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(Ryan Remiorz/The Canadian Press)
(Ryan Remiorz/The Canadian Press)

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How failure shapes future success Add to ...

My first startup experience was working for a technology company that made mobile applications for sports fans.

I worked nights and weekends in an entry-level position with the founding team while finishing up my college degree. For aspiring young entrepreneurs like myself, a business school education is valuable, but it is no substitute for working in real, live startup environments. I knew I had to have both, so I sought out entrepreneurial experiences every chance I had.

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Now that I’ve finished school and launched two startups of my own, I’m beginning to reflect on the lessons I learned outside the classroom, especially in that first startup job – and how they came to influence my decisions as a startup founder, four years later.

Timing does matter

I absolutely loved that first team’s product concept, which aimed to improve the in-stadium experience at sporting events by providing live statistics, video replays, and even concessions orders to a mobile device. The in-stadium atmosphere is great for fans, but teams are fighting to increase ticket sales against the free and convenient experience of watching games at home.

I knew that bringing some of those comforts to your stadium seat could be valuable for both fans and teams. But after working on the product launch team for a season, I was in a unique position to project the long-term viability of both the product and the overall company. Unfortunately, the view wasn’t promising: it always felt like the company was too early for its time.

We initially loaned out iTouch devices at the venues, since not enough people had smartphones at the time. An iPhone/iPad sales chart shows the market growth in these categories at close to $100 billion in sales now from under $5 billion in January, 2008, when I started at the company.

Failure is not the end

We had difficulty gaining traction. Whether it was the market, the timing, or the business model, I didn’t see much of the company after I left in mid-2008. Four years later, new companies are having success in that market, including FanVision, owned by the namesake of my alma mater at the University of Michigan.

Meanwhile, the founding team has gone on to do other great things, which led me to research what drives serial entrepreneurs. It’s a common theme in Silicon Valley and elsewhere, but is it really true that startup failure breeds future success?

Harvard researchers Gompers, Kovner, Lerner, and Scharfstein argue the answer is yes, but barely: They found that a successful serial entrepreneur has a “30-per-cent chance of succeeding in his next venture. By contrast, first-time entrepreneurs have only an 18-per-cent chance of succeeding and entrepreneurs who previously failed have a 20-per-cent chance of succeeding.”

Lessons learned

Clearly, past success is a better indicator of future success. Employees, investors and customers are all drawn to big-name entrepreneurs. Nevertheless, my college experience working with a failed startup greatly shaped my future successes at both Avomeen and LabDoor. Specifically, they taught me:

  • Customers come first. I loved that first company’s focus on customers. They only had a few full-time employees at the time, so they did a great job of leveraging associates like me to be at every sporting event interacting with customers. I followed their lead at Avomeen, where we constantly requested feedback from our clients, especially when launching new services.
  • Analyze – and capitalize – on market trends. My early exposure to mobile development and its user growth informs our work at LabDoor, allowing us to time the launch of our product safety applications (November, 2012) at a key inflection point in the market. Mobile health users are expected to double in 2012, and we plan to immediately capitalize on that growth.

I loved the experiences at my first startup, and I will be eternally grateful to my bosses there for giving me my first shot in the tech startup world. I didn’t work there long and definitely never made any money in stock options, but it was a transformative experience that I still use when running my current startups – and one I’d recommend to any entrepreneurial-minded student weighing entry-level work versus a startup gig.

Neil Thanedar is CEO and founder of LabDoor, a digital health startup that uses science to tell consumers what’s really inside dietary supplements. Before LabDoor, he founded Avomeen Analytical Services, an FDA-registered product safety laboratory, and he also worked on emerging mobile sports and medical device products.

The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab , a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.

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