An entrepreneur’s journey: Failure and resilience

  • Owner Laile Fairbairn at the counter of Snow City Cafe. (Photo/Courtesy/Oscar Avellaneda-Cruz)
  • Andre Horton, a former pro skier and current firefighter in Anchorage, surrounded by photography equipment at his studio. (Photo/Courtesy/University of Alaska Anchorage Center for Economic Development)
  • Bill Popp stands in his office at the Anchorage Economic Development Corp. holding a framed story about his businesses, Toonz, that went from success to bankruptcy in a few short years during the 1990s. (Photo/Courtesy/AEDC)

Editor’s note: The following includes excerpts from the University of Alaska Center for Economic Development’s The Failure // Resilience Project brief, which explores elements of entrepreneurial failure via a combination of storytelling and research. The full brief is available at ua-ced.org/reports-and-projects. A companion film featuring 10 Alaskan entrepreneurs sharing their stories of failure and resilience will be shown at the Bear Tooth Theater as part of the One Course Discourse series on April 17 at 12 p.m., followed by a Q&A session with entrepreneurs.

Bill Popp had a stable job at Safeway and was on the management track. If he stayed the course, he was well-positioned to climb the company rungs—except he didn’t want to. He wanted to stay in Soldotna and own a music store.

After consulting with his wife (who also worked at Safeway) in October of 1990, Popp cashed out his 401(k), applied for and received an SBA-secured loan, and opened Toonz: an 800 square-foot music retail store with two employees.

Success happened fast.

“We hit a nerve with consumers, and blew out our inventory that first Christmas season. There wasn’t a piece of music left on the shelf after New Year’s Eve. We definitely found a market need that wasn’t being met until we came along,” Popp says.

Within three years, Toonz had grown to nearly six times the size of the original store, filled with music and books in Soldotna. Popp opened an 1,800 square-foot location in Homer, and between both stores, he employed 23 people.

In 1992, Popp was named the Soldotna Chamber of Commerce Small Businessperson of the Year and received a legislative citation for his work and philanthropy. Gross sales exceeded $1.1 million three years later.

“I was the Toonz guy,” says Popp. “The guy people went to for community contributions, the go-to music and books guy. It was happening.”

Then, it wasn’t.

Caught in a price war between box chain stores, Toonz was out of business by the end of 1996. In retrospect, it ended quickly, but Bill remembers it as a long and painful descent.

“We tried every marketing tactic, everything,” Popp says. “It staved off the inevitable but the sales volume kept going down and I didn’t recognize the truth in front of me. I kept thinking, ‘Tomorrow is another day, customers will see our value…’ but they didn’t.”

After closing, Popp made his final payroll and paid his taxes, but had to break his lease, resulting in filing for personal bankruptcy. He helped the banks liquidate his business and sell the assets, and was able to restructure debts to keep his home.

“It was crushing, and I was damn near clinically depressed. I invested every part of my being into the business, poured my blood, sweat, tears and passion into it. Toonz was inextricably intertwined with who I was,” Popp says. “And then after we went out of business I felt about two inches tall. I didn’t want to go out in public or see friends.”

Life went on, and Popp returned to work — this time for Fred Meyer.

“I may have failed in business but there’s no shame in honest work and I needed to do my part with my wife to take care of our family,” he says.

Working at the grocery store gave him a steady income and time to grieve his business closure until he finally made peace with it.

“I embraced the fact that I had just failed spectacularly, owned it, and wasn’t ashamed of it any more.”

Popp’s story is not unique; in fact, research shows that half of businesses fail during the first five years.

Alaska Business Failure Rates

27% of new businesses fail during the first year of being open

35% during the first two years

42% during the first three years

47% during the first four years

52% during the first five years.

Source: Business Dynamics Statistics, CED calculations

Businesses close for a number of reasons. CB Insights analyzed 101 startup failures and identified the top 20 reasons startups fail.

