least I try. I probably still do 99% of it. And that's okay with me; actually, that's preferable to me. That gives me control, and that's the one thing I didn't have in that first startup and the one thing I really require when taking on a huge risk like building a company.
Building a better team: I build better teams now, simple as that. I build responsive teams who really care. I work with people who are genuinely and strongly rooting for and highly invested in our successful outcome. I also concept test, and if possible, I retain some of those concept testers (or beta users) as brand champions, and sometimes I even hire them on as part of the team. Those early adopters are the loyal, invested brand champions who have the power to make this thing grow. Those guys are the ones who believed in your business or idea — no matter how stupid or half-baked — before anyone else did; maybe even before you did, yourself.

I did go on to build other businesses — all of which have had their own challenges.

Some had hiccups I found nearly insurmountable, and others merely needed a bit of tweaking, rebranding, or in some cases pivoting along the way. However, in every subsequent business, I've tried to retain as much control as I possibly can in every aspect.

That includes technology, sales, marketing, finances, etc.

In fact, one day I'll tell the story of the second biggest startup mistake I ever made (with a different company)…

In this case, thinking back to this first failure story and the unparalleled relief I felt after cutting my losses, I was able to make a similar decision and free myself once again (and stop sinking around $3k to $5k a month into a barely revenue-generating, never-been-profitable channel of advertising that I was nearly too scared to quit).

See, these failure stories come back to help us out down the road, when we almost repeat our own history. Luckily, the searing pain of a startup failure cuts so deep, you'll be taking these lessons (especially if experienced firsthand) with you for a LONG TIME.

One unlikely positive outcome from that first startup:

Among the people I didn't tell about our failure was our expensive specialized sweepstakes lawyer Adam. I started getting a missed call from a New York law firm about a year later…and to be honest, I avoided it.

I assumed it was either spam, a wrong number, or some type of weird collections agency that definitely had the wrong person. I didn't have any outstanding bills and was not trying to get billed lawyer fees for a conversation (you know how that goes). At one point, it crossed my mind that it could be Adam, calling to check in on our startup, and that's really the main reason I declined to answer…it was just too embarrassing to discuss, especially with him.

Luckily for me, after the first five or ten missed calls, his firm finally left a message. Apparently, I still had an untapped $5k left in our retainer (we ended up paying both upfront and some monthly retainers that we would draw down on an hourly basis), so they were calling to ask if they should release the $5k back to my account or if we would be needing them for more work soon.

I called them back and they returned the $5k. At least one good thing came out of this!

Lesson learned? You don't have to answer your phone, but at least check your voicemail. It could be good news. (Unlikely, I'll admit, but you never know…)

The takeaways (what's in it for you?):

Here's what you can learn and how you can apply the lessons from my failure story to your own current or future ventures:

Understand your product or get someone on your core team who does (founding member and equity-holder): The last thing you want is to be responsible for the success of a product, service, or technology that you, the founder, don't understand. In my opinion, it really can't work. Maybe occasionally this results in success, but it will be through a much more difficult, convoluted, mistake-ridden journey.
Know the startup capital (funding) requirements up-front and overestimate: It doesn't do you, your company, or even your investors any good to pretend you can build a rocketship for $500 if you really need $5 Million. It's a set-up for a let-down. It's only going to result in one of two things, or likely a combination of both: failure and/or disappointment. Just be honest and realistic upfront. If you need $5 Million, then say that you need $5 Million. There's no shame in knowing what you need and seeking it out. Trying to cut corners or be the martyr in your little entrepreneurial hut, attempting to build houses out of cardboard when you can't afford wood, likely isn't going to end up all too well…
Know yourself (strengths AND weaknesses): There's no use kidding yourself about what you're good at, especially when it comes to building a startup. Yes, you can learn new skills, but if you're building a tech company and relying on teaching yourself the first line of code tomorrow, you may find you're a little late to the game. There are people out there who've been doing it for decades, and they're ready for hire. If it isn't your strength or your passion, delegate. Why not? Otherwise, you're wasting the one finite resource you can never crowdfund or raise through a VC round: time. Your startup journey is too important to be delayed by your own ineptitude and unwillingness to find and hire the right talent for the right job. If my toilet breaks today, do you think I'm going to look into getting my plumbing certification online? No, I'm going to hire a plumber who's already learned how to fix the problem. If you're not the plumber, go find someone who is! Your startup is a way bigger problem than a broken toilet, so your sense of urgency here should be tenfold that of the broken toilet scenario…
Prepare for a LONG slog: Startups, in my experience, are a long road. My first few years were painful. Honestly, sometimes it's still painful. It just depends on the business and the problem at hand. The one thing I can guarantee you is that there will always be a new problem at hand. Things you've never even dreamed of will pop up at the most inconvenient and unexpected times. I know, it sucks; that's entrepreneurship. It's hard. It's unpredictable at times (often). It's one of those things where you have to get ready to roll with the punches, even though they will sometimes knock the wind out of you and your entire company. Trust me — this has happened to me more than once, and the memory of those incidents still leaves a bruise, like blunt-force trauma you can relive, simply by thinking back on it. You don't get into startups just for the money; you have to be in it with the understanding that the returns may be small, or nonexistent at all. But it's still worth it. It's worth it because this is your dream. You have an incomparable, insatiable desire to pursue this path, and abandoning that for anything else feels like abandoning your true identity. If that's you, then you ARE an entrepreneur, you just need to embrace it and get ready for a long, difficult ride.
Whether you fail or not, just doing the dang thing is a huge, one-of-a-kind accomplishment that no one can take away from you: This is something founders don't really think about since we're so busy "doing the thing", but the fact that we're doing this whole startup thing in the first place is a huge accomplishment. In a way, we're already a part of a special, elite group, since we're among the few who decided to take that risk. We went out on a limb, maybe risked our jobs, our finances, our relationships, and came out with a one-of-a-kind story that no other person will have and no other non-founder can possibly relate to. That is something unique and special and noteworthy, and for that reason alone, I hold other founders in high esteem. Whether they succeeded or failed. They tried. They risked. They built. They persevered — and the outcome doesn't change or discount that one bit.

Why am I telling you this story at all?

To be honest, just writing this alone has been therapeutic. I've never really just sat down to spill my guts and go deep into the details of my first startup failure.

I've mulled over each aspect in my head hundreds of times, likely thousands if we count the dreams I don't remember and every subconscious flashback I probably experience. However, I've never word-vomited it all out — written or verbally — to any one person who wasn't here or wasn't an integral part of the story as it occurred.

It's very interesting getting vulnerable like this online (and with strangers). I don't do it often, but I think with this particular story, the potential outcome of sharing will do more good than bad.

What's the worst that can happen? A more successful peer of mine may read it, laugh behind my back, and possibly share it with all their friends? I think that's pretty unlikely since those more successful peers I know are actually quite nice and supportive; I'd also hope they're too busy to spend their time laughing about another founder's failures…But on the off-chance that they do laugh and then share it, then what? Then great — maybe one of the people they share it with will be an aspiring founder themself, maybe one who's even too scared to admit to their more successful peer how their startup journey is really going.

Maybe this will spark honest, never-before-had conversations among their entrepreneurial peers, which will uncover useful information about their particular failures, what they've learned from each, and subsequent discussions about how they can collaborate and help each other overcome their current challenges.

The great thing about entrepreneurship is that it's not a zero-sum game. We can all win. Really.

We can be open and honest and vulnerable, and it doesn't reveal a weakness, but rather the intent to work together, join forces, and collaborate.

Plus, if 90% of businesses fail, but all we see are these Silicon Valley unicorn successes, where the heck is that 90% of failed founders? Do they go into the dome of failed entrepreneurs, locked away from society, shunned by the startup community, never to admit their all-too-common but shamed-into-secrecy defeat?

No. Let them out. I want to talk to them. I want to hear from them. And I bet a lot of other aspiring founders do too.