Dream, determination, defeat – six lessons in analysing startup failure from a candid entrepreneur story
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While startup success stories can be truly inspirational, there is a lot to learn as well from founder failures, mistakes, and misfortune. Forewarned is forearmed, and the lessons of hindsight and research can help founders avoid failures on their part as well.
Valuable founder lessons are offered in the book, The Biography of a Failed Venture: Decoding Success Secrets from the Blackbox of a Dead Startup, by Prashant Desai.
“Success is celebrated, failure is overlooked. There is fame when one succeeds, failure is shamed. While stories of success attract, those of failures are expunged,” Prashant begins, in his compelling tell-it-all and tell-it-like-it-is saga.
Here are my key takeaways from this 240-page book. See also my reviews of the 10 related books Fail-Safe Startup, The Other ‘F’ Word, The Messy Middle, Who Blunders and How, Adapt, The Up Side of Down, The Wisdom of Failure, Fail Better, Fail Fast, and Failing to Succeed.
News of mistakes rarely makes it to the press, but fortunately there are conferences like FailCon that help entrepreneurs analyse failure. See also my articles on Eight lessons in failure from Amani Institute’s Fail Faire and Exit Plan B: Where is your parachute? 15 tips for winding down your startup.
Prashant Desai is a Senior Director at Everstone Group, an India-focused South East Asia investment firm. He is also seconded to Burger King as head of strategy and investor interface.
In 2017, Prashant launched Indian sports brand D:FY, and brought on board Rajiv Mehta, who started Puma India. The brand brought on board celebrities from the worlds of Bollywood and cricket, and launched simultaneously in seven cities.
Unfortunately, in 30 months, the business lost Rs 30 crore. It also wiped out much of Prashant’s earnings for nearly 30 years.
The book captures the entrepreneur’s personal and professional journey across five phrases, catchily described in ‘5 Ds’ – desire, dream, dare, determination, and defeat.
Prashant lost his father at a young age, and the economic hardships led to a single-minded focus to become wealthy. He excelled in accounting and finance, and moved from Kolkata to Mumbai to work with the likes of Rakesh Jhunjhunwala and Kishore Biyani.
“I began using income, wealth, and a professional career as the only metrics to measure my success,” Prashant writes, describing in great detail his business and personal journey. His story also parallels the rise of India’s growth story from the late 1990s onwards.
“Greed was a good teacher. It created a sense of hunger. It enhanced focus. It encouraged perseverance. It incentivised discipline,” Prashant explains. But the other side of greed led to his eventual downfall.
He became CEO and MD of Financial Technologies, and then the entrepreneurial bug bit when he decided to become even more wealthy by launching his own D:FY sports brand. Shoe designers were roped in from the US, with manufacturing in China.
In a big-bang launch, they opened 17 stores in seven cities, with celebrities on board such as Anil Kumble and Farhan Akhtar. Online partnerships were signed with Amazon. But due to a series of miscalculations and blunders, the venture wrapped up in 2019.
Insightful observations and founder tips are shared across the 33 chapters, but the key takeaways are captured in the chapter titled Reflections. Here are some highlights.
1. Wealth and purpose
“Wealth creation should have been a by-product and not the core purpose,” Prashant reflects. This was probably a result of the financial hardships he faced in childhood – but a batsman cannot expect to go from 50 runs to 500, he writes.
“The original desire of creating a fitter India had been elbowed off stage by the prospect of getting rich enough fast enough,” he writes. His goal of Rs 200 crore of personal wealth should not have become the singular purpose of his existence.
“The lack of clarity between vision (cannot be achieved) and mission (roadmap) led to the downfall of my company and my net worth,” he adds.
2. Customer insights
Prashant assumed that what worked for him and his friends would work for his customers as well, in terms of shoe design and pricing. He learnt the hard way that customers would not ignore price, solidly support an Indian shoe brand, or wear sports shoes only for running.
As it turned out, many Indians wear foreign shoe brands for their convenience and comfort in walking, not running. While they did consider foreign brands expensive, they would wait to buy them at sales during the end of the season.
