The importance of straight talking
Photo credit: Damian Izdebski
Whether you have been doing everything right, mistakes just pile up on you – sometimes everything just gets out of hand. And it happens to all of us. Knowing and believing this may make it easier to accept failure, but dealing with the consequences and communicating them is a topic on its own.
We talked to Damian Izdebski, founder of DiTech and Techbold, about how he felt having to let go all of his employees, the effects of failure on a family business and the communication of his bankruptcy to the public and what life has been like on the edge. After this loss he took time-out and spent some months in the US and now with the publishing of his book, Izdebski is back on his feet with a new business and ready to start up again!
When it started to fall apart
In 2014 DiTech, as the leading retailer in the hardware and electronics field in Austria, it was forced to file for bankruptcy. Founded in 1999 by the then-23 year-old Damian Izdebski and his wife Aleksandra, the startup turned into a national award-winning enterprise with over 20 shops and 250 employees all over Austria. In his early years as an entrepreneur, Izdebski chose the riskier path over finishing his studies. Even today, after the break up of DiTech, he is still not afraid to put everything at stake again by opening the first shop of his new startup Techbold in Vienna.
“As an entrepreneur you want to do everything you can to keep your business going. We tried to keep DiTech until the very last minute and put our own money into the business as long as we could. By doing this we also wanted to convince and show our financing partners that we ourselves believed in what we were doing,” when he recalls the dying moments of DiTech. One of his biggest mistakes, which he describes in the book written after his business went under, concerns this very moment: failing to see what lies ahead and failing to react quickly enough. “If I look at it now, I should have conceded some months earlier, this would have been the better way. With the money I put in the business I could have easily financed a new start.”
The difficulties of communicating failure
Naturally, one is always wiser after the event , but even if he had filed for insolvency earlier, he would still have to communicate this failure. DiTech being a family business, the first people to discuss the closing with were the founder’s wife and children. While Izdebski himself grew up in an entrepreneur family, his own children were born into business too.
In the 3-4 months before the insolvency and the months after I’ve learned more than in 15 years of running a business.
“DiTech was older than my kids, so they didn’t know anything else.” His brother, father and mother- in-law also worked in the firm, so the closing was a world shattering for the whole family. “It also hit us financially because half of the family suddenly was out of work.”
Even though it was a tough time, his family stands behind him 100% and his 13-year-old daughter recently said that she plans to become an entrepreneur too. “You see, taking risky decisions and even failing does not have to scare you away. If you embrace the experience, it can even take you further.”
Closing a company with shops all over the country is not just a concern for the inner circle, but has far-reaching implications for many. And what can be harder then telling your employees that they’ve lost their jobs? “We’ve always shared the details about the state of our company with our employees. They were informed at an early stage and knew what they might have to expect. But, they were hoping for a happy end tooof course.”When the Company filed for bankruptcy, around 250 employees lost their jobs and Izdebski admits he was ashamed that this step couldn’t be avoided. “In the end you have to stand up, understand that it’s not possible anymore and admit that you have failed.“
When you go public, be open in discussions
When it came to informing the public about the ongoing developments in DiTech, Izdebski chose quite an unusual way to inform them: “Beginning of March 2014 I sent an open letter to the media and to our business partners. I explained our status, revealed that we had to file for insolvency and began to talk about mistakes I made . I admitted mistakes, for example that it would have been much wiser to bring in an investor three years before and so on.”
With this letter he openly admitted where he failed to react. What he considered crucial when facing accusations from the public which is to be honest and take full responsibly for your decisions.
“As an entrepreneur you have to make decisions – hundreds of decisions, big and small, every day. So at the end of the day, you have to take responsibility for that. […] But that’s what entrepreneurship is all about. If you are always playing it safe – innovation cannot happen. You simply have to take a risk in order to go further. Many successful entrepreneurs have failed in the past – but without that experience of failure, they might not have succeeded.”
Post mortem: After the insolvency
Photo credit: Damian Izdebski
While Izdebski considers the press coverage of the failure fair and balanced, it was the online communication he couldn’t bear after a while. „I openly admitted mistakes, so no one could write about them in the press. The direct feedback in anonymous forums, however, was not justified and went much deeper than the business level. I experienced personal and even racist abuse but I guess that’s what happens under the cloak of anonymity.“
The time after the insolvency in Austria was exhausting for him – on a financial but also on a psychological and emotional level. “You are ostracized, people you thought you knew didn´t pick up their phones anymore or even went on the other side of the street when they see you. You are stigmatised somehow.” So, when all was said and done, Izdebski needed a change of scenery. He went to USA to find out how people deal with topics like bankruptcy and insolvency and how starting a business looks like across the big pond. In California he met with other people who had failed, talked to investors, and got inspired by writing down his experiences for others to benefit from.
Unlike Austria, people in the US simply wanted to learn from him and were interested in his business experience. They saw the whole package – the founding, the building of the company, the billion-euro revenue, and did not only focus on the failure.
“I had a lot of time to think. The way people reacted to me and how they appreciated my knowhow is what gave me a motivational boost. That’s when I decided to write a book and that founding a company again is the only way forward for me.”
In his book “Meine besten Fehler” (“My Best Mistakes”) he sums up the seven best, opens a discourse about failing as an entrepreneur and encourages others to talk about their hard times. Writing the book was not only a chance to deal with the last year on an emotional level, but also a strategic step for the new business. “I realised there are not many people who actually talk about these topics. Knowledge about failure can be valuable and I think other entrepreneurs might benefit from what I have experienced.”
Returning to entrepreneurship
“If you’ve built a business on your own and are constantly making decisions on your own it´s very difficult to be an employee again,” Izdebski explains his brave step of founding a new business in 2015. With Techbold he has stayed true to his enthusiasm for IT and is building two companies at the same time.
“You have to give everything to the creation of a new company – it´s not a part-time project and its not a 40 hour a week job either. And in my case, I have to deal with about 200,000 burdens of the past too. There is simply no time to cry over spilt milk because you have to focus on the here and now. You have to fight for every client, every order – you are broke two times a month, once on 15th and once on 30th, but you keep fighting and keep on going.”
I think many hesitate to employ a manager with an insolvency background – even if they know they could benefit from the experience.
Techbold Network Solutions offers services for clients in the areas of network, wifi, user support or cloud service. On the other hand, there is also the Techbold Hardware Service, which was launched in Vienna several weeks ago. With his two offers Izdebski provides services for pcs, tablets, mobile phones – from replacing a broken screen to software updates, virus extraction, repairs, upgrades, and more.
“The kids and the family are focusing on the future. Theylive in the here and now and what’s past is past. They might miss the old business once in a while but they’ve also experienced the founding of the new firm and we are looking positively into the future.”
For Izdebski it is this attitude that keeps life in balance and protects him from fear of failure. “I believe in the self-fulfilling prophecy and that if you are 100% sure something will work out – it will work out. Your attitude influences your employees, clients and the whole of your business.[…] Being able to enthuse others with your spirit is a talent – if not the most important of all – an entrepreneur has to bring to the table in order to be successful.”
Techbold already has nine employees and aims higher – which again all about high stakes. “I will make a lot of new mistakes with the new business – and I know that for sure because we will have innovative approaches in many areas and aim for high goals. I’m realistic enough to now that not everything will work out smoothly. The whole life is a learning process and as an entrepreneur you learn from the first minute of your business until the last.”