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How this startup failed (twice) and still found success

April 23, 2015, 11:30 AM UTC

The Leadership Insider network is an online community where the most thoughtful and influential people in business contribute answers to timely questions about careers and leadership. Today’s answer to the question “What advice would you give someone looking to start their own business?” is by Kevin Chou, co-founder and CEO of Kabam.

The company I co-founded in 2006, which ultimately became Kabam, started as a social network competing against LinkedIn. My co-founders and I launched a product called Watercooler with great enthusiasm. We confidently invited all of our friends and family to join the service. Hundreds of people in our network signed up on the first day. Sadly, one week later, no one had stuck around. Six months later the number of daily users logging into the site was in the low single digits. After working around the clock–fueled by soda and ramen–we recognized that the product we invested over 10,000 hours to build was, sadly, a dud.

We needed to make a wholesale change to our business before our funding ran out. The founding team sequestered for two weeks and came up with an entirely new business—an ad-supported sports application for Facebook. Over one million people signed up in the first 30 days and the service ultimately grew to over 60 million users with a profitable ad-supported revenue stream.

Eighteen months later, the recession of 2008 cratered our advertising revenues and forced us to change our business again or shutter the company. Again we sequestered, and this time we anticipated the popularity of free-to-play games on Facebook. In late 2009 we changed the company’s name to Kabam and launched Kingdoms of Camelot–it became the number one strategy game on Facebook. Since then we have adapted the company several more times to stay ahead of industry trends, most notably the rise of mobile gaming globally.

The key to our success has not been the laser-focused hard work—that’s table stakes. I attribute our success to something I believe all startups need: a cohesive founding team that shares common values and works fluidly together. When founders share common values, it’s easy to pass along and create a company culture. You hire people not only with the right skills but also the right values. Everyone on the team works well together and is able to adapt to adversity. You fight the market and not yourselves.

What does fighting the market look like? In my experience through all the ups and downs of creating Kabam, we never had closed-room conversations. We avoided finger pointing and we did not personally blame anyone for business missteps. Scapegoats were never made. And there was never any jockeying for power. It’s an absence of this type of behavior that results in fighting the market and not each other.

Fighting the market together resembles an orchestra. Each musician is responsible for following the same score and playing in tune. If they don’t, the music is discordant, which is unpleasing (or downright offensive) to the audience. It’s up to the conductor to set the tempo and dynamics for a harmonious sound. My two co-founders and I still face tough decisions on a daily basis. Those are inescapable. But we manage issues with confidence because, since day one, we have approached the business with a shared vision and commitment to harmonious teamwork.

Read all answers to the Leadership Insider question: What advice would you give someone looking to start their own business?

Are you resilient enough to start your own business? by Ryan Harwood, CEO of PureWow.

The most important lesson I learned as a tech CEO by Kyle Wong, CEO of Pixlee.

How to avoid a startup failure by Jim Yu, CEO and co-founder of BrightEdge.

3 things to consider before starting your own business by Sunil Rajaraman, co-founder of

4 ways to persuade people to join your startup by Nir Polak, CEO and co-founder of Exabeam.

GoDaddy CEO’s 5 tips for aspiring entrepreneurs by Blake Irving, CEO of GoDaddy.