Author: Dan Pontefract
In his book, The Secret of Staying in Love, author John Powell wrote, “The only real mistake is the one from which we learn nothing.”
Indeed, mistakes are inevitable, but they are truly useless if lessons learned do not materialize.
In whatever form, in whatever shape, blunders can become the seeds to new trees, the pollen to the new flowers … but if they are ignored, the likelihood of new growth has as good a chance of happening as Canada successfully burning down the White House again.
F***up Nights is a global movement born in Mexico in 2012 to share publicly business failure stories. Hundreds of people attend each event to hear three to four entrepreneurs share their failures. Each speaker is given seven minutes and is able to use 10 images. After each speaker, there’s a question/answer session for about ten minutes. Of course beer is encouraged and naturally there is time for networking before and after the speakers. In 2015, there were over 250,000 people who attended a F***up event in cities across the planet.
I recently attended the first-ever F***up Nights in Victoria, British Columbia, hosted by the fine folks at the Victoria Innovation, Advanced Technology & Entrepreneurship Council, or by its much cooler acronym, VIATEC.
VIATEC is a one-stop hub that connects people, knowledge and resources to grow and promote the Greater Victoria technology scene, a sector that consists of 900 companies generating more than $3 billion in revenues. With more than 15,000 employed in the sector there was a good chance not every company (or previously existing company) were operating on a bed of roses. Indeed, VIATEC seemed a perfect spot to introduce F***up Nights.
After a couple of beers and meeting some new people, Dan Gunn, CEO of VIATEC, took the stage at Fort Tectoria and calmly said to the audience, “The reality is there are going to be some mistakes. That’s why we’re here tonight … to learn from other people’s mistakes.”
It was the perfect way to start the night.
First up was Todd Dunlop. He founded an online search engine marketing agency called Neverblue Media. After several years of success, as a 27-year old he sold the firm to U.S. giant Vertrue Inc. But eventually, Vertrue went bankrupt. Dunlop said, “In the end, the only people winning were the lawyers.”
There was one word in a 50,000 word legal document between Neverblue Media and Vertrue that ended up costing Dunlop significant time, money and pain.
His first lesson?
“Always, always, cover your ass by ensuring you have multiple people go through the framework and structure of your company documents.”
His second lesson?
“Patents can be extremely contentious. Be cautious when it comes to handing over intellectual property and other patent possibilities.”
The second speaker to take the stage was Mark Grambart. His was a harrowing, emotional tale of infamy. Mark’s first line, “This is not going to end well,” was as prescient as it was hilarious. Indeed it was a story about what not to do when it comes to acquisitions.
Running a rather successful company called Contech Enterprises for a few years, Mark and his team were looking to grow. As is the case with any company, growth can come organically or it can come through acquisition. Mark and team were doing both, but it was the sixth of seven acquisitions that ultimately tripped up the master plan.
In 2013, Contech bought a raised bed garden company. I don’t claim to possess a green thumb so I had to look it up. It’s exactly as it sounds; a garden box that is raised above the ground. To him, it made so much sense to make the acquisition. The company they were acquiring had existing agreements with Lowes, Costco, Canadian Tire and Home Depot. Big players. Easy money. Simple acquisition.
At first, Mark’s gamble—like the other acquisitions—was as spot on. Sales immediately increased by 30% of the raised bed garden products. There not only was a sigh of relief, there was palpable joy.
Then panic set in.
It turns out the company Mark had acquired possessed a fantastic ordering system, but not a proper inventory tracking system. They had no idea how much product was in their supply chain or how much was in customer locations, etc. What to do?
They decided to implement SAP .
You may be guessing where this is heading.
For 24 hours, there was not a single customer who could order products from Contech after SAP went live. If you’re Costco or Home Depot, you tend to freak out if this is the case. The lack of a true inventory management or CRM solution from the original acquisition was severely impacting Mark’s larger company. Eventually, Mark had to inform his customers that they were unable to ship products, too. It went from bliss to a case of the “oh oh’s” to DEFCON 1 in a very short period of time.
