Why learning from your mistakes isn’t always a good thing
Published March 13th, 2015, updated November 22nd, 2022
Summary - Looking for funding? I learned (the hard way) that it’s better to wait until you have a product that is worthy of investors’ confidence. Funding is not to help you survive, it’s to help you grow.
Back in the mid-1990s I co-founded another start-up, a company called Espial.
Those were the heady days of the tech boom, and getting financing seemed easy – even for ideas that were a long way from being perfected.
We raised a serious pile of money very early in the company’s history. It was more than enough to get us started.
Then we made a serious mistake. We confused funding with success.
The truth was, our product was a long way from being ready. We had raised the money because our investors had faith in us, not because we had something that was ready to sell.
But you can’t build a product for the people who finance you. You have to build it for your customers.
Over the years, I reflected a lot about those early experiences. I came away thinking I had learned a fundamental lesson. In retrospect, I realized it was the wrong one.
Instead of learning that success is inextricably tied to the value we create for customers, I came away with a skewed view of venture capitalists.
Wrong lesson, big mistake.
For years, that fear held me back. I did not see the venture capitalists as partners.
So when I started Klipfolio, I was very reticent to go out and get financing.
We did a very small friends-and-family round at first, to get us through the first 12 months. But from then on, we just bootstrapped. At first, like many struggling startups, we did services that were totally unrelated to our product. We did what we had to do to feed our families. It was really hard.
The fact we were not funded meant that we had to work harder to make a go of it.
It was a very tense and sobering experience. But it also turned out to be the right one.
Even though we would have liked more cash in the bank, it was actually better for us to hold off. Instead of looking for financing, we worked at developing our product. When the time came to seek funds, we had ample evidence that we were worthy of investors’ confidence. Funding is to grow, not to survive.
In retrospect, I’m glad my fear of venture capitalists, plus the fact our product wasn’t quite ready, worked in unison to hold me back from seeking financing. As evidence grew that we had a worthwhile product, my hesitation to seek funding subsided and we realized the timing was right to accelerate our growth.
The real lesson from the Espial experience was to learn to have patience. To wait until there was solid proof we had something worth investing in.
Achieving success takes a huge amount of perseverance, plus a lucky break or two. I still remember the odd but wonderful feeling of having somebody actually pay real money for something we had built. That’s the feeling you want to have first.
I wonder what our business path would have been if we had taken investment earlier?
Would we be where we are today? Would I have done other things differently?
I don’t know.
But I do know you need to learn from your mistakes.
I also know that learning from your mistakes won’t help if you don’t learn the right lessons.
Allan Wille is a Co-Founder and Chief Innovation Officer of Klipfolio. He’s also a designer, a cyclist, a father and a resolute optimist.