Starting Y
Starting Y

Episode 24 · 4 months ago

Lessons from Taking on Facebook and Failing


“Why only give Tipps? I thought why not give typical traps?” Arnauld Henneville-Wedholm

Our Intro is based on Quantum Jazz’s piece “Orbiting a distant planet”, published under Creative Commons

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· Jörn is a podcaster, startup scout, consultant, and entrepreneur, who is based in Frankfurt, Germany. He has a background of more than 12 years of management consulting but spends most of his time helping international investors and corporations to find, cooperate and invest in startups in Germany, Austria, and Switzerland. He hosts an English startup podcast, covering the German startup scene ( You can learn more about Jörn “Joe” here:

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This is a starting why podcast. Here we ask entrepreneurs, actors, investors, in the native and hardist on the why, why they are doing what they are doing, what motivates and drive them and why can't they stop? We will start in five, four, three, two, one A. Guys, welcome back. You're listening to starting why. This time again, Joe is bringing you a another into the guest on the why of Entrepreneurship and how you should think about entrepreneurship as entrepreneur. We help you build your mental framework. Here today I welcome I know, who is a best selling author, originally from France but living in Sweden. Bonjeous, bonjeous. Thank you so much, earn. Thank you, whether in Tro very welcome. And everybody WHO's listening to this knows I'm addicted to food, and two questions. Do you still miss the French wine, and how do you like to Clip Bullah? French people are going to hate me for saying this, but I do very much enjoy new wines, so Argentinian or Australian or Chilian wines. I don't actually miss the French wine. And as for the Shit Bulla, you know the shut Bulla is literal translation is bit bolt right. Turned out. I'm a vegetarian, so I don't eatnit bows. I do, however, it versions of those that are vegetarian based. Yeah, I've skipped the shot bullas for a long time. Actually, in Germany, only get them at Ikea and we call them here club Bullah, but totally fine. I'm sorry, I'm butchering every foreign language I come across. I'm really sorry, guys here and I didn't know your vegetarian but admittedly, I'm a vegetarian to... least one day a week, sometimes even too. But we are not here only to talk about food. But you are best selling author of how hard can it be startup? Lessons from trying and failing to take down facebook, and you've shared with me a little article you wrote, you admitted yourself quite some time ago. It's the seven traps on the road to success, to start up success. I'm sorry, and I was actually I'm really having hit here. Physically. Guys really printed out old school on paper, and basically that's a little bit with which I will be teasing you today and which will be the backbone for today's interview. Could our listeners also get this from you? Yeah, absolutely, so actually it's a as you mentioned, this is something basically on top of the book. So the book is very we talked about the book another time, but the book is narrative based. It's my journey with a lot of content in it, and the whole startup journey. And then I thought why not adding something that is a little bit more a short version of five seven tips or that one could get in the condens really neatly packaged way, and I thought of writing something instead of giving actually tips, why not give traps? This extra content that you have in your head here in your hands. Sorry, yearn is the traps that I feel most of entrepreneur fall into because we are not given the answers typically. So there are summary of not only my journey as an entrepreneur, journey that I continue to do to this since I'm still involved very much into startups, but also sort of my entire corporate experience. So been working for a while now and it's a cumulation of a lot of things that I hope will help entrepreneurs and even people in organizations to make sense of what they see and hopefully don't fall into those traps. So, to answer your question, yes, people can get it. The setup that we have is that when people get the... they can send a receipt of the book via the website. There is a form for that and right away they get the PDF automatically to their deliver to the mailbox. I hope people will love it. That is really, really good. We will link, of course, your website and your linked in profile down here in the show notes as well. Before we get into like the specifics of this seven traps he you first tell us a little bit like broad over few of what your journey was. You kind of reach hell in your book and how it would sound for an entrepreneur. So the book is really typical of the kind of book you would get as an entrepreneur. I mean, as you know yourself, a typically one can only get a book that tells you about either success, so the great story of how someone made it. They might talk about some hiccups they've had along the way, but typically it's from a standpoint of success. It's looking backward and admitting that it's been perhaps hard and we struggle here and there, but overall we made it and now life is good. So that you either have that kind of book or otherwise is the books that you can find for entrepreneurs are mostly ABC types of book, the one, two, three, silver bullets to make it to your final destination of fully successful. One. And finally, you find very engaging, motivating, inspiring books, I would say, the kind of the Steve's job journey or the biography of Sir Chard Brinson or all those very highly successful people in a musque amongst many, who was very motivating for me. The hard thing about heart things right. Yes, indeed. What do you think of it? I really liked it and it made me laugh quite off. Yeah, it is, it is indeed. Luckily we have a quite a similar it was. Sometimes people interesting, they want to talk...

