What I learned from a failed agency startup

Thorsten NolteIn this guest post, Thorsten Nolte looks back at his experience running Singapore digital agency Upfront, and reflects on what went wrong for the company that launched in 2007, and closed at the start of this year.

One need only look at the self-styled descriptions on LinkedIn to see that every second person is a serial entrepreneur these days. But here is the thing. Around 80% to 90% of startups fail. Having experienced it myself, I have a theory for how failure can be avoided.

At the core of any failure is a very simple truth. So simple that it is easy to understand why most people do not see it.

The reason ventures fail is simply our inability to overcome obstacles.

The difference between the successful entrepreneur and the failed entrepreneur is that the successful entrepreneur knows that there is no obstacle that can’t be solved. And they know that more often than not the obstacle itself has the solution within it.

In January 2013, my agency Upfront won its biggest client. We had invested months of time and tens of thousands of dollars on the road to winning this client. Long nights preparing pitch documents and working out strategies that would help the client succeed in their aims. The client was so big that we had to invest aggressively in staff. We hired senior creative talent, operational talent and technical talent.

Within a matter of three months the agency had grown from 25 people to over 40 people. Overheads grew from $55,000 per month to over $110,000 per month. None of this mattered. The client had signed up to spend in excess of $5 million dollars with my little agency and would secure the aspirations I had for Upfront.

Of course, that didn’t happen.

The first month went by and nothing came from the client. The second month past and still nothing. People that we had dealt with during the pitch phase were leaving the company and the new people we were introduced to seemed confused and unsure.

Eight months past and not a single penny had been spent with Upfront. No insightful explanation had been given as to what was going on and for the first time in its short history Upfront slipped into the red.

Our debts piled up and we finally got to the point where we could hardly operate. The root problem lay not in the unfairness of the client as I saw it at the time. The root of the problem lay in the position that we adopted as an agency, or to be more precise the position I adopted as an overly emotional human.

It was the position of a small and grateful agency that desperately wanted to keep this client’s business. This desire then became a pair of emotional shackles that startups often chain themselves with through a misguided respect given to clients.

We were selected as the agency of choice because we were the best, but right after we gave our best and we won the pitch I stopped acting like the best and as a result we became unsure, nervous and unable to react to information we received. Our new client was in trouble. Everything we saw told us so.

They were not spending any money. People were leaving the company and when replacements were hired they had no idea what they were doing.

At the first sign of this I should have demanded clarity and I should have put in place a plan for what to do if things got worse.

Failing that we should have severed any relationship with that client.

Ultimately we cannot control what our clients do, but we can control what we do. How we see a situation, how we act to the given circumstances and when we act.

Every decision within Upfront was in my control. The decisions I made eight months later, streamlining the business, moving expensive resource from Singapore to more cost effective locations like the Philippines, focusing competencies to give us strategic advantage were all good decisions. But they were made too late and they were made too late because I put our client on a pedestal and I was blinded by my desires.

It would take us 18 months to rebuild what was destroyed in those eight months.

It was something that could have been avoided had I dealt with the situation sooner. My actions then seem crazy to me now.

Sitting back and giving control of your destiny to outside forces seems ridiculous but essentially that is what I did. I waited for my client to solve my problems.

None the less I am grateful for the experience and these experiences are invaluable as long as we learn from them.

When faced with any given obstacle we need to take a step back and acknowledge that there is an obstacle. This is the difference between working on a business and in a business. As an entrepreneur you need to do both and you need to be mindful when you are doing what.

When faced with obstacles we need to breakdown the obstacles into their constituent parts and then methodically work through each part one step at a time.

Of course this cannot be done when we just see this mountain in front of us and when we give in to our emotions and see only the top of the mountain miles in the distance.

I came to realise that there are many beautiful things to see and do on the way up the mountain. The mountain and the journey that comes with it are there to be enjoyed. If one element is tackled at a time without giving into emotions that can make us freeze or flee, then we soon find that this obstacle we thought insurmountable breaks down, becomes enjoyable even, and shows us the solution.

The old saying of taking the path of least resistance, as I did when waiting on my client, is not a helpful saying.

The hard path is the true path, overcoming obstacles by tackling them and finding the solution within them.

That is the way.

Thorsten Nolte was the founder and CEO of Upfront, which closed in February 2016. He was previously managing partner of MEC Interaction APAC.


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