Q: How Many Startups Fail? A: Eventually, All of Them!

A few months ago, I was invited to judge a business presentation competition by a former professor of mine for her 1st year MBA students at my alma mater, The University of Arizona. During the introduction, my former professor warmly introduced me as a professional entrepreneur and asked me to share with the audience how many companies I had successfully launched. I replied 6 and the audience generously responded with “oohs and aahs.”

I was proud of my accomplishments to have successfully launched 6 profitable companies. The key to this was ‘launch’, the 2nd key was ‘successfully’ and the third key here is ‘profitable’. My pride was short-lived because a fellow judge who I had not yet met interrupted the students’ applause and addressed the audience with “but the real question isn’t how many businesses a person has started because anyone can start a business. The question we need to be asking is how many of his companies are still in business?”

As you can imagine, I wasn’t expecting that! Being from the South, we would call that type of grand standing ‘plain rude.’ My warm welcome went away real fast and now I found myself under attack. I could hear my Dad’s wise wisdom in my head “that’s what you get for volunteering!” I wanted to stand-up, go over to this guy, get in his face and say “who do you think you are? Why does this fact matter to you? How many businesses have you started? And how many of those are still operational?”

These are all the things I wanted to say but being a man seeking to know Christ better, my biblical teaching has taught me that while Jesus would sometimes turn over the tables in the temples to right a wrong, He used this approach sparingly. So before I said something I would later regret, I reminded myself that I am a Southern gentleman, paused and addressed the man’s question by saying “Well, the answer would be 3. Three of my companies are still operational today.”

I assumed that the audience would gasp that 50% of my businesses are no longer around. There was no time to explain the details behind each of my companies that no longer exist. Yet to my surprise, the audience was delighted to hear 3 were still operational. They actually even clapped. The judge at the same time appeared to be trying to think of a cute way to make himself not look as inappropriate as he did at that moment. Knowing this wasn’t on the agenda, we both just allowed that to be all that was said. With the audience liking my response, I was somewhat relieved and that moment of pride returned if just for a few seconds.

As I sat there, I couldn’t help but reflect on his question. I thought about all the things I really wanted to say. I wanted to share while some of my businesses are no longer around, that doesn’t make those companies less successful! I won’t get the chance to say these things to him but I did think it would be ok for me to share these thoughts with you, my loyal readers. So here was what I wanted to say had time allowed…

The 3 companies that are no longer operational are Thompson Lawn Care, Pro-Seal and ACT! Certified. I started Thompson Lawn Care and Pro-Seal when I was 17 and 19 years old respectively. I wanted to explain to the judge and audience that the lawn care company was started in my small hometown of Spring Hill, Tennessee to help put me through community college and the 2nd I started to while at Middle Tennessee State University in Murfreesboro, Tennessee to help my fraternity brothers and me pay for college, rent, food and our living expenses. Since I started these companies with the goal of helping me pay for college from 1993 to 1997 and since I successfully graduated with my Bachelor Degree’s in 1997 with no student debt, we should agree that both companies were successful.

ACT! Certified, the company I started in 1999, was technically my 3rd company overall but my 1st official company since graduating college. ACT! Certified would outgrow over 600 other firms in its industry within just 3 years, it would be selected to join the prestigious Sage Software President’s Club in 2003 and that same year I would be asked to join the ACT! corporate advisory board. The CEO of Sage Software would as a gift to my company pay for my honeymoon to Hawaii in appreciation for our hard work in promoting their products successfully. So was ACT! Certified successful? Yes it was, beyond my wildest dreams!

So while 3 of my companies are no longer active, they successfully met their goals and for start-ups, that is a perfect record. To be frank, even if they were not successful, what really matters is just trying is worth a pat on the back. We live in a country that appreciates innovation, how innovation leads to creative destruction of companies and failure is to be worn as a badge of honor. If you find my reference to ‘creative destruction’ odd, click here to read my commentary on why creative destruction is important to a strong economy.

I guess the judge based on the tone of his question would have felt Pan Am Airways, Standard Oil, Arthur Anderson, General Foods and Compaq Computer were actually failures since they no longer exist. As a person trained in entrepreneurship, entrepreneurs are taught to think about the company’s future plans and how we will eventually kill it. Whether killing it is selling to another company, go IPO, sell the patents or customer-base or worst case run out of cash and be forced to close the doors, companies like humans will eventually die. However, the eventual death of a company like for humans does not make the accomplishments of the company nor the human any less important. Clearly, the judge who question me that day didn’t realize that it is more important to have tried than never to have tried at all (a play on the line from Alfred Lord Tennyson’s poem on love).

So if someone sees this judge or knows someone similar to him, please forward them a link to this article. Thanks for allowing me to share that. I have wanted to get that off my chest:)