How To Fail Before You Begin

Sometimes it’s best to fail before you start.

Several years ago, I had a vision: to build my own independent record label. I’d always been passionate about both music and business – what better way to combine the two?

I decided to call one of my friends – Sachin Rekhi – for advice. Sachin had co-founded a music startup and am worked at Imeem, the online music streaming site. I walked him through my whole pitch – why I’d be good at it, and how to find the best artists. After I’d finished, he asked me a simple question:

“Do the numbers work?”

“Well, I don’t know,” I replied. “I haven’t done the math yet.”

“Well I have. Let me send you a model that I made on the industry. I’ve run all kinds of assumptions, and honestly buddy, it just doesn’t work. I hate to burst your bubble, but the upside isn’t there – no matter how much you want it to be.”

I didn’t believe him. I told him, sure, send me the model – but I’ll find something that you’ve missed!

That night I opened up the spreadsheet he sent me. I read through it and started checking the assumptions. Everything seemed reasonable, but the numbers just didn’t add up. I tried some other ideas. Nothing worked.

The main problem was the profitability of the music business. Since the days of file-sharing, revenues for record labels have fallen off a cliff. Why would people pay for a song when they can get it for free? Sure, I could make a little money off concert tickets and merchandising, but that’s not going to pay for all of my expenses. This is why the major labels have been losing money year after year.

It was frustrating at the time, but looking back, it was probably a good decision. Yes, I wanted to pursue my passion. But no matter how hard you try, passion won’t overcome fundamental business problems. It was better me to learn that sooner rather than later so I could spend my energy on projects on projects that actually had a chance of working – such as this blog =).

Have you ever given up and thanked yourself later?

8 Responses to “How To Fail Before You Begin”

  1. Ett says:

    I can't count the hours I've spent trying to think up a way to make money by playing music.  Finding a good street-corner or subway stop is probably your best return on time invested, but alas no real big upside.
    The only thing I can think of is if you already have money to spend, spend it on making yourself famous and then you can sell out large venues and sell lots of merch.

  2. Good stuff Vik….as they say, "you've got to know when to hold'em, know when to fold'em"
    Sometimes, even passion can't overcome 'the numbers'.
    Nice read man.

  3. Jacob Sokol says:

    Interesting take Vik. I think there's a thin line between following your heart with a vague strategy and insanity. Thats the line i'm dancing on! Keep it coming dude…

  4. Matt says:

    I think one really important lesson here that is easily missed is the benefit of having intelligent, passionate friends and associates to bounce ideas off from.
    If you didn't have access to Sachin or his model, it likely would have taken a much longer time to fail – valuable time that you would have wasted.
    The first question he asked, "Do the numbers work?", immediately focused your attention on seeking information that would allow you to make a "go or no go" decision.
    If you want to succeed in your business endeavors, it is necessary that you have friends with this sort of wisdom.

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