Read through the How-I-Did-It stories of this year's Inc. 5000 honorees, and one theme keeps coming up over and over. No, I don't mean the pandemic, although that certainly has affected every business, large and small, in the past 18 months.
Many of this year's Inc. 5000 honorees have shown a willingness to face up to a brutal truth, and admit that truth to their investors and employees. In story after story, their honesty is what made the difference between failure and success. It's a lesson every entrepreneur and would-be entrepreneur can learn from them.
Here are three examples of what I mean.
1. A million members, but it didn't feel right.
Four years in, Andy Ruben had built Yerdle, an online swap meet, into a site people loved. It had a million members. And yet, he knew "it just wasn't right." Brands complained about showing up in a random assortment of products, and Ruben was well aware that Yerdle needed better curation and personalization. But he also knew fixing these issues would not be enough to turn Yerdle into a real success. He believed the company needed to go in a completely different direction.
His employees disagreed. And when he told investors he thought Yerdle wasn't going to work out, they asked if he was just feeling tired. By being brutally honest with everyone involved including himself, Ruben was able to find a better direction for Yerdle, which is now called Trove. It became a service that helps big-name brands refresh returned items and prepare them for resale as used or refurbished products.
At its peak, the company had about 60 employees, but as Ruben pivoted, that dwindled to five. But today, Trove has 300 employees and revenue that's growing fast. And, as opposed to Yerdle, which just didn't feel right, Ruben says, "I have a good feeling about it."
2. "It didn't behoove us to believe our own bullshit."
Mike Vichich and his co-founder were fresh from jobs at Accenture and absolutely sure they could figure out how to make a startup succeed. First, they tried using transaction data to match people with credit cards, which he says was not viable for many reasons. In a second iteration, they tried using that same data to create bar and restaurant recommendations for consumers. Some people liked the app, but there wasn't enough interest to make it work.
The next iteration was a restaurant loyalty app. Vichich spent four months flying back and forth to New York City, trying to get restaurants and customers to sign on. This didn't work either, and the company was running out of cash.
Up till then, Vichich and his partner had been "relentless" in their belief that they could make one of their concepts work, he says. But after three failed attempts, "we had to confront the reality that it didn't behoove us to believe our own bullshit." They decided to give in and sell the company, but no one wanted to buy it.
So they tried one last iteration, a B2B customer data platform to help restaurants recognize and better serve their most regular customers. A restaurant's best customers often account for an outsize portion of its revenues, so knowing who they are and what their preferences are is highly valuable. Lo and behold, this was the iteration that worked, and the company, now called Wisely, is seeing impressive revenue growth. Vichich loves telling his story to other entrepreneurs, who often feel like they're the only ones struggling and failing. A little honesty can do a lot of good.
3. When your product just isn't you.
Jennifer Yen was a former Power Rangers actor who set out to launch a beauty line. She'd used Asian beauty secrets learned from her grandmother to counteract the effects of heavy TV makeup on her own skin, but when she started her company 12 years ago, she didn't think America was ready for Chinese-based beauty products. So she basically hid that aspect of her line, choosing the French name Purlisse (a combination of "pure" and "smooth").
It did not go well. Yen had no experience, and no large customer. She borrowed against her condo to start the company and wound up losing it in a foreclosure. But she knew consumers loved the products, and she wasn't ready to give up.
She pitched some QVC executives she'd met at a trade show. They turned her down, saying that her brand didn't quite seem authentic. "You're all about Asian beauty rituals, but Purlisse doesn't quite represent you," they said.
So Yen decided to start over. She renamed her line Yensa, which comes from the Chinese words for "color" and "face." She included the name in Chinese characters on her packaging. She used ingredients like black sesame oil and black seaweed.
After Yensa had been selling for a while, she came back around to pitch QVC again. This time, she got an eight-minute time slot. "We were the second-best selling brand for that show," she says. "Almost immediately, QVC invited us to come back." After a pause for the pandemic, she went on to appear in a prime time slot, this time selling out of product.
Yen grew up in Alabama, the only fully Asian girl she knew. She worked hard to assimilate, to not stick out as Chinese. Now, she says, "I feel like I'm making up for my childhood of not standing up for myself and my culture." Sometimes the key to success is to let your company be a true reflection of who you are.