In 2007, entrepreneur Brad Keywell co-founded a company that intended to build a critical mass of online consumers and leverage their collective purchasing power with local merchants. The company, originally called The Point, was a quick failure.
“You could have called it ‘What’s the point?,’” he joked Friday, while delivering the keynote address at the University of Michigan’s “Entrepalooza,” a two-day seminar on entrepreneurship at the Ross School of Business.
Forced to retreat and reinvent the company’s business plan, he and two partners simplified the concept and re-launched as Groupon. Since then, the Chicago-based company has seen its workforce mushroom from 37 employees to 3,600 and grown from 152,000 subscribers to approximately 115 million. Forbes Magazine recently called it the fastest-growing company in history.
Per Securities and Exchange Commission regulations, Keywell could not comment on the company’s upcoming initial public offering, tentatively slated for October or November, nor its recent decision to delay the IPO due to what it termed “market volatility.” But in general remarks, he attributed the company’s position to its willingness to embrace failure.
“The surest thing you will experience in life is failure,” he said. “But talking about that is a taboo. We take classes in accounting and everything else. How much time do we spent talking about failure? Zero, usually.”
Keywell graduated from Michigan in 1991 and earned his J.D. from the university’s law school in 1993. In addition to Groupon, he has co-founded Lightbank, a venture fund that invests in disruptive technology businesses, Echo Global Logistics, a transportation management firm and MediaBank LLC., a tech firm that provides integrated tech platforms.
While noting that more than half of the companies currently among the Fortune 500 were started either in a recession or bear market, he lamented that U.S. policies and businesses were primarily concerned with risk avoidance during the most recent downturn. He believes they should instead concentrate on intelligent risk-taking.
That position left Keywell in a quandary recently. Illinois Gov. Pat Quinn asked him to serve as chairman of the state’s Innovation Council. “My reaction was that I’m happy, but I don’t know how much government can do, other than get out of the way,” he said. “Cheerlead, connect and get out of the way.”
In his closing remarks, he said current conditions make now the “best time in the history of the human race,” to start a business, noting that capital markets are more efficient, real-time data is available and technology is cheap or often free. Groupon, he noted, started on WordPress.
Since he believes failure is inevitable, he said that entrepreneurs should not view their business success as win or lose, as much as “win or learn.” He defined a three-step entrepreneurial business process as: taking risk, inevitably failing and then, hopefully, emerging stronger.
Keywell advised would-be entrepreneurs in the audience to avoid a common mistake in writing their business plans.
“Too many entrepreneurs write business plans to convince themselves how they’ll defy gravity,” he said. “The best thing you can do is have an idea and convince yourself it’s not a good idea. You’ll save yourself the aggravation. … Write down your idea and beat it up.
“Precious few (ideas) get through that process.”