Failing Forward: A lesson in business, life, and relationships
I’ve been thinking about this post for several months now, struggling to find the right words to levy against the mountain of negativity that I’ve experienced in closing my first business.
Writing this post wasn’t fun, but absolutely necessary in order to move on and seek closure.
So, I will be blunt: Integral Impressions has failed.
The fact of the matter is, the business that I founded, nurtured and built is now closed. People are disappointed. Some seriously let down. I feel like shit.
Now what? Time to write a blog post and do my pass on the lessons learned. Time to make every attempt to find the value in a really devastating situation.
Let’s take it from the top:
The last communication regarding Integral Impressions referenced an acquisition by ‘Morefocus’ that never came to fruition.
We entered in negotiations towards the end of 2008, hopeful that we would be acquired as our runway was quickly coming to an end. After a several month courting process and a few critical mistakes later, I became the victim of misfortune as I watched the deal start to fall apart.
Here’s how: Both companies entered the ‘Due Diligence’ phase of the agreement on the verge of SouthbySouthwest (SxSW), in March 2009. Hopeful that everything would pan out, and disparately needing to communicate what the future held for clients, developers, users, and staff- I made the decision to release the news of the acquisition before the docs were signed. (enter Mistake #1)
After the news broke, it became really clear to me that the deal was going sour for several reasons:
* The books weren’t clean, and filled with accounting holes
* Morefocus was no longer in a position to make an investment in my company despite their good will/intentions
* The valuation at this level proved to be very difficult (we ultimately settled on 1x revenue)
With the news (and video) of the acquisition released, and the reality that the deal failed, I had really struggled with how to respond. I was faced with the immediate need of figuring out how I was going to survive. I have a new family, new baby, and ailing family members that all depended on me. I had to do something, and I had no motivation to face the fight.
I tried to revive my back up deals that fell by the wayside when I entered the DD phase with Morefocus. I tried to reposition the company for a round of investment. I tried to sell my way out of it. In the end, nothing worked.
I was not able to pay myself, the development team, or even the server bill on some occasions. I was faced with more collection calls than sales calls and I didn’t know what to do, or where to turn. Things were getting really bad.
Which brings me to (Mistake #2): Holding on too long.
Almost every failing business gets to a point where they know they should close before they’ve committed to making the decision. Some entrepreneurs put the superman cape on, and pull their business from the wreckage, however- most don’t. My second failure was making the mistake of holding on too long. I did myself, my vendors, and my clients a major disservice by not reading the writing on the wall, and closing our doors sooner.
The fact of the matter is, companies need money to close their doors, which is counter-intuitive. Knowing how to get out safely is a skill you only acquire by experience. You either have it and know it to be true, or you have absolutely no idea what I am taking about.
I simply held on too long to the dream, and didn’t put myself in a position of strength for my next endeavor. I was completely tapped financially, emotionally, and physically. I wanted to hibernate for at least 30 days, but I couldn’t. I needed to get out there and make something happen.
Good entrepreneurs know when to cut their losses, and how to position themselves for success even if everything around them is failing. A lesson I am learning, albeit painfully.
So the Morefocus acquisition fell through, I was down to the felt, and I needed to close the business. Unfortunately this meant leaving unfinished business with many of the people that helped service my clients months and years before. Which leads to me to one of the most difficult experiences I have had to face to date, telling contributers that I would not be in a position to pay them for their work. I know this is shitty, but relatively common given our economic climate. Regardless, it is an experience I will never be comfortable with. For the sake of my own survival, I needed to communicate the reality and hope that down the road I would make everyone whole.
Some accepted the communication as fact of life. Others persisted to email/call me frequently until they realized I wasn’t bluffing. All I can do is profusely apologize to these individuals and offer my help (in sweat equity). The list of people below are talented contractors that have helped me a great deal, and I’d like to ask any of you to employ them as needed if you can use their services.
* Ryan Cartsen of Carsten Media (www.carstennewmedia.com) – Flash Genius
* Ryan Kuder of Koombea (www.koombea.com) – Agile Web Development
* Kane Baccigalupi (www.linkedin.com/pub/kane-baccigalupi/7/29b/916) – Rails/Merb Developer
* Chris Schulte (www.oceanbreezesoftware.com) – System Administrator
* Jim Hughes (www.unkind2monkeys.com) – Rails Developer
* Cooper More (www.coopermor.com) – Designer
* Leland Saccone (www.pglawfirm.com) – Lawyer
To some of the above I owe a financial debt. To all I owe a personal debt. Thank you, everyone with whom I’ve worked, as client, contractor or staff member for what you’ve done. It is my fondest hope that at some time in the future I can provide you with a fraction of the value that you’ve provided to me.
