Lose €200,000 or work in a clothing store?

That was a difficult question that Richard had to ask himself and his partner a few years ago.

This month, we bring you a featured story from our special edition of Fuckup Nights e-Estonia last year.

Keep reading to find out about his screw-up...

👤 Who.

Richard Morla began his career in marketing and ventured into entrepreneurship almost by chance. Since then, he has created four companies and sold two. First, it was a magazine publishing company, then a clothing store. Later, without knowing how to program, he launched a technology startup that failed. Now he heads an app development company that he sold to a large consulting firm, and continues to lead a team of 75 people.

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FuN: What is your personal definition of failure?

Richard: For me, failure isn't so much about a project going wrong or a business not working out. Failure is realizing, over time, that I made a decision to fit in with what was expected of me, out of fear or convenience. Failure also looks like not trying something, knowing you should have done it, or staying too long in a place that no longer suits me.

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FuN: What was your context before this anecdote?

Richard: I ran a very successful publishing company, with eight magazines and €3,000,000 in revenue. I had a pretty fun life, which was what I dreamed of when I was little. But I was starting to have some disagreements with my partners. I wasn't very convinced about what we were doing anymore, and after talking with them, they offered to buy my share.

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At that moment, I felt sad because I liked the life I had, but I also understood that in those cases it is better to go with the flow and let things happen. After selling my share, I asked myself: What dream will I pursue now?

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I did a wonderful MBA in China and the United States. That's where I met my friend Fer, and during the master's program we always talked about setting something up together. But we didn't know what.

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Upon returning to Spain, I saw the news that an English clothing brand was going to open here: Superdry. We knew the brand from a mega store we visited in Times Square when we were in New York. It was a brand we really liked.

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We sent an email, and they called us right away. The next day, we were traveling from Valencia to Barcelona talk with them.

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It was an investment of €150,000, with profits of €50,000 per year. In three years, we would have recouped the entire initial investment. The rest of the time, they showed us the numbers, and it made a lot of sense. We weren't going to become millionaires, but it was a good amount.

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We put in the money we had. I had the money from selling my share of the publishing company, and his parents were able to leave him something. The truth is, it was a fantastic idea. We signed the franchise agreement, registered our company, and set about setting up our store.

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💣 The True F*up

Richard: We found a really cool place in Valencia, which we completely renovated. We conducted around 40 interviews to find four people with experience. And we went to Barcelona choose all the clothes for that season.

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In a few months, we had everything ready for opening day.

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It was incredible. The opening was a huge success, all our friends were there, along with lots of other people. We sold loads. The next day, Fer and I went out for breakfast. The team had already started work, and we arrived at the premises at around 12 noon to find it like this:

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Sure, they see everything as perfect, everything in its place, but that was the problem: we found it like that, with no one there, no people. How much had been sold? One T-shirt.

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We said, "Well, it's still early in the morning. It's normal that there aren't many people around yet. Let's wait a little while." We went into the store and started to calm each other down. It was still the first day.

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But the second day was similar. The third day too, the fourth day as well... And when the first month was over, we had lost 10,000 euros.

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FuN: What did you do at that moment?

Richard: We spoke to the franchise, and they told us to wait a little longer, to be patient. But we didn't have the money to be patient.

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A few more months passed and we had lost €50,000. We were then faced with two options. The first was to close down and lose €200,000 in total. It was as if we had taken out a 30-year mortgage to buy a house and it had burned down. We had to find jobs and pay it off. I just wondered, how could this be? We couldn't have screwed up that badly.

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We went for the second option: cutting costs as much as possible by laying off the entire team.

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FuN: How did you feel at that moment?

Richard: There we were, Fer, a computer engineer, and me, from Marketing, earning 50,000 euros a year, making 200 euros a month. Luckily, Fer's parents had an apartment in a town in Valencia and let me live there.

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It was very hard. I had gone from doing my master's degree in the United States and believing I was God to this being my daily life: half the time in the warehouse, labeling clothes, putting alarms on them, cleaning the other half of the time and serving people. I used to say I was a failure.

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I thought I'd messed up for good. I was feeling pretty down.

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FuN: How did you get out of that situation?

Richard: We realized we didn't know anything about that business or the customers. We paid attention and discovered a few things. Thirteen- and fourteen-year-olds really liked clothes. Tourists were a great market opportunity. And customers would come back if they were treated exceptionally well.

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So we started doing marketing activities aimed at that audience we already knew, as well as some campaigns with influencers.

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The store continued for a few years and we managed to pay off all the debt. We didn't make any money, but we did pay it off.

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Then the pandemic hit, and we had to close. I won't dwell on this too much because we were already fed up with the store. So we finally decided to close it after 10 years. We threw a big party on the last day and invited everyone who had been involved in any way, former employees, friends, and family.

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We celebrated as if it were a farewell. And the next day, we closed the shop shutters for the last time. With great sadness, but having learned a lot.

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💡 Insights from an entrepreneur, for corporations...

Richard: " Don't put all your eggs in one basket."

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FUN: Resilience is most effective when it does not depend on a single element. Develop your talent and your teams across the board, so that skills, knowledge, and responsiveness do not fall on a single person or project. The same applies to tools, processes, and software, as this prevents single points of failure.

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Richard: "Don't get into a business if you don't have a clue."

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FUN: Before taking risks on an investment, scale, or project, make sure you understand the model, the risks involved, and the resources available to execute it. Sharing this knowledge with the team helps align the collective mindset and facilitates decision-making at all levels of the organization.
Richard: "Know your audience."

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FUN: Design policies, processes, and spaces with the diversity of your team in mind. Not everyone learns or is motivated in the same way. Actively listening to your stakeholders allows you to communicate better and offer the right support, especially in times of uncertainty or crisis.

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Connect with Richard!

Remember, our channels are open for questions, complaints, feedback or collaborations at: rich@fuckupnights.com.

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