Startup: Lessons from Failures

Published: 2019-09-26

From the anxious graduation season settling in Beijing to the eve of starting a business. Some accumulation of perspective and professional knowledge, together with positive feedback from my surroundings, quietly carved a proud posture in me. Amid self-admiration, an idea stirred.

As a technical person, I always felt I had a relative advantage in business. So I marched confidently into the wave of startups, determined to realize myself and work for myself. Soon, the market and reality harshly taught me a lesson. After deep blows and failure, I am now moving from disappointment toward a calm self-awareness.

When the heart is devoted to an art, the art will be mastered; when the heart is devoted to an office, the office will be performed. – Ji Xiaolan, Notes from the Yuewei Cottage

The first company I founded took the two characters “Bi Ju” (must succeed) as its name. From birth to demise, it lasted five months. I want to use a complete and profound post-mortem to commemorate this unfortunate preterm child. It is all he left me and also my deep reflection after four years of work.

During this review period, I studied Teacher Hua Shan’s interpretation of The Art of War on Dedao. I was deeply inspired, and I borrow its structure here to guide my outline.

Business model

With the formation of city clusters, some cities’ locational advantages gradually stand out. The offline service radius across cities is expanding, and as fast transport networks form, new business opportunities attached to them will arise. Riding the current interest in downmarket expansion, I sketched aoffline C2C shared knowledge service platformmodel.

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In fact, similar to online C2C platforms, we also serve both ends. The difference is that our instructors are employed staff from higher-tier cities, while the students are university students in lower-tier cities.

Instructors commute to nearby cities in their spare time to teach part-time, which meets the income growth needs of white-collar workers in higher-tier cities and brings good-quality, affordably priced offline teaching to students in lower-tier cities.

Educational resources thus flow along the high-speed rail lines. We entered through pre-employment education for college students, adopting a model of skills (internet/employment/entrepreneurship) plus professional conduct to begin initial operations.

After more than three months of preparation, we completed company registration and banking, course architecture design, the online public account and store, and the offline classroom. With a crude marketing plan, we launched into the lower-tier city I knew best — Datong. Thisis a city where challenges and opportunities coexist. Like other downmarket areas in the Beijing-Tianjin-Hebei region, the siphoning and radiating effects of core cities profoundly affect them.

Our plan was that if Datong could be made to work within a year, the model and experience could be rapidly replicated in other target cities to achieve scalable operations.

Marketing — a critical weakness

Drucker once evaluated marketing like this:

It encompasses everything the business does. From the final result, that is, from the customer’s perspective, a company has only one function: marketing. Therefore, all departments should pay attention to and be responsible for marketing.

This was my first experience of practicing a complete business. My deepest impressions were about marketing: I felt the power of new media platforms like Toutiao and WeChat on the marketing side and understood the commercial logic behind them.At the same time, I deeply realized how weak my theoretical grounding in marketing was.

Mistakes made from the start

University opens in September, and with freshmen enrollment this period is often a peak for student activity. We rode the momentum into large-scale marketing promotion. With the mindset of making the whole school aware, we collaborated with campus student organizations, placed ads on Toutiao and Douyin, and leafleted buildings. Soon, very low conversion rates dashed my market expectations.

Student organizations’ influence is limited to the freshman cohort. For general traffic platforms like Toutiao and Douyin, in regions with a limited user base and daily active users of only thirty to fifty thousand, targeted advertising costs are higher than average and yield little effect. Most students who picked up our flyers just glanced and put them down; few scanned QR codes to follow us.

The feedback I heard most from students was “professional.” After investigating, I found a deeper meaning: it implied that our offering was too sophisticated and therefore not widely appealing. They didn’t know what we did, what our courses were for, or how they could help them.

For a business like education with high decision costs, building user trust is paramount.Let them deeply understand you and clearly know what the return on their spending is. We relegated that deeper promotion to after they followed our public account. For the first task of capturing students’ attention, our effort was superficial. The name got out, but students still felt distant from us.

There is a saying that the correct order of building a brand today is: first build loyalty, then reputation, and finally awareness. We did the exact opposite and went in the wrong direction.

Marketing is not just advertising

The book Marketing: Authentic Self-Expression presents this view:

When should you run large-scale advertising? When other marketing means are ineffective and it’s hard to reach the target audience. We categorize that as 'cannot reach.'

We immediately expanded promotion to the whole school regardless of grade or major, hoping everyone would be our user. Looking back, it was naive.

Treating every student as a potential user could work if they could convert through sharing, spreading, and referrals into real users.But all that requires having a first batch of users.

So our early work lacked a clear focus on immediately convertible user groups. For us, the immediately convertible profile was clear: fourth-year students nearing graduation. Because we focused initially on programming courses, students from the computer science department were relatively easier to convert.

The correct approach should have been: first, inspire—paint an attainable, attractive picture to spark student interest. Second, provide immediate value through free talks or public classes so students quickly feel benefit. Third, sell the paid courses.Only such stepwise conversion strategies can achieve the goals of increasing trust, prompting decisions, and raising conversion.

Sun Tzu says:

If you prepare the front, the rear will be sparse; prepare the rear, the front will be sparse; prepare the left, the right will be sparse; prepare the right, the left will be sparse; if you are prepared for everything, then nothing is abundant.

If you want everything, you will get nothing. At the right time, for the right people, do the right things. Invest resources and energy at decisive points, find the strategic center of gravity, and concentrate superior forces to win a decisive battle.