Letting people down sucks. Starting over in business sucks. Your life changing because of these repercussions suck. I wish I had a different adjective than sucks, but it fits.
And this brings me to my 3rd big mistake: not communicating enough, sooner.
People have a right to know what’s going on, even if the news is ‘nothing’ or ‘we’re working on it’. It became increasing uncomfortable for me to interact in the social environment because I was keenly aware that I hadn’t addressed the situation.
After short period of avoiding the matter completely, I typed a letter and posted it on integralimpressions.com, then waited for the fall out.
To my surprise, that fall out never came. Maybe people didn’t want to speak on the matter until I did. Maybe people discussed it amongst themselves, offline. Maybe people really didn’t care.
The only thing that gives me peace is knowing that I made every sacrifice I’ve asked people to make for me, and then some.
At the end of the day, I had a strong 5 year run at creating a self sustaining business and got sideswiped by a bad economy and diminishing client base. I put everything on the line to create something better for my family, and those around me. This time, it didn’t work out.
So that’s the cliff notes on what happened. Maybe I will post more detail if people really want to know. For now, this is all the info I feel comfortable sharing on the subject.
So, now you know what happened. Let’s talk about what’s next.
I went through a myriad of emotions throughout this entire process. I’ve felt angry, depressed, anxious, and everything in between. I seemed to conquer my issues by realizing three important facts:
Fact 1: Acceptance First.
I had to work hard to accept myself, regain my confidence, and be as comfortable as I could with what happened. All of which was really difficult with Pride and Ego constantly in my ear. I had to let go of other people’s perception and just charge through life utilizing my newly minted experience.
Fact 2: You’re not alone.
I had to realize that as much as I am responsible for Integral’s failures, I am not alone in this. I am not completely responsible, nor am I an outlier. This is a reality most businesses (and even governments) face and I am not single handedly responsible.
Fact 3: Feed your support network, and you’ll get fed.
I can’t thank my family, friends, and close colleagues enough for sticking with me through these times. You know who you are, and I appreciate you all SO much. You’ve kept me fed in more ways than one. I’d probably be working some dead-end job if it wasn’t for your genuine caring and support.
Accepting myself, understanding I wasn’t alone, and feeding off my close support network was the key to getting me back in game.
After the dust had settled on the failed acquisition, MoreFocus still needed a skillset that I possessed. I negotiated a role as acting Chief Marketing Officer, where my responsibility will be to oversee all internal and external marketing initiatives.
Just when I wanted to be done with everything Integral and dedicate myself to a new venture, there was still a great deal of work that still needed by done.
(1) Fire sell the assets of Integral
(2) Communicate the reality to investors and vendors
(3) Clean house, terminate contracts, and close the doors
All of which take more of an emotional toll, than physical. I honestly feel, after dealing with this, I can handle almost anything business has to offer. I am not patting myself on the back, inferring that I handled this perfectly. However, this experience thickened my skin in a way that only experience does. You can’t get this knowledge from reading a blog, book, or Twitter feed- it has to be lived.
At times I have found it difficult to pursue new business with this failure fresh in my head. Starting a new role and constantly tending to another, put me in a constant state of conflict. Until a mentor of mine reminded me that in order to make good on anything I’ve done in the past, I must put myself in a position to be successful in the future- and I shouldn’t feel guilty about that. He went on to say, “a good amount of success is garnered from putting out an aura of success; and you can’t embody that if you’re constantly doubting yourself.”
Right now I am pressing on with Morefocus, and personally reevaluating a lot of things in my life. I hope to be in a position one day where I can look back on this experience and see that it was only a temporary set back. I know my best days are ahead of me, and I’ve yet to do my best work. That is what motivates me everyday moving forward: making good on past commitments, and propelling my next venture into a great success.
Thank you for reading this, and listening to my lament. Given the breadth of this subject, if there is anything you’d like me to elaborate in further detail, leave me a comment and I will be happy to oblige.
One final note. If you’re going to fail… Fail, and then keep moving forward. Success is a venture away.
