Startup: Learning from Failure

Published: 2019-09-26

From the anxious graduation season settling in Beijing to the eve of starting a business. Some accumulation of perspective and professional knowledge, combined with some positive feedback from around me, quietly carved a proud posture in my heart. Amid self-admiration, an idea stirred within me.

As a technologist, I always felt I had a relative advantage in business. So I boldly joined the wave of entrepreneurship, determined to realize myself and work for myself. Soon, the market and reality gave me a harsh lesson. After suffering deep blows and failure, I am now moving from disappointment toward a calm self-awareness.

Concentrate the heart on one craft and the craft will be well done; dedicate the heart to one post and the post will be advanced. – Ji Xiaolan, Notes from the Thatched Cottage of Readings

The first company I founded took the two characters “必举” as its name. From birth to demise, it lasted five months in total. I wanted to use a complete and thorough postmortem to commemorate this unfortunate premature child. This is all it left me, and also my deep reflection after four years of work.

During the postmortem period, I studied Teacher Hua Shan’s interpretation of The Art of War on Dedao and was deeply inspired. I borrow some of its guiding points here.

Business model

With the formation of urban agglomerations, the locational advantages of certain cities have become increasingly prominent; the offline service radius across cities is expanding, and the emergence of fast transport circles will inevitably create new commercial opportunities attached to them. Riding the wave of interest in this year’s lower-tier market concept, I sketched out aoffline C2C shared knowledge service platformmodel.

In fact, similar to online C2C platforms, we also serve both ends. The difference is that our instructors are employed staff in high-tier cities, while the students are university students in lower-tier cities.

Instructors commute to nearby cities in their spare time to teach part-time, which both satisfies high-tier office workers’ need for additional income and brings reasonably priced, quality offline teaching to students in lower-tier cities.

Educational resources thus flow along high-speed rail lines. We entered early operations targeting pre-employment education for university students, using a skills (internet/employment/entrepreneurship) plus professional literacy training model.

After more than three months of preparation, we completed company registration and bank setup, course structure design, building an online public account and store, and preparing offline classrooms. Armed with a rough marketing plan, we launched into the lower-tier city I know best — Datong.It is a city where challenges and opportunities coexist. Like other sinking markets in the Beijing-Tianjin-Hebei region, the siphoning and radiating effects from core cities deeply shape them.

Our plan was: if Datong could validate the model within a year, we could quickly replicate the model and experience to other target cities to achieve scaled operations.

Marketing — the critical weakness

Drucker once commented on marketing:

It encompasses all the business. From the final result, and from the customer's perspective, what a company must do is marketing. Therefore, every department in the company should be concerned with and responsible for marketing.

This was my first time feeling and practicing a complete business. My deepest impression was marketing — experiencing the power of new media platforms like Toutiao and WeChat in marketing and understanding the logic that makes them commercially viable.At the same time, I became acutely aware of my weak theoretical grounding in marketing.

Mistakes made from the start

In September when university starts, with new students arriving, this period is often the peak of student activity. We rode that wave into large-scale marketing. With a mindset of making the whole campus know us, we collaborated with campus student organizations, ran ads on Toutiao and Douyin, and went building-to-building handing out flyers. Very quickly, the extremely low conversion results crushed my market expectations.

Student organizations’ influence was limited to freshmen. On general traffic platforms like Toutiao and Douyin, in a region with a limited user base and only thirty to fifty thousand daily active users, targeted ad placements not only cost us above-average spending but yielded little effect. Most students who took our flyers only glanced and put them down; few scanned QR codes to follow us.

The most common feedback from students was that we were “too professional.” On investigation, I found a deeper meaning: it implied our message was too obscure. They didn’t understand what we did, what our courses were for, or how they could benefit.

For a business like education, which involves high decision costs, building trust with users is paramount.Make them deeply understand you and clearly know what they get for their money. We had relegated that in-depth communication to after they followed our public account; in the first task of capturing students’ attention, our efforts were superficial. The name got out, but the distance between students and us remained large.

There’s a saying: the correct order for building a brand today is to first build loyalty, then reputation, and finally awareness. We did the exact opposite and chose the wrong direction.

Marketing is not advertising

In the book Marketing: True Self-Expression, there’s a view that:

When should you do large-scale advertising? When other marketing methods are hard to work and hard to reach the target audience. We classify that as “cannot be done.”

We immediately expanded promotion to the entire school, regardless of grade or major, naively hoping everyone would be our user. Looking back now, it was childish.

It would be acceptable to consider all students as potential users — they could become real users through sharing, word-of-mouth, and referrals.But all of that requires a first batch of users.

So our initial work focus lacked a clear direction toward users who could convert immediately. For us, the immediately convertible user profile was clear: fourth-year students near graduation. And because we initially emphasized programming courses, students from the computer science college were more likely to convert.

The correct approach should be: first, build a dream by描绘 a reachable attractive blueprint to spark student interest. Second, use free talks or open classes to give students a quick sense of gain. Third, only then sell paid courses.Only through this step-by-step conversion strategy can you achieve the goals of increasing trust, prompting decisions, and improving conversion.

Sun Tzu’s The Art of War says:

Prepare the front and the rear will be thin; prepare the rear and the front will be thin; prepare the left and the right will be thin; prepare everywhere and everything will be thin.

If you want everything, you end up with nothing. At the right time, to the right people, do the right thing. Invest resources and energy in the decisive point, find the strategic center of gravity, concentrate superior forces to fight a decisive battle.