It’s not enough to have a technically sound and aesthetically pleasing product. It’s not enough either to spot and ride broader economic and social aspirational trends.
“My mistake was to equate the Indian customer with the Chinese customer. China has also prided on wearing Chinese. Indians prided on wearing ‘imported’,” Prashant writes, describing his early analysis of China’s successful ANTA shoe brand.
In hindsight, Prashant cites Kishore Biyani in this regard: “Shelf test is better than self-test.” He cites another good quote from Warren Buffet: “The street knows the price of everything and the value of nothing.”
Prashant explains that his string of rapid business successes in his early years fueled a sense of arrogance. “Since I had grown rapidly, it was only reasonable to assume that the momentum would sustain,” he recalls.
Early product validation from his friends fed his ego, and he ignored the views and advice of dissenters. “I was a victim of the need for confirmation bias,” Prashant describes.
Ultimately, the business became unsustainable. “We had possibly bitten off more strategically than we could chew operationally,” he adds.
4. Lack of prudence in risk-taking
While risk-taking is part of an entrepreneur’s journey, there were not enough checks and balances for Prashant, and plenty of miscalculations.
Growth should have begun in an asset-light manner, and eventually evolved into a mix of online retail, exclusive stores, and departmental stores. Some funds should have been set aside as reserves. Unfortunately, there was “no intellect or courage to offer a contrarian opinion” within the company.
Bringing in investor capital early on would have shared the risk as well. “Promoters need skin the game, but not the entire skin,” Prashant affirms. Delay in getting the backing from one corporate group when funds could have been raised from other investors led to a fatal financial setback at the final stages.
He should have followed the advice of Utpal Seth from RARE -- to start small, experiment, make affordable mistakes, keep adapting, strengthen the business, reach the sweet spot, and only then step on the accelerator.
For example, challenger brand Sketchers started off in the walking category, and then moved on to easy-to-slip-into sporty shoes.
Prashant also cites Rakesh Jhunjhunwala in this regard: “Make a mistake you can afford so that you live to make another one.”
5. Brand building
“We overspent on building of the brand than the brand spend itself,” Prashant explains. Crores were spent on celebrity ambassadors, creative agencies, film shoots, and campaigns across all media.
“We felt the brand could be built instantly,” he recalls. Unfortunately, the brand message was scattered and drowned out. Perhaps focusing on one medium first may have helped, Prashant reflects.
“In building the D:FY team, I selected familiarity over competence. What I gained in terms of integrity and commitment I lost on ideas and experience,” Prashant writes.
He chose friends and family in key positions, with lack of clarity on roles and responsibilities. Errors which should have been reported ended up being ignored due to expectations of respect.
“There was no review meeting everyday where such challenges could be shared or acted upon,” he recalls. There were too many assumptions that were not surfaced or challenged, which led to blunders and underperformance.
Prashant candidly admits that his own temper was also not good for the team or the company. His frustration with lack of business progress prevented him from being empathetic with his team.
The road ahead
Prashant hopes his book on entrepreneurial failure will lead to valuable learnings and dialogues in the business community on how to assess and bounce back from failure.
“When we make mistakes, we deny, defend, ignore, and blame them on someone else. As a culture, we have not developed tools for accepting our mistake,” Prashant observes. (See also our pick of Top Quotes of the Year on Failure Lessons, from 2021, 2020, and 2019.)
“We are mistaken about what it means to make a mistake,” he adds. “Our capacity to forget mistakes takes precedence over remembering them.”
“Mistakes help us see things differently. However, we have to see mistakes differently first,” Prashant emphasies.
In sum, this book is an outstanding example of what it takes for entrepreneurs to see their mistakes differently, and have the courage not just to admit errors, but share them with the broader community for their own benefit.
YourStory has also published the pocketbook ‘Proverbs and Quotes for Entrepreneurs: A World of Inspiration for Startups’ as a creative and motivational guide for innovators (downloadable as apps here: Apple, Android).