I Failed

My backyard game, The Plunge, failed.?

Here's the story of why I'm closing the business & what I learned:?

I was interviewing one of my clients for my ghostwriting agency this week & he said something fascinating.

I asked him "What are the best decisions you've made in your career?"

His first answer: picking my cofounders.

His second answer: deciding to close down my last business.

This is someone who has built 2, mid 8-figure businesses by the age of 35.

And it makes perfect sense.

By taking the L it gave him the time to dedicate to an idea that could become huge.

This reminded me that a few of my favorite, most informative startup experiences have been studying the failures of entrepreneurs, not the successes.

I remember going to an event called Startup Graveyard, where failed founders would give Ted-style presentations about why their business failed and the lessons they learned.

There are other great resources with failed startup case studies:

1)? Failory

?2) 452 startup post-mortems by? CB Insights

?

But beyond these valuable, abstractable lessons that any founder can take from the stories of failed businesses, I think there's an even larger benefit.

And that's the unfiltered story of entrepreneurship.

I believe there's so much revisionist history around entrepreneurship.

We celebrate the successes, but never stop to recognize all of the failures that preceded the first big win.

And that's super dangerous imo.

It creates a lack of security around learning, pivoting, and trying again.

Imagine the pressure it creates for aspiring entrepreneurs who think they need to hit a home run their first at bat.

It's such a daunting idea, that many, potentially great founders never go for it because they can't stomach the idea of failure.

So I commend those that are willing to share the entire entrepreneurial experience, not just the Instagram version.

And to pay it forward, I want to share my experience talking through the failure of my backyard game business: The Plunge.

A quick refresher: The Plunge is a backyard version of axe-throwing where you throw plungers at a glossy board and get them to stick to earn points.

I was excited about this business for a few reasons:

1) It felt like pure play.?

I loved building the business, I loved creating a physical product, and I loved creating a product that could disconnect people from technology.

2) I thought it was a game that could naturally go viral.?

I saw an opportunity to create? Dude Perfect -style trick shot content & use that content as organic marketing to sell the game

3) I thought that this game could draft off increased demand that axe-throwing has seen over the last 3-5 years

But here's the reality of the situation:

? I spent $37,000 on the game

? We have a finished product

? We played the game with 100+ people and hosted 10+ events

We got to a natural go/no decision for the game.

If we said go, we'd launch on kickstarter start taking pre-orders, and if we hit our funding goal we'd start fulfilling orders.

If we said no-go, we'd pivot the product, pivot the launch strategy, or throw in the towel.

Here's how I thought about it.

To say "go," I wanted to feel exceptional about the product.

I wanted to feel like customers were obsessed so much so they'd lose track of time.

But instead i felt so-so about the product.

I think it's a well-made product & I enjoy it but i didn't feel that addiction from our potential customers.

Random side note: the most addicted audience we found were actually little kids who loved the suction.

And my fear was if we pushed forward not feeling exceptional, the worst case scenario would set me back significantly more money.

Here's the worst-case scenario:

We launch on Kickstarter.

We sell $250,000 worth of Plunge sets (2,500 sets).

People are dissatisfied with the game because they find it too difficult (which is a piece of feedback we've gotten from several people) and the customer asks to return it.

We then have to take returns which means we refund their money, we pay for their shipping, and then we have to pay to warehouse all of these games that we have to figure out what to do with it.

So I was left with a few options:

Option A: push forward

my worst case scenario is what i just described and i'm 6-figures in the hole.

and my best case scenario is little profit on the first production run (maybe $25-50k) and a clear indication of demand to moving forward.

Option B: try licensing the game to someone else.

How it works??

You get something like 3-5% of net revenue as a check in the mail for however long the licensor (Mattel, Hasbro, Nerf) sell it.

The best-case scenario is the game blows up. Let's say a million sets sell and there's $20 of margin per game, that's $1m in licensee fees I can get.

That sounds amazing, but this assumes you have a top 5 backyard game of all-time and a toy company agrees to license.?

The downside is all of the time spent pitching toy companies for more likely a more modest royalty amount.

Option C: go back to the drawing board

Create another suction-based game that is easier and more resembles an analog game that's already out there like bocce or cornhole.

I think this could be a really interesting opportunity because it's a game-style that already has PMF and you can make the game smaller and lighter since you're not throwing a plunger 35 miles per hour, so the economics get better.

But if you go this route you have to be down to spend probably another $10,000 on R&D, bringing my costs to $47,000.

Option D: hang up the plunger

I spent the last few weeks thinking about it and I made the decision to go with option D.

I made this decision both in a vacuum and also based on the opportunity cost of my time & money.

The risk-reward just didn't make sense.

For The Plunge to be a meaningful business (8-figures in revenue w/ healthy margins), one of 2 things would have to happen.

1) we'd have to sell something like 200,000 units per year which is a shit ton

2) we'd have to launch a backyard game holdco with many other games.

To create that size of a business would probably take 5-7 years.

I also looked at this through the lens of opportunity cost.

I asked myself: What is the best allocation of my next $50k and 500 hours of time and is it The Plunge?

The short answer is no.

As many of you know i'm in the process of spinning up an executive ghostwriting agency (storyarb) and I believe the path to $10,000,000 and an even bigger vision beyond that is way clearer.

It's a business that leans into my unique abilities around content strategy & building audience.

It's b2b which i generally think are easier businesses than b2c.?

And it's a business that you can get cash-flowing day 1 versus putting a lot of capital up front into R&D and product.

So taking a loss and hanging up the plunger is what i perceive to be the right decision.

But it's not an easy decision.

But maybe not for reasons you may expect:

The most obvious reason that people are afraid to fail is because they're worried what others think.

They fear that they'll be considered bad entrepreneurs.

They worry that it'll be harder for them to build a business in the future.

They worry that they've lost to all of the haters that said their business would never work.

That's actually not at all what makes this a tough decision.?

I find it tough for a few reasons:

1) It's the death of a vision.

When an entrepreneur starts a business they have this image of the world today and how the world in the future will look different and better with their product in it.?

That's what gives many entrepreneurs so much firepower to keep building despite the pain & setbacks.?

By officially bringing The Plunge to a close, i'm accepting that the vision won't be realized.

2) It's the death of a partnership.

One of the reasons, I love building businesses is being able to work hand in hand with other smart, motivated people.?

For The Plunge I've had an awesome partner, who was equally as motivated to make this thing happen. There's something so special about problem solving & collaborating every day with someone on a business.?

Ending the Plunge is ending the daily conversations with my partner that made this experience so rich.

2) It makes it very easy to be self-critical and have self-doubt.?

By throwing in the towel, I can't help but question my abilities.

Did you jump into an opportunity too fast??

Are you too reactive of a person??

Are you taking the easy way out??

Is this just a challenge that you would have pushed through with Morning Brew and now because you're less motivated and softer you're not willing to?

Is your fear of spending money preventing you from seeing this opportunity through?

These are just a few of the many questions that have gone through my brain as I've made this decision.

But all in all i'm feeling resolute about things.

I understand that The Plunge failed because:

- It didn't leverage my uniques

- Trying to create new consumer behaviors is very hard - The cost to possibly find PMF was greater than the cost i was willing to sink into the business

But that's okay.

I've learned from the experience, I really enjoyed getting to build with someone else, and i'm excited about hopping back on the horse and continuing to build.