Good Reads
Wordpress 2.8 Now Available
Jurasic Erase = Epic Fail
Recently I had a syncing nightmare and erased all my contacts, across all platforms (including my phone). All I am going to say about that is, be careful when you mess with Spanning Sync, Google Contacts, Exchange, and your iPhone. It could be a recipe for disaster.
A long story short, I need your contact info because I probably don’t have it.
Please send the following info to matt@mattbrowne.com:
* Phone
* Skype / IM
* Birthday
Also, please update your address book with my new information:
Matt Browne
matt@mattbrowne.com
619.717.2416
Here is my vCard (use ’save link as’)
Thanks!
Everything is Amazing; Nobody is Happy
Everything is Amazing; Nobody is Happy
This video segment is hilarious. I really enjoy Louis CK’s comedy, and he’s got a really good blog too.
Where’s The Best Beer in San Diego? TapHunter Knows!
If you are looking for your favorite brew and don’t know where to find it, TapHunter is a brand new site you must bookmark.
Now you can find a list of craft beers in San Diego, and see what pubs are hosting your favorite ale. Conversely, you can also see what local pubs have on Tap.
TapHunter makes all this information available to beer enthusiasts through live updates, namely RSS and Twitter.
In the spirit of full disclosure, TapHunter was founded by Jeff Gordon, aka Flash and Mel Gordon, two of my best friends.
Twitter Belly Flops – We’re Long Passed #FailWhale
Twitter Belly Flops on OAuth support and gives new meaning to the term Fail Whale. In fact, they didn’t even bother to do a snazzy ‘we suck’ graphic that the community can banter about. WTF?
I wouldn’t bring attention to this normally, but Twitter OAuth was being heralded as a popular alternative Facebook Connect despite the fact it was in ‘public beta.’
The Twitter Blog was rather defensive about the outage, blaming it on OAuth and pointing out that Yahoo had problems too.
Passing the buck doesn’t fly with me. Admitting that you flopped, taking some responsibility, is a start. Shit happens. But, in my experience, it seems a lot shit happens at Twitter. Bits and pieces of their service are constantly offline or don’t work, despite what their Status blog says.
Another (somewhat related) frustration- 3rd party apps don’t get enough live interaction from Twitter because they have limited intervals in which they can poll Twitter, instead of getting push updates (like Text messages).
For all these failures, ‘Twitter’ is pure genius. Their execution however, has been abysmal; given they are the darling of the tech community.
Public beta means different things to different developers. Google and Facebook have done a commendably good job about launching public beta’s that are ready for public consumption. When Twitter launches something in ‘beta’ again, I don’t doubt it will send shivers up the spines of developers. I don’t think that’s the vibe they wanted to create in their community.
Maybe this post should be directed at all the blogs that overhyped the service, or developers that rolled it out too quickly.
I’ve seen seen Twitter 404 pages turn into the Fail Whale, and the Fail Whale turn into a pop culture phenomenon. It seems like tolerance to these failures is not only accepted, but embraced by the community. How? I don’t know. But it is truly one of the 7 Wonders of Social Media.
Spring Cleaning: Feeds, Followers, and Favorites
Okay, many of you know that I started a new gig over the last 3 weeks. Life as I know it, has been turned upside down, sideways, shaken up, and splattered everywhere. To say I’ve been befuddled is an understatement.
How am I coping with all the activity? I’m not. I am beyond email bankruptcy, Twitter overload, and ready to abandon my feed reader.
Not good.
Where do I go from here? Two words: ‘Spring Cleaning’.
I blocked off my schedule and took about 2-3 hours going through all my feeds, followers, and friends and applying Occam’s razor. Here is the result:
Twitter:
I manage 8 different Twitter accounts which all had the same strategy, follow and be followed. I was a big fan of Scoble’s secret to Twitter, but I am afraid I need to detract.
Twitter doesn’t have enough native features to sort and manage your lists. Sure, you can manage a list of tweeps via TweetDeck or Seesmic Desktop, but I find it rather inefficient to create and manage the same favorite list across web and mobile platforms. After much consideration, I decided to unfollow a good number of people I don’t have a personal relationship with.
The noise was filtering out the people I wanted to hear from the most.
As a repercussion of this new thinking, I took my follower count down to the people I maintain personal relationships with. I went from following nearly 1,000 people, down to about 200 and the result has been wonderful. My Twitter apps have been giving me more value than ever before. I find that my lists are much more manageable, the noise isn’t as deafening anymore.