And then the bottom fell out.
Three years after the now infamous acquisition, Contech Enterprises slid into bankruptcy.
But here he was at F***up Nights sharing his pain, baring his soul. He left the audience with three important lessons learned:
1. Time Pressure
“Don’t do an acquisition under any sort of time pressure as it will come back to bite you.”
2. Due Diligence
“Post-merger integration suffers if proper due diligence is not performed.”
“I saw the founder of the company as a composition of something he wasn’t. I was wrong about his character. Don’t just look for patterns, dig deeper into the characters you are inheriting as part of the acquisition.”
The final speaker of the night was Clayton Stark.
“I don’t recommend to purposely f*** up your company,” Clayton deadpanned as he strolled on stage. “But here I am!”
In 2004, Clayton was COO of a web development shop called Mercurial Communications. The staff of 30 were developing a toolbar for AOL when one day a different request came in from their deep pocket customer.
“We want you to build a Netscape browser,” was AOL’s request.
Clayton’s jaw broke into pieces as it hit the floor so quickly. The opportunity of a lifetime was now his. It wasn’t just a big contract, it was AOL! It was Netscape!
He quickly hired another 100 employees.
They created a dream product. There was a “kickass toolbar” using a server programmable user interface (SPUI). The browser contained a dual rendering engine browser. If you’re a techie, this is important stuff. They built a widget for every imaginable component of the browser. They even cooked up an App Store – and this was back in 2004.
But for all of his creativity and penchant for innovating—for getting this project and every other product to market on time and on budget—Clayton hated (and still hates) analytics.
His disdain for analytics, however, ended up costing him and the company dearly.
“I assigned analytics of this incredible web browser we were developing to a lead developer, and never thought about analytics again until the day before the project was due,” confessed Clayton. “And that was a stupid thing to do.”
Clayton inquired the day before launch with the lead developer assigned to the task. It wasn’t completed. Like anyone trying to meet a customer’s deadline, they hacked away, pulled an all-nighter, somehow ‘fixed’ the missing analytics requirement and shipped the product.
Judging from the immediate downloads, the browser was a smashing success. One million downloads quickly turned to five million. Then ten million. It was a runaway hit. Booze was flowing in the office. Everyone was downloading Netscape, the browser for the future.
Until the customer called.
“Hey Clayton, what a great job you and your team pulled off,” said the lead at AOL. “Now, can we see who these people are that have downloaded the browser?”
This is the point at which a properly functioning analytics engine and database would come in handy.
As it turns out, because Clayton wasn’t really paying attention to the analytics requirement of the project, the employee assigned to it somehow set the database to zero, and wrote this actual code to the database itself. If you’re a techie, this is a bad, very bad, extremely bad thing to do.
I didn’t understated at first what Clayton was getting at, but then he explained.
“We had a database that contained a terabyte of zeroes,” he said. “There was no data. Only zeroes. Not even any ones. Just an entire database of zeroes … and so, there was no data to give to AOL. I had to tell them that we f***ed it up.”
And AOL was not happy.
In the end, Clayton recognized what a colossal mistake he had made not paying enough attention to the analytics component of the Netscape browser. I was left thinking what might have been if it weren’t for that database being set to zero. What would Clayton and Mercurial Communications have accomplished thereafter? Thankfully Clayton recovered and now is SVP Technology of Kixeye, a social game development shop in San Francisco, with a team of developers in Victoria.
I didn’t know what to expect from F***edUp Nights in Victoria but it reminded me of the importance of both storytelling and outwardly sharing your failures with others.
“To err is human” … but so too perhaps, “To share is humanly.”
If an organization want to truly and transparently grow it ought to find avenues and channels for employees to share their mistakes, project gaffes and failures. It should be done in an open and safe environment so that as many people can learn from the blunders of others to move the organization’s goals forward. This is collaborative learning at its finest.
Serving beer—like at VIATEC’s version of F***edUp Nights—would be a fabulous idea, too.