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Brain food

 

Harry Tsao (MBA 1994), General Partner at Juvo Capital and Co-Founder of MeziMedia


Themes: Entrepreneurship

In the 10 years after completing his Cambridge MBA, Harry Tsao had learned enough from his business mistakes to have a business worth £180m. So how did he do it, and why does he think failure is such an integral part of success?

Harry TsaoWhat’s the secret to being a successful internet entrepreneur? Failure’s a big part of it, says Harry Tsao. It might seem a strange answer from someone who sold the company he co-founded for $300m (£180m) back in 2007. But, says Tsao, if you learn from failure, you can profit from it.

“Life’s successes and failures are really a sequence,” he says. “My entrepreneurial spirit took me to the first company I started in 1998, which was a failure. It was called ShowExpo.com and the idea was that it would be great to have trade shows over the internet. But it didn’t work. Looking back, it was an interesting idea, poorly executed and poorly positioned. So I learned a lot about how to position a business from that. And through that failure, the next opportunity came, then the next skillset, then the next.”

Tsao began his MBA in 1994 and graduated from Cambridge Judge Business School in 1996. Back then, the Internet was still an unknown quantity. But he could see which way the tide was turning. His first job was as product manager with tech giant Hitachi, but he quickly moved on to GoTo.com, a business which pioneered “search marketing” – the art of increasing web traffic by buying advertising on search engines – and which would eventually be acquired, as Overture, by Yahoo for $1.6bn.

In 2002, armed with his then-rare search marketing skillset and his ShowExpo experience, Tsao co-founded MeziMedia with his GoTo colleague Talmadge O’Neill. It operated coupon and comparison shopping websites. Its first website, CouponMountain.com, cost just $10,000 to launch. They ran the company in evenings and weekends.

In its first month, turnover was $1,000, but after just a few months it was clear that MeziMedia was a viable business. Tsao and O’Neill quit their jobs at GoTo and set up a small office to work on MeziMedia full time. Five years later, MeziMedia was turning over $100m in revenue and had offices in 10 countries, at which point Tsao and O’Neill sold it to Valueclick for $300m.

The pair now run investment company Juvo Capital, which specialises in Internet and green technology firms – but Tsao’s still not shying away from risk. In 2012, he started a company called Loveit.com, a Pinterest clone. “We hired a lot of ex-colleagues – a real A-team. We had millions of unique users but we weren’t big enough to generate a substantial revenue stream. So we had to shut that down. And from that failure I took the lesson that putting a bunch of nice, experienced, high-paid people together without a great idea is a completely dumb idea. For our current business venture, we’re hiring a bunch of fresh 20-year-olds who’ll listen to us and do what we want. And I think that will work better.”

In the post-Zuckerberg age, everyone wants to be the next Internet billionaire. But, says Tsao, not everyone has what it takes. “I always feel like there are two challenges to starting a business,” he says. “There’s the business model risk – is this going to work? And once that’s out of the way, then there’s the execution risk – this model works, but can you execute it? Do you have the ability? Are you a hard-driving entrepreneur who is willing to give up a lot? When I ran my last Internet business, I went five years without a vacation. I checked my email every waking hour. Do you have the desire to do that? If not, then being an entrepreneur isn’t for you.”

I am interested in hearing from people who…

… treat the businesses they work for like it’s their own business. Entrepreneurship is really hard work, and those who want to give it a go should be mentally prepared to make lots of sacrifices.