...about that book you mentioned and they say how hot can it be, which I obviously enjoy very much. I see, I see. So basically, what I got from this article so far is that you've basically built a startup as you usually do it, what's currently, let's say, sexy in the startup world, and you failt with that approach. Yeah, exactly, so that was already we launched in two thousand and twelve. We wrapped up six and a half years later and, as I was saying, we wrapped up as a I mean we did a small exit, we sold the platform, but eventually, I mean from my own perspective and the perspective of the founding team, it was a failure. It was a fit in that sense that we didn't reach the you know, the expectations that we had. We didn't meet those expectations. So I call it a failure and we can, we will talk about that, I'm sure, but to some extent there was a lot of success in it. But what I want to show is that it's hard and you know the numbers. You know none out of ten startup fail. And yet that story of failer could and could is not so much told and it leaves us with a sour taste in our mouth, this idea that, you know, either we're unworthy of doing the journey because we fail, and we take it on us that maybe there's something wrong with us, maybe we're incapable of doing this, maybe others no better than we do, and that, I think, is a shame because there's so many factors that may lead you to success or not. An in our own story, own journey, you know, on paper everything went okay. We did have plenty of successes. We did have a nice variation. We raise money several times, but then in the end we couldn't really scale. And that story, which is the story of most people out there, because again, ninety percent of us will fail, is not told and I think for everyone's own you know, life and building a you know, continue to leave post that failure. It's important to talk about this. It's important to recognize that this shit is hard and it's okay to fail in a way. So, yeah, that's...

...the whole book and the whole journey. So to your question, we did at that point something that was, we thought, sexy. I mean at that point two thousand and twelve, everybody was talking about social networks. So that's what we built. We built a social network, initially be to CE social networks, or we went against facebook, and eventually, because we couldn't make it, because we're bit to be people, were management consultants, we had to turn the whole business upside down and ended up with a internal social networks or one towards organization, something that we actually knew about. So yeah, it was sexy then, maybe not so much now. I mean today you hear a lot of many interesting feels. We were talking offline prior about health and wellness and longevity and bio hacking and those very interesting health topic that are really hot at the moment. There is also the whole space and climate field industry to them, working with drones, drone data. So we are working to some extent into, you know, the space industry, monitoring climate change and augmenting a satellite data with drawn data. So they are quite a few hot topics currently and I think social network somewhat has gone stick in a backseat and would have found interesting. is you talking about Yammer in this context, like within the company, a social network? I've used it in the path as an employee and I thought, Oh, it's already that for quite some time and apparently Microsoft still runs it. Yeah, I don't know what's the status today, but certainly yammer was really hot in the early Yeah Twenty Five, two thousand and ten, would assume, was definitely one of the main player when we played around with in esn enterprise social networks. And, as I explain this little booklet that you have, you don't necessarily have to have the most brilliant product. I know it may hurt, but this yammer having been acquired by Microsoft, being run by Microsoft, we manage to get... part pretty much with a much smaller team. We had, you know, very similar features. Stability of the product, we could do pretty much the same. We had analytics, we had a lot of different similar features and you could do pretty much the same for customers. But we're not Microsoft. So that's something entrepreneurs we often find is that the best product doesn't necessarily win. The best strategy does. And so when you are small player and you come it with the big monster like Microstoft, for Oybm or whichever industry you're in, and you competing with the leading players, it turns out that their strategy is often better than yours because, while you have nothing, you've just started. So in our case, you know, Microsoft was pretty much embedding Yammer into the Microsoft suite and as a result, the Amor was baked into whatever a company would buy. And so it's not that we could come in and say, well, you should add some more money and use our product, which is on power with that of Yammer, because well, they already had something which they didn't have to pay for and whether they used it or not didn't make really any difference. For the corporation buying the product. And on top of that it was Microsoft and, as you know, no one ever got fired by buying Microsoft, whereas people may get fire when they buy from small start ups. So it's very difficult to penetrate a new market that is already mature, with big players having the fingers in old pies, or to say so. That's something I debate in that extra book that you have. Would have found pretty fascinating is that you talk a lot about across all the topics. You always talk about orienting yourself on what other startups did, let's say on Voke, what was in fashion at this time, and you also did it, not because it worked or it would have particularly worked well for you, but other because other people did it. How Much Do... think an entrepreneur should stand up to this pressure? How much do you think they can and should reflect this pressure and say, guys, that would not work for us, because right now all the hype has been chat boughts and explain of videos and so on and so forth. And, for example, I still get at least one request a month for making explain of videos for my product and then just to try out if this person writing me message. Actually looked at my website. I right back. Oh, I'm an audio only podcast. Guys, what does it explain? A video? Help me? And I have ever heard anything back. That completely kills the conversation because they don't look at you, they just mail out everywhere. Guys, this is the hot new stuff you need to do, but it does not always make sense correct. It's a brilliant questions at the many level answers I could give you. I mean, I think the first one when it comes to you and deploying your own start up. I mean you've got a podcast called starting why. I think you really need to start with your why. I'm not the first one saying this. Obviously, Simon senic talks about starting with why. Another you know, like Marthon not king did at launch his speech with this is how we're going to do it. He had a vision, he had a why, he knew why things ould to be done. Then then figuring out how was another thing. So I think you need to start with what you believe. So now I'm talking about your core right, what you go with to market with. You need to be really, really passionate about that topic. You need to be willing to take this for at least a decade, because this idea of you flipping your business in a couple of years, you know by just having a ad me to idea like the same as the other one, with a tiny twig, you won't get anywhere most likely. So it starts with your core passion, is something that they...

