You’ve probably heard more success stories from entrepreneurs than you can shake a VC at. And if you listen to the abridged versions of these stories, you may believe that each of those founders is some kind of super-genius who plays every single move perfectly.
But you should know that at least 50 percent of businesses fail within the first five years of operation and that some experts believe the number is even higher. These dismal statistics make the success stories you do hear about seem that much more impressive.
The reality is that these successful entrepreneurs are rarely the infallible whiz kids they’re made out to be. Even though they’ve made plenty of mistakes along the way, the reality -- despite what their stories say -- is that they face difficulties before realizing success. Case in point: Walt Disney, Milton Hershey and Henry Ford are among the entrepreneurial legends who have filed for bankruptcy over the past century.
Mark Organ has one of the most inspiring stories out there: this entrepreneur rose from near-bankruptcy to become the CEO of a billion-dollar company. Organ has openly admitted to making numerous mistakes in the early years of his entrepreneurial career, which in turn forced him to make many changes. I recently interviewed him to learn more about the errors he'd made and the changes that helped turn his company from the brink of financial ruin into a highly successful business.
Organ began his foray into entrepreneurship in 1999, with Eloqua, a demand-generation software and service company for marketers (and now a subsidiary of Oracle). In 2010 Organ also founded Influitive, a marketing startup that specializes in leveraging customers as brand advocates.
Mark decided to start Eloqua with some friends after realizing that he couldn’t cope with the grind of a regular job. But he quickly discovered that running a business wasn’t as easy as he thought, either; and today he recalls the series of mistakes he and his team made. He admits that none of them knew very much about marketing, either; they would literally beg potential clients for meetings and struggle to convince them to write checks.
In retrospect, it’s easy to see that a lack of a clear vision, a poorly executed marketing strategy and anemic cash-flow management all contributed to Eloqua's problems. In fact, the company was less than a week from filing for bankruptcy before Organ realized that the team needed to make some major changes -- fast.
A remarkable turnaround
Anyone who took a look at Eloqua’s balance sheet back then probably never expected the company to stay in business -- much less grow into a billion-dollar enterprise. Organ proved his skeptics wrong by making substantial changes to the company’s business model.
One of the biggest ones entailed reassessing the company’s marketing plan. Organ realized that aggressive outbound marketing was one of the least effective ways to grow the brand, so he started leveraging "happy customers" in order to turn things around. The practice of using Eloqua customers as brand advocates also became the basis of the business model for one of Organ's subsequent startups, Influitive.
Eloqua further changed its focus to micro-verticalization. In other words, the company identified niche markets with strong revenue potential and aggressively pursued them. This allowed the company to stand out among the competition and raise prices accordingly. Revenue rose sharply, which turned out to be the biggest factor in steering Eloqua away from bankruptcy.
“I think there’s very little that’s more important in the development of the startup than target-market identification and focus and being able to dominate a small niche,” Organ told me. “It’s a great way to get profitable fast, grow fast, and . . . roll out of there to [adjacent markets] once you’ve started figuring something out that you can own.”
Thinking about throwing in the towel yourself?
Starting a small business is always full of ups and downs. However, many of the challenges can be overcome if the entrepreneur is willing to make the necessary changes. Organ is living proof that even business owners on the verge of bankruptcy can make a massive rebound if they take action.
The biggest takeaway from my interview is that business owners should focus on changing the factors over which they have control. Organ is emphatic that new entrepreneurs recognize that, “The only thing you can control as a CEO is your own mindset and activity produced.”
If CEOs come to terms with this rule, they’ll have an easier time adjusting to the trials and tribulations they’ll inevitably face while trying to start and grow their companies.
Do you agree or disagree with Organ on this? Share your thoughts by leaving a comment below, or check out the full video of our interview for even more interesting insights: