We’re all familiar with the grim statistics of starting a business: 20% of new businesses fail within the first year, and 50% will fail within the first five years. When it comes to rapid testing and validation, however, failure may not signal a bad idea, but rather a great idea with bad timing.
Take Apoorva Mehta, the founder and CEO of Instacart. His grocery delivery app has experienced skyrocketing demand and market share in the pandemic economy. In April, Instacart notched a benchmark that has become increasingly rare in Silicon Valley: A profitable month of operation.
After 20 Failed Startups, Here's What Turned This Engineer's Next Venture Into A $17.7 Billion App - Post Outline
Profit schmofit, though, because a flurry of additional investments in 2020 have ratcheted up the app’s valuation by over 124% this year alone. Translation? Mehta is now a billionaire.
Before cementing his status as the newest billionaire business owner on the block, however, Mehta’s startups had failed over and over again. By breathing new life into an already-proven value proposition, the entrepreneur’s next venture took off.
20 Failed Business Ideas In Two Years
After a string of positions with companies like Qualcomm, Blackberry, and Amazon, Mehta set out to launch a few business ideas of his own. Among his failed pursuits: An advertising network for gaming companies and a social networking app specifically for lawyers.
Being a software engineer, Mehta found the challenge and learning curve of niche offerings to be a thrill. But a critical piece was missing from the equation: Passion.
“When I went home, I wouldn’t think about it because I didn’t care about lawyers,” he shared in a 2017 Los Angeles Times interview.
Reflecting on his lifestyle in San Francisco and love for cooking, Mehta recalled that it was a timesuck to pick up certain specialty groceries because of his location in the city, and a business idea was born. People purchase a result, not a service, which is why an early iteration of Instacart’s tagline – “Add an hour back to your week” – stuck like glue.
It's Not What You Launch — It's When You Launch
The notion of grocery delivery was certainly not original. Mehta had studied the rapid rise and fall of Webvan, a company which raised $375 million in its 1999 IPO debut and achieved a peak valuation of $1.2 billion, but filed for bankruptcy less than three years later.
To Mehta, Webvan’s value proposition was still viable. And his entrepreneurial foresight touched on an important distinction: It’s not just what you launch, but also when you launch.
In seeing the steady rise of Uber, Mehta knew smartphones were approaching ubiquity and customers had become comfortable with app-based transactions. It was time to jump. Mehta built the prototype of Instacart in a month and delivered the first rounds of groceries himself to validate the product.
How To Cultivate Your Next Business Idea
Mehta has stated that “The reason to start a company is to bring a change that you strongly believe in to this world.” Bionic belief will certainly make you jump out of bed in the morning, but some actual skills will help too.
Here are a few pointers to sharpen your entrepreneurial instincts:
- Talk to strangers. Okay, maybe not complete strangers. But when soliciting feedback on a business idea, the worst thing you can do is ask your mom or a group of friends. The commentary will be filtered and distorted, and you’ll either give up or launch something that flops. Seek out confidantes, groups, and other straight shooters.
- Stay in the know on market trends. There’s a reason Jessica Lessin’s team over at The Information gets away with charging $399/year for tech news: Having timely, relevant information as an entrepreneur is really freaking important. Industries shift constantly, and if you can be first to market when an opportunity arises, you don’t actually have to be original to be successful.
- Ask yourself, “Do I really care?” Why does this business matter? Before you put yourself through the chaos of birthing a business, get crystal-clear on the problem you solve.
The lives of most startups are short. But the insights we glean from testing our ideas live on for years to come. Fail fast and stay informed, and you’ll improve the odds of your next business venture becoming a slam dunk.
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