What the Beatles' early failures can teach you about staffing, timing, market research, and product development.
THE FAB FOUR: Ringo Starr, John Lennon, Paul McCartney, George Harrison in a promo photo for Sgt. Peppers Lonely Hearts Club Band, 1967.
The words "failure" and "the Beatles" seldom appear in the same sentence. But the Beatles' early career was actually a series of failures--a record that culminated in their unsuccessful audition with the leading record company of their era, Decca Records. This particular failure nearly caused the band to break up.
At the time of Decca's rebuff, the Beatles had been performing under various monikers for nearly five years. Faced with that kind of rejection, most bands would have returned to Liverpool, gone back to their run-of-the-mill day jobs, and continued to play occasional gigs. But the Beatles were not like most bands.
And you should not be like most companies. Setbacks on the path to success are inevitable. What matters is whether you allow them to build you up or tear you down. Be like the Beatles. They ignored the alleged musical experts, internalized their failures, and improved their value proposition by working their asses off.
Here are start-up lessons you can take from the Beatles' biggest setback.
Lesson #1: Know your product.
The material for the Decca audition was selected by the group's manager, Brian Epstein. Brian's musical qualifications? He curated the record section in his father's furniture store. Of the 13 songs the band played, 10 were covers of American tunes, which the Beatles sang with exaggerated American accents.
Brian's intent was to showcase the group's multi-generational appeal by drawing upon mainstream songs, including Broadway show tunes. Brian only selected three Lennon and McCartney songs for inclusion in the audition. Notably, the Beatles never released these original compositions; they didn't make the cut.
What can you take from this? Adviser input should not be unequivocally treated with reverence. You must know when to listen to your advisers and when to reject their well-meaning advice. Sure, advisers are helpful--and necessary--but they don't know everything. Do your homework.
Lesson #2: Know your audience. When band members looked back on the audition in later years, they realized they were ahead of their time. Per George Harrison, "It was unusual at that time to have a group where everybody did the singing. In those days, it was... one guy out front who sang." John's recollection was similar: "When they listened to these audition tapes, they were listening for The Shadows. So they were not listening at all."
Understand the potential investor's point of view, and don't try to change it. You'll be spinning your wheels. Instead, focus on wooing investors whose POV is aligned with your venture's value proposition. Ignore the rest. You're not going to change their minds.
Lesson #3: Gather the right team. The Beatles' ultimate lineup was incomplete at the time of their Decca audition. The affable but musically mediocre Pete Best was the drummer, rather than Ringo Starr. One of the keys to the Beatles' ultimate success was the creative tension and balance they achieved once Ringo joined the group. A start-up can likewise ill afford to compromise when establishing its core team.
Lesson #4: Timing is everything. The Beatles were simply not ready at the time of their Decca tryout. According to Paul McCartney, "Listening to the tapes, I can understand why we failed the Decca audition. We weren't that good, though there were some quite interesting and original things."
Start-ups have limited opportunities to secure key customers, investors and employees. It is very difficult (usually impossible) to recover from a bad first impression. You have to balance your desire to move fast with your actual capabilities. Get ahead of yourself and you're likely to fall flat.
Lesson #5: Know what you're getting into. Brian paid Decca £15 to record the session (equal to $42 at the time, $317 in 2013 dollars). It's unclear whether Decca's motivation was sincere or if it was an opportunity to score a small payday from an otherwise empty studio.
Your two most limited resources, time and money, must be strictly guarded. When a customer, investor, or partner makes a request, investigate. If their motives are not congruent with your goals, the opportunity should be ignored.
Lesson #6: Set expectations. Said John Lennon: "I think Decca expected us to be all polished; we were just doing a demo."
Establishing appropriate expectations among a start-up's stakeholders is imperative: Over-promising and under-delivering can be a death knell. For instance, if you deliver a prototype to a potential partner who is expecting a commercialized solution, the partnership may be irreparably damaged.
Lesson #7: Critics can be wrong. In their later years, John Lennon recounted their numerous early failed auditions, recalling, "They used to keep telling us, 'It's too much like rock and roll and that's all over now,' because they all thought rock and roll was dead, but they were wrong."
The Beatles recalled their Decca rejection with bitter satisfaction.
George: "... [Decca] signed Brian Poole and the Tremeloes instead. The head of Decca, Dick Rowe, made a canny prediction: 'Guitar groups are on the way out...'"
JOHN GREATHOUSE is a partner at Rincon Venture Partners, an early-stage VC firm. A serial entrepreneur, John led Computer Motion’s $110 million public offering, and the $236 million sale of Expertcity (creator of GoToMeeting) to Citrix. Check out his hands-on start-up advice blog at Infochachkie. Or, follow his start-up oriented Twitter feed, where he promises not to tweet about koala bears or killer burritos. @johngreathouse