Vine’s demise was sudden and unexpected, and news of the social media app’s shutdown spread like wildfire through the Twitterverse and beyond.
Social media company Twitter pulled the plug on its project just three years after the launch, citing decreased demand and a lack of mainstream appeal.
Not every business model can be a winner — even if they are successful for a time — and research suggests the vast majority of them will never even see short-lived success.
In 2015, Forbes magazine reported that roughly 90 percent of startups fail. The reasons for the overwhelming collective failure are varied, but among the top trends identified: no market demand, financial difficulty and issues related to the company’s structure.
Locally, one organization has chosen to celebrate industry’s noble defeats through a centuries-old tradition used to mourn a death. So, on the third day of November, in the year 2016, Colorado Springs nonprofit Peak Startup held its second annual “Business Wake” for those ventures and concepts that have passed on this year.
“It’s a courageous act to show up and to acknowledge a loss,” said Toddi Norum, vice president of Peak Startup. “Tonight is about recognizing that loss; it is about releasing some of what we’ve gone through and celebrating the passing on of some of those things. … We’re all in this together.”
The event was hosted by Epicentral Coworking and sponsored by Lee Spirits, two businesses run by locals doing their best to invest in and bolster the city’s entrepreneurial ecosystem.
“We have a really great community here of people who continue to work together,” Norum said.
During an introduction to the event, Norum spoke of her own failed business, Four Pistons Media, which she ran with her son in Los Angeles until earlier this month. Norum attributed the failure of her company to California’s treacherous tax structures for small businesses. The company’s last project was a $25,000 documentary on the Pikes Peak Hill Climb, which Norum said she still owes money on.
Epicentral owner Lisa Tessarowicz also eulogized a venture of her own: Epicentral’s failed southern campus that she started in 2015 and that came to be known as “EpiSouthCentral.”
“What I didn’t realize at the time is that having two physical locations would be a serious drain on resources,” she said. “Rent, furniture, marketing and security were costly. We needed more staff, and they had to work harder in order to manage the traffic between the two locations. Also, we were not able to offer the same amenities at Ivywild as we were in our downtown location.”
Tessarowicz explained that most of Epicentral’s revenue is generated through rentals for private desk space, offices and conference rooms, which were not features of the south location. The second location ended up increasing expenses more than it did revenue, and she was forced to call it quits earlier this year.
“I learned a lot during this failed expansion effort,” she said. “Growth isn’t always the answer; it isn’t always a good thing; it doesn’t always necessarily equate to greater success. If you want to grow, don’t do it on a whim. Instead: plan, budget — extensively — consider growing when you’re ready, not just when the opportunity arises. Also, when you’re hemorrhaging money, find a way to stop the bleeding as soon as possible, even if it seems impossible.”
Young entrepreneur Connor McCormick also spoke during the wake about the failure of Narrativ, a collaborative storytelling app he co-created last year.
“We were going to have this beautiful thing,” he said, “and we fell flat on our faces.”
The company lacked the right team to make the app successful in a marketplace already saturated with similar software, he said.
Their inexperience as entrepreneurs led his teammates and him to create a solution for a problem that didn’t really exist, rather than find a marketable solution to a common problem.
“That, I think, was our No. 1 problem,” he said.
McCormick said he also attributes his failure to things such as trying to pivot too late and a general misunderstanding of business principles. But in the end, he said, it was the most basic flaw that was the Achilles heel for Narrativ.
“Ultimately, the reason that we shut down is because we didn’t build for a problem,” he said. “We built because we thought we had a good idea that was a solution to a problem that never really existed in the first place.”
Shaun McNerney, a local serial entrepreneur, also spoke during the event and highlighted the many lessons he has learned via the failures he has experienced throughout his career.
“I consider my businesses as children,” he said. “So I’ve had several children die; I’ve had several children leave home and get married — and then die; and I have some that are still living at home.”
McNerney said his entrepreneurial spirit was born in junior high school, when he began to sell candy and sodas to his fellow classmates. Then, in college, he started installing swimming pools. After that, he worked in the corporate world before becoming a serial entrepreneur.
“Every company you do, you learn a lot of lessons,” he said. “The money will come if you have the right product and you have the right customers. … So don’t worry about that — worry about solving the problem and finding the right key for the right door.”
McNerney started about half a dozen tech companies, most of which failed, and fathered many more concepts that never saw the light of day. But despite his hardships, he is adamant about the idea of pushing through, regardless of failure.
“There is always hope,” he said. “There is light in the tunnel as long as you keep trying.”
The event concluded with a “eulogy” from Peak Startup President Chris Franz and a poem by local entrepreneur Chug Sides.
“Failure is one of my favorite topics, and it’s something I don’t think we talk about enough,” Franz said. “At a funeral, we have two choices: to suffer the loss or to celebrate the life.
“I choose to celebrate the life.”