Not every startup can succeed, but the lessons learned from failures are invaluable. High-quality failures can become crucial assets for future success. Today, we’ll explore essential factors for becoming a successful startup through examples like Yellow Mobile.
1. Case Study of Yellow Mobile’s Failure
Yellow Mobile once emerged as a unicorn startup but failed due to excessive expansion and inefficient management. Choi Jung-woo, the former CFO of Yellow Mobile, pointed out that the founder lacked a proper understanding of the financial situation. He emphasized that many founders have insufficient accounting knowledge.
2. The Quality of Failure and Its Relation to Success
The quality of failure is crucial for it to nourish future success. Failures due to unrealistic visions and excessive spending are not helpful for the next challenge. For instance, after becoming a unicorn, Yellow Mobile’s founder made inappropriate expenditures like buying luxury foreign cars and hosting large festivals, which did not contribute to the company’s substantial growth.
3. Importance of Accounting and Financial Management
Accounting and financial management are essential for successful startup management. Founders need to properly understand their company’s revenue and cost structure. Many startups fail to use accounting services correctly to reduce costs, leading to a lack of precise understanding of their financial status, which can result in management failures.
4. The Issue with Unicorn Aspirations
Aiming for unicorn status can cause problems for startups. Obsession with company valuation can distort the actual value of the company. Like in the case of Yellow Mobile, excessive acquisitions and expansions can hinder sustainable growth.
5. Relationship Between VCs and Startups
Venture capital (VC) plays a significant role in the success of startups. Accounting services and financial education provided by VCs help startups establish fundamental management skills. Yoon Kun-soo, the chairman of the Korea Venture Capital Association, emphasized the importance of maintaining a cooperative relationship based on mutual trust between VCs and startups.
6. Overcoming Failures
Lessons learned from high-quality failures serve as stepping stones for success in the next challenge. It is important to establish fundamental management skills and aim for substantial growth. Additionally, transparent communication and responsible management are necessary.
Conclusion
Achieving success in startups is challenging, but lessons learned from failures can help design a better future. The experience gained from high-quality failures will illuminate the path to success.
Reference: FORTUNE KOREA, “Lessons Learned from Startup Failures”