...often talk a lot about. It really starts with what is it you have in you and why should you be the one taking this to market? How does that resonate with you and what value do you bring that is unique to you as a person? Because it's going to be rough, title of my book. How hard can it be? Well, very hard. You're going to take those hits for many years to come. So unless it's really something that you can accept failing at and accept the journey being rough, you're not going to survive it, which is why it starts with passion. So that's the first element. The second one you were mentioning about everyone you know sending new emails. I describe that exactly this in the book that you have start up. Typically want to automize everything. Won't and it becomes a face lace sort of automated process. As you said, it just blast email everywhere, not knowing who's the recipient and often times, if not always, it has nothing to do with you. So obviously they haven't done the search. At best about and in a list, and now they're hoping that, you know, if I just hit zero, point one percent of the recipient, then I'll be fine. They look at it as a funnel, you know, the more I put on top, we do the math and eventually I get to a few at the bottom of the funnel. But this is the wrong approach. It's a wrong approach because it kills your brand. Even if you don't have it, it will kill it down the road as you start building one. So it's totally off and then you don't build trust. I mean, one thing that I've learned in business is that you will build your brand over time and that happens through trust. And it doesn't take much really to understand that. You don't have a video podcast, just two minutes research and you should figure this out. So someone would have done that kind of research and would have sent you a, you know, specific email with the specific service. Maybe they send less per day, but the hit rate is much higher. So that's what one should do. Is a saying in sales. I crap in, crap out. So the more you put in your funnel,...

