Un-Entrepreneurship

Two great ideas undone by the one thing that’s not on a balance sheet—ego.

Yes, I know I just made up a word. It’s the best way I can define the two individuals below.

An entrepreneur comes up with a good-to-great idea and executes the idea with passion and determination. But that’s not all. Behind the Oz curtain, there needs to be a trusted team doing the day-in, day-out work to make the vision a reality.

The following two un-entrepreneurs each had great ideas, worked hard, and had passion. But they completely fell on the sword of their large egos, losing not only their companies but also the millions of dollars they had raised from people who believed in their vision.

I was one of them.

But it wasn’t without trying. Not only did I invest, but I also rolled up my sleeves and helped—or at least tried to.

Do you want to start a new venture? Do you have a good-to-great idea? Here are two examples of what not to do.

Case #1: Wingtip
I’ll spare you the founder’s name. It’s my way of giving him an “E” for effort. Let’s call him Will. His vision was to create a private club, with a retail men’s store attached or adjacent. The genius of his initial idea was this: the club would charge monthly dues, which would be applied toward purchases at the Wingtip men’s store.

Simple enough. At the heart of the genius was the knowledge that men hate to shop for clothing, and they shop as seldom as possible. But if you put money in their pocket—even if it’s their own money—hold their hand and walk them into the store, they’ll end up shopping. And more often than not, they’ll end up spending more than the money in their dues account. And they’ll end up coming back, not necessarily because they liked the experience, but because they passed by or through the store on the way to the club.

This fundamental understanding of men’s attitude toward apparel shopping was familiar to me. It’s how Men’s Wearhouse (MW) made its bones.

The social club, while not necessarily only open to men, was geared toward them. Besides the men’s store downstairs, the upstairs club had a bar, restaurant, billiards room, cigar room, outdoor lounge, and a wine cave for members to store their collections. Will was able to raise several million dollars from investors who could envision Wingtips in major cities across the country.

But behind the curtain, there was…well, nothing. Will loved the club, but hated the store. I begged him to find a retail person to operate the store, but I was consistently told, “I can’t afford it.”

He had exquisite taste and believed the club's members did, as well. Adding up the cost difference between the real and the knockoff of everything in the club—from carpeting to toilet paper holders—added up fast. The company couldn’t sustain these over-the-top, unnecessary purchases.

At one point, Will reached out to three members of the Board to inform us he needed an infusion of capital to keep the business afloat. We asked for a strategy session with him. Over two days, we sat and listened to his ideas for the company and reviewed the financial information. And over the course of two days, we made many suggestions. And not some, not many, but every single suggestion we made was rejected by Will.

At this point, I realized it was only a matter of time before Wingtip collapsed under the weight of the ego of its founder, which it did less than a year later.

CASE #2: Trumaker
In the early 00’s, “custom” became popular in suits, sport coats, slacks, and shirts. Several companies, from Nordstrom to MW, tried it successfully, and each had its own slant. Trumaker’s was to send an “outfitter” to the customer, who would measure you, show fabric samples, and, of course, take an order.

A friend of mine who had a small VC firm and was an investor in Trumaker asked me to try out the product and give feedback. I was impressed and soon met Paul, the Founder (not his real name, again). Paul articulated his vision for Trumaker as being “quality, but not over-the-top priced custom apparel.” Decent vision.

But behind his curtain, there were way too many Totos. I didn’t think much of it then, because I was only a customer who had bought a few shirts. But a few years later, I was asked by another VC firm that had a multi-million-dollar investment in Trumaker to come in and help out.

I had no idea what I was walking into.

Their execution at all levels was a disaster. To wit:

• There was no shortage of talented, expensive personnel. A few days after starting, I sat in on a weekly all-hands meeting run by an MBA and a former management consultant. I walked out of the meeting thinking I probably wasn’t up for the job; I had no idea what Mr. MBA had presented. Fortunately, my VC/friend was also at the meeting and said to me, “What the f&*k was that?” A relief for me, but not promising for Trumaker.

• The brand “Trumaker” was supposed to stand for custom-made. They had a warehouse full of sweaters and khaki slacks. In the biz, we call that “ready-to-wear” (RTW). When I asked Paul if RTW was consistent with the brand, I couldn’t get a reasonable explanation.

• The outfitters were in a dozen cities…with little supervision. These people (mostly women—go figure) who were getting leads from the website were also asked to find customers on their own, with minimal guidance. And asking women to go into a man’s home or office to be measured for apparel? What could go wrong? Ugh.

There’s much more, but you get the picture.

What was similar about these two failed ventures?

Focus. Once you decide what you’re going to do, you have to commit to the strategy. At Men’s Wearhouse (MW), we were constantly getting suggestions from otherwise well-meaning employees on what else we should offer in our stores. Most often, they fell into what I called the “snow tire” category. Could MW sell snow tires in its stores? Maybe. But the more important question was: Is it consistent with the brand and the brand promise? Which was to have men like the way they looked. So when ideas like offering gifts to women or even life insurance (real suggestions) came across my desk, I had to say no.

Ego. Once you have your idea and vision, you have to let go and find people you can trust to make it happen. To this day, I know senior management at MW would have been successful in any retail venture—even snow tires. We were that good.

Loving your employees. More than once, Will told the Board he hated the retail apparel side of the business and the employees made him batty. And more than once, I cringed hearing this, knowing Wingtip club members and the street traffic coming into the store weren’t going to buy clothing from unmotivated clerks. At Trumaker, Will relied too heavily on the pedigree, not the person, in his hiring. And by relying on the pedigree, he didn’t do enough managing of the many managers.

Your customer is not you. Yes, a founder has the privilege of inserting personal taste into a venture—it’s part of the fun. But real vision means deciding, clearly and early, who the customer actually is. These two ideas have to go hand in hand, not compete with each other.

What can you, as an entrepreneur or an investor in a company, take away from these examples? It comes down to one word—people. If you’re going to start a venture, invest in the best people. If you’re going to invest in a venture, take a long look at the founder and their team. A great idea rarely survives a poor leader.

TL;DR: Two smart concepts. Real money behind them. Talented people in the room. What killed them wasn’t competition or timing. It was founders who wouldn’t listen, couldn’t focus, and didn’t know how to get out of their own way.

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