[Tel Aviv, ISRAEL] Don’t let failure get you down, even when the
money’s gone, the Nasdaq is plummeting and you have to fire everyone, said
speakers at Wednesday’s “Learning From Failure” conference at Tel Aviv
University. Just get back on the horse.
“Even though the title of this is ‘learning from failure,’ this doesn’t imply that it
is necessary to fail before you succeed, but that it is possible to succeed
after you fail,” said conference moderator Ed Mlavsky, chairman and founder
of Gemini Israel Fund. The conference was organized by the local chapter of
the MIT Enterprise Forum.
The most striking illustration of this was leadoff speaker Bob Rosenschein,
founder of Atomica (formerly GuruNet) who spoke candidly about the rise and
fall of his first company, multilingual software company Accent.
“I had no gray hair when I first went into business,” said Rosenschein, who
graduated from MIT in the late 1970s and moved to Israel in 1983. After being
present at a Microsoft demonstration of Windows in 1984, he became Israel’s
first Windows developer, unveiling the first Hebrew word processor for English
windows, Dagesh.
By 1996, after an initial public offering on Nasdaq, Accent, which branched
out from Hebrew to multilingual word processing, had 155 employees and the
stock price was shooting skywards.
However, despite much media hype, a Prime Minister’s Award and a request
from Microsoft to help with support for Hebrew and Arabic, Accent’s business
model failed.
“It seemed so exciting, but what was wrong with the picture?” said
Rosenschein. This was the time Netscape was released – for free.
“We were selling software in an Internet age. It didn’t work,” he said.
The end came in 1998. The boxes weren’t moving off the shelves, a planned
secondary public offering was canceled and the stock price began to sink.
The Israel office doors were permanently closed in November 1998.
“It was a bloodbath, carnage. It is hard for me to talk about it. It was very
painful,” said Rosenschein.
However, he emerged to establish a second startup, Atomica, which, thanks
to (free) advice from Mirabilis/ICQ founder Yossi Vardi, put a new spin on one
of Accent’s technologies.
In June 2000, Atomica completed a $28.5 million round of financing. The
company has hired 45 people in the last six months and is “still growing,
carefully,” said Rosenschein.
“The conclusion is very simple,” he said. “Embrace change. Business is
tough but you have to be optimistic. Don’t make old mistakes, make new
ones.”
David Teten, an American in his late 20’s with an MBA from Harvard Business
School, learned different lessons.
His startup, GoldNames, an “investment bank” for trading domain names,
rose and fell in the space of nine months but is still operating with 1 1/2
employees. Five startups have been formed by former GoldNames staffers,
Teten told the conference.
“We had 34 angel investors,” he said. “The problem with angels is that they
were ‘spray and pray’ investors.'” Had GoldNames raised the $2.25 million
from “one or two committed investors who really cared, they would have paid
more attention to us.”
Teten also had a few words to say about the hiring process. Apart from his
intention to be less impressed by glowing resumes and to check references
more carefully, Teten has decided that next time, he will “pay people with the
future an
d not with the present,” he said.
“I would have preferred to have offered employees lower salaries and high
options,” he said. If they join you for the options it means they believe in the
company.”
Teten, who said his company operated in stealth mode for too long, said that
the experience was his “second MBA.” One lesson he learned was the danger
of overconfidence.
“I think GoldNames, our vision, made sense, but it wasn’t as big as we made
the company out to be,” he said. “Today we are at a more logical structure for
the company. We are hopeful that we will be able to pay back our seed
investors.”
The four-hour Learning From Failure conference, held in Tel Aviv University’s
Business School, attracted approximately 100 people, including those who are
currently employed in the industry and business school students with an eye
to the future.
While the conference’s subject matter is highly relevant to all industry sectors
in Israel and abroad as the dot-bombing continues, during the 45-minute
networking break in the middle, failure was not the topic of conversation. For
the most part, conference participants enthused about their own startups,
preferring to live in hope that failure is what happens to the other guy.