The Top 20 Reasons Startups Fail

42%: No market need

23%: Ran out of cash

23%: Not the right team

19%: Get outcompetes

18%: Pricing/cost issues

17%: Poor product

17%: Need/lack business model

14%: Poor marketing

14%: Ignore customers

13%: Product mis-timed

13%: Lose focus

13%: Disharmony of team/investors

10%: Pivot gone bad

9%: Lack of passion

9%: Bad location

8%: No financing/investor interest

8%: Legal challenges

8%: Don’t use network/advisors

8%: Burn out

7%: Failure to pivot

Source: CB Insights

A pivotal point

Failure is a pivotal point in an entrepreneur’s journey. Their response to failure — and their experiences immediately following failure — will influence whether or not and how they pursue new ventures, as well as impacting the success of those ventures.

Studies show that “[I]f the costs of failure (i.e., financial, social, and psychological) are too high compared to the benefits of learning from failure, entrepreneurs may choose to exit their entrepreneurial careers.”

Other entrepreneurs take failure in stride, applying the lessons they learned to their next startup, or funding a way to pivot in pursuit of their dream.

Anchorage restaurateur Laile Fairbairn vividly remembers the disappointment she felt when she narrowly missed out on securing a location on G Street in Downtown Anchorage for her first restaurant, Snow City Cafe.

“I was crushed… I had to walk away from that space and I was convinced that it was over, that was it. I still remember walking across the street with my attorney and crying. He had to stop in the middle and give me a hug, then Mom came over that night to give me a hug, friends were reaching out to commiserate. My dream was dead at that point. It felt like it was time to move on, this is not going to work out.”

But instead of giving up, Fairbairn took some time to readjust her vision and eventually opened her restaurant at Fourth Avenue and L Street.

Today, it seems almost laughable to think of Snow City and failure in the same sentence. After all, the restaurant has been voted “Best Breakfast” by Anchorage Press readers since 2003 and Anchorage Daily News readers since 2006.

The line to dine regularly stretches out the door, and even President Obama stopped by for cinnamon rolls when he was in town. And yet, if Fairbairn’s response to that first failure had been to give up, Snow City wouldn’t exist today.

Since then, Fairbairn has continuing expanding to open other restaurants, including Spenard Roadhouse and South Restaurant and Coffeehouse. Most recently, she became part owner of Crush…located in the very spot on G Street she missed out on all those years ago.

Learned optimism

According to research, serial and portfolio entrepreneurs are less emotionally attached to their businesses, and posses an adjusted optimism bias and with more resistance to psychological costs.

A former professional athlete, Andre Horton says that though he dealt with failure every day, each time was an opportunity to learn what to do better. The experience helped him develop “learned optimism.” Entrepreneurs displaying this trait are more likely to make sense of failure as a useful experience, motivating them to engage in future entrepreneurial activity and to see adversity as a challenge.

According to Horton, “Ski racing can be a gamble, but winning the race is worth it. The irony is that I lost more races than I won. I have also failed at business more than I have won. Then again, in athletics, losing just makes you a better winner…the same goes for business. They key is that the athletic ‘losers’ have to be optimistic to keep trying, as eventually they will win. Same for business.”

Horton has launched six businesses to date, with two still operational: Haka LLC a bespoke business consulting (and sometimes lobbying) agency and Andre Horton Photography. He also is currently a firefighter for the Anchorage Fire Department.

Using lessons learned to help others

As for Popp, he eventually moved on to a job developing the Challenger Learning Center of Alaska, served as a Kenai Peninsula Borough Assembly member from 1996 to 2002, and later worked as the oil, gas and mining liaison to the KPB Mayor.

Today, he is the president and CEO of the Anchorage Economic Development Corp., where elected leaders and members of the media often seek his opinions on issues about the economy and business community.

Popp says his experience as a business owner — from the high of rapid growth to the low of bankruptcy — informs his work as an economic developer. He takes pride in offering businesses the kind of impartial counsel he could have used back in the ‘90s, providing data, perspective, and advice on possible paths to pursue to local entrepreneurs.

Gretchen Fauske is a marketing-minded economic developer fueled by a passion for entrepreneurship, innovation, and small business. She is the associate director for the University of Alaska Center for Economic Development, Board President for Launch Alaska, and a Gallup-certified CliftonStrengths coach.

Updated: 
02/13/2020 - 1:59pm

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