Sun Tzu advocates “know yourself and know your enemy.” In business, the first key is understanding yourself and your team; the second is understanding users and the market. We did poorly on both; let’s address the second point first.

Not knowing the enemy

The fatal blind spot

We soon discovered the market was not as rosy. After a rough estimate, a city could generate 60,000 yuan in monthly revenue; 70% would go to instructors, leaving 30% as our service income. After subtracting rent, operational staff, instructor commuting costs and other fixed costs, the profit left for us was only 11,800 yuan. This excludes various hidden costs like campus marketing, curriculum research services, and dispersed multi-city management expenses.

We considered that as brand reputation strengthened, online we could develop knowledge-based personal media, and offline we could pursue a multi-channel franchising lightweight expansion. But even so, we had little confidence in breaking that low ceiling.

The tiny volume of each single lower-tier city, combined with pre-employment education still being in an early ‘enhancement’ stage and the inherently slow growth characteristics of offline services,left insufficient imagination — our first fatal flaw.

In the first month of promotion, one partner, after seeing the next month’s course schedule, was despondent. He told me frankly he couldn't guarantee commuting once a week to another city. First, overtime at work would conflict with the part-time schedule; second, for about 5,000 yuan a month in extra income, it felt too tiring and not worth it.

If even a stakeholder who invested and held shares could not reliably execute the course plan, how could we expect other employed staff to take on part-time roles? This was a devastating blow to our cross-city part-time model.

If we couldn't resolve instructors’ willingness to participate, our business model logic would fail and the staffing and price advantages it relied on would disappear. This was our second fatal flaw.

In fact, this issue had been raised early on, but I quickly ignored it out of arrogance. I replaced the lecturers’ real intentions with my optimistic assumptions.

Detached from reality

Before we started, we had drawn a complete lean canvas. But we were too immersed in our fantasies and didn’t diligently understand the market’s key players and the real environment in the business model. Sothe canvas we produced was merely a reflection of self-delusion, revealing no risks or problems and remaining superficial.

Toyota has a production philosophy called“Three Reals and Two Principles”— the three reals arethe real place, the real thing, and the real situationand the two principles areprinciple and rule.

The “Three Reals and Two Principles” emphasizes that youmust go to the site,see the real thing and the reality happening there, then summarize the operating principles and underlying logic. Finally, formulate solution principles based on that logic.

If we had done this in the business design stage, the two fatal flaws mentioned above and the marketing strategy problems would have been exposed early. For example, doing two days of sales with other institutions, interviewing a few familiar colleagues about their intention to take a part-time role, etc., would have maximally reduced our operational risk.

Not knowing oneself

Personal

Regarding self-awareness, this failure was my greatest gain. Cruel reality pulled me back from fantasy and shattered my sense of omnipotence.

Coincidentally, the central idea of The Art of War aligns with correct self-awareness.

The art of war is largely defensive rather than aggressive. It’s not about making us stronger, but about making us fully recognize our helplessness. We control very little; this world is not under our control. What we can control is ourselves, and in fact few people truly control themselves.

This period of practice gave me a deeper understanding of personal boundaries and my own capability model.

When I stepped outside my professional domain and had to independently establish a complete marketing strategy, I gradually realized a large theoretical blind spot. When I had to do ground sales, my subconscious resistance doubled my energy expenditure. I fell into deep self-doubt and felt powerless.

To address this, I took the MBTI career personality test and the result was INTJ. The most prominent trait is independence, suited to roles requiring high execution and autonomy. So my original professional path may suit me better.

I now better appreciate the trade-offs between employment and entrepreneurship — the best fit for you is the best choice. If you follow your will and choose to be an employee who does the work while others bear the risk, remember: employees will have dissatisfaction.

Team

On the team side, failing to form combat effectiveness was also our problem. Our founding team had three people; considering early costs, I as initiator was full-time, while the other two were part-time partners.

In execution, almost all the work fell on me: marketing, promotion, product, operations. From designing a header image for an article to formulating marketing strategies with major traffic platforms, writing articles, producing videos, and so on. These should have been done by a team; I did everything and ended up doing nothing well.

This is closely related to my occupational personality, but it also exposed another issue:our initial resolve and cohesion were insufficient. We all had better options, so it was hard to give our all.

Supplement

1. We never deeply thought from the user’s perspective. For example, in marketing we naively assumed most professional students understood the realities and prospects of internet work. In fact, their understanding of the internet was far below our expectations. Especially in universities in lower-tier markets, you must invest significant effort in user education before they might buy your courses.

2. Using a privately oriented platform like WeChat as the main initial marketing front was also inappropriate.

3. During this period I discovered a remedy for stress and insomnia: reading materials with a grand historical or cosmic perspective elevates me to 30,000 feet, distracts attention, and fosters self-acceptance, bringing brief peace.

Gaining from failure

The first chapter of The Art of War, “Laying Plans,” says:

“Those who calculate much will win; those who calculate little will not win—how much less those who calculate not at all?”

Use the Five Factors and Seven Calculations to assess the odds. If the odds are high, attack; if low, retreat. Don’t expect rare miracles like using little to overcome much. We failed because we were lax in pre-calculation. Now that we have limited input and have not gone deep, recognizing and calculating the win-loss in time and stopping losses is fortunate.

Because our funds, manpower, and time all came from ourselves, after weighing opportunity cost and deep self-reflection,I believe the venture may be a good thing, but not something we can handle now. More investment would mean greater losses and could ultimately become unmanageable, possibly forcing us into a dead end.

So in the end, we chose to accept failure.