...that is nonsense. Yeah, the less the idyhood that you get something that makes sense at the end. So, you know, let's do some research. And you don't need so many, you know, that's another thing for whatever business you are in, you don't have to have a thousand customers, you don't have to have plenty of advocates ambassadors, you just need a couple. You Start Slow, you get your ambassador, someone who actually can vouch for you and put their name on your website because they're happy with your service, because you've the leavit value, because you've brought something that they couldn't get anywhere else. And as you bill those ambassadors, they would refer you, they were talking nicely about you. You can befriend them and, you know, have testimonials and so forth, and then you build that trust and that trust would be paid back. So it takes longer, but it works much better because business is that means, that's the foundation of business, is trust. It's not a reap off one of in and out. That's a totally wrong approach to business in my view. I couldn't agree more with you and it's very interesting. I just had recording actually yesterday we talked with the formers, what hostage negotiator, about trust, that they also need trust, and we've went from there into sales and also the you need trust, and that's really would you've been talked about. That's why I was making this big exclamation mark next to your writings in my notes, because with an automated approach, as you said. By the way, I do believe it's not only in sales, it's also done in consulting, saying Shit and shit out, and basically I do believe that it's true. And I also realized myself. If I have five conversations with potential clients for consulting or scouting in a day, I won't close anyone. If I have three conversations within a week, I'll most likely start to work with that least one of them. You have... focus, you have to put the work in and usually there is no shortcut, even though chat butt can talk to like hundred additional people a day. But then you also need to have somebody who really then closest deal, who really built the trust its as yes, I'm an human. Yes, I understand you. Yes, we could do that for you. Absolutely know, you're totally right. I mean I know also, to piggyback on what you just said, the short cut. This is one of the traps, right, we all believe that there is out there somewhere a silver bullet, like I cannoto make this so I can accelerate that. But this is just an illusion. There is no silver bullet, there is no magic. You have to do the work, you have to do the Reps. it's like going to the gym. You won't get yes, you can take supplements and do whatever on the side. That is illegal. Same you can transpose that in business, but it's very short term. You will deflate as fast as as you grew and then you we probably be sick down the road. It's better to build a foundation, build a proper business, not look for the magic source, the trick that will fix it, because it doesn't exist. And then many people who would make you want to believe that such a thing exist naturally because that's what they're trying to sell you. You know, it's interesting all those masterclass and all those things come to us and download the EBOOK and come to our masterclass that caused so much, then you know how to Rock Your Business in two hours. If it's only you would take two hours, I guess we'll have a lot more successes in the world and the rate of success to fader ratio in startups would not be ninety percent fader. So again, the seal of a bullet doesn't exist. I'm sorry for your listeners. It's really all about the hard work, putting in the sweat, which is why, again, it starts with passion and commitment and desire to change your world. Doesn't need to be changing the world like facebook did. All... some massive companies do is like test that. But you can change the word in your neighborhood by having a small shop that you're happy to have and delivers great value for your community. So everyone has to have his own level of addition straight and all they can do to do something that's help them and serve others. You know, the end, it starts with serving others. What can you do that others don't that we add value to others, not to you personally, but to others, and if you manage to do that, you would be compensated for your hard work and actually would. I also found interesting. That comes to the next exclamation mark. I did at your note. We say ultimately it's your job as an entrepreneur to verify that what you're witnessing is the real thing. Then we talked about shoot cuts, but you also talk here about traction, because everybody talks about traction. But I do believe it's very, very, very hard to really, really quite defy what is traction. And you can debate food days if this company has or have no traction. No, absolutely, Steve Job said, it's easy to connect the dots looking backwards. For sure, when you are in the midst of it and you see that you are acquiring clients and you know where is that acquisition coming from? Is it fast enough? It's very hard to say in the moment. You may end up believing that you are having traction, and we've have had that traction, or seemingly traction, illusion of traction, I call it, many times. So we were acquiring clients. We move from BTC to be to be. So in the first instance, as we were a bit Toc company and we work with celebrities, I mentioned that we had celeb traction. We did because we were signing up celebrities to help ups support the social network that we had built, but the numbers of users that we would get as a result of the celebrities that we would bring on to...

...the platform to help us get those new users, like you and I, would not correlate. So in fact it didn't matter really how many sellers we would bring in. The correlation was off. So then you can exhaust yourself in bringing selled and working with them, and it's quite tricky to do so. But if what you're looking for initially in our case was number of users, just like you would on facebook, if that is not growing, then you're having the wrong traction. Then the celebs is not something you should spend your time on. So that was one learning when we were doing B to see then sort of similar thing happened when we were working towards be to be. We had client traction, so we were acquiring clients, we were delivering the service slash product that we're offering. But perhaps over a year it looked okay because we could deliver what we would sell. So we had enough time to acquire new client customize the product, deliver the product, clients will be happy. The problem started to happen when we we were looking for more clients that we could chew on. That is a trick, because if you acquire a client that you can't serve because you have a small team, and you realize that the only way to serve those clients, those extract clients that you may be getting, is to staff up, to get more personal inside your organization, more employees, then perhaps it becomes unsustainable. And so if traction that you generate as a result of sales activities, for instance, is not enough to compensate for the cost that you have of delivering the service, then again you have a traction problem. And that what we eventually concluded that we were not the could get top line, we could make money, but it would be unsustainable in the long run because it would cause so much to acquire a client and to deliver the service to the client that in the end it would not be worth it. So traction is really key. And Man is... that you have it, and when is it that you don't? Then how is it generated? Is it because you actually have something that is awesome and a great product that people love and are happy to talk about, or is it because you are running campaigns and playing with the sales phone. Know that we started with where you you buy your way into the clients. But again, if you can't keep those clients for more than the length of one set cycle, they are no good for you or you are no good to them, because acquiring one client is expensive. If you can't keep him on board and you have to look for the next one, you don't have a business. There's nothing. It's a one off and that's not sustainable. Yeah, the customer lifetime world. You it's always interesting. The more we talked about it. It comes down to what do. You also said ninety five percent of our decisions are made by our unconscious mind. Getting back to the trust it's also unconstrust decision. Cannot Trust this person, or can I trust this or can I not trust this person? And would are also found very, very interesting is the real reasons for failure. You write some of the most cited reasons for startup failure include not understanding one's customer, not being able to pivot fast enough, not focusing on revenues and not having raised enough money. In my experience, these are not the actual reasons, but only the outcomes of deeper reasons. Can you tell us a little bit about the background foot this statement, because I found it very impressive. Most of the time you hear about yeah, customers funding, yet, ADA Yacca, but it's just the headline. Yeah, no, absolutely. I mean, most of the time you put the reason on to someone else. Right, it's never your fault. Typically it's the market. It's something that you can control.

