Having a big name involved in your start-up is likely to draw investor and media attention to your business, but it’s unlikely to sustain it in the long term.
That is the painful lesson being learned by US tech venture Airtime, which is reportedly struggling for users despite the backing of Napster founder Sean Parker.
Parker is a serial start-up investor, having backed fbFund, ooma, Causes, Plaxo, Yammer, Asana, Element Payment Services and Spotify, so it’s not surprising that every one of his businesses aren’t immediate hits.
However, struggling start-ups might take a sneaking piece of comfort from the fact that Parker isn’t the only heavy-hitting entrepreneur to make a very public slip-up.
Indeed, almost every leading entrepreneur can point to an error he or she made, some with nearly catastrophic consequences.
With this in mind, we’ve picked out mistakes made by five well-known business founders and what start-ups can learn from them.
For each mistake, click on the tabs below:
1. Sir Richard Branson
One entrepreneur who appears to turn everything he touches into gold is Sir Richard Branson, who has managed to turn a small record label into a sprawling, global group of household name businesses.
But in 1971, he made what he now calls “the biggest mistake of my life.” A 19-year-old Branson was running his record mail-order business when he found out that records brought into the UK intended for export were not subject to purchase tax.
“I bought the records I needed, pretended they were for export, and then sold them to British customers,” Branson blogged for the Virgin Group in 2008.
“I was caught red-handed by HM Customs & Excise and put in a cell overnight. Naturally I agreed to pay back everything and the fines imposed and avoided a criminal record.”
“It nearly killed off my entrepreneurial dreams; thankfully it didn’t. But it did teach me a hard lesson about never doing anything illegal or unethical again.”
Oh dear Richard.
How did he sort it out?
By turning it into sage advice that could be monetised in various speeches and books. But Branson says there is also a lesson here for other businesses when it comes to taking your medicine.
“One thing is certain in business – you and everyone around you will make mistakes,” he says.
“When you are pushing the boundaries, this is inevitable – and it’s important to realise this. Even when things are running well, there is always the prospect of a new reality round the corner.”
“Suddenly, all the good decisions you made last week are doing you untold damage. What on earth did you do wrong?”
“Failure usually occurs when leaders avoid the reality of business. You have to trust the people around you to learn from their mistakes. Blame and recriminations are pointless.”