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Starting a business doesn’t always go so smoothly. More than 20 percent of businesses fail in their first year, with nearly 50 percent closing their doors in the first five years, according to the U.S. Bureau of Labor Statistics. And while those numbers aren’t as bad as the oft-cited myth that half of all startups close their doors in the first year, there’s still a significant chance of failure.
For some founders, the failure of a startup is a one-and-done thing. The thought of taking that sort of risk again, both financially and emotionally, is too daunting. Failure doesn’t make you persona non grata in the funding world, though. In some cases, it can be considered a good thing to venture capitalists. In fact, some of the most successful entrepreneurs in history have stumbled or flopped before, they went on to launch businesses that had a much greater degree of success.
Here’s a look at five founders who didn’t get things quite right in their first run at entrepreneurship.
Reid Hoffman
Before finding success with LinkedIn, Hoffman tried launching another sort of social media site in 1997. SocialNet was basically a Facebook/Match mashup before either of those sites existed. It was designed as a place to meet and make friends online (and, should you want, to date them). There weren’t as many people using the Internet then, though, and the technology was too rudimentary to foster those connections. It shut down in 2000—and Hoffman refunded all of the capital the company’s investors put into it. After joining the founding team atPayPal, he founded LinkedIn in 2002, eventually taking it public in 2011 before it was acquired by Microsoft for $26.2 billion in 2016.
Steve Jobs
Steve Jobs experienced failure in a way that’s much different than the other founders in this list. Apple was a hit from the start, but nine years after he co-founded the company, he was famously forced out in 1985 following a power struggle with John Scully. He went on to found NeXT, a tech company focused on workstations for higher education facilities. It flopped – and Apple bought the company in 1997 and brought Jobs back as CEO of Apple. The failures of NeXT and his ejection from Apple had given him a new perspective, though, which helped him shape the company into the $3.67 trillion powerhouse it is today.
“I didn’t see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me,” Jobs told graduates at Stanford University in 2005. “The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.”
Bill Gates and Paul Allen
Four years before Gates and Allen launched Microsoft, the duo teamed up on another company. Traf-O-Data was meant to take the raw data from traffic counters along a state or city’s roads and automatically create reports for traffic engineers. (The duo used a computer at the University of Washington to do so.) “We ended up being okay successful, not seriously successful,” Gates later said in a 1993 interview with the Museum of American History. The State of Washington eventually offered free processing of the data for cities, which put an end to Traf-O-Data, but Allen and Gates both said the experience they gained with that company was critical when they decided to launch Microsoft.
Travis Kalanick
The third time was definitely the charm for Uber founder Kalanick. His first company, in the early 2000s, was Scour, a peer-to-peer file-sharing company. Before long, though, Scour faced a $250 billion copyright infringement suit from the entertainment industry and filed for bankruptcy. Next up was Red Swoosh, a content delivery network. That company struggled, but was eventually acquired in 2007 by Akamai Technologies. Two years later, Kalanick co-founded Uber, which revolutionized the transportation industry. Kalanick was forced out as CEO in 2017 after a series of workplace scandals revolving around a toxic work environment. These days, Kalanick is onto another venture, having acquired CloudKitchens, which provides commercial kitchen space to food delivery companies. He serves as CEO.
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Chris Morris
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