It's the investor that didn't trust you enough, didn't give you enough money. You didn't understand the customer, you couldn't get that traction that we're talking about. I mean, you can find a zillion reasons why you are fading, but it's never your fault. Well, as it turns out, it's always your fault. Basically, if you haven't managed to do what you wanted to do, it's because, yeah, you may not have pivoted enough, but that's all on you. If you had done more research, if you have figured out earlier that you were not getting that traction, you would have changed track and therefore you might have found it. So it's always about you at the end of the day. You know when you have cost you know you may say, well, we have a organization, we have too many people and caust us so much and we can't deliver, etc. Etc. Again, you put the blame on to someone else and I know it's painful and it's hard. It's very hard to do to let go people, for example, when you realize that you burning too much money compared to what you're bringing in. It's not an easy decision, but ultimately it's your decision as a leader. Either you go bankrupt because you're costing too much, your burn rate is too high, or you make a decision that okay, we tried all we could, we're not getting the speed that we need, we're costing too much, you have to let go people. That's the way it goes. You can look at anything in your company, the reason it's not working, it's because of you, your decisions and the way you look at the world. If you look at it this way, and since start up, every business really, but specifically start up because we don't have the ton of cash in reserve, so you don't have the time to play with what you have and look the market being created and then you jump on board like Big Corps do. I mean they very set them displace themselves because they are too comfortable with current state of affair and what they have so they just the system until the system can no longer be juiced and then then they are in a bit of a problem. So in the startup we don't have that situation because we...

...don't have cash. So what you have is time and what you are after is, you know, leveraging the small amount of money that you have and make sure that you hit your market, you find this product market fit, as soon as you can, as early as you can. So what you have to play with this time and try as many things as you can. You know, throw stuff into the market and see what sticks, basically until you find something that they sustainable. So again, it's all on you to make the right decisions, make the right moves to make it work. So I don't think the reason for Fader is external. The reason for Fader is internal. It's you and what's in your head. Not the most comforting closing word, but since we talking for more than thirty five minutes already, I do believe how we call it a day here, but we can tell the people that you will be back as guests on my other podcast. We talk a little bit longer about the whole book. Fantastic. Yeah, we could have left it on the more positive note, and maybe we should find one to like, a more spiritual or perhaps positive way to end it. I think you know, end of the date. It's okay. It's as actually convulting in a way, that it's all on you, because then you can't blame any circumstances. Those who make it make it because of the hard work, typically unless you come from a family, but typically because of the hard work that they pour in. I guess the next all of what we discuss. There's no secret shows, there's no magic. It's not easy, it's actually very hard. But the good news is if you do the hard work, if you understand that you can actually then the universe and you do all you can to make it work, it will work. And if it doesn't, it's still all fine because at the end you you will have learned so...

...much, you would have equipped yourself so much that you be able to bring that knowledge and those skills that you've required into your next venture, it to your next iteration as an entrepreneur. So ultimately, it's all good that it is all on you. Yes, totally, and you all success is only to get up one time more often than you fall. Right something like this sorry, guysactly what it is. You know, I'm a little bit off with my grammar here. I'm sorry, not really. It's Michael Jordan, you know, or Edison, to my citizen, you know, it didn't he fail a thousand time, but the one time was enough. Similar to Michael Jordan, and I mean you can't strike a three points every time. You do fairly. Takes Training, it takes hard work. So, as you say, you just have to stand up one more time that you fall down. Great, I know, with a pleasure having here everybody who like to learn more. We will link down here in the show notes. You linked in profile, your book, your website and, of course, you instagram account. Absolutely super. Thank you for having me you and it was nice. I look forward to the next one, though. Thank you me too. Bye, bye. Yeah,.

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