3 Lessons About Failing the Right Way
This is the story of an entrepreneur who meant well but went wrong. His name is Raymar Hampshire, and he’s only 26. I admire him, even as our staff has revealed his business model has failed. A few years ago, Hampshire launched SponsorChange. It was a novel idea: Help solve the student loan crisis by having borrowers volunteer their way out of debt. In a nutshell, companies would pay down borrowers’s debts in exchange for a certain number of volunteer hours that wouldn’t interfere with those borrowers’s day jobs.
Hampshire’s problem, like many entrepreneurs, wasn’t the idea or even the marketing. It was the execution and his response to a crisis.
Hampshire is a compelling young man, and he earned coverage for SponsorChange in mainstream media outlets like CNBC and industry-specific websites. However, this coverage didn’t translate into actual borrowers being helped. Then, as Debt.com reported on Jan. 2, “SponsorChange has been wiped off the Internet.” Its website was gone, and there was no word on what happened. When Debt.com dug a little deeper, it found: “There’s no proof that the organization ever helped anyone.”
When Debt.com finally tracked down Hampshire after weeks of trying, the interview went poorly. I share this with you not to insult a young man who I hope will rebound and be a success, but to instruct other entrepreneurs about how to fail the right way.
1. Fail publicly and openly.
As an entrepreneur myself who’s thankfully succeeded more often than he’s failed, I tell young entrepreneurs all the time: Better to try and fail than never try and always wonder, “What if....”
Creating a business that doesn’t work is often the prerequisite for creating one that does. So you need to take the long view. Therefore, when one business fails, be honest about it, because the people paying attention may be your investors or partners in future ventures. Drill down on why it failed. Don’t make excuses.
Hampshire’s mistake wasn’t in the failure of SponsorChange. It was shuttering his website with no announcement or messaging, causing many interested parties to wonder what happened. SponsorChange may have failed for any number of reasons that have nothing to do with Hampshire’s vision or work ethic. Sometimes it’s changing market conditions, new competitors or simply bad luck.
When Hampshire suddenly shut down SponsorChange, my own staff of financial journalists got curious. So they started to dig. Hampshire no longer controlled his own story. Now it was in the hands of my staff.
2. Resist historical revisionism.
For years, Hampshire boasted about SponsorChange’s mission and alluded to its success. However, when Debt.com asked him what happened, Hampshire replied, “We went through a beta phase where we worked with volunteers paying down some debt and work with nonprofit organizations. Then we kinda put it on pause.”
So nearly a decade of work was just a “beta test”? That doesn’t pass the smell test. That will make it tougher for Hampshire to get media buy-in for his future projects. The narrative must get better fast!
3. Be transparent about the numbers.
When Debt.com asked for testimonials or numbers of people SponsorChange has helped, Hampshire replied in rambling fashion, “It’s not that we don’t have it. It’s that it’s so dated that it doesn’t make sense to put it out now when things are going to change. It makes sense to do it later once we’re in a better place and our strategy is set and we’re doing something.”
Obviously, no entrepreneur owes the media anything. Sometimes, it’s better to stay away altogether. However, once you tout your own success, you should easily provide some numbers to back that up. You can certainly choose those metrics, but you never want to deny any sort of proof. That makes everyone suspicious of you, even if you’ve done nothing wrong.
The sharpest entrepreneurs I’ve known are like swords: They’ve been made stronger by surviving the heat. This is just one example of how uncomfortable that heat can be. Always control the narrative. Never be afraid of failure. Failure just allows you the opportunity to succeed in the future from lessons learned -- good or bad.