Most startups will fail. Everyone in the startup community knows that failure is a more common occurrence than success. Silicon Valley has become so enamored by the “value of failure” that rumors suggest they are considering handing out merit badges for failed entrepreneurs.  Just how common is startup failure? Harvard researcher Shikhar Ghosh cites that 75% of VC funded startups fail to return a single dime to their investors. So why do we hear so little about failed startups in Minnesota? Are we too “Minnesota nice” to brag about our failures?

Since 2009, former Minneapolis native Cass Phillipps has been hosting the FailCon conference in San Francisco, CA. FailCon is a daylong event focused on entrepreneurs and the startup community sharing their stories of failure and the lessons learned. The tagline for the event is “Stop being afraid of failure and start embracing it.” In my opinion we need to bring a little of that attitude back home to Minnesota?

In the last decade of my professional career I focused on driving high risk innovation initiatives and through those experiences I have learned to become comfortable with failure. I have seen firsthand the benefits of learning from my failures and those of others. I have seen the confidence rebound for individuals and teams when they realize that they have survived from a failure. My goal in sharing these stories is to help build a stronger entrepreneurial community by learning these lessons together.

Local entrepreneur Jon Wittmayer learned many lessons over the last few years and is willing to share his story of shutting down his application startup inSphere. This is Jon’s story:

[A condensed version of the following interview was originally published on
September 11, 2014 in TECHdotMN.]

1. You’ve mentioned before that the idea for inSphere came from your personal experience. What was the manifestation for inSphere?

Often when individuals find themselves in a job transition they are seeking to quickly expand their personal network with as many introductions as possible. They are hoping for quick outcomes with an introduction, a forwarded job opening, or a referral to a potential employer. This rarely happens.

It isn’t until people start building a deeper relationship that this type of support occurs.

inSphere was developed to help people build these deeper relationships. I described it as “CRM” for an individual’s professional relationships. I now see the term PRM “Personal Relationship Management” being used a lot.

When I found myself in transition I was meeting between 10 – 15 people a week. I could hardly keep up remembering anything about them. I turned to others in the same situation and what I heard was that were using Excel spreadsheets to manage their relationship network.

Having come from a business that developed SaaS based solutions I was surprised to see there was no one else working on this problem?

2. Once you identified the idea, how did you go about getting things started?

Honestly, I thought about the idea for a long time. I wasn’t sure if it was good enough to actually be a business or if I was just solving a problem for myself. I started to talk about this in my networking circles. I received positive feedback. People would say “I need something like that” or “when is it going to be available?” From there I took pen to paper and started to define how it might work, what it would look like, etc. I then bounced the idea off of a focus group and things just started to roll along.

3. Did you find it challenging as a non-technical founder of a technology company?

This is a really good question and one of the reasons I moved to close the business. I recognized early on that having a technical co-founder was important but I didn’t take action early enough. When I did start to look I didn’t realized how difficult it would be to find someone with the technical skills and the same level of passion.

Having a technical co-founder on a project is extremely important. With a technical co-founder you can stop and change directions at a moment’s notice. This allows you to be much more responsive to quick learning, customer input, and changing market conditions. It’s also the difference between spending cash out of pocket and doing it in-house for sweat equity.

4. Not having been an entrepreneur before, were you able to network with other entrepreneurs?

The Twin Cities has a tremendous support network for entrepreneurs; there are meet-up groups, organizations whose sole purpose is to help entrepreneurs. While I tapped into this a bit late it was a great help as I was getting going.

5. You have mentioned before that you appreciated Eric Ries’ book The Lean Startup. What did you find most helpful in your journey?

Eric talks a lot in his book about “Build, Measure, Learn” which, as a mantra, is really helpful to an entrepreneur. What I take from that is don’t over build and find out it’s not what your customers want. Build a little, build it quick and test to see if it’s what your customers are looking for. Fail fast, fail early and keep failing until you hit on something that is right and you can develop further and market. I didn’t do enough of this.

Along the way I also came across “Who is your customer, what problem are you solving, and what solution will you deliver?” I’m not sure if this is an Eric Ries concept but it certainly permeates the learn philosophy, and should be a guiding principle for anyone who is thinking about starting something new.

6. In 2013, the professional networking site LinkedIn added “relationship tracking” functionality to their site. Did you see this as a direct threat?

