Failure is not final
Over the weekend, I decided to solve a persistent air-conditioning problem with one of our cars. I needed to replace the air conditioner compressor but the prices quoted were outrageous. I remembered that there was a startup that had pitched to me at the TechCabal Battlefield startup competition some years ago and their value proposition was to help motorists source car parts. I didn’t see it as a use case for myself at that time, and I told the founders. I told them that people were not going to start ordering car parts for themselves. I told them to partner with the mechanics. It turned out that they were right and I was wrong.
I checked the startup’s website and it no longer existed. I checked their Twitter account, and the last update was sometime in January 2016. For an Internet company, it meant only one thing; they had ceased to function. I asked around, and nobody seemed to know what happened to them. It seemed they had faded quietly away.
The Process of Failure
“How did you go bankrupt?” Bill asked.
“Two ways,” Mike said. “Gradually and then suddenly.”
The dialogue above is from Ernest Hemingway’s 1926 novel, ‘The Sun Also Rises.’
Failure typically happens in those two ways. I know because they both happened to me as well.
We started a technology company when we were in our early twenties just because we could. It was an amazing thing to create products, solve problems and get paid a lot of money to do what you already loved doing. Honestly, we could have done it for free because we enjoyed the challenge and were passionate about what we were doing.
Our passion led to creating probably one of the most amazing products ever built by a local software team. We created an entire Enterprise Resource Platform for The Okomu Oil Palm company, the largest agro-allied company in Nigeria at that time. I think they were the first farm ever to be listed on the Nigerian stock exchange.
Mr. John Whitechurch was the Managing Director of the company then, and he gave us the biggest break in our careers. He is British but had lived in Africa most of his life, he believed in empowering Africans. He told us that he could have given the project to a foreign software company but knew that there was no way the local software industry would grow if nobody gave people chances. He allowed his company to be our Guinea pig. Mr. Whitechurch is one of the most innovative and transcendent thinkers I have ever met, and I learned a lot from him both as a client and a mentor. He was also the brains behind the Mr. Biggs fast food chain when he worked at UAC Foods.
Our platform, which we named “MicroFarm” transformed the processes at the plantation. Payroll processing used to take days, but we cut it down to hours. Inventory control and farm management modules were all talking to each other and sharing data with core accounting. Reporting became much more efficient. We built asset registers and even helped them create and maintain a shareholders’ register as a separate platform. We kept fine-tuning the platforms for almost seven years until our startup died.
Our startup did not die because the products were useless or that the client was terrible. They were a perfect fit, probably too perfect. Our startup died because we had built a product for “a client” and not “a market”. There is a difference. No startup can survive forever with one client. We didn’t know how to scale. We didn’t even know what scale was all about. To us, success meant getting paid to do what we loved and nothing more. We didn’t realise that even more success was available. There was a market for the products, but we didn’t know how to access or create it.
The death of our startup was also accelerated somewhat by the client itself. They got acquired by a Belgian group called Socfinco, who also had other farms around Africa. They wanted a standard product on all their farms with uniform as well as converged reporting. They wanted the farms to also share information with each other. Today, doing that kind of project would be a dream for me, but at that time we just didn’t know how to go about it. We could only do one more farm at a time and not four at once. They loved our product, it met their needs, but we didn’t have the capability to grow.
One thing about good markets is that they never go for a long time without a solution. A solution to Socfinco’s problem came from India. An Indian company had learned to build farm software and also knew how to scale it. They used “The Internet.” They were far ahead and forward thinking regarding the technology even though they didn’t fully understand the client’s requirements. The client decided to give them a chance, and they replaced us. We were suddenly out of business.
Income dried up immediately but the company had been dying gradually for seven years, we just didn’t realise it. We thought we were growing. We were becoming fat instead of moving fast. I fired 21 people in the first week of January 2000 and moved from Benin to Lagos.
I was lucky that my uncle was involved in a bank acquisition at that time and I found myself in the project team. I started learning to consult again. We later restarted Swifta as a services company, and we never forgot the lesson from Okomu. We were in 14 countries in another four years.
Openness about failure
I can write openly about my failure because I am not ashamed of it. We were young, and we were learning. We just learned the hard way. I believe more entrepreneurs should talk about failure openly and dispel any stigma about it. Jason Njoku, the founder of Iroko, openly talks about his failures as well, and a lot of people have learned from it.
Startups are in the business of “creative destruction.” More often than not, they destroy, disrupt and recreate themselves. Some people call it a pivot. There is nothing like “failure” for a tech startup, it is a learning iteration. I hope more people will learn to share their lessons. An ecosystem becomes better when lessons are learned collectively.
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