I happened into a room for entrepreneurs on Clubhouse the other day, and the topic was dealing with failure. I’m not sure why I entered, as I don’t spend much time thinking about that. All of a sudden, I asked to be brought onstage to discuss my company failure: Best Selections.com.
In the mid-1990s, I founded a company based on the premise that people would buy high-priced items on the internet from extraordinary small stores from all over the world. I believed that if stores were housed on a single website and they paid a monthly fee for that location, along with 10% of each sale, it could be an amazing business. I was first to market with the template, and I raised three rounds of millions of dollars to launch it.
Because I was connected to some of New York City’s financial circles, I ended up asking my friends Bob Harris and Jody Owen to raise the money and launch the company. Bob was particularly successful at Bear Stearns, having launched giants like WorldCom and other startups through huge IPOs. Jody was also a banker and was Bob’s significant other. Jody and Bob loved the concept of the company, put all the documents together, and brought in financing, including a major investment of their own.
Jody decided she wanted to come in as CEO (I never wanted to run it; I was happy with my simply having conceived it), and I became chairperson of the board. I was in awe of Jody and Bob, never really thinking about my role, my concept, my vision. They stacked the board with their peeps, and I never asked for a seat for any of mine. Actually, I never asked for anything.
We shared an office in the company's loft space in the lower west side of New York City, with me on one end and Jody on the other. Day after day, month after month, I watched her surf the Web before it was even a thing, and I watched as she made decisions that disquieted me, or didn't make any decisions and just treaded water making corrections on the website. I said nothing. I sat with the feeling of sensing we were not on the right path, but overriding that feeling with my confidence in the idea that these people were really smart, and what the hell did I know.
After a third round of financing, with a grand total somewhere around $30 million, I had a conversation with Bob.
“We aren’t making our projections for sales. We are too early. Stores don’t know they need to be on the Internet, and rich women aren’t buying yet. They will, but we need to slow down our spending because we are bleeding cash.”
“Don’t worry about that. We can raise more, and every time we do, our valuation goes up. Just spend the money and increase the number of stores signing up. This isn’t your problem.”
So I sat on the other side of the room from Jody, feeling like we were going nowhere. I can’t recall how it all came to a head, but there I was, presenting to the board my point of view about scaling back spending and waiting out the necessary time for consumers to catch up to my vision of the future. Then Bob spoke up, and I’m sure you will not be surprised when I tell you the board voted me out and them in. That was in the spring of 1999.
When I stepped down, the foundation for success was there. Strong luxury brands, unique and coveted, were part of the site and paying very little to have their 'store' on the web. HRH Princess Michael of Kent (rent a Kent as I called her) made introductions to brands in England, and we had leather boutiques from Italy, and galleries from Aspen, and pink and green clothing from Palm Beach. We could have survived and thrived if we'd slowed the burn rate (most of which was going to advertising), and continued to grow the foundation of small, reputable boutiques as part of our Best Selections family and waited the 'too early to market' position we were in.
I walked away, having lost the bulk of my investment, which I will admit was also my net worth. I went back to my marketing company, and just over one year later, the dot-com bubble burst in June of 2000, just as I’d predicted it would, and Best Selections was gone. The founders of Duane Reade were on the board and also major investors. After the company closed, one of the sons who had been at the board meeting reached out to me and apologized. He said that he and his father thought I’d made sense, but they’d chosen to go with the experience and reputation of Bob’s acumen in the arena.
I have spoken before about Best Selections, and in speeches or meetings with clients, when I had an anecdote that was relevant, I referenced the lessons I learned. However, until I walked into the room on Clubhouse yesterday, I’d never thought about the “failure” of the experience; I just stepped up and tried to build something. I have started and closed a number of “ideas” since, but nothing like Best Selections in terms of raising money and getting so very close to the brass ring.
So I tried to articulate in the Clubhouse room (they kept me up there and asked a lot of questions) my feeling that focusing on our failures is not the way to approach the ebb and flow of our entrepreneurial lives. Perhaps I was inarticulate, as I really don’t consider my experience with Best Selections .com a failure, but there was one thing I knew for sure. While many of the speakers talked at length about focusing on taking time to cement the lessons learned so as not to make them again, and owning their mistakes, I consider this to be a waste of time.
Look, if I’d embezzled money and that’s why Best Selections had failed, or I’d been lazy and prideful in my approach to leading the company, then maybe I would have gone into the fetal position. I suppose I believe that while the company failed, and some of my errors in judgment contributed to that failure, it wasn’t my fault. So I just moved on. Having not really spent much time pondering the entire event before now, I can say, “Wow, look what you did. Look at your vision and how you were ahead of your time and how you saw what turned out to surprise others more experienced than you in the arena in which you were competing.” What it gives me is a jolt of confidence in some new things I’m crafting that I am someone who has vision and is able to build. Onward!
Here are some lessons I learned from my 'failure':
· Never give up control of a company you started. Sometimes that is not possible, but pay attention to where the votes lie at the board level.
· Make sure you have the right to put your own people on the board.
· Do not go along with appointing board members solely because of their incredible credentials if what they are presenting doesn’t pass the test of questions you have in your head.
· Boards of directors matter, so do not fill them without thoughtful analysis to ensure independent voting and personalities that lend themselves to strong discourse.
· If you are going to try to make a change at board level, speak individually to each board member before the meeting.
· Don’t leave on principle to make a point; set up a deal for yourself as well.
Download the PDF below to read Women Wear Daily's piece about Christine's consulting role with BestSelections .com.