In July 2013, TU Delft alumnus Jan van Kranendonk and his business partner Thomas de Leeuw decided to discontinue their start-up company Sunuru. The reason was that customers were not interested in their ingenious solar project. Van Kranendonk spoke about his failure during the Failcon event in Amsterdam, which is modelled after similar events in Silicon Valley. ‘Having your own company looks good on your CV.’
Why did you want to talk about your own failure at Failcon?
‘Failcon is relatively important in Silicon Valley. The people there are more conscious of the type of company that a start-up actually is. As Jasper van Kuijk (assistant professor at TU Delft and comedian – ed.) once said: “Innovation is a fashionable term for something that often does not work”. In the Netherlands, we are not yet sufficiently aware that failure goes with the territory. We’d obviously like to avoid it, but I take comfort in the notion that there’s life after death. I have never received as many job offers as I did during the two weeks after we pulled the plug on Sunuru. Having your own company looks good on your CV. Moreover, failure taught me quite a bit about how a start-up works.’
What went wrong?
‘As true engineers – we are both mechanical engineers – we designed a product containing tons of innovation. We did this in six months, and with €100,000. Our product had an attractive appearance and it was remarkably innovative. Our costs were low because we had used very little material. As an engineer, you tend to think, “This product is perfect. We’ll just bring it to the market, and we’re done”. Subsidy agencies and investors in the Netherlands were enthusiastic. We were too, of course. We wanted a scalable product, something that could become really big. After six months, therefore, we went to California, one of the world’s largest solar-energy markets. We proudly presented our product to prospective customers. Their reaction? “See ya!” Only then did we realise that customers don’t simply consider the costs. They are concerned about the risks as well. And they considered the risks too great. In order to reduce the risks, we eliminated many of the innovations from our product. This increased the cost, however, and this in a market where solar were getting cheaper quickly. We discovered that we were unable to be cost-competitive.’
That must have hurt.
‘Absolutely. Another speaker at Failcon said, “Failure is a gradual process through which you slowly come to realise that your idea is bad”. We pulled the plug after 18 months of hard work and €300,000 in investments. The most difficult time for me was during the two months before this decision. Deep down, you know that things are not going well, but you are afraid to acknowledge it. You become tired, moody and ill. Then we sat down together, and we both reached the same conclusion. It became obvious that it could never have been successful. I’m glad that we realised this relatively quickly. We did not want to become a zombie start-up. So many people just keep plugging away, wasting a lot of energy, emotions and government subsidies. Subsidies would have kept us going for years in a Dutch design niche, but that had nothing to do with manufacturing a scalable product. We were able to avoid bank-
ruptcy and burnout. If you fail, fail fast.’
Do you have any other tips for TU Delft engineers who would like to become entrepreneurs?
‘Participate in the YesDelft LaunchLab. It teaches all about entrepreneurship and provides concrete information about the methods you should use in order to become successful. We didn’t start working on customer development until after we had completed our product. In the United States, we realised that customers are concerned about entirely different things than we were. For example, they have to estimate risks. No matter how hard you work to develop a product, if it’s the wrong product, it’s a waste of energy. Designing the product is only 20% of the work that an entrepreneur must do. I regard entrepreneurship as a science. You have a hypothesis. If it’s negative, you make a note of it: nobody is interested in this product. Many students would like to build and sell the next 3D printer, drone or app. You can use these ideas to participate in the LaunchLab, but you should not think of the gadgets as your ultimate goal. Look around to see what is needed in the industry, and act on that. There are opportunities waiting to be found by entrepreneurial engineers.’
How can they find these opportunities?
‘Together with my partner, I went to observe companies, including Nova Terminals, which was previously Argos. We looked around to see what they needed. We are now developing a product and a new company, but it’s still under the radar.’
Does a failed company look good on your CV?
‘At first, I was a bit surprised that Nova Terminals was glad to have us and that they were willing to pay for our visit. Yet having your own company does look good on your CV. It attests to your entrepreneurial spirit. We have a good explanation for why our company didn’t make it. This has led to a different manner of working. We have stopped focusing on technology push and turned our attention towards market pull. Our experience with Sunuru taught us that the first strategy can be very risky. The second strategy makes it possible to validate your innovation quickly, almost like a scientific experiment. Companies are willing to pay for this, because they have neither the time nor the fresh perspective that it requires.’
Haven’t you ever thought, ‘I think I’ll take a regular job after all’?
‘That’s not an option for me; I’m not cut out for that. I’m curious and stubborn, and I like to work outside my comfort zone. I’m not in business for the money. I think that is the case for most entrepreneurs. You want to have the greatest possible impact, and sometimes you can fall flat on your face. That’s no fun, but if you know that it goes with the territory, you’ll be less afraid to decide to pull the plug. In the Netherlands, if we could learn to accept such failure, we would be able to innovate more quickly. In the United States, a bankruptcy is regarded as a success factor, even by financiers. This is because people who have experienced bankruptcy are much less likely to go bankrupt again. When we decided not to continue with Sunuru, we were embarrassed to approach one of the largest subsidy agencies. He told us, “Congratulations. Now you’re experienced”.’
In recent years, 139 companies have been established with guidance from YesDelft. According to figures from the TU Delft incubator, five have gone bankrupt. Of the other companies, 17 have gone out of business. Sunuru is one of them.