The failed startup: a narrow-minded view [opinion]

Recently, I published an article about 17 South African startups to watch out for 2017. The piece included a range of well-known companies that achieved some pretty amazing things in 2016, such as Zoona, OfferZen, and Rainfin. Among those included was micro-jobbing platform M4JAM, which had to be sold last year. Apparently, this has caused some consternation among a few readers.

I think it’s time to add in my two cents to this topic.

What spurred me on to write this opinion piece was the culmination of two tweets by the same author (and without mentioning names in order to avoid social media ‘dog-piling’). One of them read: “[…]articles like that hurt rather than help the industry/entrepreneurs wanting to get started in it”. To me, this is a very narrow-minded statement and one that doesn’t just hurt startups, but businesses overall.

I hate using such a crass and ignorant word, but the reality is that startups “fail”. There’s the generalisation that nine out of 10 business fail. Hell, a large portion of business don’t even make it past year one. The failure of companies can happen for a number of reasons, such as ill-management, products that don’t work in the market, going into business with the wrong people, and more.

In the case of M4JAM, it’s a startup that actually succeeded for a while. The company had managed to find investment, pulled in a big name, and even purchased another company. Now that’s the kind of success that entrepreneurs strive towards.

Unfortunately, it fell apart. Last year, M4JAM’s founder, Andre Hugo, confirmed to then Ventureburn reporter, Stuart Thomas, that the company needed to find a buyer, otherwise it would close down. It’s never been publicly stated what lead to this turn of events for a startup that was on the rise.

Not long after, it was announced that M4JAM had actually found a buyer in the form of Informal Solutions. A re-launch was on the horizon, but M4JAM has been a bit on the quiet side over the past few months.

Then we come to the second tweet that was asked of me: “How is a co that fails/goes bankrupt ‘one to watch?'” The answer is that it’s not failure, but rather a show of promise, if not for M4JAM, then for other businesses in similar situations. The sale of a company on its way out isn’t something to scoff at or look down upon, but it is something to give hope to those wanting to start their own company.

The irony is that both of those tweets were sent from an iPhone, which is a product created by Apple. This is a company that saw one of the biggest comebacks in business history.

To summarise Apple’s story: after Steve Jobs was ousted from the company he had founded, the position of CEO was given to John Sculley, a man who had previously held the same position at Pepsi Co. After numerous product flops and going through another two CEOs, Jobs was eventually brought back to a company that was on the verge of bankruptcy. He began restructuring the company, Apple launched the iMac in 1998 and, well, the rest is history. Not bad for a company that almost filed for bankruptcy to having a market value of US$605-billion.

According to Ventureburn’s stats for 2016, over 30% of you will have read this article on an Apple device.

Apple isn’t the only company to rise from the ashes after falling profits and products. A few of these comebacks can be seen in everyday brands, such as Marvel Comics, Nintendo, Converse (which actually filed for bankruptcy), Netflix, Starbucks, and even Lego. All of these brands had massive failures in some way or another, and eventually bounced back.

In no way am I saying that M4JAM will make a comeback and be the company it once was (that’s up to the decisions of its new management regime and their product strategy — I have no horse in that race). What I am saying is don’t count out a company because it failed in the past. It’s a very narrow-minded approach to have.

Feature image: Christopher Ross via Flickr.