Entrepreneurship is like a roller coaster with lots of ups and downs. Three entrepreneurs explain how they found success when their businesses flopped and what lessons they learned along the way to do it better the next time around.
Steven Sal Debus
Steven Sal Debus once described his customers as “anyone with legs and an open mind.” Born in 1995, Modrobes initially designed hip but comfortable pants sold “over the table” on college campuses. Five years later, 445 stores across Canada carried an array of Modrobes garments. That success was short-lived: the business entered bankruptcy protection in 2003 and was dead by 2005. But over the past year, Sal Debus has revived the brand and launched an online store, with a retail outlet scheduled to open March 1.
“At first, it was fun. But once we hit 30 people and $10 million, I had to spend all my time dealing with buyers and employees and financial stuff. It got to a point where I thought, ‘This sucks.’
“Then I got a call from the guy I hired to help run the company and he said, ‘We have to file for bankruptcy.’ What? The stores we had opened in malls were not performing the way they should have. 9/11 had just happened. Old Navy and American Eagle had come into Canada. Mall traffic was down.
“I’m actually glad it went into bankruptcy protection, and I spent the next four years in hell dealing with that. We had grown too fast beyond the original idea. I shouldn’t have expanded beyond my vision or capabilities. Growing for growth’s sake is not a good idea. You should grow as your business grows. And enjoy it. It got to the point where I wasn’t enjoying it. When I realized that, I should have pulled back, taken the elements I liked and gone with those.
“I ended up laying off people and running the business for the next three years just to pay off creditors. People said, ‘It’s over for you. You’re on your way out.’ Buyers wouldn’t meet with me. I had to deal with it and run the business, so that wasn’t fun. But you learn a lot.
“Eventually, I wound down the business and moved to Vancouver. At the same time, my dad got cancer and I got divorced, so I wasn’t in good shape. I hired myself out as a consultant and did other things. There was a little ‘Woe is me,’ but I kept working through it. I like challenges, so if I am down or bummed, I just divert and put my energy into something else.
“Now, I’m relaunching Modrobes as an eco-friendly fashion line. I like the challenge of reviving a dead brand because it doesn’t happen often. People, especially businesspeople, look at you and say, ‘Yeah, right. This guy is going down in flames. He can’t do it again.’ People think you have one chance, and I’m like, ‘I don’t think so.’ I think that I’m really going to make this bigger and better.
“I love entrepreneurship. At the end of the day, failure is good. You don’t ever know that you’ll succeed until you really, really fail. And then you understand that it really hurts. But when you get a bit of success, you’re on top of the world. So, you can’t have success without failure. Don’t be afraid of failing and don’t be afraid of what people think. That’s a great life lesson: ignore the naysayers. But it’s tough.”
Coastal Contacts Inc., Vancouver
“I’ve made just about every mistake in business known to man,” says Roger Hardy, who co-founded Vancouver-based Coastal Contacts Inc. in 2000. Since then, the online retailer of eyeglasses and contact lenses has gone public and made two appearances on the PROFIT 100, achieving 2009 sales of $140 million.
“I had a couple of businesses before this one. One I sold too soon, and one I held onto for far too long. It’s a delicate balance to get it right. There was definitely regret. But my value as a person — my self-worth — wasn’t connected to the businesses.
“With the company I sold too soon, I didn’t understand the business as well as I should have, and probably didn’t understand its potential as well as I could have. I was lured by the thought of a financial windfall that would help my family.
“I held the other business too long because I thought the opportunity was there and I couldn’t understand why we weren’t capitalizing on it. I thought it should work. I was lucky that I had a couple of different things on the go. The learning was that I needed to better understand the strategic direction of the businesses and have a better sense of the metrics involved.
“In either instance, I didn’t spend a lot of time sitting around thinking about it remorsefully. In retrospect, I probably should have sat around and had more remorse. But I think my personality is such that, the next day, I’m thinking, ‘Hey, now we’re going to go on to the next thing.’ That’s just how my mind works. I don’t think I dwell too much on the past, whether there is failure or success. I just try to learn from what happened and keep moving forward.
“At Coastal Contacts, we’ve made lots of mistakes along the way. We look at the business in terms of people, strategy and execution. People is the top piece. Have I made mistakes in hiring? Absolutely. And the cost of making a high-level mistake can be catastrophic, especially in marketing and finance. If you know there’s a problem, you have to move fast; there’s no time, really, to feel bad about it. You pay the penalty and move on.
“In business, you have to try a lot of things. Some work, and some don’t. You have to look at every failure as an opportunity to learn, and every failure moves you one step closer to success. You have to keep trying until you get it right.
“Old-school business is all about getting the perfect concept correct. At our company, that type of thinking would be the end of our lives. For us, doing business is all about changing and being dynamic, making mistakes and moving on.
“I’ve been writing business plans since I was 18, and there are 12 in the filing cabinet right now. I’m passionate about business. And I’m fortunate. But if my business fortunes changed tomorrow, I have three more ideas ready to go — the next three things I see that consumers would like. I’m always looking for disconnects, looking at the signs for business ideas.”
Zipfy Inc., Oakville, Ont
Mark Cahsens is best known for his big success: inventing the ultra-cool Zipfy mini-luge, coming soon to a toboggan run near you — if there aren’t a dozen on the hill already. But he’s also a high-tech veteran and survivor of the dot-bomb. The MIT grad and serial entrepreneur ran two companies in Silicon Valley during the late 1990s, neither of which became sustainable or achieved the Holy Grail of the dot-com era: the initial public offering.
“When I was in California, everything was racing and taking off. There was more of a naive perspective on the risk of failure, and people were barely concerned about generating revenue.
“At one point, I had two groups of investors. We had two companies, and I ended up leading both, which was not realistic. Then the whole marketplace began falling apart. We tried to stay in the game. We kept developing our technologies, but there wasn’t enough revenue to sustain a business.
“I kicked myself for sticking it out for so long. Some people were quite surprised that I kept paying my employees. I probably stayed a good year and a half longer than I should have. I still felt I was indebted to my investors. We ended up selling to one of our investors. So few companies made it beyond that crash. I didn’t see it as a failure, but I learned a tremendous amount from that experience.
“Once things calmed down after the crash, I was in a position where I could choose to do anything — it was like a rebirth. It was exciting. But I was not ready to engage in more risk for a few years. I did consulting for startups, strategy work and fundraising. Perhaps I needed a break. I didn’t launch Zipfy until 2007.
“I learned it’s good to have a vision and to be determined and occasionally unswayed by the people who are trying to influence you. When I was launching Zipfy, people would say, ‘I’m not certain it’s going to fly. Maybe you should change it this way or that way.’ But I had a certain vision and I stuck to it. I am far more passionate about what I’m doing now than I was back then. I think it’s easier to be swayed when you’re not as passionate about what you are doing.
“Today, I’m much more careful about where I spend. My team now is very lean, perhaps way more than it should be. And I’m more aware of the importance of locking down committed customers before making any risky investments. I made sure I got a commitment from a well-established company in writing for an order that would bring me to break-even, so I already made money before I made an investment.
“I told myself that if I’m going to start something new, it has to be fun. It has to be low-tech, something I could completely understand and wrap my arms around. I came up with the Zipfy mini-luge, and it has been a tremendous success. You can be experimental, bold and innovative, but it’s very important you have a solid revenue stream. If you don’t have that, you are on the fringe.”