Last week, the Octopus Wealth team had the pleasure of hosting its second event in partnership with Instant Impact, the early careers recruitment specialists.
The topic of discussion for the night was the F word — failure. (Thankfully the event wasn’t one!) More specifically, on why this taboo subject is so critical to discuss and learn from if you’re to achieve future business success.
With speakers Richard Wazacz, Octopus Wealth’s own CEO, and Tide Founder, George Bevis, ready to take us through their own experiences with failure, we welcomed a diverse audience from across London to Octopus HQ for an insightful evening of discussion.
Failing on the big scale
Richard took to the stage first and delved straight in with a question to the audience — “when was the first time you remember failing?”
Luckily for him, he’d sailed through school without breaking a sweat and so never really experienced proper failure until it came to his driving test, aged 17. He remembers feeling genuinely shocked, angry and everything in between when confronted with this new emotion. (He also failed his second attempt, just for the record.)
Richard then went on to narrate what he considers to be the biggest failure throughout his career which, unfortunately for him, ended up making the national news.
It was the busiest weekend of the summer during 2006 when a security threat at Heathrow airport meant hand luggage could no longer be taken onto departing planes. Instead, every piece of luggage had to be put through the baggage system — roughly 300 times more than usual.
Who was in charge of the baggage department at Heathrow that day? Richard was.
It only took a few hours before bags upon bags were being piled up throughout the airport as the usually slick baggage system went into meltdown. It was the well-circulated photo of the ‘bag mountain’ that eventually made its way onto the ten o’clock news, leaving a deflated Richard and his team to pick up the pieces of the so-called ‘national emergency’ for the next few weeks.
As he stated, “Our motto was ‘Every bag, every customer, every time’...and we couldn’t deliver. We had failed, quite catastrophically.” Although not at fault, Richard was lumped with the failure nonetheless. And it’s stuck with him.
A changing attitude to failure
Over the next couple of years, Richard worked for three large financial institutions that placed huge importance on not failing. So much so that it restricted their innovation, he felt.
When he eventually joined Octopus four years later, it was a refreshing change. In it, he found a company that wasn’t afraid to try, or fail, because it was founded and run by people who, still to this day, follow that very ethos.
“Creating a culture of innovation that’s not held back by the fear of failing ultimately comes from the top. It’s extremely hard to engender that environment in your own company if you’re not leading by example.”
Richard finished by looking at perhaps one of the most successful people in the world — Richard Branson.
Of course, we all know him as the globally successful entrepreneur who founded the Virgin Group. But over the years, Branson has tried his hand at numerous different ventures across many industries. And failed spectacularly. (Virgin Cola and Virgin Brides are thankfully a thing of the past.) Yet, we still admire his determination to continue trying new things without being deterred by the dreaded F word.
Ultimately for Richard (Wazacz), failure is a personal thing. It’s how you deal with it that allows you to pick up and carry on — hopefully to bigger and brighter things.
Failing: by an expert
Next up to give his take was Tide Founder, George Bevis. Although he’s the originator of an extremely successful venture, things haven’t always been so easy.
George began by reassuring the first-time entrepreneurs in the room that their business would almost certainly fail. Cue lots of nervous laughs.
Business ventures rarely happen upon the same luck that Tide has. In fact, eight or nine out of ten early-stage companies are headed straight for failure. But that’s OK. And it’s what you learn from your failures that’s the real kicker.
George took us through the pinnacle of his failing career — his previous venture, SpeedSell, a buying and selling platform for second-hand goods. Although the proposition made sense, it was executed and marketed well and he did a sound job of managing the whole thing, ultimately its margins were so small that they were struggling to stay afloat.
“Everyone could see the whole thing was a disaster, except me,” George could now laugh about.
But it actually came pretty close to hitting the big time. Just before calling quits on the whole thing, SpeedSell had a contract lined up with Argos that would have given it a much bigger platform on which to play.
Ultimately, they couldn’t raise the funds needed to get through a final trial phase and so lost out on their last lifeline.
If there was one thing to take away from the evening, George insisted, it was the basic principle that the lifetime value of your customers must be at least three times your cost to acquire them. And that’s where SpeedSell went very wrong.
What did failure feel like for George? In many ways, he said, it felt almost like a relief when it finally happened.
He had spent so long trying to run an operationally complicated business, and lost most of his money in the process, that when failure inevitably came, he felt thankful that he didn’t have to struggle on anymore.
“I could take a holiday, get a job somewhere else, earn some money and do the things that keep you sane.”
He also echoed Richard’s earlier remark that failure is incredibly personal. As an entrepreneur, you’re guaranteed to take the hardest hit out of everyone — over your employees, your investors and your customers.
Mistakes you won’t make twice
So what did he learn? George drew on three key points:
Unit economics — in particular, the all-important lifetime value to cost to acquire ratio discussed above.
Management inertia — not putting your head in the sand and being bold enough to make changes.
Insufficient paranoia — why won't customers like this? Is this a good hire? Will this partnership work out? Always asking the hard questions and wanting to know where things might go wrong.
And for those who were failing, George had some powerful advice — “be honest and be honourable.”
Nobody wants to fail, but when you do, it’s important that you look out for those who are affected by the failure, too. Namely, your employees. Make sure you pay them and, if you can, help them to find their next role.
And be honest with your investors — you shouldn’t harbour any guilt about what’s happened. After all, they know the risk they’re taking.
George stuck by his principle of being honourable in his failure so much so that nearly of the investors in Tide knew him during his SpeedSell days and still decided to take a bet on him.
“Failure is one thing, but keeping your reputation when you fail is another. Always do the right thing.”
A huge thanks to Richard and George for sharing some powerful insights on what still remains a taboo subject. Their openness and honesty was incredibly refreshing.
And, of course, to Instant Impact for helping us to put on such a successful event.
We hope everyone enjoyed it as much as we did and took something away from what was a great evening’s discussion!