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Anatomy of a Failure

Tuesday, 25th September 2007

One of the things that fascinates me is the way in which businesses fail. Having been through the process myself (more than once) of being convinced that I've got the answer only to see the adventure die a grisly death some months or years later, there is something of the fascination of watching a train wreck to it. But there's also something rather deeper to it. This from Michael Robertson on the failure of his latest business, AnywhereCD, has part of it I think:

Sadly, few press outlets covered our grand opening. Looking back I suspect there were probably many contributing factors. Maybe the price for the CD+MP3 bundle was too high? Thanks to iTunes the world thinks albums are worth $9.99 and many of the CDs on AnywhereCD were more expensive. Maybe nobody cares about CDs anymore? Clearly they are becoming less relevant as people adapt to a digital-only world. Maybe having just a fraction of the major label music made for a disappointing consumer experience? Warner Music represents roughly 20% of the major label titles -- so we were missing 80%. Maybe I didn't give the leading off-line publications enough notice to compete with the bloggers? Maybe the press is Apple-fixated? Maybe I didn't do a good job explaining the system to Warner Music who could have helped to educate a confused press? The answer is probably a combination of all these factors.
I think it's highly instructive that even as he's closing the business down he doesn't actually know why it went wrong. He knows it did go wrong, he can read his own accounts to see that, but not exactly why. That I think is the deeper lesson.

This capitalism thing, the producer of the cornucopian wealth (by any historical standard) that we all enjoy, isn't successful, I think, so much because of the rewards to those who succeed, rather, by the way in which we try out many different ideas and rapidly discard the bad ones. Not bad for any specific reason, not bad according to some set of strictures or plans, simply, "Hey, that didn't work. Let's try something else".

H/T Gary Bigmouth.