While I was working on inSphere I mostly focused on what I was doing. I was trying to get my offering right by building something to meet the needs of my users.

At the time LinkedIn had significant scale with close to 200M users, they had completed their IPO so they were flush with cash, and they were the de-facto professional networking tool – they were the 800 pound gorilla.

While their functionality was still just a fraction of what I was trying to create, I knew they could easily own relationship management.

7. Before you decided to shutdown inSphere operations you mentioned that you were putting the company on a timeline. Can you explain more?

I had my product in the marketplace for about 18 months. Somewhere around the 12-month time frame I was getting the inkling that it might not be working. The primary measure I was fixated on was the number of users and paying users.

At the time I was not focused on the product since I was receiving positive feedback every time I demonstrated it to potential users.

Instead I was focused on marketing efforts. Feeling as though I could (or should) do more. So I put myself on a 3-month timeline, with an additional 3 months if I could show significant progress. Really what I was doing was trying to hold myself accountable to the business.

8. How difficult was it for you to make the final decision to shut down the business?

It was really rather easy – easy and relieving. I stepped back, as unbiased as I could, took a look at the state of the business. Where we were today and what efforts had we tried. I assessed what could be done differently to keep the business going. In the end it was easier to discontinue the business rather than try and move forward in a new direction.

9. Looking back, are there any things that would you have done differently?

First of all I would have preferred to have a technical co-founder from day one. It is so much easier to make changes, pivot, and be agile when your development team is also a founder.

Also, I would not have sacrificed the cost of development for speed to market. I would have staged the development much more so that we could have gotten parts of the product into the hands of beta users much sooner. Momentum was lost from when I first introduced the concept to potential users and when we finally rolled out a product.

10.From your vantage point, how supportive is the local venture / entrepreneur community with failed startups?

I don’t think it is. Of course everyone wants to speak of the success story but given the failure rate of start-ups today, we should be more willing to share our stories.

I have learned so much along the way from others, I would think that someone else might be able to learn from what I did or should have done.

Just this year at MinneBar I sat in on a presentation where someone talked about his failed start-up. It was the first time I had heard someone honestly pour their heart out in an open forum. The room was packed and there were many questions for this person. I think the community is clamoring for more of these types of debriefs.

11. Do you have any advice for those that are thinking now about starting their own company?

Yes, do it! You will never regret it regardless of how it turns out. Also, talk to a lot of other entrepreneurs. Learn from what they did, didn’t do, and what they would do differently.

12. What are some things that you learned from the experience?

Being Humble – You have to be willing to do it all. Especially if you’re a solo entrepreneur you have to be willing to take on all aspects of the business. You have to learn things you never expected you might have to learn and to manage tasks you don’t particularly care to.

Highs & Lows – There is tremendous satisfaction is seeing your vision take life and to actually see people using it. On the flip side of that you also can experience the low of the lows when something isn’t going the way you had planned. But through all that you come back the next day and continue on because you still have confidence in what you’re doing.

Generosity of Others – I was amazed that so many people were willing to give their time to help me be successful. They were willing to speak the honest truth, tell you their stories, and pour their hearts out to you. This was extremely important in the early days.

Team Effort – It takes more than one person to move your idea forward whether you have employees, contractors, or friends willing to lend a hand. Recognize those people along the way and make sure they understand how important they are to you.

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Jon was right on his opportunity identification but missed the mark on execution. There is an absolute need for tools like inSphere to help individuals move beyond personal connection “transactions” to building professional relationships.

Earlier this year I was introduced to Chuck Feltz, a former CEO at Deluxe and now an executive recruiter with Korn Ferry. A great insight that Chuck had shared with me is that in all of the people he meets as an executive recruiter fewer than 10% follow up with him after the initial introduction. They are seeing the introduction as a transaction rather than an opportunity to build a long term relationship. Chuck didn’t have a job for them at that time so they decide to move on.

As Jon mentioned, LinkedIn has added some of this relationship management functionality but the tool set available for users to manage this information is sparse to say the least. Maybe this is an opportunity for another Minnesota entrepreneur to move the idea forward? If you have any questions for Jon or just want to reach out you can connect with him via LinkedIn at Jon Wittmayer.

If you would be willing to share the story and lessons learned from your failed startup in a future issue of TECHdotMN or if you know of a good failure story that we should track down please contact me via email at matt.hunt@stanfordgriggs.com or on LinkedIn at Matt Hunt.