FAILURE: Entrepreneurship’s Untold Story

FAILURE: Entrepreneurship’s Untold Story

Written by Tom Houge

This isn’t the typical entrepreneurship story. You already heard about the startup that began in the closet and conquered the boardroom. The media always tells us about the corporate buyouts and massive seed rounds. Not this time. This story deals with entrepreneurship’s darkest secret—failure.

What is failure?

Google will tell you what failure is not by defining it as a “lack of success” or “an unsuccessful person, enterprise, or thing.”

To me, failure is subjective. Failure is a story defined by its negative outlook, but within every failure hides the seed of an equivalent or greater success.

My story begins on a ship. In Spring 2011, I embarked upon the journey of a lifetime with Semester at Sea, a study abroad program that allows students to sail around the world while earning university credit. One day, a shipmate and I decided that we wanted to create something that could connect the diverse people across the globe.

Jeff Lucas and I returned home from our epic odyssey and founded a tech company with the goal of being the number one destination for finding people. Fipeo was going to be a search engine capable of finding the perfect person for you to talk to, based on any query.  From there, you would be able to connect face-to-face from the comfort of your home.

Soon after returning, my business partner moved across the country to my home in Maine so we could be more productive. We worked like maniacs. Every moment was dedicated to Fipeo.

People noticed our dedication. We were amazed at how many people wanted to help us out and it was inspiring to see how talented our friends and family members were. When we finished our investment presentation, an awesome video and Prezi created by friends, we moved to Long Island to find investment. 

Our first investment presentation was in my uncle’s movie theater. After my uncle returned from a business trip the following week he called us into his office.  Jeff and I showed up very overdressed, but the meeting was a success. He agreed to invest. I can remember our celebratory fist bump and the relief we felt as we walked out of that office.

We outsourced much of the design and development to an Indian web agency. It was very stressful as we negotiated a contract from across the globe, not sure if the company could be trusted.  We were heading into unchartered territory. 

Once the web build began, we relocated to Jeff’s home in Colorado. Disputes with the team in India were frequent and we were forced to discover what drives people to do their best work. We quickly learned to value the tools of passion, shared values, and giving credit to drive progress forward.

Somewhere along the line we learned of Airtime, founded by Sean Parker and Shawn Fanning, and their $33,500,000 worth of star-studded funding.  Others thought that we would be crushed by Airtime, but I was confident that our product was superior.  Even so, it was overwhelming to think of the odds we were up against before Airtime eventually launched and flopped into oblivion.

When Fipeo beta launched, we were immensely proud of our product.  We believed that it would be the next revolution if we could only get it in front of enough people.  In only a matter of months we managed to secure huge press throughout the country and the globe and our user base spanned over 100 countries.  

At one point we had two investors, a billionaire member of the DuPont family and the owner of the largest commercial real estate company in Delaware. During second financing round talks, we raised issues with the wording of a document and talks began to disintegrate.   

Originally, one of the investors said that he wanted to write a six-figure check and take a backseat, but by the time we got down to drafting paperwork we felt as if they were collectively clawing for control.  Though the terms were extremely favorable for us, we thought they were trying to take advantage of us in the fine print.  Without the additional funding, our remaining funds slowly began to bleed away.  As our expenses hit us month-by-month, things started to become more uncertain. 

One of the most crushing blows to Fipeo was when we discovered Runfaces.com.  The site, so similar to Fipeo that I was convinced they stole it, was exploding in popularity.  Runfaces now has more than half a million users (according to the counter they previously displayed on their site) and is making the Fipeo dream a reality.  While it validated our idea, it also brought us to the realization that we had dropped behind the curve.

Our decline occurred gradually over a period of weeks and months for a number of reasons—a lengthy registration process that deterred users, the investment disaster, and, maybe even Runfaces; but, the definitive blow came when Jeff’s house burned down in a Colorado wildfire. We made the decision to pay back my uncle and move on with our lives.

I was absolutely devastated.  We had made all of that progress and put in all of that time and effort only to tear everything down.  No words can express the devastation of a shattered dream.

We learned many lessons, but I believe we learned more from our eventual failure than from any of our successes.  While our triumphs were much publicized, we seemed to disappear without a sound.  It takes courage to be at the helm during rough seas and my hat goes off to all those who have weathered the storm.  As a culture we seem to shun failure and this is something I think we need to move past.  It is no coincidence that some of humanity’s greatest achievers can also claim monumental failures. 

This piece is dedicated to all of the entrepreneurs who risked everything pursuing their dreams and ultimately failed.  It is my final catharsis from a brutal plunge.

But still, I charge on!

The grandest challenges of the human race lie ahead of us and there is no time to be halted by the dreaded “F” word.

*Editor’s Note: Jeff is working at Deloitte in San Francisco and Tom Houge has just returned from a six-month hospitality internship in Israel, followed by a three-month European backpacking expedition. Both remain entrepreneurs at heart and Tom is advising a private jet startup.