Sun Tzu teaches 'know yourself and know your enemy.' In business, the first key is to understand yourself and your team; the second is to understand users and the market. We did poorly on both—let’s discuss the second first.

Not knowing the enemy

A fatal blind spot

We soon found the market was not so rosy. Rough estimates showed a city could generate 60,000 yuan in monthly revenue, 70% of which would go to instructors, leaving 30% as our service income. After deducting rent, operating staff, instructor commuting costs and other hard costs, our profit was only 11,800 yuan. This excludes hidden costs like campus marketing, course research and development, and dispersed management expenses across cities.

We thought that with stronger brand reputation, we could do knowledge self-media online and pursue lightweight multi-channel franchising offline. Even so, we lacked confidence that this would break through the low ceiling.

The small scale of a single downmarket city, the fact that pre-employment education is still in an early phase of honing excellence, and the inherently slow growth of offline services all compounded the problem.Ultimately, limited upside was our first fatal flaw.

In the first month of promotion, after seeing the schedule for next month’s courses, a partner of mine looked crestfallen. He told me frankly that he couldn’t guarantee commuting once a week for part-time teaching. First, work overtime and part-time schedules would conflict; second, for roughly an extra 5,000 yuan a month, he now felt it was too exhausting and not worth it.

If a stakeholder who both invested and held equity cannot reliably execute the course plan, it’s unreasonable to expect other employed staff to take part-time roles. This was a devastating blow to our remote part-time model.

If we couldn’t resolve instructors’ willingness to participate, our business logic would collapse, and the supposed advantages in faculty and pricing would vanish. This was our second fatal flaw.

In fact, this issue had been raised early on, but my arrogance quickly dismissed it. I used 'what I thought' to replace asking part-time instructors and gave an overly optimistic answer.

Detached from reality

Before starting, we did map out a full lean canvas. But indulging in our own fantasies, we failed to ground ourselves in the real roles and environment of the market. Sothat canvas was only a reflection of self-delusion, revealing no risks or problems and remaining superficial.

Toyota has a production philosophy calledthe 'Three Reals and Two Principles' doctrine—the three reals arethe site, the real thing, and the realityand the two principles areprinciples and rules..

The 'Three Reals and Two Principles' emphasizes that youmust go to the site,see the real thing and the reality in action, then summarize the operating principles and underlying logic. Finally, use those principles to set the rules for solving problems.

If during business design we had done this, the two fatal flaws and our marketing issues would have surfaced earlier. For example, doing two days of sales at another institution, interviewing a few familiar colleagues about their willingness to do part-time work, etc., could have minimized our operational risk.

Not knowing yourself

Personal

In terms of self-awareness, this should be the biggest gain from this failure. Cruel reality pulled me harshly out of fantasy and shattered my sense of omnipotence.

Coincidentally, the core thought of The Art of War aligns with correct self-knowledge.

Military strategy is largely defensive rather than aggressive. It doesn’t make us stronger; it makes us fully recognize our helplessness. We can control very little—this world is not under our control. What we can control is ourselves, and in fact few people can truly control themselves.

This period of practice gave me a deeper understanding of my personal boundaries and capability model.

When I stepped beyond my professional field and had to build a complete marketing strategy independently, I gradually realized a huge theoretical blind spot. When I had to do ground sales, my subconscious resistance multiplied my energy expenditure. I fell into deep self-doubt and felt powerless.

To address this, I took the MBTI career personality test and found I am INTJ. The most notable trait is independence and suitability for roles that require high execution and autonomy. So my original professional line might suit me better.

I now better understand the trade-offs between employment and entrepreneurship; the most suitable role for you is the best one. If you follow your own preference and choose to be an employee who 'does the work while others bear the risk,' remember: employees will always have grievances.

Team

On the team side, failing to form combat capability was also our problem. Our founding team had three people. Considering initial costs, I, as the initiator, committed full-time while the other two were part-time partners.

In the end, almost all execution fell to me: marketing, promotion, product, operations. From designing a header image for an article to setting marketing strategies with major platforms, writing articles, making videos, and so on. These were tasks for a team, but I did everything and ended up doing nothing well.

This relates to my professional personality, but it also exposed a problem:Our initial resolve and cohesion were insufficient; we each had better options, so it was hard to give our all.

Supplement

1. We never truly thought deeply from the user level. For example, in marketing, we naively assumed most professional students understood the current state and prospects of internet jobs. In reality, their understanding of the internet was far below our expectations. Especially in universities in downmarket areas, you must invest significant effort in user education before they will buy your courses.

2. Using WeChat—a platform with clear private-domain attributes—as the primary initial marketing battlefield was also inappropriate.

3. During this time, I discovered a method to treat stress and insomnia: reading broad-history and cosmic-perspective works lifts me from the ground to 30,000 feet, disperses attention, and helps me accept myself, granting brief peace.

Harvesting failure

The first chapter of The Art of War, 'Initial Estimations,' states:

“He who multiplies calculations wins; he who multiplies few calculations does not win—let alone one who makes no calculations.”

Use the Five Constants and Seven Considerations to evaluate the odds of success. If the chance is great, proceed; if small, retreat. Don’t hope for low-probability turnarounds. We failed because we neglected calculations beforehand. Given our limited investment and shallow involvement, recognizing the outcome in time and cutting losses would be fortunate.

Because our funds, manpower, and time all came from ourselves, after weighing opportunity cost and conducting deep self-reflection,I concluded that something might be a good thing, but it wasn’t something we could handle right now. More investment would only mean greater losses and, if unchecked, could ultimately push us into a dead end.

So, in the end, we chose to take the lesson of failure.