I’ve done the same thing with Facebook. I’ve set up lists and limited the people that hit my primary news feed. Similarly, I reduced the number of feeds I subscribe to in Google reader from 300 to less than 100 feeds.
It was really challenging to limit my input streams to a couple hundred friends and influencers.
Less IS more. And that cliche is proving to be true once again.
My Birthday Jam
Integral Impressions, a morefocus company
I’ve been sitting on this post for a while now, craving an opportunity to write about the Integral and morefocus relationship. The time is right to let loose on what has been almost 6 months in the making.
I want to explain first, why the merger with morefocus made strategic sense Integral Impressions. Secondly, I want to share with you why I am so excited to be an ‘integral’ part of their organization.
Integral Impressions was an amalgamation of application development and hourly services; where the consulting business fed the application development side. Our goal at Integral was simple… instead of raising VC cash to fund our applications, we set out to do high quality service work, and invest in our own internal applications. We’d license these applications to individual users as a “freemium service” with the goal of growing our residual income.
In fact, the plan worked well for 5 years. We made it out of the critical first year where most business fail. While getting the basic infrastructure of our business built, the company was extremely profitable.
Year two also went well for our business. Revenues doubled, profits were consistent, and there was a overall feeling that we had made it. I was slowly starting to realize that I was becoming a career entrepreneur. It was at the end of that second year that I realized I’d never work for someone else again, as an employee that is. The value I brought to my business, and the business before it (Z57), could not be confined in a job description, or bonus structure. I wanted to be paid on the growth of the business, the rise in profits, the efficiencies in the systems I recommended, and the long-tail that my influence created.
Year three we hit a few snags as most businesses do. Revenues were consistent, while profits thinned. Our challenges involved clients defaulting on large sums of money. The result was the over-use of our legal team that was not budgeted nor anticipated. It was also in year 3 that we launched our 2 flagship applications, Outlandish and Nourish. The business model was coming together. We created a profitable service business that developed standalone applications that would thrive given the right exposure.
Year four was a growth year for our applications, and we shifted focus away from services. The result was a major reduction in revenues, while our profits slipped. We’d hoped to complete the transition from an agency to a full fledge application firm, but the foundation wasn’t prepared for such a stark transition. It was also in our 4th year that my partner, and our lead developer were recruited to a San Francisco based start up. Sufficed it say, we went through several major changes that significantly affected the trajectory of the company.
Now we are entering our 5th year in business, kicking it of with one of the most important events in Integral’s 1/2 decade, namely a merger with morefocus.
This merger allows Integral to focus on application development, and the growth of Nourish, Outlandish, and EasyCropper. morefocus formed a strategic partnership with Integral to develop similar applications that support the growth of their vast content network.
Moving forward, morefocus has a major stake in Integral’s applications giving them resources and support. On the flip side, I have assumed the role of Chief Marketing Officer for morefocus Media. My responsibilities will include the development and execution of all internal and external marketing initiatives.
morefocus wins, Integral wins, and two complimentary businesses form a symbiotic relationship and reposition themselves for growth in a down economy.
From a financial perspective, the deal makes a lot of sense for both companies. However, it wasn’t purely a financial decision. At the end of the day, I chose the company that I felt had the best cultural fit. Listening to Tony Zappos talk about company culture at SxSW reaffirmed my decision.
You can’t succeed if you run cultureless business, driven solely by VC cash. You can raise money from anyone, even in this market. However, being financed by a company that is aligned with your goals, serves as mentor, and has a long term perspective; all necessary ingredients if an acquisition was going to take place.
After a 6 month courting process that included many lunches, email, meetings, and projects; we made the commitment and announced the decision. It just so happened we were able to break the news at SxSW, which was pretty cool for me personally.
I’ve been working for morefocus for 3 weeks and I couldn’t be happier. I have worked for, and with many entrepreneurs in my 10+ years in this business and I have not worked with a more talented, intelligent, and capable leadership team than those at morefocus. I’ve never been so challenged, motivated, and confident I am making a difference in the success of a commercial enterprise. I am fulfilled, content, and ready to charge ahead to new heights.
p.s. I predict that amazing things are going to happen with morefocus Media, stay tuned @morefocus.
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Making the best of challenging situations, but having fun while doing it.
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